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Screwing Up Medicare Even More

By June 1, 2021Commentary

Medicare is broke.  One health care “reform” idea has been to expand its age eligibility, which obviously would add to the program’s cost.  People’s health care costs tend to rise steadily as they age, so the group just under typical Medicare eligibility at age 65 is fairly expensive.  This report examined the effect on private health insurance of moving older workers and their older family members to Medicare.  (KFF Report)  Note that currently Medicare is always a secondary payer when someone has private insurance, so not sure if the authors are assuming this changes.  If not and the worker continues to have access to their employer’s health plan, shouldn’t be much effect on Medicare or the employer.  The researchers find that lowering Medicare eligibility age to 60 would lower employer health plan spending by 15%.  Lowering it to 55, would reduce spending by 30% and to age 50 by 43%.   Those figures assume that everyone switched from the employer plan to Medicare.  Total health spending might also decline because Medicare sets the rates it pays providers and they are substantially lower than the rates typically paid by employer health plans.  Health care providers claim they lose money on Medicare, which is dubious, but if a lot of their business switches to Medicare, there will likely be substantial political pressure from providers to increase Medicare payments.  And they would likely raise their rates even more to the remaining private health plan business.  Not the smartest idea in the world to muck around with a program that is already broke.   And more government in anything usually means inefficiency and poorer quality.

Join the discussion 4 Comments

  • J. Thomas says:

    The fact is that we have socialized medical coverage for our children via CHIP and those over 65 via Medicare. As long as the insurance companies have businesses and corporations available as their sources of revenue for the ‘working’ population, they are going to charge accordingly. If everyone was put on the street (think Auto and Property), insurance companies would have everyone in the marketplace and have to compete for their business/funding. Get healthcare out of the business realm completely, freeing them to put all resources into what they do best, their products and services. They end up outsourcing most of the support anyway which is just another layer of cost in the system. The entire paradigm of making businesses into the middle-men just creates very inefficient layers of costs that should go to helping patients instead.

    The insurance exchanges, which already exist, would pick up the rest of the population and be able to spread costs over the full age range (birth to death). The linchpin in the system is capping the profitability of insurance companies (think PUC) so excess profits had to be put back into the system to manage premiums. If we can regulate the utilities because they are fundamental needs … there’s no argument that can be made for not including health insurance.

    Medicare is broken because it’s a government run system … just like everything else they touch, it’s a bloated, bureaucratic, inefficient shit-show. Govern, set the rules, tax structure, hold accountability and get the hell out of the way. You could go as far as allowing portions of IRA’s to become HSA’s … instantly opening up hundreds of billions in cash for older people to care for themselves tax free. There’s’ plenty of money in the system …

  • rob says:

    I assume a lot of people would retire earlier if they could get Medicare.

  • Rob says:

    I find it funny that people think government – which proves every single day that it is incapable of managing risk – can somehow solve the insurance business when it has been the sole cause of its present condition.

  • James L. Edholm says:

    Of course providers “lose money” on Medicare. That’s because they have private plans that they can hold at gunpoint and charge, on average, 240% of what Medicare pays them. Because carriers charge more to private plans, LOTS more, they don’t have to worry about efficiency, competitiveness, or other marketplace controls on their operations. Instead, they can overload the system with administrators who know nothing about treating people but love cushy, paper-pushing jobs.

    And then, fatted up, they can rightly claims that “they can’t make money on what Medicare pays.” What BS!! Employer who are willing to creatively and effectively manage their health care supply chain routinely save 20-40% on their health care costs.

    Of course, it’s “easier” to let one of the BUCAs (Blues, United, Cigna, Aetna) “do it for us … after all, they’re the experts.” Yeah, they’re the experts at fleecing those who pay them to manage health care.

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