Why Medicare Isn’t the Problem, It’s the Solution

Why Medicare Isn’t the Problem, It’s the Solution


I hope when he tells America how he aims to tame future budget deficits the President doesn’t accept conventional Wasington wisdom that the biggest problem in the federal budget is Medicare (and its poor cousin Medicaid).

Medicare isn’t the problem. It’s the solution.

The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles.

Americans spend more on health care per person than any other advanced nation and get less for our money. Yearly public and private healthcare spending is $7,538 per person. That’s almost two and a half times the average of other advanced nations.

Yet the typical American lives 77.9 years – less than the average 79.4 years in other advanced nations. And we have the highest rate of infant mortality of all advanced nations.

Medical costs are soaring because our health-care system is totally screwed up. Doctors and hospitals have every incentive to spend on unnecessary tests, drugs, and procedures.

You have lower back pain? Almost 95% of such cases are best relieved through physical therapy. But doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. Why? There’s not much money in physical therapy.

Your diabetes, asthma, or heart condition is acting up? If you go to the hospital, 20 percent of the time you’re back there within a month. You wouldn’t be nearly as likely to return if a nurse visited you at home to make sure you were taking your medications. This is common practice in other advanced countries. So why don’t nurses do home visits to Americans with acute conditions? Hospitals aren’t paid for it.

America spends $30 billion a year fixing medical errors – the worst rate among advanced countries. Why? Among other reasons because we keep patient records on computers that can’t share the data. Patient records are continuously re-written on pieces of paper, and then re-entered into different computers. That spells error.

Meanwhile, administrative costs eat up 15 to 30 percent of all healthcare spending in the United States. That’s twice the rate of most other advanced nations. Where does this money go? Mainly into collecting money: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Trying to slow the rise in Medicare costs doesn’t deal with any of this. It will just limit the amounts seniors can spend, which means less care. As a practical matter it means more political battles, as seniors – whose clout will grow as boomers are added to the ranks – demand the limits be increased. (If you thought the demagoguery over “death panels” was bad, you ain’t seen nothin’ yet.)

Paul Ryan’s plan – to give seniors vouchers they can cash in with private for-profit insurers — would be even worse. It would funnel money into the hands of for-profit insurers, whose administrative costs are far higher than Medicare.

So what’s the answer? For starters, allow anyone at any age to join Medicare. Medicare’s administrative costs are in the range of 3 percent. That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

In addition, allow Medicare – and its poor cousin Medicaid – to use their huge bargaining leverage to negotiate lower rates with hospitals, doctors, and pharmaceutical companies. This would help move health care from a fee-for-the-most-costly-service system into one designed to get the highest-quality outcomes most cheaply.

Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.

Let me say it again: Medicare isn’t the problem. It’s the solution.

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997.  He blogs regularly at Robert Reich, where this post first appeared.

Leave a Reply

200 Comments on "Why Medicare Isn’t the Problem, It’s the Solution"


I guess this is my first visit here and I always love it. I am going to be a frequent visitor here. Love your writing style. Thanks for this wonderful tips. Even though I am not very good with writing I can see where you are going with the suggestions.

Joseph Cooper
Feb 15, 2014

Student Discounts, ASE certified, AAA approved
We understand motor vehicles are not immortal. They would soon break down and be requiring a decent auto repair service. That’s the reason why it’s necessary to send the auto to an established support center to obtain the best results.
Auto Repair, Car Repair

Mildred Ward
Jan 1, 2014

urgence vétérinaire Nyon, veterinaire de garde Nyon
Vétérinaire 24h/24 Nyon et environs
022/ 755 57 57
sos vétérinaire de garde Nyon

Kathryn Smith
Jan 1, 2014

sos vétérinaire de garde genève, veterinaire de garde geneve
15 minutes du centre de Gen̬ve РParking r̩serv̩, urgences 24h/24,Service de qualit̩ pour vos chiens et chats
urgence vétérinaire genève

Mary White
Jan 1, 2014

veterinaire de garde geneve, sos vétérinaire de garde genève
Vétérinaire de Garde à 15 min du Centre de Genève 022/ 755 57 57 – 24h/ 24
urgence vétérinaire genève

Raymond Williams
Jan 1, 2014

urgence vétérinaire genève, sos vétérinaire de garde genève
Vétérinaire de Garde à 15 min du Centre de Genève 022/ 755 57 57 – 24h/ 24
veterinaire de garde geneve

Donald Wilson
Dec 4, 2013

work from home, facebook, home based business, mobe
Get $1,000, $3,000 & $5,000 Commissions Deposited In Your Bank Account!
mttb, matt lloyd, business seekers

Kevin Young
Nov 28, 2013

seattle dentist, seattle best dentist, downtown seattle dentist
The Best Dentist Seattle – A Directory of Dental Professionals and Services In Seattle, Bellevue, and King County
find dentist seattle, best seattle dentist

Oct 16, 2013

Thanks for the article. It will be interesting to see how this all shakes out in the coming months. Time will tell.

John Young
Sep 10, 2013

Free Software To Build Your List, subscriber
Start Building A Quality Email List With This Amazing Free Software
List Building Software, Build Your Email List

Patricia Hernandez
Aug 29, 2013

yourprofitweb, your profit web, on line reputation marketing
On Line Reputation Management Company Services – YourProfitWeb
on line reputation services, on line reputation management, on line reputation company

Dorothy Bryant
Aug 23, 2013

Secure Paper Shredding, Document Shredding
PROSHRED provides paper shredding services in Ga for business, medial, financial, legal, office at home and residential shredding requirements. Call for a free estimate.
Paper Shredding

Patrick Roberts
Aug 5, 2013

dentist Nepean, Merivale dentist, Adel Sidaros
At our practice, we believe that excellent dental care is achieved by offering patients choices. We endeavour at all times to inform and educate you, so you can select a course of treatment that suits your needs and lifestyle.
dentist ottawa, cosmetic dentist ottawa

James Lopez
Jul 27, 2013

first aid kit, survival kit, doomsday prepper, prepping supplies
Tactical survival gear-Survival and Prepping are in huge demand and this is your chance to prepare yourself and your family from doomsday! Outdoors and survival guide will help you find the right tool, kit, gear, equipment, first aid and food for you to be prepared!
outdoor survival guide, survival and prepping, wilderness

David Scott
Jul 23, 2013

fencing panels, garden fencing, lattice wooden fence panels
Farmac Timber & Building Resources present you with a variety of fencing products – fence panels, lattice, gates, timber posts and materials, fence supports and fixings, and much more. Based in Pudsey, Farmac deliver to Leeds, Bradford, Halifax, Wakefield and Huddersfield.
wooden fencing, wood fence panels