Medicare For All Wouldn’t Work For Anyone!
There is a knee-jerk reaction among proponents of a single-payer system for health insurance who keep mindlessly reciting the mantra, Medicare For All! The problem is that even though Medicare is one of the most popular government programs–a veritable sacred cow politically–the fact is expansion of the plan to cover all Americans would never work. If you doubt me, do the math.
What supporters fail to take into account is basic actuarial science. This is the backbone (or at least should be) of insurance pricing decisions, but the public rarely considers the statistical work that goes into making an insurance policy financially sound.
You see, we all pay Medicare premiums from the moment we start working–meaning we usually pay premiums for 40 or more years before ever drawing a benefit after hitting 65. Not to mention the fact that those people who die before 65 never draw a benefit, no matter how long or how much they paid into the insurance fund.
This is a good thing, because it means we should be able to finance our health care for our so-called “Golden Years”–a time when we are most likely to incur massive medical expenses–at an affordable rate. It’s the same theory behind Social Security–having the worker and employer set aside a relatively modest sum each year to partially finance our retirements down the road.
However, if we were to open up the Medicare plan for all Americans of any age, that would blow the acturarial calculations right out of the window, since we are not paying a premium level anywhere near what would be required to finance medical care for our 20s, 30s, 40s or 50s.
Some might flippantly say, fine, just adjust the rates upward so that the damned actuaries can sleep at night! But I don’t believe most people have a clue how much health insurance really costs.
Of course, the 50 million or so without coverage have a pretty good idea, and they realize they cannot afford it. However, those who have insurance through their employers lack any idea what is being paid on their behalf. It can cost employers well over $10,000 per year, per employee, to offer decent coverage, and that is on top of the employee paying some of the premium. That is much, much, much more than what is deducted for Medicare right now (and what would still have to be deducted to pay for care when we get old).
Sure, if we offer everyone bare-bones coverage with huge deductibles, co-payments and exclusions, we might be able to lower the cost. But would the 100-million plus lucky enough to have coverage not scream bloody murder if they saw their premium bills go up for less coverage? Try to campaign on that platform if you are a member of Congress and see how far you go!
In addition, covering everyone would certainly remove a lot of the cost-shifting that goes on today, lifting a burden on those who are insured and those who insure them. But such savings would not be nearly enough to make a huge difference in terms of total cost.
And even if we did adopt Medicare For All, remember that Medicare leaves huge gaps in coverage–particularly on prescription drugs.
Thus, the conundrum facing the Obama administration and Congress. Getting everyone covered affordably appears to be a paradox, as every “solution” comes with fatal political liabilities.
So the Democrats agonize over what form of political suicide to choose–whether to tax health benefits, for example, and thereby “punish” those who have coverage to finance costs for the uninsured. That’s a step Candidate Obama swore he wouldn’t take, and a distinction that helped sink John McCain’s campaign.
Meanwhile, the Republicans sit on the sidelines, tossing bricks at every passing Democrat, rejecting every reform option, leaving the burden and political liabilities squarely with the Democrats. Will that backfire on the Republicans during next year’s midterm congressional elections? Only if the Democrats deliver a plan the public can live with.
I don’t envy them their task.
How would you solve the health care crisis?
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Sam, I do not believe we have a “health care crisis.” We are experiencing reality, where there are employers and individuals that can afford insurance, and those that cannot afford insurance, a new home, a new car, etc, etc… Who created the premise that we “owe” others health care?
We will soon “owe” them a new car, as Obama is proposing, or a new house, as Obama is proposing. Where will it stop?? He also wants to take our guns so we no longer have the means to define ourselves (presumably against our own government).
I am currently on Medicare, after paying into the program my entire working life. Tom Daschle now says if I require expensive treatment under the national healthcare program, “someone” will have to decide if I am too old to be treated, due to the expense, and I will have no choice. Who makes THAT descision?
We now have Medicaid for those without the resources to pay for thier needs. Once the national healthcare passes, which it will, the trend for free goods and services will be irreversable… and an Obamination of our democracy.
SAM RESPONDS:
Sir, first of all, I would not equate access to health care with the “right” to own a car or home. That is a fallacy and the comparison is quite ridiculous. In a just society, people should have access to basic medical services, and it’s better to do that through a universal health insurance system then via the makeshift system of emergency room care we have now.
If that is not the society you want to live in, vote for the candidate calling to let uninsured people “eat cake,” so to speak. That’s why we have a democracy. The polls how pretty widespread support for universal health insurance. The question is how to do it and pay for it.
Also, I don’t recall President Obama wanting to take away anyone’s guns. In fact, he has been rather outspoken about letting people keep their weapons. That’s why I laugh when people accuse him of being a “socialist,” since I don’t even consider him a true “liberal”!
Sam, I mentioned this on another post you had on this subject–the only way to fix health care is to transform how Americans approach their health care needs.
We have to start treating health insurance like we do our auto and homeowners policies, and that means paying the ’small stuff’ such as routine visits and other routine care and rely on the policy for the big ticket items.
As I said, if we expected our auto insurance to cover oil changes, new tires and alignments, we’d have an auto insurance crisis as well. I truly believe that if the patient was footing the bill for the routine care, you’d see those costs drop to be more in line with what people can afford to pay.
Yes, that may mean we have to start spending less on dinners out, I-Pods and flat screens and set money aside for our health care. The idea that you can go to the doctor or hospital pay a $20 office visit or $100 ER copay has to go by the wayside.
This also doesn’t take into account that we as a nation are in decrepit physical shape and need to start taking a greater vested interest in our personal health, but that’s a whole ‘nother issue altogether.
Here is a personal example. Last month my daughter’s dentist said she needs braces. I have nominal dental coverage that caps annually at $1,000. Braces will cost $5,000, which leaves me with $4,000 I need to come up with–but guess what? The dentist says we can a) put it all on our Visa and he knocks off $500 or B) we pay full price over 2 years at no interest. We picked option B.
I subsequently found that this is not uncommon among dentists because a good chunk of their clientele have no dental coverage, which means if they don’t accomodate patients financially, people just don’t go to the dentist. I’m not saying this is the end-all of lowering costs but it is certainly a step in the right direction.
What I don’t think is going to fly is leaving Medicare as is, providing a universal system for the 40-50 million uninsured while leaving the rest of us with group health care to continue paying higher premiums for our own insurance as well as footing the bill for the rest on the fed system. Especially if our health benefits are taxes as is being discussed.
Tough question. I am of the mind that any insurance that is not strictly casualty related tends to be inflationary. It’s inflationary in that the policyholder may deem he or she is holding an unlimited value of health care dollars over and above what the premium costs. Demand for services will increase while the supply of doctors remains slow to respond.
The medical service industry has adjusted somewhat with the creation of nurse practitioners and advancement in technology, but if the government promises health care to all, the demand will increase tremendously. Doctors will eventually be paid less and the supply of doctors will go down.
The government will have no choice but to play gatekeeper on who gets services, and in effect some of us will be without health care coverage outside of a black market.
I’d say the market is the answer, but nobody will buy that. Maybe if we open up the medical school enrollment we’ll get more doctors who wouldn’t mind the low pay.
One should note that Medicare premiums for Advantage Care HMO (private Medicare carriers) are proposed to be reduced by at least 3% next year. Provider contracts in renegotiation will either see the doctors take less money or leave the HMO program altogether.
Freedom requires responsible decisions, which starts with an individual’s day-to-day decisions on how to prioritize everything from how we spend our time, to how we spend our money.
I’m sure readers would be shocked if they knew the percentage of people without healthcare that own I-Pods, flat-screen TVs, new cars, and other discretionary items that have been given financial priority over the purchase of health insurance. I’m the first to acknowledge the purchase of health insurance over other items is a tough decision, but the individual should be held responsible for the consequences of the decision.
I do not have an issue with Americans that need help because they truly cannot afford health insurance. What is frustrating is when the responsibility of freedom is overtly shunned, and those that have prioritized responsibly are forced (yes, forced) to pick up the tab.
SAM RESPONDS:
You make an interesting point. Thus, would you be in favor of a government mandate, requiring people to buy coverage? That was Hillary Clinton’s stance during the campaign, and Candidate Obama hammered her over it (with the exception of requiring parents to insure their kids), but word out of the White House is that he now might be considering it.
A mandate would theoretically force people to buy coverage, even if it means giving up their I-Pods, flat-screen TVs, etc.
Sam, here is a truly off-the-wall proposal, but first a little history.
Back in the late 60’s and early 70’s our property insurers were regularly avoiding certain properties located in tough areas, and in response to a lack of market the FAIR Plan(s) was developed.
Fair Access to Insurance Requirements plans provided coverage to those property owners that could not find such coverage through the voluntary market, but the coverage provided was “basic” only.
As I recall, there was a funding mechanism mandating industry as well as taxpayer support, but FAIR Plans were successful in that they did give the consumer such basic protection required to secure or maintain their mortgages, etc.
Perhaps a similar approach could be considered for the medically uninsured, whereby they would be eligible for a FAIR Plan providing basic medical services at a subsidized price, but such qualification for the uninsured must be universal.
SAM RESPONDS:
Fascinating! Would that mean existing health insurers would have to take a portion of the FAIR plan, according to their state marketshare? Or would the government itself cover them? (There’s that public plan again!)
“Medicare for All” will certainly work for one key group–Elected Officials. I have often recently had a disgusting thought–a means and intelligence requirement to vote, based on federal income tax liability and passing a basic multiple choice exam on the federal government.
Back to reality. The one question I never hear, why suddenly in 1992 and again in 2008 did this issue become hot? There was no health care concern in 1880? 1910? 1933? 1946? Nobody got sick, nobody ever went broke or untreated before Clinton or Obama?
SAM RESPONDS:
Dear Mr. Skeptical,
This issue didn’t “suddenly become hot.” It has been debated since the Truman years, at least, when Harry failed to drive through universal coverage. Johnson got Medicare passed so the elderly wouldn’t be left to die in the street.
As for decades or even a century ago, so what? For one thing, medicine was not so expensive or complicated–doctors actually made house calls, and even at 51, I recall such routine visits at home! And the cost was very, very cheap. Access was much easier than it is now.
As for your means/intelligence test, how about a compassion test as well? Even the Wizard of Oz recognized the equal value of a brain, a heart, and courage!
I am definitely not in favor of a government mandate that requires people to buy coverage. I am generally in favor of any government mandate that holds an individual responsible for the consequences of poor decisions. The sticky issue is how to set the consequences for those that make the decision not to purchase insurance, yet incur costs for care.
In the world of Medicaid expenses, states have had to grapple with the issue of how to cover the costs of uninsured patients. An uninsured individual that cannot pay for required nursing care services faces the consequences outlined in the state’s “estate recovery” program. The estate recovery programs were introduced as part of the 1993 economic package (see below).
“In August 1993, Congress passed an economic package that contained new requirements on the state’s Medicaid program. The federal law requires each state to establish an ‘estate recovery’ program. This program will allow the state to recover the cost of Medicaid benefits from the estates of nursing home residents and other recipients who use long term care services. The state will be collecting recipient’s property after their death.”
The harsh reality is that the solution will require the government to seize property to pay for irresponsible decisions. The real question is whether the property is seized from those that made the irresponsible decision, or if property is seized from everyone else to pay the consequences.
Sam, thanks for posting my comments, however oppositional they are… I do not disagree with your comments in general, with the exception of gun control. Mr. Obama is using tools he has available to him to promote bills that will control the use of firearms while publicly supporting the right to own guns. Time will prove my comments.
A National Health Care bill will not resolve the health care issue. Canada and other European countries have already established that fact. If a “universal health care system” will NOT compromise health care quality, then I will support it, but we both know the government is NOT the resource to design such a program.
We must understand that we cannot hold the government responsible for solving all problems that surface due to inequities in our society. Using your words, “that is a fallacy and … is quite ridiculous!”
The bottom line is that the hard working individuals in our society have been plundered of their resources, and there is no more booty available for the government to take for their “just society” programs. We are now the “minority” and it is time to demand our rights as well. Once health care is removed from private enterprise, Medicare and Medicaid WILL collapse.
Thanks again… I enjoy your blog and timely issues.
Sam, I think Hillary’s mandated coverage wasn’t that bad of an idea. A good chunk of the 40 million uninsured are thus based upon personal choice. As the saying goes, it’s all good until someone gets hurt and then everyone else is indirectly footing the bill. Requiring a minimum of catastrophic coverage would be similar to how we in Indiana require drivers to carry at least liability insurance.
Also, as Mr. Stewart remarked, people tend to spend discretionary income on luxury items mainly because we have been programmed to think of health care as a right, rather than just another commodity we need to consider in our day to day budgeting.
Again, the first step in reform is to reform our thinking on health care because whether we get it through a private plan or a goverment one, we’re still going to be paying for it either way. The question will then be, who is paying and what kind of care are we receiving for it?
I would like to know how the uninsured went from 40 million to 50 million in less than a year. Is it the illegals or the newly unemployed?
What percent of the 50 million choose not to buy health insurance because they are young and healthy? I know plenty.
How will the government charge sufficient premium to cover claims when it is politically unpopular? If a private insurance company were run like FEMA and Medicare, they would be shut down.
SAM RESPONDS: All excellent questions! Should the young and healthy be mandated to have coverage?
I think a National Health FAIR Plan would provide for a standard limit of coverage annually of say $25,000, supported by a surcharge to all health policies, matching contributions by the carriers and a premium of X ($300?) paid by all coverage holders.
There should be availability for excess coverage through the standard market at competitive pricing. Each coverage holder would have the limit at their disposal to choose the most competitive provider or just choose their favorite medical practitioner: providing choice to the coverage holder will reduce or contain costs.
That’s all I have to contribute. Thanks for the forum to air my thoughts.
What politicians seem to ignore is that insurance is a contract where one person agrees to indemnify another against a risk of a contingent or unknown loss. It is not a right. It needs to make money for the insurer and, as you said, it needs to be paid for based on clear actuarial calculations.
When government gets involved, science has nothing to do with it. All that matters is politics.
When Medicare came into play, my Mother, now 97-years-old, decided that “free” medical care was wonderful and saw a doctor about three times a week. It made her sick and my father, rest his soul, a prescription drug addict that eventually killed him, but it was free and was their entertainment for their retirement years as was the entertainment for everyone who lived in their retirement community.
Free takes away judgment. No one will care what happens if it is free.
Forgive me, Sam, but I do not want my health care–now that I collect Medicare–controlled by a government employee who could not get a job with an insurance company and who could not define the term “insurance.”
Sam, your comment about how, in a “just society” it is a “falllacy” and “ridiculous to compare…access to health care with the ‘right’ to own a car or home,” goes right to the heart of the controversey.
Many others would say instead that a “just society” is one where you get to keep the fruit of your labors, instead of having the government reach into your pocket to rob you and buy votes for its politicians with the proceeds.
Medical service is just one more service among many that the more productive and lucky can buy more of than the less productive or less lucky. Why should it be different from any other product or service?
Differential access based on economic achievement is just another reason to strive, to push onself to climb up the economic ladder. Take away the motivation to strive by giving people something for nothing, and the whole society will become poorer.
Of course, as you say, “the polls show pretty widespread support for universal health insurance.” That’s because most people think that under such a system, somebody else will pay their medical bills for them. Who would that be?
Sam, you’re a redistibutionist, not a productionist, at heart. That way lies poverty.
SAM RESPONDS:
Mikk! Welcome back! Haven’t heard from you in quite some time. I hope you are well!
Mikk, by your reasoning, why should cities/states/feds tax at all? Let everyone be armed and defend themselves, if they can…no need for police! Your house on fire? Contract with a private company to put it out…Can’t afford it? Tough! The same could be said for tax money that goes to pay for paving roads, assuring clean water, air and food, etc., etc.
Frankly, I am surprised you are not on my side on this. After all, isn’t insurance “socialism,” by spreading the risk among millions? That’s what our tax dollars do in assuring our health and safety, no matter what our individual financial condition.
I have read this with great interest. I am a former Prudential agent that retired in 1987. I now have over 20 years as an independent agent.
I have experienced the cost of health insurance since I am providing health insurance for the agents in my employ. The cost for the agents thru Blue Cross is about $500 per agent. I successfully sold Individual and group insurance during my 30 years with Prudential.
I am now on Medicare (my only choice), and a supplement which is fortunately still provided by Prudential. The new coverages for Health Savings Plan has been of great interest to me. This might be a way to go in the future.
I like the idea of a National Health Fair Plan as described by some of you. In Louisiana the Citizens Fair Plan has worked well. Our citizens have to pay for the coverage–sometimes more that what it costs on the regular market. They pay because it is all that they can buy.
The states attempt to bring in new companies by creating a fund of $100 million to entice some new companies in, has worked well, I now have five new companies seeking business in the state–the “only” companies available to me in South Louisiana. This is my first real good market in years.
A National Health Plan could work, with high deductibles like those offered by the Heath Saving Accounts. The deductibles could be anywhere from $1,000 and up. The plan could be changed as time went on to adjust for costs. It would be a start to insuring the uninsured.
Do uninsured people need this coverage? You bet they do. They call my office often seeking coverage, only to find out they don’t qualify for most companies. It has been so discouraging to me that I decided not to offer individual policies in my agency. Their stories are so sad!
And guess what? Our present agents could offer the National Health Plan and our present system of doctors and hospitals could provide benefits as they do for senior citizens. They appear to be doing a good job now. If we don’t cut out people sellling and furnishing care, a National Health Plan might work.
Sam, there are proper roles for the government–defense against external enemies, prevention and punishment of violence and fraud, enforcement of valid contracts, controlling the currency. Maybe preventing excessive pollution, and preventing the spread of conflagrations (a valid purpose of socialized firefighting).
I’m happy to pay taxes to support these kinds of services. But making me pay for someone else’s medical services isn’t one of them.
Health care is everybody’s personal business (and parents’ business as respects their young children). Eat right and not too much, exercise adequately, don’t smoke, use alcohol (if at all) in moderation, drive carefully, and the like. Behave! These are the only things that will control the aggregate costs of medical services.
None of these disease-and-injury prevention behaviors generates income for the medical establishment, except maybe the occasional medical checkup, so the medical establishment does not provide health care. It provides medical services for the sick and the injured.
Everybody eventually gets sick or injured, and dies. The issue is, whose money should be spent to put off that day for a while longer? My answer is: one’s own money, either directly or through voluntary participation in a voluntary insurance plan where one’s premium is commensurate with one’s risk of incurring medical service expenses.
Not someone else’s money, either directly or through cross-subsidization in so-called “insurance” schemes that are really coercive income-transfer schemes.
Insurance is not an income-transfer scheme. I am really shocked that you, the Editor in Chief of the major insurance trade journal, could hold the view that insurance is inherently “socialism”!
Insurance certainly gets abused through governmental coercion in a socialistic manner, to redistribute resources systematically from one pre-identifiable group of people to another, but that’s not insurance, that’s forced subsidies. Or more charitably, it’s charity. Insurance is not charity.
Wlile Mikk and I often differ, I believe we fundamentally agree on this issue.
Insurance is a risk transfer and not an income transfer, but the government wants to make healthcare as much an income transfer as the current taxation system. Take from those who pay the taxes and spread that among those who do not, those who will not, and those who dodge the system, and when the pot becomes bare, simply increase the taxes again and again?
I believe there has to be health care for everyone to some degree. But what are we willing to sacrifice for it and at what cost? Do we want a single-payer Canadian or a British system that has been failing people for years? People seem to believe that just because the service is universal and somehow government controlled, that it’s good!
What about the cap on expenses? Do we want the government to set a cap on the value of your life? Or will we be purchasing an umbrella to lift the cap to a more comfortable level, much as we do with liability coverage now? If you can’t afford the cap, do we pull the plug as sometimes happens regardless of protestation today? (Yes, it does happen when one is discharged from the hospital when the money runs out and a person simply goes home to die)
My opinion is to have the private carriers handle health care and provide tax credits to employers for covering all employees. Make the cost a sliding scale in proportion to income. Perhaps cover the uninsured through a FAIR plan system as suggested above with tax credits for the employed and coverage through unemployment or disability plans for the unemployed.
Those on welfare and the illegal population are already covered with your tax dollars so that’s a moot point.
Medicare is certainly not the answer to the nation’s health care issues, but neither is any government-run program where the bureaucrats get their fingers in the coffers and start rummaging around. On our Ops board was a large sign that that everyone saw just before walking out the door that stated:
“You have no idea how expensive anything can become until the government gets involved”
In my opinion, truer words were never spoken…in this or any other scenario.
Sam, your reply to Beyond Skeptical is frightening to say the least…. In one breath we are discussing national health care, and in the next breath you are proposing that “the young and healthy be mandated to have coverage?”
This mandate is what the Senate is discussing as we speak, forcing a $1,000 fine on those that fail to carry heath insurance. I propose that the word “mandate” will be the catch word for the years ahead, and quite frankly, will be the end of our society as we know it. S
oon we all be mandated to have health insurance, mandated to turn in our weapons, mandated to do whatever the “government” decides is in the best interest of a “just society.”
Sure, you claim “just” comparisons for existing mandates, such as having a driver’s license, marriage license, etc., but there is a difference. IF I want to drive, I need a license, etc. These are not mandates, but rather laws passed by the government if we want to take part in a certain activity.
But future mandates will be different, and much more invasive of our constitutional rights. My question is, will we as American citizens, stand up against these “mandates,” or simply buy into the beliefs that they are necessary for a just society to work.
Yesterday, in church, as we sang “The Truth is Marching On,” I leaned to my wife and whispered… “Soon WILL be the day that we will not be able to sing this song, because “marching on” will be construed by our government to be a subversive act against it….”
What I do not understand is why intelligent individuals like yourselves do not recognize the invasive intrusion into our personal lives by our own government.
SAM RESPONDS:
Sir, I could say the same thing–how could intelligent individuals like you think that a health insurance mandate is the end of our constitutional rights. After all, we are mandated to contribute to Social Security and Medicare, and have been for decades, have we not, and no such end of constitutional rights has taken place, correct?
With all due respect, I believe you are getting paranoid and carried away here.
DENNY GETS THE LAST WORD:
With all due respect, your comparison is not valid. As a young person, my wife and I raised 3 children, sometimes on a meager income. When I did have an income, yes, I paid a small percentage of my income into Social Security and Medicare, as required by law. I did not carry health insurance for a period of time when my income was marginal, because I simply could not afford to do so.
If our government “mandates” young families to carry health insurance, that mandate will overide food on the table, or gas for the vehicle they drive to work. If they violate the mandate, they will pay a fine which will further exacerbate their financial condition.
What will happen to those that simply have no income? Will they also be required to carry health insurance? If so, how will they pay for the coverage? If they receive the coverage without paying for it, who WILL pay for the coverage? How can our govenrment enforce such a mandate?
Your caption reads “Medicare For All Wouldn’t Work For Anyone.” I agree completely. As for my paranoid nature, I can only hope that others will begin to recognize the direction our government is taking us before it is too late. What you consider to be paranoia is reality for millions of Americans today.
We are quickly becoming a divided nation, and will soon be a bankrupt nation as well. Thank you for your impartiality to issues such as these.