News & Politics

Expanding Medicare to Everyone Is the Only Way We Can Fully Protect It

Our health care system is incredibly inefficient.

Photo Credit: mollyktadams / Flickr

Medicare is under attack. The only way to fully protect it is to expand it to everyone.

Today’s Republican politicians have made no secret of their desire to end Medicare as we know it. For years, they have supported raising Medicare’s age of eligibility from age 65 to age 67 and transforming it from a guaranteed benefit program into one in which the government gives you an inadequate “voucher” for private health insurance. The well-respected Center on Budget and Policy Priorities has explained that the Republican proposals “would shift substantial costs to Medicare beneficiaries and… leave many 65- and 66-year olds without any health coverage at all.”

This anti-Medicare battle is one that conservatives have been waging since its enactment. Like Social Security, which they argued at the time of its passage was “socialism,” opponents in 1965 accused Medicare of being “socialized” medicine and claimed it would put the government between you and your doctor.

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Social Security and Medicare have now stood the test of time. That means it’s harder for opponents to scare you about “socialism” and government “interference.” Instead, they claim that the issue is affordability, and that they are simply trying to “save” Social Security and Medicare. But these programs don’t need saving. They are both solutions, not problems. The fight is about ideology and values, as well as whether to protect the profits of powerful political donors.

Those who oppose Medicare are against government-sponsored insurance. They want to keep for-profit corporate middle men involved in delivering our health care. But that is what is truly unaffordable, as well as morally bankrupt.

Our health care system is incredibly inefficient. Just look at the drug prices we pay. They are the highest in the world.

The following graph, prepared by the non-partisan Congressional Budget Office, projects the nation’s health care costs over 75 years, assuming that future costs rise at their historical rate.

If we keep going as we have been, our health care costs will eventually consume 99 percent of GDP. Obviously, that is impossible. We cannot spend all of our collective wealth on health care and leave nothing for food, housing, and other necessities! Rising health care costs overall are what is unsustainable, not Medicare.

While Medicare and Medicaid are much more efficient than private sector insurance, they cannot keep their costs in check when overall health care costs are rising so rapidly. This is particularly true when Donald Trump and the other Republicans hamstring Medicare by prohibiting it from negotiating for lower drug prices and implementing other cost-saving measures. It is overall costs, private as well as public, that must be addressed.

By ending Medicare and substituting vouchers so that seniors and people with disabilities must fend for themselves against private insurance companies, what Republicans aim to do is to shift costs away from the government and onto the shoulders of seniors, people with disabilities, and low-income families. That will make the government balance sheet look better, but it will cause all of our health care costs to go up.

If Republicans are successful in raising Medicare’s initial age of eligibility from 65 to 67, for example, that action alone would reduce the federal government’s balance sheet by $5.7 billion—but it would cost individuals, employers, and states $11.4 billion! And that’s only in the first year.

Ending Medicare—or simply continuing to constrain it, so that it can’t even negotiate for lower drug prices—will enrich corporations but bury the rest of us. It will allow Republicans to cut taxes even more for their billionaire donors and spend more on military contractors, while more and more of us will have to choose between health care and food.

That is no solution. Market-based provision of health care using for-profit corporations is vastly inferior to universal, government-sponsored health insurance, which is the most effective and efficient way to cover everyone. Insurance is most cost-efficient and reliable when the risks can be spread across as broad a population as possible and when no one can purchase the insurance only when personal risk factors increase—a practice known as adverse selection.

Only the national government has the power and ability to establish a nationwide, universal risk pool, which makes adverse selection impossible. And when the federal government administers the insurance, overhead is minimized. Instead of high-paid CEOs, hardworking civil servants are in charge. And other costs, like advertising and marketing, are unnecessary. Moreover, the government is not seeking a profit for shareholders. Consequently, the government can provide health care less expensively and more efficiently for everyone.

For these reasons, every other industrialized country provides universal health care coverage, spends far less as a percentage of GDP, and produces better outcomes. But we don’t have to look to other countries to see the advantages.

Given the greater efficiency of government-sponsored wage and health insurance, it is not surprising that Social Security and Medicare are so cost effective. More than 99 cents of every dollar Social Security spends is paid in benefits. Less than a penny goes to administration. These are much lower administrative costs than can be found under Social Security’s private sector counterparts.

Similarly, Medicare covers seniors and people with disabilities, people who, on average, have the worst health and the most expensive medical conditions, requiring the largest numbers of doctor and hospital visits. Accordingly, they have the largest number of health care claims. Yet, Medicare is significantly more efficient than private health insurance.

According to the most recent Trustees Report, Medicare spends just 1.1 penny of every dollar on administrative costs. The rest is paid in benefits. In contrast the administrative costs of private health insurance average around 11 to 17 percent. In some cases, they can run as high as 30 percent.

Medicare’s per capita administrative costs are substantially lower than those in the private sector. And that is without universal coverage, which would allow even greater efficiencies and even lower prices.

It is noteworthy that if the United States had the same per capita health care cost as any other industrialized country, our nation would project long-term federal budget surpluses for the foreseeable future. (The Center for Economic and Policy Research has an online calculator that allows you to pick any of those other countries and see the effect on the U.S. budget.)

Unless we extend Medicare to everyone, costs will rise, giving Republicans the excuse that they want to cut or, worse, privatize Medicare. By replacing for-profit insurance corporations with Medicare for All, we will lower Medicare’s per capita costs and dramatically reduce how much our nation spends on health care. This will free up resources to provide better benefits and still have money left over for other pressing federal needs.

Medicare for All is extremely wise policy. Its efficiency will make adding dental, hearing, vision, and other important treatments much more affordable. Unlike cutting Medicare, which would shift costs to seniors and people with disabilities, expanding Medicare would reduce the costs all of us pay.

So why isn’t Medicare for All the law of the land yet? Big Pharma and other powerful donors know that it would reduce their profits. Therefore, they have resisted this sensible solution for a century. They fight against Medicare for All so that their profits can grow even larger at the expense of the rest of us.

Including everyone in Medicare will protect the program politically. Instead of politicians and their corporate donors playing the young against the old, they will instead have to bow to the will of all of us. Expanding Medicare will finally force politicians to improve Medicare, eliminating lifetime caps and making other reforms that should have been enacted long ago. If they refuse, we can vote them out of office in favor of elected officials who listen to the people.

Medicare for All will be better for seniors, better for people with disabilities and better for all of us. It will make guaranteed, high quality health care a right, not a privilege. But to win against the powerful special interests and their political lackeys, we must all stand together and make sure our voices are heard and our votes counted.

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Nancy Altman is the president of Social Security Works and chair of the Strengthen Social Security Coalition. She is co-author, with Eric R. Kingson, of Social Security Works! Why Social Security Isn't Going Broke and How Expanding It Will Help Us All (The New Press, 2015).