Except for Conyer's HB676 Medicare for All bill, all Democratic Health Care reform proposals. Edwards (PDF), Richardson and Wyden, ignore Medicare. For the most part, they interfere very little with other government financed programs in their plans. They establish two systems that will operate simultaneously; Medicare and other government health care programs, and a separate system built on existing private insurance supported to some degree by government subsidies for all others.
Essentially, they suggest that the US taxpayer support a very expensive system designed for the least healthy populations among us: the elderly, those who are disabled and the very poor. At the same time they propose allowing the private insurance industry, with some new regulation, to continue to insure the younger population. I suggest that any fiscally viable reform proposal must integrate Medicare, Medicaid, SCHIP and the other public programs that accounted for 45% of US health expenditures in 2005. (PDF, Table 5) In fact, public expenditures in that year exceeded those of the private insurance industry by 9.1%. The single largest component of this public expenditure is Medicare at 19.9% of total health expenditures, followed by Medicaid at 17.4%. Perhaps surprisingly, health expenditures by these two programs, at 37.3% of the total, exceed expenditures by private health insurance programs at 35.9%.
These figures become astounding when one considers the vast difference in the number of people covered by each sector. Medicare covers about 44 million beneficiaries. (PDF) In 2003, Medicaid covered about 55 million. (PDF) So the two programs insure about 99 million people. In contrast, private insurers provided some sort of coverage (it may have been wholly inadequate) to about 200 million people in 2006 (PDF, p. 18). I suppose one could argue, and some probably have, that the government is simply incompetent, spending more on 99 million people than the efficient private sector spends on 200 million people.
In reality, the "system" structuring health care financing in the US has, for reasons both calculated and accidental, become a very effective means of shifting the risk of providing health insurance from the "efficient" private sector to the government. Medicare covers some disabled people and people 65 and older. Both these populations tend to be sicker than the general population, and people use more health care resources as they get older. Thus, in 2004 Medicare paid an average of about $6 thousand per beneficiary. (PDF) But this spending was highly skewed. About 10% of beneficiaries accounted for two thirds of total spending, and average spending for beneficiaries in their last year of life was about $22 thousand while that for all other beneficiaries about $5.5 thousand.
Similarly, Medicaid provides coverage for the poor. This includes children, their parents, some elderly people and some disabled people. In this program, too, spending is highly skewed. (PDF) Only one quarter of beneficiaries are elderly or disabled, but they account for 70% of total expenditures. Specifically, in 2003, estimated spending was $1,410 per child; $1,799 per non-disabled adult; $11,659 per disabled enrollee, and $10,147 per senior enrollee.
In insurance terms, the risk pool has been fragmented. The most costly and risky people have been placed into government programs. The least costly and risky have been left to the private sector which competes to deny or limit coverage to the riskiest of those remaining. This development has had two major consequences for health care financing reform proposals. The built-in high costs of paying for the health care costs of the sickest people in this nation give ample ammunition to those who decry "government programs" as inefficient and too costly.
More significantly, the fact that about government at all levels spends about $746.9 billion on health care services (PDF, Table 5) creates an enormous pool of money that the private insurance industry can tap. And it has done more than just tap it. For a number of years private insurers, using the notion that private managed care is efficient and money-saving, have taken over state administered Medicaid programs. Now, they are doing their best to "privatize" Medicare.
Until health care reform plans take account of the enormous contribution that governments at all levels already make to our health care system, as does the Conyers bill, but no other, such plans only allow private insurance companies to continue, with some regulation, their exploitation of those who are most healthy in our society.
Update I have partly fixed the discrepancy in the numbers of people insured noted in the comments. But there is still a problem with my presentation of the numbers. The Census bureau reports about 80 million publically insured people. I have chosen to go with the Keiser Family Foundation's numbers for enrollment in Medicare and Medicaid which exceeds Census Bureau estimates and does not include all beneficiaries of public programs. I can only attribute the differences to methodology and to different times of data collection. Similar problems probably apply to all other figures presented above.