Myth 24. Medicare is the model of efficiency and fairness.

Medicare is immensely popular, has very low administrative costs, is already a working model,… it is said: Why not just have Medicare for all?

At one time, calling Medicare “socialized medicine for the elderly” caused stunned silence in the Congress. Now, if one opposes “socialized medicine,” at least one listener is bound to dare you to say you’re opposed to Medicare.

Government may bumble at almost everything, but in a handful of areas it does better than the private sector, writes Nicholas Kristof. He lists firefighting, police protection, and health care. Also postal service and education (NY Times 9/3/09).

And even if government is inefficient, he writes, at least it is fair. It doesn’t cancel your coverage if you get sick.

Here’s a reality check on Medicare:

  • It is structured as a Ponzi scheme. Or should we call it a Madoff scheme? Its unfunded liabilities—an estimated $38 trillion—are unpayable. Promises made to Baby Boomers, who were forced to pay into the system throughout their working lives, simply cannot be kept. Their money is gone, just like that of Madoff’s “investors.”
  • Its low administrative costs are a mirage. See Myth 2.
  • It is sustained by the general fund and by cost-shifting. Medicare Part B premiums pay only about 25% of the cost; the rest must be made up from the general fund. In addition, Medicare underpays hospitals and physicians, and costs are shifted to private insurers. The hidden tax on private insurers to subsidize Medicare and Medicaid amounts to $89 billion/year, or $1,788 per average family in a PPO plan (Grace-Marie Turner and Joseph Antos, Wall St J 9/11/09).
  • It is unfair to both patients and physicians. Payments to physicians are often so paltry that patients are having increasing difficulty in finding a physician who can afford to see them. Coverage of prolonged serious illness is poor; seniors who exceed the allowed number of hospital days are on their own. Neither is Medicare a model for comprehensive coverage of non-catastrophic costs. Seniors pay 50% of their medical bills out of pocket, and most buy supplemental coverage (ibid.).
  • The system is rife with fraud. An anti-fraud campaign went into high gear with the passage of the Kassebaum-Kennedy, Health Insurance Portability and Accountability Act (HIPAA) of 1996. Hundreds of millions of dollars were made available to prosecutors, along with huge penalties and new tools: a fraud hotline, bounties of up to 30% of amounts collected, and money laundering charges, on which the accused can be convicted without being convicted of any underlying fraud. This amounted to a post-hoc criminalization of medicine. Still, despite allocating $1.13 billion for “program-integrity” and enforcement activities in 2008, government-wide “improper payments” allegedly amounted to $72 billion that year, writes John Iglehart (N Engl J Med 7/6/09). “[I]n our freewheeling society driven by capitalism, there is a strong distaste in many quarters for overzealous investigations,” Iglehart opines. While physicians may be ruined or even imprisoned over alleged coding errors, the threshold for investigating a Medicare carrier is $200 million (Theresa Burr, J Am Phys Surg, winter 2003). The Government Accountability Office found that CMS enrollment and inspection procedures were so poor that it routinely granted billing privileges to fictitious companies with no clients and no inventory (GAO-09-838R Posthearing Questions; 2009).
  • Government care costs much more. The passage of Medicare led to an immediate, enormous jump in spending. Between the introduction of Medicare in 1965, and 1970, real hospital expenditures jumped 23% , reports Linda Gorman (Library of Economics and Liberty 6/1/09). Since 1970, Medicare’s per-patient costs have risen 35% more, and Medicaid’s 34% more, than all other medical care in America. This analysis greatly underestimates the cost of government care by counting all Medicare prescription-drugs purchases as part of private care; not adjusting for billions of dollars in cost shifting from Medicaid to SCHIP; and counting care purchased privately by Medicare and Medicaid patients (including Medicare copayments and Medigap premiums) as private, without counting those patients as recipients of private care (Jeffrey H. Anderson, New York Post 7/18/09).
  • Medicare taxes impose uncounted costs. Among the hidden costs of government programs is the deadweight cost of taxation. The taxes that finance Medicare impose costs on society in the range of 30% of Medicare spending (Michael Tanner, Cato Policy Analysis #642; Aug 6, 2009).

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12 thoughts on “Myth 24. Medicare is the model of efficiency and fairness.

  1. Unfortunately, this article will never have a chance to be seen and appreciated by those who need to know the truth. Thank you for your accurate asessment of this dire situation in medicine and in the history of our country.

  2. Medicare is immoral.

    Why?–Because it asks that some men sacrifice for others with the government as the administrator of the sacrifice.

    Consider this: Medicare is funded by taxation of every working person. This money is confiscated by the government, which funds the payment codes that are created by the American Medical Association. These codes are termed “CPT” codes, which stands for “current procedural terminology”.

    This unholy alliance between the Federal Government and the American Medical Association is nothing more than a veiled disguise for a “public option” that is 44 years old, and one that many in the Congress want to unleash on the entire country.

    What you need to know is that your money is being stolen from you. Furthermore, the effects of this theft is a debt of tens of trillions of dollars that no one in Congress gives a damn about because they will be long dead when the effects of this Congressional “love-fest” destroys what is left of the lives and fortunes of freedom-loving Americans.

    The answer to this problem of government intervention into medicine is simple, but it is not easy to implement. It is this: The Federal Government has no right to violate the rights of individuals. When they do this, they infringe the authentic rights of individuals and forfeit their right to govern.

    It is time for Americans to stand for their authentic rights to exist without infringement of their rights by government bureaucrats.

    The proper function of government is the military, the police, and the law courts, and nothing more. There is no right to medical care, and the sooner Americans understand this, the sooner we all have a chance to regain our authentic freedoms.

    Mark A. Hurt, MD
    Creve Coeur, MO

  3. Pres Obama decries the denials of care by private insurance companies, suggesting that federalization will fix that. But a recent study by Heritage Foundation showed that the average Medicare denial rate is twice that iof the average insurance company.
    Smoke, mirrors, and blinders.

  4. Pingback: Medicare: unfair, inefficient, fraudulant, costly | Independence Institute: Patient Power

  5. Keep up the good work…We all need to know all this but the “main stream media’ is not doing well @ all to this country because they choose to keep everyone in the dark….

  6. Pingback: Myth 30. “Healthcare reform” bills will increase doctors’ pay while “saving” nearly half a trillion Medicare dollars. « AAPS News of the Day

  7. Pingback: Myth 31. “Healthcare reform” bills will increase doctors’ pay while “saving” nearly half a trillion Medicare dollars. « AAPS News of the Day

  8. “Practice guidelines are for disease states, not for the individual who has the disease. To apply even the BEST science by rote to an unknown individual, in all of his or her rich complexity, is akin to plating bacteria on an unknown culture medium. It is not good science and it is certainly not good art!” ~ Faith T. Fitzgerald, M.D., Professor of Internal Medicine and Chairman, Department of Bioethics; University of California Davis

  9. I am 85 years old and have good insurance co. Everytime the government has intervened, it has gotten more expensive and less reaponsive.

  10. Like the majority of Americans, I’m totally against the new Obamacare! I’ve let my federal respresentatives know how and where I stand, but that doesn’t seem to mean much. What are the “rules” to playing the Washington game? It is frightening to see the slippery slope we are on right now! It is distressing to see how our “democracy” is working! I can only imagine how other countries are laughing at the democratic process in the U.S. I want to battle, but feel like I’m “boxing the air” right now. Again, what are the real rules to playing the Washington game?

  11. As a former Respiratory Therapist, I have become disabled and am on Medicare. I blew out 4 discs helping to lift a 450 pound man from the floor.
    I also have a Chronic A-Fib and uncontrolled hypertension, along with a few other things. I worked until I just couldn’t work anymore.

    I, too, was against Obamacare and did my part in all that I possibly could to see that it didn’t pass. I did not vote for the fraud to begin with.

    Even being in Medicare, I SELDOM go to my doctor. He has had to call me in because I am trying to look out for him. I know medicare is an entitlement that I paid into for 39 years of working.

    I know that most doctors truly have their patients best interests at heart, but there are also many that don’t. I know, I was in the field and seen allot as well as had arguments with doctors for unnecessary orders in the ER.

    Now, this is just a thought. Since the Pharmaceutical companies are always on the take, and come on doctors, you KNOW they are…it is a money thing with them. They have the government in their pocket. All the chemicals they have manufactured and look at all the recalls. I was on Bextra for almost 3 years and it is only by the grace of God, with my heart, that I had no ill effects.

    So, how about finding a way to treat the things that you can holistically?
    Krill oil instead of Warfarin for example. A good grade would do the same. Being on Warfarin, I was taking Icelands Best, Glucosamine Chondroiton with Omega 3 and as my INR started to rise, the mgs of Warfarin decreased. There are many more things that supplements can take care of if there could be a way that it would be covered like a prescription. Why do you think they are trying to introduce a bill to ban supplements? It is the pharmaceutical companies. They aren’t getting the profits. It is time to look at a different approach to things because although we can fight this, I feel it is going to stand.

    You see, as a Christian as well, this is basically all in the Bible. World takeover for a New World Order, a one world government and elimination of all Christians who know the truth. This is a matter of good versus evil as it has been since the beginning of time. God put all minerals, herbs and roots here that we needed to keep healthy. Educate your patients in proper vitamins and herbal supplements where and when you can. It will, in the long run, help both you and them!

  12. I have to feel fortunate, for I am exempt from the medicare tax due to being hired before 1986, but I pity those who were hired afterwards.

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