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This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington. This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington.

“No pre-ex’s, community rating, guaranteed issue.”

“No, that’s Obamacare stuff,” I said to my colleague, as she read a summary of Congressman Paul Ryan’s House Republican budget plan released on Tuesday. “Everyone in Medicare already has those. You must have the wrong memo.”

She scrolled to the top of her iPhone and pointed at the screen. “Summary of the Ryan Budget Plan – Medicare.”

“Maybe just a gimme for popular support?” I speculated, knowing from headline coverage earlier in the day that the Ryan plan sought to repeal Obamacare, not strengthen its most popular consumer protections. “Guaranteed issue but no mandate — that would sure hang the insurers out to dry. But why would you put that in a budget?”

“Here’s why,” she read. “‘Seniors buy coverage through new Medicare Exchange.’”

“Oh.”

Consumers need protections only when they are turned into consumers. And that is what Congressman Paul Ryan’s budget seeks to do for — or do to, depending on your feelings about medical capitalism — future Medicare beneficiaries.

The latest version of the Ryan budget — really his old budget, for three years running now – came out this week. The document generated near universal dismissal by the mainstream media as an act of pointless political grandstanding – to the Right, a courageous statement of fiscal responsibility, to the Left, a defiant display of Randian cruelty.

And so the budget will go nowhere politically, except onto the bonfire raging in Washington where there used to be discourse.

But the actual details of Ryan’s controversial proposal to remake Medicare – into what he and conservative economists call a “premium support” plan, and what defenders of the Medicare status quo deride as the program’s “voucherization” – are oddly familiar in non-partisan health policy circles, and not for reasons the Congressman will appreciate.

Sure, the document excoriates the President’s health reform law, as one might expect. The Ryan budget curtails Obamacare’s funding and calls for its outright repeal – while preserving its cuts to Medicare, retaining its tax increases, and re-architecting the future of Medicare along nearly its exact same design principles. Really.

Under the Ryan plan: Medicare recipients would choose from among competing private health insurance plans on a new government-run health insurance exchange. Insurers would offer plans at emerging market prices and seniors would be covered at the level of the second cheapest. Well-off seniors who want richer plans pay more, and the government subsidizes those less-well-off. Private insurers would not be able to discriminate against seniors for their pre-existing medical conditions and would have to charge all seniors the same premiums for the same plans.

Under Obamacare, Americans will choose from among competing private health insurance plans on new government-run health insurance exchanges. Insurers will offer plans at emerging market prices. Well-off Americans who want richer plans will choose the platinum or gold plans — versus the silver or bronze versions — and the government will subsidize those less-well-off. Insurers will not be able to discriminate against anyone for their pre-existing medical condition and will have to charge all people in the same broad age groups the same premiums for the same plans.

Premium support, voucherization, to-ma-to, to-mah-to, whatever. Let’s just call it what it is: Oryancare — Obamacare for Seniors.

The Ryan plan pushes Medicare from a dysfunctional program — where everything is always sort of paid for — into a transparent, competitive marketplace, using premium vouchers and co-payments. The health reform law pushes individuals, small businesses and the uninsured from a dysfunctional non-system — where too many are priced or kicked out and no one is ever sure what will be paid for — into a transparent, competitive marketplace, using premium subsidies and co-payments.

If only because it really is an act of political grandstanding, the same budget creating an Obamacare-like apparatus for seniors also calls for the repeal of Obamacare. The document reminds us one more time that Obamacare is a “government takeover” of health care (page 40) and repeats the bogus assertion that the law is 2,700 pages long (page 54) – even though the consensus erroneous figure is that the law is 2,400 pages. (The actual law as legislated – not originally drafted – is 955 pages.)

Because Congressman Ryan apparently thinks people will take his budget seriously, he makes provisions for the possibility that President Obama might not sign a bill overturning his signature domestic achievement, a law now bearing his name if only, at first, for the purpose of ridicule. Hedging against a scenario where no such repeal is forthcoming, the Ryan budget simultaneously starves Obamacare out of existence in two ways: by defunding its expansion of Medicaid — always help the neediest first! — and by defunding those overwrought bureaucratic contraptions needed for the implementation of the Obamacare, namely, government-run health insurance exchanges.

What remains from Obamacare in the Ryan budget, down to the dollar, are its cuts to Medicare — $716 billion to be precise. Yes, these are the very same cuts trotted out by Governor Romney and Congressman Ryan in their criticism of President Obama on the campaign trail, when the audience was sufficiently senior. With the new Ryan budget in hand, spotting such er – inconsistencies – does not require time-lapse photography: the budget retains many of the taxes included in Obamacare — as reported by even the Wall Street Journal — as the document itself criticizes those very same taxes.

Finally, the Ryan budget repeals the Independent Payment Advisory Board, or IPAB, the provision included in Obamacare to — guess what — control Medicare spending growth. As discussed here in January, IPAB is a black box, not a blueprint. No one is sure exactly what it will do or how, one of the more legitimate reasons it has become the biggest punching bag in Obamacare. All we know about IPAB is its goal: gather evidence for what Medicare should and should not be paying for, and use this to eliminate payment for medical treatment that is not only wasteful and unnecessary, but potentially dangerous.

The Ryan plan repeals IPAB and instead lets the market decide what medical treatments Medicare should and should not pay for. Because that works so well today. Medicare reform indeed.

But forget sore thumbs like IPAB. At their cores, the functional similarities between Oryancare and Obamacare are not all that different — once you power-wash the political rhetoric off both and recognize that both are voucher-like programs, with the same consumer protections and with the well-off subsidizing the not-so-well-off.

How is that possible? Because the two plans are actually adjacent to each other along the broad spectrum of health reform models developed and debated since the 1980s, which I discusesd here a few weeks ago. Premium support and voucher plans, as formulated by conservative economists, fit into the second box from the right.

Back at the health policy wonk-in, the talk all turns, inevitably, away from policy and back to politics.

“Charm offensive? Grand bargain? The President should call Ryan’s bluff on Medicare!”

Indeed, the President should call Ryan’s bluff on Medicare.

As they work on their “grand bargain,” President Obama should encourage Congressman Ryan and his fellow House Republicans to lay out and pitch their plan for reforming Medicare to those whom it will affect, even if the “reform” part of the plan cleverly does not affect them at all, but the next generation of Medicare beneficiaries.

During the summer recess, while talking up their fervor to “cut entitlement spending” at any political cost, they should explain at town hall meetings across the country how the plan will actually work. Especially the $716 billion in cuts that were so potentially dangerous a year ago, when they were included in Obamacare.

In between screams from those in attendance who love Medicare, hate government, and resent moochers, they should describe how Oryancare will let future seniors shop on a new government-run exchange for coverage from competing health plans, without worrying about medical or economic discrimination.

A few months later, those implementing Obamacare will also be rolling out new government-run health insurance exchanges – which will allow small businesses and individuals to shop for coverage from competing health plans, without worrying about medical or economic discrimination.

No doubt they will appreciate having the ground ready.

J.D. Kleinke is a pioneering health care information entrepreneur, medical economist, author, policy expert, and business strategist.

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77 Responses for “Ready For O’Ryancare?”

  1. BobbyG says:

    I still have to confess to eye-rolling bemusement as to how the notion of giving people federal tax dollars with which to buy private insurance “coverage” became a “conservative” principle — absent the quietest waft of challenge. Perhaps it’s a morally good and necessary idea, but, please spare me, Goopers.

    WWARS?

    What.Would.Ayn.Rand.Say?

    • It is a conservative principle because for each federal dollar given out a certain portions goes to pay rent to private insurers, transferring a nice chunk of wealth from taxpayers to corporations. And since the rent is a fixed percent of the number of federal dollars flowing through, nobody has any reason to control prices.
      There is no known working solution in the purple to red spectrum. Only theories…..

      • BobbyG says:

        Yeah.

        Not my father’s bedrock principled “conservatism.” More like plutocratic Gresham’s Law looting.

  2. bob hertz says:

    One of the secret goals of Ryan-Care is to have American consumers do self-rationing.

    Ryan has no intention of regulating prices, partly from ideology and partly due to campaign donations.

    (The Democrats are not much better.)

    Since no American government will say that hospitals and drug companies charge too much, the idea is to use patients as the kamikazes of cost control.

    Patients are supposed to refuse expensive treatment, because of their high deductibles.

    Ugh.

    Bob Hertz, The Health Care Crusade

    • J.D. Kleinke says:

      Nailed it.

      I heard a guy on Fox News suggest that with a repeal of Obamacare and a tax code that encouraged very high deductible insurance – the second from the right box – “people could be their own death panels.” And he meant that in an approving way. Really.

      • Pinak Joshi says:

        Great comment, Bob. I couldn’t agree more.

        A recent NEJM publication pointed out that the Cuban health system is getting a lot of things right – even surpassing the US in some cases (http://www.nejm.org/doi/full/10.1056/NEJMp1215226).

        I wonder if the solution to all of this would be fragmentation of the mega-monster hospital/research centers in favor of smaller centers of care nationwide. It really astonishes me how little ol’ Cuba can do provide health care with high US trade tariffs and a crippled 1970′s economy yet we can’t seem to get it right. The patients shouldn’t be the kamikazes, and Cuba tells us that they don’t have to be.

        • Aurthur says:

          Average doctor in Cuba makes less than the average bartender. You don’t need the treatment, just have a drink or two and don’t call me in the morning.

  3. Aquifer says:

    “The Ryan plan pushes Medicare from a dysfunctional program — where everything is always sort of paid for — into a transparent, competitive marketplace, using premium vouchers and co-payments.”

    Sounds like you approve … ?

    • J.D. Kleinke says:

      Given all the political reasons we couldn’t get a truly reformed and rebooted Medicare program – and If properly funded and regulated – yes…for all the reasons I think Obamacare is the least bad option for the rest of the system going forward. Neither truly changes anything, but both would bring key incremental improvements both need: competition and market discipline for Medicare under Oryancare…a pathway to universal access for everyone else under Obamacare.

      • Aquifer says:

        Frankly I am a bit confused about your position – you argue that Ryan care is the equivalent of Obama care, applied to seniors, then you agree ( “Naied it”) with bob hertz that Ryan-care would use patients as kamikazes, then you say you approve of Ryancare – using the same benediction as I assume he (Ryan) does – for promoting the virtues of “competition and market discipline” …

        So “competition and market discipline” are sufficient reasons to back a system that turns patients into kamikazes – because, I suppose, after all, in the end, that IS the obvious end point of “market discipline”, now isn’t it?

        It seems that your “critique” of Ryancare is not of the plan but of Ryan’s hypocrisy in not admitting that it is the same as Obamacare – which you support …

        I suspect you are right – they ARE both the same – so for those who hate Ryancare – they should hate Obamacare for the same reasons – shucks, i do …

        Two comments i would make, in general, – 1) from my perspective, as a retired healthcare professional, it always seemed to me that the only competition there should be in healthcare is between the provider and the patient on one side and disease/injury on the other and 2) whoever is describing you as a “lefty” has no idea what a lefty is … :)

        • Aquifer says:

          Oh, good grief! Smiley faces – yuk! I had no idea my colon and parenthesis would show up as that ….

        • J.D. Kleinke says:

          I agree, approvingly, with Hertz’s disapproving observation that patients under Oryancare will “self-ration” – though I wouldn’t use his hyperbolic metaphor about patients as “kamikazes.” And yes, I think both Obamacare and Oryancare strike a good political and pragmatic balance between market capitalism and patient protection.

          Rational, regulated markets are the best of both worlds, and the only attainable compromise between single-payer utopian fantasies on the Left and pure-market, Lord of the Flies cash-and-carry medicine on the Right. Neither of these purist visions could or would work in the real world, except as market alternatives themselves (e.g. Kaiser and the VHA) to competing alternatives, i.e. Kaiser members and veterans do have choices, and can leave those systems.

          This is why single payer systems the world over are adding private layers (UK, Canada, Australia, Israel, Singapore) and why the US is constantly returning from failed experiments with barely regulated commercial models (’90s pretend managed care, “CDHPs,” HSAs) – any kind of model – that flushes out the counterproductive, harmful, and ultimately self-defeating practices of medical underwriting and price discrimination. Pure health “insurance” markets – given how medicine works culturally and psychologically and pervades our everyday lives – ultimately spirals and crashes to null set coverage. It’s a game theory problem, and this is the real reason the health plans are mum on Obamacare. Sure, they’re “greedy corporations” (a redundant phrase if ever there was one) but with an aging society, ever more pervasive medicine, and a stalled economy, they have run out of pavement to grow their businesses, as the ranks of the uninsured grow and grow, just beyond that pavement.

          Between medical underwriting and consumers’ rational compulsion to game ahead of their medical needs and pay only for what they think they might need or want . . . no one ends up covered for anything.

          Both Obamacare and Oryancare will/would establish transparent choices and competition for well-defined insurance plans, while shifting the locus of that competition away from medical underwriting and shell games about what is or isn’t covered. We have none of this in today’s commercial insurance markets, and but we do have the rudiments of it in Medicare Advantage and Medicare Part D – both of which work better than Medicare FFS A & B.

          If my remarks seem hard to classify for readers of this blog, it is because I am a pragmatist, not a partisan.

          • Aquifer says:

            No, i think you have made it rather clear – you are a “market man”, and you wish to submit healthcare to the market model, according to “game theory” principles –

            The fact that at least some of us in the healthcare field think that “market” and “game” theory do enormous disservice to the concept of healthcare – those on the side who believe it is a right and not a privilege – is perhaps what is really at issue here – a belief that the exigencies of a fundamental need for at least certain aspects of healthcare make it totally unsuitable to stuff into a “market” – where the quality of the product one receives depends on the price one can pay. That concept is, or should be, IMO, fundamentally abhorent to anyone who takes the Hippocratic oath ….

            You claim single payer is “utopian” – on what basis, pray tell – that it is “politically unfeasible”? – You do realize that is code for “we ain’t gonna do it because we are owned lock stock and barrel by the FIRE sector, ” Anything is politically feasible if we put the right folks in office. And if other countries are turning away – it is because the same right wing market fundamentalist forces are gaining stronger footholds in those countries, e.g. Canada, UK, as hold sway here, bought by the same monied interests (consider the absurdity of the austerity plague that is sweeping the planet) – not because their systems were inherently flawed …

            Methinks, or at least “mehopes”, that the whole fiasco with the banks has opened the eyes of many – when TPTB decide they want to spend money on something, the sky is the limit – if they had spent a fraction on healthcare as they have spent on worthless financial trash, or human trashing wars – we could have truly universal blanket coverage for all – it is a matter of priority …

            i am very much a pragmatist and quite non partisan as well – you seem to wish to put your pragmatism in the service of the market ideal, I simply prefer to put mine in the service of another … When all is said and done, this is about ideology after all …

  4. bob hertz says:

    The dream of conservative reformers is that all of health care would become like refracrtive eye care (if I am saying that right– I mean the treatments to be able to go without glasses). This treatment is not insured, and has fallen in price while increasing in quality.

    They also have in mind medical tourism, which also features price competition and quality improvement in hospitals from India to Puerto Rico.

    This is surely not an evil dream, but I have never seen how it carries over to heart attacks, cancer, kidney faillure, premature babies, and all the other expensive treatments that are not discretionary and take a lot of nursing care and cannot be outsourced to nations with cheap labor.

    I suppose we could have a medical world where all discretionary care was done in Mexico, and American hospitals were reduced to ER’s and the adjacent beds for those who could not go home the same day.

    But not tomorrow, I suspect.

  5. steve says:

    Your mistake here is assuming that Ryan and the GOP are serious. Notice how they ran away from the Ryan plan during the election. They would run away from it again if they were pressed. The important thing to remember about Ryan is that he is a politician. He is doing what is best for Ryan, not anyone else. His many budgets and plans have not produced any change in our laws. What have they produced? A nomination for VP and a future shot at the presidency. He produces plans that his base loves, and offers no compromise. WHich is consistent with his voting for the spending bills in the prior administration. He is in this for Ryan first, everything else is second.

    Steve

  6. Dennis Byron says:

    This blog post is full of more than the usual Health Care Blog, Democratic-Party, far-left-wing ignorance about Medicare today, current Medicare reform proposals, and Medicare history. The author’s false statements are numbered below and his errors are corrected in the attached commentary:

    1. “Seniors buy coverage through new Medicare Exchange. Wow, this is new!!!” What’s this lefty talking about? That’s been the Ryan proposal all along; it is nothing new. And that’s the way the Federal Employee Health Plan has worked for years and Ryan has always said his reformed Medicare would work just like FEHP. And more important, that’s the way the Democratic-party Medicare Voucher plan that I and 12,000,000 other Medicare beneficiaries subscribe to works. It’s called Part C Medicare and it was proposed conceptually by two Democrats in 1995 and signed into law by President Clinton in 1997. (As with all such situations, the Democrats’ 1995 proposal was not written in legislative language. Similarly, the final legislation Clinton signed did not implement every idea in the original Democratic proposal. But it’s always been an exchange.)

    2. “But the actual details of Ryan’s controversial proposal to remake Medicare – into what he and conservative economists call a “premium support” plan…” Again, what ignorance about Medicare reform history and current Medicare. “Conservative economists?” Premium support as it relates to Medicare – or vouchers as Democrats prefer to call it although it is an ignorant use of the English language — was “invented” by the two Democrats I mentioned in item 1 above. One of them is now a Medicare trustee, appointed by President Obama and as far left wing as anyone can get. Premium support already exists for anyone on Part C Medicare as well as Part D. (Arguably it exists for Parts A and B too but explaining how that works gets pretty wonky.)

    3. “Ryan re-architects the future of Medicare along nearly its exact same design principles as Obamacare.” No they both are based on the FEHP, RomneyCare, and pretty much the way any private insurer has sold insurance – and any private company has explained insurance choices to its employees – since the dawn of the world wide web and browsers. This lefty blog’s author seems to make the typical far-left-wing academic mistake of confusing premium support and exchanges. An exchange is just a web site, like Amazon.

    4. “Medicare recipients would choose from among competing private health insurance plans on a new government-run health insurance exchange.” Bulletin! Bulletin! That’s nothing “new,” lefty. That’s the way over 95% of us seniors on Medicare already do it, choosing between Part C Medicare or private Medigap insurance unless our former employer offers insurance or we qualify for Medicaid. (Although the private Medigap plans have to follow Federal government rules, they are regulated by the states.)

    5. “Well-off seniors who want richer plans pay more, and the government subsidizes those less-well-off.” Again, that’s just plain an ignorant statement. Today low income seniors are the ones that get the richest plans (assuming he means rich in benefits). That makes sense of course; “well off” seniors self insure.

    6. “The Ryan plan pushes Medicare from a dysfunctional program — where everything is always sort of paid for…” Actually Original Medicare does not pay for many things such as annual physicals and dental work and what it does pay for comes with very high co-pays, deductibles and co-insurance. Original Democratic-party LBJ Medicare covers less than half of senior healthcare costs (which is why the two Democrats made their reform proposal back in 1995).How can this guy pretend he knows something about Medicare and make such a fundamental error?

    7. “The Ryan plan repeals IPAB and instead lets the market decide what medical treatments Medicare should and should not pay for.” The Medicare bureaucracy already does that today and will continue to do so under Ryan’s (and Rivlin’s and Wyden’s and Bowles’) proposed Medicare reforms. We don’t need another bureaucracy to do it.

    The idea that this weird blog post proposes, that the Medicare reform proposed by Ryan in 2010 (and Rivlin in 2010 and Wyden in 2011 and Bowles in 2011 and years ago by Reischauer) follows Obamacare is simply the most intellectually dishonest proposition a lefty has ever written. And that’s jumping a very high bar.

    • J.D. Kleinke says:

      Premium support for Medicare has most recently been floated by the American Enterprise Institute, where this “leftie” spent 2012 as a Resident Fellow in Health Policy.

      http://www.aei.org/press/health/healthcare-reform/premium-support-will-save-money-and-medicare-aei-health-expert-sheds-light-on-flawed-study-press-release/

      Yes about the similarities of both O-cares to FEHB, and Part C sure, but Medicare Advantage or Part D (President Bush’s legislation) would actually be a better example; but the piece was already too long. If you think name-calling is an effective way to argue, then I’d suggest finding a name that someone who may actually be a “leftie” would find an insult, rather than a compliment.

      • Aquifer says:

        Ah, a Resident Fellow at the AEI – that explains a lot ….

        And it is rather revealing that such a “fellow” would defend Obamacare, as well as Ryancare …

        True, true, you ain’t no “leftie” …

      • Peter1 says:

        “If you think name-calling is an effective way to argue, then I’d suggest finding a name that someone who may actually be a “leftie” would find an insult, rather than a compliment.”

        Usually these types of pre-argument name callers use “liberal” as if whatever comes after is the gospel truth – no need to question.

        Conservatives have worked hard to associate the word “liberal” with the same hate as pedophile. Hate just seems to come natural to them.

        • Dennis Byron says:

          Peter, FYI, I just saw your comment.

          I was not name calling. I was — I think pretty accurately — calling the blog (helathcareblog.com) lefty. Since all these blogs are ideologically based and not based on any unbiased statistics, I think it is fair to attack the ideological bent of the blog. You should read my anti-Romney blog on Massachusetts health statistics if you think I am one-sided in my criticism.

          I know nothing about the author of the specific post other than — based on this post — that he seems to know very little about Medicare..

    • Matthew Holt says:

      I love the concept of the Democratic party being far-left. Certainly the far left doesnt think so–you may have missed the actual Socialist candidate for the Presidency being asked if Obama was a socialist on the Colbert Show. (No prizes for guessing his answer).

      But unfortunately starting out like that–about an Administration with a Finance dept on loan from Goldman Sachs and a health care policy on loan from Heritage makes people ignore your arguments.

      The one that is wrong-est is thinking that an exchange is just a website. EHealthinsurance.com is just a website. You can sell any insurance you like on it. The Obamacare exchanges will carefully regulate what type of insurance can be sold (not as carefully as I might like) but there is a very real difference. AND of course they’ll provide subsidies (or be the vehicle for that provision)

      • Aquifer says:

        “Far left” description of Dems – that is indeed a LOL idea. These days the generally accepted definition of Dems, among those who have any lefty sympathies at all, is “center right”, with Obamacare a shining proof of same …

    • steve says:

      I would just ignore him. He doesnt appear to understand Ryan’s plans, Obamacare or much about Medicare.

  7. bob hertz says:

    As Dennis Byron points out, there is a lot to like in Part C Medicare, and it is very far from the horror show that some of Ryan’s opponents predict.

    However, I believe that Part C has never saved a nickel in Medicare costs due in part to generous pricing formulas, and also to risk adjustments that limit any underwriting losses to the participating insurance companies.

    My own feeling is that the sheer demographic weight of the baby boom retirements is going to undercut all elaborate formulas and subsidies, which now protect both seniors and insurers from real rationing.

    The Federal employee plan also has many strengths, but last time I looked on their website it was wildly expensive, and without the high salaries earned by federal workers it would be shunned.

    • Aquifer says:

      Actually from what i understand, the gov’t has decided to stop subsidizing Med Pt C plans because they charged more than traditional Medicare did for a similar level of service …

      What will happen is the “vouchers” will be woefully insufficient at providing any level of insurance that is worth a hoot, “exchange” or no “exchange” – and will wind up subsidizing private insurance co. bottom line while providing less healthcare to seniors …

      But hey, there will be “competition and market discipline” so what’s not to like …

      • BobbyG says:

        “What will happen is the “vouchers” will be woefully insufficient at providing any level of insurance that is worth a hoot, “exchange” or no “exchange” – and will wind up subsidizing private insurance co. bottom line while providing less healthcare to seniors …”
        ___

        Could that not be more obvious? What is wrong with people? In a private market you only want to sell insurance to people who are not gonna use it. In the high-util demographic (that I’m just entering, at 67), it’s not “insurance,” it’s partial pre-payment.

  8. Curly Harrison, MD says:

    Both plans will fail because of their complexity and reliance on the cracked foundation of IT that is costly (more than $2 trillion for the USA) and fails to improve outcomes.

    I read this on one of these blogs a few years ago. I agree with it. Pay the doctors providing full time care (70 hour work week) $1 million per year and charge them with giving the right care at the right time for the right patient, with agreement that care will be provided to the best of their ability.

    Get rid of both party’s plans. They are abusive to patients and doctors alike.

  9. Mary Smith, PhD says:

    The US Government policies for the past three decades is responsible for the flagrant inflation in medical care costs. It lies in the economics of wage and price controls, which is the government policy towards health care, via the MEDICARE DRG and allowable charge programs.

    Did you know that the Medicare payment in 1990 for the same test with the same cognitive deployment done in 2013 is 10 cents on the 1990 dollar. When counting inflation, doctors are working for one cent on the 1990 dollar.

    • Peter1 says:

      “When counting inflation, doctors are working for one cent on the 1990 dollar.”

      What doctors? Specialists, PCPs? If we abandoned Medicare price controls would health costs fall?

  10. bob hertz says:

    As usual Mr Kleinke is correct about the health insurance industry. The insurers make most of their profit now on the Medicare market, I assume through risk adjustment allowances.

    The woebegone individual insurance market gets more headlines because of claim denials and huge premium increases, but it is a small percentage of their business.

    Health insurers need the government more than ever to subsidize their customers. I have sold health insurance, LTC insurance, and disability insurance. It is worth noting that LTC and disability insurance have no federal subsidies, and so they are purchased by about 5-10 per cent of the population who can afford the premiums.

    In that sense the insurers need Obamacare very much.

  11. J.D. Kleinke says:

    @ Aquifer…continuing the discussion above, but we’re apparently out of “reply” slots…

    …we are less far apart than you think, and I want to state with absolute clarity: I too believe that access to health care is a human right. If someone cannot afford it, then we as a society should provide it. If someone CAN afford it, then they need to pony up. This is why I support the insurance mandate. The issue is about how we get there, and how much care – emergency, rescue, maintenance, preventive, experimental, recreational, nonsense – defines and delimits the scope of this “right.” We dedicate 1/6th of the economy on health care – tens of billions of it on crap – and we can afford baseline minimal coverage for all. As with food, we have enough to go around – just not the will to get it around.

    If you think that single-payer is anything less than a complete daydream and fantasy politiically, you need to watch the news sometime. Probably one-third of this country would NOT agreed with the statement about health care as a right, and would happily let someone drop dead in the street for the crime of not having insurance or cash.

    Single-payer? Hold your breath. Hatred of and distrust in government, as a religion in America, is so deeply embedded that we couldn’t even get a public option, or it would have derailed Obamacare. Not worth the price of losing all the consumer protections we have needed around pre-existing conditions for decades – which is why the President caved.

    • Aquifer says:

      We can well “pony up” as we already do through payroll taxes – we don’t need the middle man of private for profit insurance companies, they do nothing but divert healthcare dollars away from healthcare – I am no business guru, obviously, but business 101, I gather, teaches that to make a profit you need to increase revenue and decrease overhead. For health insurance companies revenue is premiums and overhead is – healthcare. Money should go directly to providers – some of the “crap” we are spending money on is insurance co. and Big Phrma profits …

      The momentum for single payer was building – it was headed off at the pass by Obamacare – a long drawn out affair that will deliver next to none of what you seek because it utilizes, or at lest pretends to, that “market model” that macerates it – when you try to put the square peg of healthcare into the round hole of the market, you have to cut off so many of its corners that it bleeds to death.

      It has pretty much been established that the so called “public option” was always intended to be a bargaining chip to be tossed right off the bat, that Obama made deals with Big Phrma to not allow gov’t to price bargain – that the person who wrote much of the bill – Baucus’ right hand woman, Liz Fowler, came out of and went back into the insurance industry, that Obama wouldn’t even allow single payer on the table, let alone fight for it – Baucus even had physicians arrested for trying to speak for SP at his hearing, and on and on …

      Please – spare the “Pres. caved” – he never even tried – he had the public and both houses of his own party with him when he started – never since the original Medicare, ISTM, was there a better opportunity to expand it – he had a bully pulpit and he used it for this, this …

      People may well “hate government”, but they don’t hate Medicare – remember those folks who kept yelling – “Tell the government to keep its hands off my Medicare!” Folks, on all sides of the aisle, love Medicare – ISTM it would have been a lot easier to sell “Medicare for All” than “Obamacare” – which is why, i suspect, it was never tried – the folks who fund the politicians want to keep diverting more bucks into their own pockets and they have 2 parties running the gov’t who seem quite happy to take their money and do precisely that, though polls have repeatedly put the public in favor of single payer …

      Obama care will derail itself – Arkansas has gotten permission to divert Medicaid extension funds into the exchanges – it is pretty well accepted that this will cost more than traditional Medicaid, (unless of course, the amount of subsidy is limited to what Medicaid would have cost, in which case folks will be getting next to no coverage.) No doubt others will follow suit – this may well “bankrupt” the system lickety split, even before we get to the exchanges for the other “uninsured” – do you think a gov’t that is going through this ridiculous sequester routine will be willing to fund all this? Methinks not –

      If you wish to argue on cost – Medicare for All would be cheaper – other countries provide better, more universal care for half the cost …

      No, if really getting good universal cheaper care is really where you want to go – it seems rather clear to me, and to others, that promoting Obamacare or Romneycare is counterproductive – it is in fact delaying and getting in the way of going where we really do need to go … And if going where we need to go is a political fantasy, then ISTM we had best direct our efforts into changing our politics so that they suit us rather than promoting programs that suit the politicians and those who fund them …

      Markets may be fine for potato chips or computers or autos, but lousy for healthcare – we serve ourselves ill when we try to make it “fit” …

      • Dennis Byron says:

        Your statement about for-profit insurers is total far-left-wing nonsense completely contradicted by the facts on ground. .

        I live in Massachusetts. Both our healthcare delivery and healthcare insurance system are made up almost totally of non-profit charitable organizations and have been for generations. (The exceptions are a few remaining physician practices and a former non-profit hospital chain that was going to go out of business — abandoning tens of thousands of patients — before being bought by a for-profit company.)

        And yet Massachusetts — with almost no profit motive and with highly government-controlled pricing and reserve structures for decades — has the most expensive healthcare system in the world. (That’s an extrapolation. You lefties keep telling us that the U.S. has the most expensive healthcare system in the world and other various data says Massachusetts has the most expensive healthcare in the U.S.)

        ———–

        Your statements about Medicare are wrong as well. It is not Medicare that people love. It is the private insurance that we seniors can buy to make up for the obscene limitations in lefty Medicare that we “love” (your word). Only about 5% of Medicare beneficiaries depend on lefty Medicare for their healthcare costs (presumably very rich seniors that self insure).

        • Peter1 says:

          Dennis, in this country “non-profit” is a joke that only gives tax advantages but still rakes in huge salaries for executives while imposing large paperwork costs and extra overhead on providers.

          Here in NC BCBS is “non-profit” but has done nothing to control heath cost and doesn’t really care as it makes it on the spread. When I was insured we would typically get a 6% -10% compounded premium increase each year along with the usual “age” bump from time to time.

          Inside all that “non-profit” are highly paid docs and administrators, drug and device companies, computer providers, labs, etc. etc. etc.

          ” It is not Medicare that people love. It is the private insurance that we seniors can buy to make up for the obscene limitations in lefty Medicare”

          Where do you think all that extra available cash for private insurance comes from – taxpayer funded Medicare.

          • Dennis Byron says:

            Peter1

            Nothing in my comment said otherwise about non-profits. That was my point. Aquifer claimed it was the for-profit insurance industry that was the problem. I am showing him a situation — Massachusetts — where there is almost no profit motive at all in either healthcare insurance or healthcare delivery. We’re almost totally government “run” here in Massachusetts. And yet the healthcare costs are the highest in the world.

            ———

            As for your comment about Medicare, you are probably too young to know much about Medicare (and you tend to get fooled by people like the author of this blogpost that want to split generations for some weird ideological agenda). No “taxpayer funded Medicare” pays for the private insurance that seniors use

        • Aquifer says:

          i have to agree with Peter – i apologize, i was a bit too sloppy in my terminology – i should have said any third party that makes a money off healthcare dollars, thatt doesn’t actually provide healthcare and that include those wonderful “non-profits” who, in fact, make considerable amounts from it – and they snuck in to Med Pt C in order to “profit from Medicare $ –

          Remove all those extraneous entities from the Medicare system and Medicare saves $$. Medicare could save many more healthcare $$ spent on the entire system if these entities were eliminated altogether for a couple of simple reasons – 1) if it were the only game in town it could bargain with providers quite effectively. 2) having to deal with only one paying agency would eliminate tons of paperwork which translates into considerably lower overhead for providers ..

          • Dennis Byron says:

            Wow, now you gone totally over the edge with your ideology.

            Do you want to talk about the insurance system for those under 65 or those over 65 (plus some of the disabled)?

            Originally you made some comment about “for-profit insurers” diverting dollars from healthcare.. You certainly were talking about the under-65 healthcare system in the first comment. It wasn’t bad termijnology as you now claim; you were cribbing entirely from some single-payer advocacy group’s web site word for word. And you couldn’t have been talking about Medicare originally because it is already single payer–if you don’t count that fact that seniors on average pay for more than half their healthcae costs themselves.

            I called you out on your first statement where you were rambling on about single-payer and the profit motive. I called your attention to the Massachusetts experience where not only almost all of the insurers but the vast majority of the providers are non-profit charitable organizations. In addition, in Massachusetts, the entire insurance to provider supply chain is totally regulated almost down to the number of aspirin one can take by the government

            So now you change your mind. The single-payer agenda is not what you meant to talk about. You meant to talk about the “for profit” aspects of Medicare.

            – Do you realize that you are mostly suggesting the disbanding of the Original Medicare structure, which is totally run by for-profit insurers (Most Part C Medicare plans on the other hand are offered by charitable organizations–but I repeat my and Peter’s comment on what non-profit means above)

            – Do you realize that Medicare already “bargains” quite effectively — but counterproductively — with providers. It fixes prices. There is no negotiation.

            – Do you — like President Obama and the 2010 Congress — have something against the inner-city and rural poor? The 2003 version of Part C was tilted to give them the same kinds of coordinated accountable and preventive care that us suburban seniors get from Part C. But PPACA changed that so I — a suburban middle-income senior — still get a good deal from Part C (compared to buying private supplemental insurance from a for-profit company) but the inner-city and rural poor got screwed. Nice job, guys. You really should have read it before you passed it.

            The above are rhetorical questions. Like the lefty who wrote the original post here, your opinions about Medicare are totally ideology driven and not based on any statistics or facts.

          • Aquifer says:

            DB – not sure why i am replying, as you either completely misunderstand or choose to misrepresent the point of my posts, but i will give you the benefit of the doubt, so;

            1) i am a fan of the concept of Medicare – a single payer system – we “prepay” the gov’t for our health care through a payroll tax (in addition to “contemporaneous” payment as a deduction of set amount from SS) and the gov’t, in turn pays out health care expenses at a certain % of bargained for rates that the provider chooses to participate in for payment or not … Currently the part the gov’t doesn’t pay can be either paid for out of pocket or to a various extent by supplemental private insurance. There is no restriction as to choice of provider – except to the extent the provider participates in, i.e agrees to accept the system (and by “provider” i am NOT referring to an insurance company of any stripe, but to one who actually provides healthcare )- It is not a perfect system, but a very good one that can be improved upon …

            2) private insurance companies, of whatever stripe, have no useful place in a healthcare system – they suck money out of it and, by their multiplicity, in the name of “competition”, prevent more effective bargaining with providers for price, restrict access in a haphazard manor both to care and to provider … In the Medicare for All scenario – the gov’t is the sole, public “insurer” …

            3) i am in favor of Medicare for All – or, more precisely Improved Medicare for All as outlined in HR 676 – why don’t you read it, it’s only about 18 pages long and then you can throw some more brickbats … (In this system, private insurers are allowed for covering expenses for services not covered under the definition of appropriate necessary medical care …)

            4) With improved Medicare for all, the payroll tax serves as a contemporaneous “replacement” for out of pocket expenses (premiums, co-pays, deductibles) – the “skin the game”. That tax could be made more progressive or supplemented by other taxes so that they would not be onerous to any who currently pay out of pocket through the nose (and other orifices) for lousy care and still wind up bankrupt (a good % of bankruptcies are from medical expenses and a good % of those are for people who “had” insurance)

            Perhaps folks of certain “ideologies” can contemplate with equanimity a system that allows such a travesty to happen, but i do not honestly know how any healthcare provider worth his/her salt can.

            5) My “ideology” is one i would describe as being a “pragmatic idealist”. As a retired healthcare provider, my ideal is the provision of a system which provides adequate healthcare for all – the pragmatic part says the system must be such that there are provisions for cost control – but with the caveat that they are secondary, not as an end in itself, but for purposes of eliminating “waste, fraud, and abuse”, as they say. One of the mechanisms for eliminating all 3 is to remove private insurers from the system – The gov’t may hire out private firms but solely for the purpose of doing the paper work required to facilitate payment from government to provider …

            If people object to this concept on its merits, then have at it. Bit if they “object” because it “can’t be done” or is “politically infeasible” under our current “system”, then i would suggest it is our responsibility to work for a system under which it can and will be …

        • Dennis Byron says:

          Aquifer

          I think I understand your view because it appears to be vanilla PNHP. I actually have no objection in principal (sp?) to single payer. And I was an original member of one of the original real HMOs so not only was no for-profit insurer involved in my and my family’s health care for most of my life, there was no insurer of any kind involved (at least from my perspective; presumably the clinic re-insured somehow).

          The problem is that all the rationales for single payer fail in the light of day. Typically – and you have repeated them all through this thread – the rationales include:

          1. The profit motive sucks trillions out of the healthcare supply chain, adding no value
          2. Medicare is great and everyone should have it
          3. Medicare negotiates great prices with providers and everyone should be able to take advantage of those prices
          4. Medicare is great except when for-profit insurers screw it up
          5. Uncoordinated care with freedom of provider choice is good for seniors on Medicare but bad for those under 65 on Obamacare
          6. Low income people, particularly low-income seniors, are especially harmed by the current health-care insurance/delivery system but a single-payer approach will solve that

          My objection to single payer is not for political reasons. It is totally because all of the PNHP arguments are demonstrably flawed.

          To your first argument (using my numbering above), I have cited the Massachusetts case two or three times, and you never counter it. In Massachusetts, there are basically no for-profit insurers and there is effectively no profit motive anywhere in the supply chain. And both healthcare insurance and delivery are extremely highly regulated by the state. And yet Massachusetts has the most expensive healthcare in the world. Also arguably Massachusetts has a large disparity in who gets treated where, exhibiting the two-tier medical delivery system common with PNHP-like plans around the world. (Where did the Queen go in London a few weeks ago when she had the sniffles?)

          I have run the numbers on the MassCare proposal (the Massachusetts version of PNHP) and sales and income taxes would have to increase to close to 20% net of the elimination of insurance premiums (so it’s more like a rise of 28 percentage points). For us here in Massachusetts to do such a thing – turn our healthcare completely over to the corrupt Massachusetts government (e.g., the last six House speakers in a row are convicted felons, probation department jobs are bought and sold by the hundreds, our DPH brought you the meningitis epidemic, etc., etc.) would be incredibly stupid. If you think that’s just a Massachusetts government problem, work your way south and west and you’ll find all the same issues. No one anywhere wants to put the DMV in charge of their health.

          As to your second argument (based on my listing above), uncoordinated Original fee for service Medicare really sucks. I mean it is really bad insurance. Do you want more detail or do you already understand that (which is why you use words like “…or, more precisely Improved Medicare…”)?

          As to your third argument (based on my listing above), Medicare does not “negotiate prices.” It fixes prices. Any price fixing approach is fatally flawed (see Soviet Union between 1919 and 1979)

          And I could go further down the list but why bother. You PNHP guys need to get away from your ivory towers and find out what it’s like in the real world.

          (Aside: There is one thing I am not familiar with in your point of view. What does this mean: “… (in addition to “contemporaneous” payment as a deduction of set amount from SS)?”)

          • Aquifer says:

            I see, so you have no problem “in principal (sic)” with SP. That’s interesting – so you have no problem with eliminating private insurers, and no problem with a single public insurer – “in principal”. Considering that the “principal” behind this is that private insurers bring nothing but added expense, more paper work, and limit choice and bargaining power – then i am puzzled why you insist on retaining them in the system …

            You continue to insist my objection to private insurer’s is based on “the profit motive” and think that using the presence of “non-profits” in Mass where prices are high is sufficient refutation of a single payer model – Far from a refutation of single payer, ISTM, that perhaps eliminating all these private entities and their need to make money for their companies (whether you call it “profit” or not), which money comes out of healthcare dollars, would indicate that perhaps eliminating them, as single payer would do, would “in principal” lower costs – you keep dancing around that idea, never refuting it, even “in principal”. You cannot juxtapose Mass as an example of SP – Mass is the prototype for Obamacare, not single payer … And there I agree with you – the Mass example indicate mandating increased purchase of insurance through private insurers will increase costs – could you explain why eliminating private insurers with the costs it requires to maintain them, isn’t itself a cost control? And being “highly regulated”, per se, is no assurance of cost control.

            In Mass “there is effectively no profit motive anywhere in the supply chain” – ha, ha, ha – sorry, but i don’t believe the folks in Mass who run the insurance companies are a bunch of Girl Scouts or Mother Thereses and live on crumbs (heh, even GS cookies are getting expensive – smile …)

            Your repeated assertion that “Medicare is lousy” doesn’t seem to be backed up by much of anything, as far as i can tell …

            As far as your 2 tier medical system – the rich will always be able to access more healthcare, just as they are able to access more of everything else … And your point is? STM the important point is not who can access “more” healthcare but whether all can access the healthcare they need. I really don’t care where the Queen went …

            Ah yes, and then there’s the “turn your healthcare over to a corrupt government” routine – that really does smack of the “hatred of gov’t” routine that Mr. Kleinke refers to – the DMV running healthcare is such a ridiculous image that i really don’t think it merits attention, and frankly, for the record, my local DMV office is pretty good, IMO… As for corruption, if you really want to talk about that, how about throwing Jamie Dimon, Lloyd Blankfein, et.al into the mix as examples in the “private” sphere. And if you just want to keep it to healthcare, how about all the fraud that is perpetrated against Medicare every year by “private players”?

            You are correct that uncoordinated care needs to improve – but “uncoordinated” care has been the norm for quite some time, irrespective of the public/private nature of the insurer – That needs to improve under any system and is, iSTM something a SP system could more easily handle. The fee for service model needs to be seriously overhauled, if not eliminated, no matter who the insurer is …

            As for “fixing” prices – perhaps your term has some merit – except if that price “fixed” is too low for the service, there will be no providers of the service – so to that extent there has to be some input from providers – an agreement or “bargain”, if you will. Medicare has been “fixing prices” for awhile and though there are those providers who won’t accept it – enough, apparently, still do …As for any “price fixing approach” being fatally flawed – i suggest that very much depends on the price – as for myself, a profit motive was not my reason for entering healthcare – so if a price that is “fixed” yet provides a decent living for the provider and his/her family drives the profit seekers from the profession, that is fine with me, let them start hedge funds .. Personally i think that healthcare providers at every level need to do some honest evaluations as to what is a decent level of recompense for their services …

            As for PNHP ivory towers – methinks that many, if not most of the folks involved got involved, precisely because they were/are in “private” practice in the “real world” and saw the devastation the current system is wreaking on their patients and their ability to deliver the care they think is needed, looked around at other systems as to cost and results and said SP would be a lot better than what we’ve got now, including Obama/Ryancare … And do you think that NNU composed of nurses, in the trenches, that strongly supports SP, are “ivory tower” folks?

            You claim to be non-ideological – but your ideology keeps leaking out through the seams, the longer the discussion, the more leaks appear .. And you still haven’t laid out what you think would be a good system – it is always easier to tear down than to build up (though i do not concede that you have torn down SP, far from it) .. So have at it, what’s your plan?

            PS – that “contemporaneous” payment is the money deducted from one’s SS payments to pay for part of Medicare once one enters the system -

          • Dennis Byron says:

            Aquifer

            1. Because having government employees do the same work private insurer workers do now will cost a lot more.

            2. You seem to admit Medicare sucks with your words. But to be specific, most important, Original Medicare lacks catastrophic coverage, the real reason anyone would want to buy insurance. It also has very high co-pays and deductibles. It covers a very limited number of (but admittedly important) healthcare services. It does not cover annual physicals. It does not cover drugs. it does not cover me over the border in Ontario and Quebec where I go often. The list goes on for pages. How much more do you want?

            3. Sorry I thought I was very clear about what I thought was a good system right at the beginning of my answer to you. A true HMO. No government in the middle. No insurer in the middle. Worked great for me for 20 years but most people did not like the concept. And if you think you can force people into government run healthcare, why not force them into provider-run healthcare?

          • Aquifer says:

            Dennis …

            As to your 1), with only one insurer instead of multiple, and a single set of guidelines (with some regional adjustments) you will need considerably fewer folks to handle the paper work overall. And, in case you hadn’t noticed, the administrative costs for Medicare are considerably less than for private plans …

            How silly – i never suggested Medicare sucked, that’s YOUR bag, I said it wasn’t perfect and needed to be improved, which is why i am in favor of the Medicare for All bill, HR 676

            As i pointed out elsewhere, those “high co-pays and deductibles” you refer to are well handled with a supplemental policy through those private insurers you love so well – I am on SS and traditional Medicare with a supplemental and i pay considerably less per month than i did the year before for a private policy with much higher premiums and a high deductible that had to be paid out of pocket before it would shell out a penny and that was even with a COBRA subsidy …

            So you want a policy that covers all your expenses to see whomever you want wherever you go all over the world? Did your HMO do that? Medicare is a national program – all participating providers in the country are “in network”. Did you have “in network” providers all over the country in your HMO?

            Hmmm, so if those HMO’s of the 90′s were so wonderful, why did they go out of style? Why DID most people “not like the concept”?

            Your last sentence, huh?

  12. bob hertz says:

    I too would like to see Medicare for All, but the payroll taxes needed would be very, very large.

    The cost of expanding Medicare to everyone under age 65 would soon be in the neighborhood of $1 trillion a year. (this assumes no insurance company profits whatsoever, no underwriting, no adverstising, just paying legitimate claims.)

    The payroll inome of every firm in America is about $6 trillion. Add in retained corporate profits, and you have about $7 trillion.

    Therefore you need a payroll tax of 14% to fund Medicare for All.

    (this is just about what France and Germany spend, incidentally.)

    At this point, some will point out that American companies currently pay 14% or even more than that to health insurance carriers, so why is it such a big deal if they pay 14% in payroll taxes?

    Leaving aside ideology, there is still a big problem. The 14% average is made of General Motors paying 28% for health insurance and Dunkin Donuts paying 0%………….or a state goverment paying 20% and Walmart paying 2%………

    A 14% payroll tax would be a windfall for General Motors, but it would be a big problem for Dunkin Donuts and other low wage businesses. The quiet contentment at GM will be no match for the legislative furor kicked up by the National Federation of Independent Businessmen, et al.

    What we saw in 1994 is that the big businesses actually did not have the clout to steamroll the low wage businesses in Congress. I do not think they have the clout or the interest today.

    If I have missed something here, let me know. I just do not see how we make the tax transition for universal Medicare.

    • Dennis Byron says:

      I think you’re in the ball park based on estimates I’ve done for Massachusetts. I came up with slightly higher numbers but that’s probably because this is Massachusetts (see my comment above about the fact that our healthcare delivery and insurance systems are already non-profit and highly regulated here; there is no profit margin and underwriting savings to be had; all the insurance companies do is administer claims).

      So in addition to the industry/size of business differences you mention, you have to add regional differences.

      But more important, please point out that that you are talking about additional taxes on top of all the taxes already paid.

    • Aquifer says:

      Several issues –

      1) the use of payroll taxes at some level i think is important to provide that “skin in the game” whereby people ARE contributing to their healthcare and to give them a personal vested interest such that they will defend the program – that, ISTM, is the reason the programs have survived as long as they have in spite of repeated assaults, attempted or only contemplated. “Don’t touch my Medicare!” FDR was no fool when he set it up that way ..

      2) there may be other sources of revenue that could be used, e.g. the Tobin tax on stocks, or even just a tax on HFTs – there is no rule that says it has to be funded solely from a payroll tax. One could increase the corporate share of the tax especially from large corps who are making record profits and paying no income taxes, or even getting refunds, e.g. GE … Smaller cap corps could pay less …

      3) i do not know what your figures are based on, but if they are based on the total we spend on healthcare today, that total would be considerably reduced under single payer (eliminate cost imposed by private insur. profit, redundant paper work and ability to bargain down prices for drugs, services etc.)

      4) with single payer – there would be no more premiums, deductibles or copays (the services are not “free”, they are simply “prepaid” ), so ones actual total costs for healthcare, even with a higher payroll tax, might well be less …

      Check out the PNHP website – they have done a lot of work on these issues …

  13. bob hertz says:

    Thanks Dennis.

    The various researchers into single payer in Vermont are also coming up with similar numbers. To hold things down to 14%, the Vermont team is assuming that hospitals will agree to be paid at Medicare + 15%.

    The taxes already paid are the 2.90% for Medicare that is split between employee and employer, plus about 4% in total income taxes for Parts B and D of Medicare, plus the new Medicare taxes in the ACA.

    Quite a total.

  14. Peter1 says:

    ” No “taxpayer funded Medicare” pays for the private insurance that seniors use”

    Dennis, my point was that without taxpayer funded Medicare there would not be enough senior income left to buy private for most seniors. Private insurance benefits from the supported income seniors receive from not paying the full cost of their senior health care through Medicare. Just as private insurers will profit from subsidies through Obamacare.

    • Dennis Byron says:

      Peter

      You seem to be a guy that likes to deal in facts rather than ideology.

      Here are some facts:

      – Not all seniors are the same when it comes to the question “Did you pay for your Medicare or did “the taxpayer?”
      – For starters, you have to separate seniors as a group between those born before 1945 and those born in or after 1945.
      – Then you have to divide them among low income, middle income and high income (which the law defines as making more tan $85,000 with no inflation adjustment; this will take in 20% of seniors by 2020)
      – Those middle income seniors born before 1945 intentionally got a great deal from the 1965 Congress that created Medicare and Medicaid. Those middle income seniors and about to be seniors born between 1945 and 1960 basically pay their own way when it comes to Medicare (but not for long-term care which is not covered by Medicare). Those middle income taxpayers born after 1960 are pretty much screwed by current law.
      – Low income seniors of all currently retired age cohorts get free Medicare healthcare insurance,almost free drugs (nominal co-pays) and totally free drug plan premiums and no exposure to the donut hole (the definition of low income differs slightly between the Medicare healthcare insurance and drug insurance programs), and the lowest of low income (those with very few assets) also get Medicaid (millions of low-middle-income/minimal-asset seniors — with the specific assistance of the Medicare/Medicaid bureaucracy — conciously “spend down” their assets by giving them to their spouses or children so that they qualify for Medicaid)
      – High income seniors of all age cohorts considerably overcontribute to the Medicare trust fund as compared to what they get out of it (as — sadly — do people who die before reaching 65 of course); But who care’s; they’re rich
      – Finally you have to factor in that most seniors were taxpayers for 45-50 years and are still taxpayers and that on average Medicare only pays 45% of our healthcare costs, including paying Medicare Part B, C and D premiums
      – If you want to make the forced division between taxpayer and middle-income senior that the left likes to make (and pretend that seniors never paid taxes and don’t still pay taxes), the “taxpayer” pays 75% of Parts, B, C and D and 0% of A . Melded, “the taxpayer” pays about 60% of Medicare (and as noted above, Medicare in turn only pays of a senior’s total healthcare costs)

      • Peter1 says:

        Dennis, this seems to support the fact that we (all) get more than we put in, maybe other than “super rich”. I don’t think they’re suffering.

        http://www.urban.org/UploadedPDF/412660-Social-Security-and-Medicare-Taxes-and-Benefits-Over-a-Lifetime.pdf

        I don’t know how high in income you want to go to calculate when the “rich” get less than they pay, but if $85,000 is it the above chart does seem to support your contention. I’ll look at your link.

        To say that those who die get screwed is to say that those who do not collect on house and car insurance also get screwed. These programs should be treated as social “insurance” not return of benefits, no matter what your income. The “rich” have also benefited from a 15% tax rate on investment income while this is not enjoyed by wage earners.

        The trick to controlling contributions is to control costs, which this system is not doing.

  15. Dennis Byron says:

    Peter

    1. Your observation about house and car insurance is a very good point and you illustrate one of the two major faults with the Urban Institute research you reference (anything from Urban Institute has a total left-wng bias to the point of intellectual dishonesty). Notice in my wording, using the approach that any insurance — social or otherwise — analysis would take, that I said people “born between 1945 and 1960,” or “people born after 1960.” I took it from the point of who is in the insurance pool.

    The Urban Institute document to which you refer does not take that approach; it takes the weird approach of only talking about the “winners” (that is, it just looks at the people who had a car accident, to relate it your observation, and sees how they did compared to what they paid in vs. what all car owners paid in whether or not they had an accident). The Urban Institute begins with people who lived to 65 and then only those that live to average life expectancy thereafter. No one analyzes insurance that way.

    When I say middle income people born between 1945 an 1960 have paid their own way vis a vis Medicare (and way overpaid vis a vis SS, even according to Urban Institute), I am analyzing it the house/car insurance way. Urban Institute is not.

    Of course that is not true of low income seniors of any age cohort. They get free Medicare healthcare insurance and free drugs and insurance. (But even that does not count what they put in as taxpayers.) I have no objection to that. That is a concious choice we have made as a country. But I go ballistic when I see misleading statistical statements from the left that say things like half of us poor seniors “only have an average income fo $22,000″ 90% of the time, or some such weasel wording (half of… average… 90% of the time) that totally misleads readers. It’s total deceit by the left.

    2. Urban Institute is also flawed in the linked report because it uses a 50% lower rate of retrun on the money people put in than most analysis like this, particularly 50% lower than what the CBO uses.

    This information is buried in the footnotes of the Urban Institute report but you’ll never see it in the press releases or the fawining left-wing coverage of such things,

    (By the way, I didn’t give any link so not sure what you are referring to. My sources are almost totally CBO, CRS and MedPAC. Everything else seems totally biased and even the government stuff has to be read with some understanding of what party was in power in the White House (MedPAC) or Congress (CRS and CBO) at the time it was written.)

  16. Dennis Byron says:

    By the way, I did not say those that “died” got screwed (they did but I would hope not to be that crass). I said middle income people born after 1960 get scrwed by Medicare under current law.

  17. Peter1 says:

    “No one analyzes insurance that way.”

    It sounds like you’re an insurance guy. For one I don’t agree that determining who gets health care and who doesn’t be based on an insurance mind set (pre-exist, max lifetime, affordability), although everything needs to be paid for. On that I’m a proud “lefty”, except for I guess the “paid for” part.

    “The Urban Institute document to which you refer does not take that approach; it takes the weird approach of only talking about the “winners””

    If by winners you mean those who got sick and needed Medicare against those losers who did not get sick – well that would be life. Insurance, even in the insurance world, has “winners”, those who get back at least their premiums by having an event(s), and those who don’t have an event. That’s the shared risk part.

    I’m uninsured (used to be insured) but now I contribute to my own health care through saving my own premiums. So far I’ve spent far less than I would have if I’d paid an insurance company. I guess I’m one of the winners for now. Maybe if more people had access to actuarial tables they’d make the same decision, seeing the odds are in their favor for not buying insurance.

    Where all this guesstimating (winner/loser) gets flawed is how long you live and how healthy you stay and how long it takes for you to die while consuming health care dollars. If we separate those who get sick (winners) and those who don’t (losers) then it’s not any form of “social” insurance, it becomes only about “ME”, not the other guy in a shared world.

    I think we spend far too many dollars on “soon to die” old people, so I don’t know where that puts me on your “lefty” scale.

    • Dennis Byron says:

      No, I am not an “insurance guy.” I am just a senior citizen on Medicare who gets really PO’d when demagogues or goo goos like the author of this blog post (not sure which he is; he does not seem to know which he is) totally misrepresent Medicare. With their Medicare misinformation, people like the author of this post do a disservice to my fellow seniors (but most of us know Medicare is lousy and 95% of us make other arrangements) and he does an even bigger disservice to the public debate about the national debt because those not yet on Medicare think it’s good insurance, worth protecting at all costs no matter what it does to the nation in its current form.

      Yes, that what I meant by “winners,” which is why I used quotes. But both my statistics and Urban Institute’s are broader than just healthcare “winners.” My statistics include both SS and Medicaid and the Urban Institute’s includes SS.

      But you don’t have to become really sick to be a Medicare “winner.” Best case: you are relatively healthy given your age, you get free or low cost preventive tests and vaccines as needed, cataract surgery at 68, a knee replacement at 75, a pacemaker at 83, treatment for some serious but not life threatening if caught in time disease in your late 80s, very low cost drugs to lower blood pressure and chloresterol (sp.) and shrink your prostate all these years into your 90s, and die in your sleep in your own bed in your own home. A middle-income baby boomer that makes it that far will just about get back what he put in counting the payroll and income taxes paid for 50 years, plus the ongoing Medicare premiums and supplemental “private” insurance, and the OOP healthcare expenses and income taxes paid during retirement

      Anyone older is way ahead of the game. Anyone younger is screwed unless some variation of the Aaron/Bowles/Dominici/Reischauer/Rivlin/Ryan/ Simpson/ Widen plan is passed. Which ain’t going to happen as long as people like this author call it the Ryan plan.

      (Aside: Interesting that you self insure? What are you going to do next year when you are mandated to carry it? Pay the tax?)

  18. Peter1 says:

    “Pay the tax?”

    I might. I won’t qualify for a subsidy and I don’t have any faith that the “exchanges” will offer less costly insurance. The individual pools will really determine the cost. With pre-exist not rated I think my pool will be unfairly loaded with high risk. Insurance and providers are not taking a shave in the ACA so guess who will – other than the taxpayer.

    I could also sign on to my wife’s policy at work but up to now its been way too expensive even compared to individual policy. Here in NC we really only get one choice, BCBS, and that company has a terrible history of good customer service and keeping insurance costs low. It has a good history of giving it’s executives 50% pay increases while raising rates 5% -10% yearly.

    I wonder what you would consider making everyone a winner in Medicare would take? Pay more of your health costs while taking less tax?

  19. Dennis Byron says:

    You ask:

    “I wonder what you would consider making everyone a winner in Medicare would take? Pay more of your health costs while taking less tax?”

    I don’t use this terminology. That is the implicit (maybe even explicit) terminology of the Urban Institute study you referenced. That’s why I put “winners” in quotes. And again it applies to all government programs, not just Medicare.

    That being said, I’d say the guy in my example would be a “winner” in life (as opposed to Medicare). What could you add to my example other than that he died in his own bed at home in his 90s… with his 25-year-old mistress :)

  20. Bob Hertz says:

    When health care and health insurance are paid for with private voluntary dollars, then wealthy persons will receive better health care on average, and poor people will depend mainly on the charity of doctors and hospitals (and of church hospitals).

    That was roughly the situation of the elderly in America before 1965. (I was a teenage then, so my comment is from research.)

    The achievement of Medicare has been to run elderly health care through the tax system, which makes things far more equal. As Dennis notes above, this is a value judgement the country has made and by and large does not regret.

    The Affordable Care Act is a clumsy attempt to run health insurance through the tax system for persons under age 65. It is clumsy because the designers of the ACA are trying to limit tax support to the uninsured and self-employed, and still have full maintenance of effort by corporations.
    This may prove a fatal flaw.

    Finally, just a personal experience. At age 64 I had a stingy private health insurance policy that cost $5,000 a year and had a $5,000 deductible plus 20% coinsurance.

    At age 65 I received Medicare Part A for free, with a $1300 deductible, and I pay $99 a month for Part B, with a $150 deductible and 20% coinsurance.

    To me Medicare is heaven. Those who complain about Medicare must have come off of very generous corporate or union plan, as far as I can tell.

    • Aquifer says:

      I agree – my experience is similar, i have made a decision to get a supplemental policy – at $168/mo for payment of deductibles and co-pays, i figured it was worth it – between that and the SS deduction for part B – my insurance is considerably cheaper than before …

    • Peter1 says:

      “At age 65 I received Medicare Part A for free, with a $1300 deductible, and I pay $99 a month for Part B, with a $150 deductible and 20% coinsurance.”

      Dennis would call that Medicare failure.

  21. Dennis Byron says:

    I don’t think I ever used the word “failure” but maybe I did? What you describe is Original 1965 uncoordinated-care Fee for Service Medicare.

    Its Part A is not “free.” Depending on how old you are, you paid payroll taxes for 45-50 years (and may still be paying them if you did not retire at 65) for your “free” Part A. Part A actually costs about $400 a month, which is being taken from the Trust Fund where your Medicare payroll taxes went. If you are in your mid-60s, you are part of the first age cohort to have paid Medicare payroll taxes your whole working life and will be the first not to get the truly “free” Part A insurance that your older brothers and sisters and parents got (as fully discussed by and intended by the 1965 Congress). You (if self employed) and your employer probably paid in over $60,000 in these payroll taxes if you were an average wage earner. At $400 a month — and making no adjustment for what you could have earned had you saved and invested that money yourself and making no adjustment for the pooling effects of those that paid in but died before reaching average life expectancy — you will have to live to near 80 to break even.

    Part A is especially bad insurance in that it does not do what insurance usually does: protect you from financial disaster in the worst case situation. There are lifetime limits on how much Part A will pay out. (This is not changed by Obamacare, which prohibits such lifetime limits in insurance for those under 65.) And you should mention that that $1300 deductible is per admitted hospitalization, not per year (there is no annual cap but effectively the annual cap is around $8000). There are also per-incident limits on SNF admissions which are much more lengthy than admitted hospitalizations (but be careful: you have to have an admitted hospitalization of 3 or more days before Medicare Part A will pay for a SNF admission.). Part A does not cover custodial nursing care or hospitalizations — even emergency hospitalizations — outside the U.S.

    As you say, Original Medicare’s Part B has a $104 monthly premium unless you make more than $85,000 a month or less than about $14,000 (depending on where you live). It is optional. Part B also costs about $400 a month so you get $300 a month in Part B premium support (you may prefer to call it a voucher) from general tax revenues (to which you also contributed of course for 40-50 years and are most likely still contributing). It’s kind of hard to figure what percentage of your income taxes over the years should be attributed to your Part B needs. I would say at least the same amount as your Part A contributions so at $400 a month — and making no adjustment for what you could have earned had you saved and invested that money yourself and making no adjustment for the pooling effects of those that paid in but died before reaching average life expectancy — you will also have to live to near 80 to break even on Part B should you choose it. (And if you don’t opt for Part B…. thanks from the rest of us for contributing to the Part B pool with your income tax dollars!!!)

    Part B is not terrible insurance like Part A. It is just bad insurance because of its high co-insurance rate, which you mention, and because there are many important healthcare services not covered. Part B does cover observed hospital visits (which therefore — with 20% coinsurance — often end up costing a lot more than admitted hospitalizations), outpatient visits and procedures, ER visits in the U.S., visits to some but not all types of doctors, a few free preventive tests and procedures, some durable medical equipment and drugs that have to be administered in a hospital or hospital-like setting. Part B does not cover annual physicals, self administered drugs, ER visits outside the U.S., dentists, audiologists, optometrists, acupuncture and other such stuff some government bureaucrat has decided is not health related.

    No matter what I think, Original 1965 Fee for Service Medicare was considered a failure by both seniors and almost every politician and policy wonk — both Democrats and Republicans — from almost the minute it was enacted. A large unregulated market for supplemental insurance grew up around it and the wonks offered all kinds of plans to fix it between 1965 and 1995 (especially see the debate over catastrophic coverage during the 1980s, a still needed reform that was scuttled by the Democrats who didn’t want Reagan to look good). Sometime in the early 90s, the private market that had grown around it – called Medigap – was reformed by Federal law. Finally using a blueprint fashioned by two Democrats in 1995, reform of the public portion of Medicare was enacted in 1997 and signed by President Clinton. Further major and minor reforms happened in 2000, 2003, 2008 and 2010. It’s a real mismash today of some uncoordinated care and some accountable care, some capitation (now called global payment) and some fee for service, and some private and some public supplemental options. It is all administered by over 40 insurance companies with overlapping geographic and functional jurisdictions. Some FFS care is covered in some jurisdictions and not in others. Some competitive bidding has helped lower costs and some has raised costs. Original Medicare “offers” providers very low fixed prices which an increasing number are refusing to accept. Recent CMS Director Berwick estimated that the Original FFS Medicare part of Medicare is wasting 20% to 30% of its multi-hundred-billion-dollar budget

    But I don’t think I called it a failure. Maybe I said work in progress.

  22. Dennis Byron says:

    that should say “$85,000 a year” up there somewhere, not month

  23. bob hertz says:

    I am afraid I am on Dennis’s side in not blaming insurance companies.

    The worst insurance rates I ever saw were from a co-op non-profit insurance federation that was set up for school districts.

    The rates were high because many years of seniority rights had produced a very old work force. There were no commissions, no CEO’s , and certainly no profits.

    Insurane in an expensive pool will be expensive. Insurance for a pool of younger men will be cheap.

    On a purely actuarial basis, insurance rates for someone over 60 would be 6 times as large as for someone age 30.

    And yet persons age 60 do not have six times the income of those aged 30. In fact statistics say that inomes on average start falling at about age 55.

    For this reason, a free market in health insurance would leave about 80% of old people uninsured. Hospitals would go broke in short order.

    This is why we need some type of public program funded by taxes.
    Medicare is indeed clumsy but it will have to be refined, not replaced.

    As Joseph White and George Halvorson have pointed out, the problem with Medicare is that the government does not own the hospitals. There is a permanent adversarial relationship of private institutions looking for any way they can to extract more and more federal dollars.

    Medicare is the constant and dumb victim of upcoding.

    The classic texts of the single payer movement (by Bodenheim, Himmelstein, McCanne, and others) all say that hospitals will be put on global budgets.

    No one in HHS today is going to tell Mayo Clinic what to spend. As we speak, Mayo Clinic is telling the city of Rochester MN what to spend on roads and parking ramps for its pending expansion.

    Medicare for All is ethically right, but could lead to an incredible looting of the federal budget. Even the existing Medicare will absorb 30% of the federal budget by 2021.

    • Aquifer says:

      bob –
      As you point out, your example argues for a single payer solution – the larger the pool the more spread out the risk and the lower the cost per person. But the other really important aspect, dealing with total cost, is the ability of the insurer to “bargain” (or “price fix” as Dennis would say) with providers – the larger the insurer the more leverage it has.

      As for “blaming insurance companies”, perhaps it would be more accurate to lay blame on a system that uses private insurers – that, no matter their “intent”, ipso facto, introduce unnecessary costs, confusion and complexity into the system ….

      As for the mayo Clinic – fine, if it wants to be a non participant, so be it … If it is telling Rochester what to do, i suspect it has more to do with its financial clout and “influence” with politicians than with its stance on healthcare ..

      And as for “looting the budget” methinks that will solely depend on the extent to which Medicare uses its clout as a cost controller AND to the extent to which the gov’t starts dealing with major aspects of the cause of disease – via the “food chain” and pollutants. Methinks it is a mistake to focus only on what is traditionally encompassed by the term “healthcare system” when trying to figure out how to deal with the cost of healthcare.

      But that, ISTM, is the problem when one focuses primarily on the cost of a system instead of its purpose – Once you focus on the purpose of a “healthcare system” instead of its cost, it quickly becomes obvious that you must deal with the things that get in the way of “health” and when you do that well and honestly, you wind up reducing the cost as an “added benefit” ….

      Or we could continue to argue about the “political in-feasibility” of dealing with the elements of society that put profit over people – if we do that all this charming discussion is nothing more than hot air, and the planet has quite enough of that already …

  24. bob hertz says:

    Just to clarify my last statistic………

    Medicare will absorb about 30% of federal revenues.

    Mediare in 2021 will cost close to $1 trillion a year, assuming the existing demographics and annual medical inflation of 3%.

    Federal revenues in 2010 were $2.1 trillkon. Revenues are growing now but may not exceed $3 trillion a year in 2021

    • Aquifer says:

      bob -

      As you say, those numbers assume that costs will rise at their current rate – an assumption that seems to me unwarranted if one introduces the cost control mechanisms that SP makes possible …

  25. bob hertz says:

    To Aquifer:

    No matter how much we lower average costs, as you imply, at least 20 million more persons will come onto Medicare in the next 10 years.

    This is a combination of those turning 65, plus disability beneficiiaries, less deaths.

    Too many reformers underestimate pure demographics,

    Ask me for more detaisl!

    • Peter1 says:

      “plus disability beneficiiaries”

      The big medical scam. People move from unemployment to disability. States move people from welfare (state paid) to disability (fed paid).

    • Aquifer says:

      Well, bob, if i had my way 300 million more would come into Medicare in the next few years ,,,

  26. bob hertz says:

    If Peter is right, and I think he is, then Houston we have a big problem.

    A large bloc of people are alive at age 55 or 60 that used to be dead from heart disease or lung cancer or kidney failure.

    These peiople have been working in low wage jobs largely since they were 20 years old.

    35 or 40 years is enough!

    We have never (god forbid!) forced restaurants or janitorial services to fund pension plans. The very few union plans like for bakers have been savaged.

    The labor markets as a whole do not want these workers.

    The answer is what James Galbraith proposed– increae Social Security benefits and let them reitre! Raise social security taxes on those who make over $113,000 to pay for this.

    Longer life spans are going to cost America a lot of money. Get over it.

    Bob Hertz, The Health Care Crusade

    • Aquifer says:

      i agree – we need to fortify both SS and Medicare benefits. At this point we have the lowest level of corporate tax and the least progressive income tax in decades. This nonsense about the need to “balance the budget” on the backs of SS and Medicare recipients is one of the most cynical political ploys I have seen in a very long time. The deficit was caused by unfunded wars, Bush/Obama tax cuts, and bank bailouts – the rich are indeed getting richer, and the poor poorer. And there is nothing ‘inevitable” or “necessary” about that – it is the result of political decisions as to whom this economy “should” work for. We can and need to make different political decisions ASAP – that is up to us ..

    • Peter1 says:

      “If Peter is right, and I think he is, then Houston we have a big problem.”

      Bob, and everyone, you need to see this!

      http://apps.npr.org/unfit-for-work/

  27. Dennis Byron says:

    Peter1

    FYI, somewhere way above in this thread you referred me to an Urban Institute report that purported to estimate lifetime tax contributions to SS and Medicare vs lifetime benefits paid by those programs to people turning 65 in certain years at various wage levels and couples/singles status. When you made that reference, I pointed out some of the known issues with the Urban Institute’s methodology (e.g., did not do analysis from the point of view year people were born, used very low rate of return, etc.).

    But your reference to it prompted me to go back and look at it again and I also noted an even more glaring error in its methodology. On the contribution side, the Urban Institute counts our B and D premiums (which go into the B/D trust fund) and our lifetime Medicare payroll tax contribution (which feeds into the A trust fund) but the Urban Institute does not count the percentage of our lifetime of income taxes that feeds the Part B/D trust fund. The Urban Institute has confirmed for me that it leaves out this contribution, probably the largest contribution we make.

    As a result if it not correct for Urban Institute to say that all Medicare/SS beneficiaries get much more out of the programs than they put in. That is very likely the case for those over 75 or so (because they did not have to pay Medicare most of their working lives, the income on which they paid Medicare tax on was capped, they got to retire earlier at “full SS pay,” etc.). But it is not the case for those of us born between 1940 and 1960 (we probably break even, particularly those born in the 1940s). And as I said, those born after 1960 get screwed — even if the programs still exist — unless the programs are reformed.

    • Peter1 says:

      “But it is not the case for those of us born between 1940 and 1960 (we probably break even, particularly those born in the 1940s).”

      Then why is Medicare in trouble?

  28. John says:

    Has anyone discussed the principle that there should be differential treatment for those who choose to be high risk for health problems ie smokers / overweight.

    An emotive debate!

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