We're being told Medicare is dangerous, even here. Not just by one person mind you, there are way too many people here who are defending Medicare cuts. They tell us if Obama wants to put Medicare on the table and raise the eligibility to 67 along with the Super Congress we should jump at the chance because Medicare is so out of control! Oh no! Fantasy 20 trillion unfunded liabilities, oh my!
Those Canadians who used it as their model for their Medicare for All are just wrong I tell you! Their system collapsed...wait no it didn't. Funny, I thought Democrats hated the Ryan Plan and all aspects of it. The next time anyone wants to try to excuse insurance profits and then say that Medicare is the driver of all costs and insuance premiums just remember they don't understand the trends of the underwriting cycle they claim expertise on:
This is from 2003 but it has relevant historical data showing how we got to this point.
Report: Recent Premium Increases Exceed Health Care Cost Growth
Over the last few decades, typically, Health Plans realized underwriting gains when health care cost trends were falling, and experienced losses when trends were rising, according to the report. This pattern changed toward the end of the 1990s, it notes, when underwriting losses were replaced by gains, even as health care costs were rising.
"This was due to insurers attempting to improve their profitability after having eroded their surplus by aggressively pricing in reaction to the stiff competition (for market share among health plans) in the mid-1990s," according to the report. "Financial problems contributed to consolidation in the market, reducing competition and allowing Health Plans to raise premiums. This trend correction began to produce gains in 1999 and 2000 that have continued through until 2002."
The report explains that underwriting refers to Health Plans paying or reimbursing for health care in exchange for a premium. When Health Plans collect premiums that exceed the amount of money that they pay out for health care ("claims costs") and the cost of doing business, they experience an "underwriting gain." When their collected premiums are less than claims and business costs, Health Plans experience an "underwriting loss." Health Plans' profitability is determined primarily by underwriting gains and losses, and by investment income.
This is a disturbing change in trends that affects our entire health care system even now. The elephant in the room no one wants to mention is that this pattern changed toward the end of the 1990s, it notes, when underwriting losses were replaced by gains, even as health care costs were rising. Pressure from Wall Street coupled with the investment losses in the underwriting cycle is exactly the same phenomena we see today.
You would think this would sound the alarm as well as the consolidation of our monopolistic insurance market the ACA did nothing about. Historically, this type of market hardly ever benefited consumers no matter how much anyone inside the industry or anyone wanting to excuse Medicare cuts by the Super Congress wishes it were so.
The word Medi-Scare comes from the 90s which is why it's appropriate to use it now. We were told back then that Medicare needed austerity and that would improve its performance, even by Democrats which reminds me of why I am writing this diary. Funny story, putting Medicare on the table actually made our problems worse.
It led to the BBA of 1997 and then Medicare Advantage which is 9% more expensive, not to mention the huge consolidation of big pharma that was also part the Medicare Modernization Act.
Compounding these issues were substantial reductions in Medicare and Medicaid provider payments from the Balanced Budget Act of 1997 (BBA). The goal of the BBA was to control Medicare spending growth and offer Medicare beneficiaries more health care plan options and access. The BBA significantly reduced hospital financial performance starting in 1998 and beyond. In 1997, hospitals’ total Medicare payment to cost ratio was approximately 103.6%.32 The BBA froze Medicare inpatient care rates for 1998 and reduced the annual increases for subsequent years compared to previous years’ updates.
The BBA also included payment reductions for skilled nursing, home health, and outpatient services as well as other changes that reduced overall Medicare payment levels relative to costs. According to the Medicare Payment Advisory Commission (MedPAC), by 2001, hospital total Medicare payments again fell below cost.33 The Medicare reimbursement changes caused hospital margins to decline and created the need to hold the line with private payers.
By the late 1990s, managed care contracts represented a larger proportion of hospital revenue. Hospitals began to find that the deep discounts negotiated earlier with the now larger managed care companies were unsustainable, particularly in the post-BBA environment. By 1997, hospital consolidations continued, although at a significantly slower pace.
This consolidation and monopolistic system stems to hospitals, equipment manufacturers and whole sections of hospitals devoted just for administering paperwork in association with dialing up insurance companies to approve procedures. If you read defenses of our for profit industry they all say fee for service is the main problem. They ignore how insurance companies operate as they have the same perverse market incentives that goes into building consolidated gigantic expensive hospitals accommodate them.
The defenders of this system claim this has nothing to do with it and it's all fee for service and that's it. Problem is in the 80s and early 90s, managed care was actually a big part of our system and it still couldn't buck the perverse symbiotic relationship our for monopolistic profit system operates on. Costs continued to rise anyway and were double by the late 90's.
The United States has horrendously high administrative costs are a gigantic problem. They shape how our entire health care system is built. To ignore this dynamic because of loyalty to politicians over Medicare patients needing care should be an embarrassment.
In order to even pretend something like Dolecare or Romneycare can work, you have to have something like a successful system to build on, not just a theory that's failing this country as we speak. Health care costs are not dictated by Medicare, because if they were we would be in much better shape. Medicare is able to tame this beast as much as it can, but our for profit system has become a huge monopolistic beast and it's sucking us dry.
But let's assume you have a personal incentive to defend whatever comes out of this Super Congress and your best friend is some "brilliant" health care actuary who's imaginary world of sustained for profit health care costs is something you feel like boasting about. Can you find your magical modern industrial country as a model on the Center for Economic and Policy Research's Health Care Budget calculator?
Health Care Budget Deficit Calculator
The U.S. health care system is possibly the most inefficient in the world: We spend twice as much per person on health care as other advanced countries, but we have worse health outcomes, including a lower life expectancy. The government, through programs like Medicare and Medicaid, pays for approximately half of the country's health care, almost all of which is actually provided by the private sector. Thus, the bulk of our projected rising budget deficits are due to skyrocketing health care costs.
I didn't think so. Every country where the government is more involved(or for profit insurance companies are outlawed) has sustainable health care costs. These are painful uncomfortable facts. And guess what?
Personally I don't care how much money you might personally plan on making as we trend towards 20% of GDP without the cost benefit analysis. If so, you might think you can hide it, but self preservation is what's behind this reasoning and it's pretty obvious. I also don't care if you care more about politicians and the "New Democratic Party" than seniors counting on Medicare.
That's called lacking a moral compass and a reality compass and it doesn't impress anyone. When I see pseudo analysis stating how we need to cut down Medicare without realizing that our problem is the private monopolistic system itself, it makes me want make the author study for a month. Then they might figure out that there are huge insurance monopolies in each state thus perverting the incentives for hospitals who then need to get bigger and consolidate merging with each other in a perverse symbiotic Gilded Age type of relationship from these incentives.
Our health care system is naturally monopolistic as well.
A natural monopoly is a monopoly that exists because the cost of producing the product (i.e., a good or a service) is lower due to economies of scale if there is just a single producer than if there are several competing producers.
A monopoly is a situation in which there is a single producer or seller of a product for which there are no close substitutes. Economies of scale is the situation in which the cost to a company of producing or supplying each additional unit of a product (referred to by economists as marginal cost) decreases as the volume of output increases.
Economies of scale is just one reason for the existence of monopolies. Monopolies also exist because of sole access to some resource or technology and because of the use of non-market means to eliminate competition, including buying up competitors, colluding with suppliers or customers to discriminate against competitors, enacting legislation to restrict competition, threatening costly lawsuits or even engaging in physical violence.
If there are multiple firms in an industry that is characterized by natural monopoly, all except the one that can attain the largest volume of output, and thus the lowest production cost, will generally exit the industry because they will not be able to compete on a price basis. Once a single firm becomes established in an industry that is characterized by natural monopoly, it is very difficult for competitors to emerge because of the very high costs for production facilities (including infrastructure) that allow a scale of output equal to or greater than that of the existing monopolist and because of the uncertainty that they will be able to oust the existing monopolist.
Investors hold stock in insurance companies, hospitals, medical device companies and that gives them twisted incentives to grow as big and costly as possible like they do insurance companies to deny care creating negative medical loss ratio to profit more(and no the 85% MLR requirement won't stop this as it is already planned to be gamed). They will ultimately look out for their shareholders instead of patients. In fairness, law dictates they have to which is what' wrong with this system.
Unless you understand that, economies of scale, as well as barrier entries with insurance companies, hospitals, pharmaceutical companies, and medical device companies, you have no business writing Medi-Scare stories for this administration or putting diaries that do on the rec list.
Why? I'll let Paul Krugman explain.
Medicare Saves Money
The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.
But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.
By the way, we have direct evidence about the higher costs of private insurance via the Medicare Advantage program, which allows Medicare beneficiaries to get their coverage through the private sector. This was supposed to save money; in fact, the program costs taxpayers substantially more per beneficiary than traditional Medicare.
And then there’s the international evidence. The United States has the most privatized health care system in the advanced world; it also has, by far, the most expensive care, without gaining any clear advantage in quality for all that spending. Health is one area in which the public sector consistently does a better job than the private sector at controlling costs.
Indeed, as the economist (and former Reagan adviser) Bruce Bartlett points out, high U.S. private spending on health care, compared with spending in other advanced countries, just about wipes out any benefit we might receive from our relatively low tax burden. So where’s the gain from pushing seniors out of an admittedly expensive system, Medicare, into even more expensive private health insurance?
Wait, it gets worse. Not every 65- or 66-year-old denied Medicare would be able to get private coverage — in fact, many would find themselves uninsured. So what would these seniors do?
Well, as the health economists Austin Frakt and Aaron Carroll document, right now Americans in their early 60s without health insurance routinely delay needed care, only to become very expensive Medicare recipients once they reach 65. This pattern would be even stronger and more destructive if Medicare eligibility were delayed. As a result, Mr. Frakt and Mr. Carroll suggest, Medicare spending might actually go up, not down, under Mr. Lieberman’s proposal
Funny how Obama and the idea of defending Obama no matter what can make DINO Senator Joseph Lieberman and his ideas cool again here on Daily Kos. Funny, I thought most of us liked Ned Lamont and his ideas. Maybe not, huh?
Sad, but Medicare has 44 years of success for a reason. There are things that can be done to make it more efficient like taking away some of these for profit incentives with Medicare Advantage and hospitals being built like 4 star hotels while moving towards modernized capitation payments among other things now that there is more expertise on this than the 90s. Really we need to get the private sector and the twisted incentives within out of our health care delivery system altogether.
If you think I'm wrong, you're free to tell me how awesome the successful for profit health care system is in your head or to try to find a modern industrialized country that successfully implemented Dolecare while getting their costs in line with Canada's.
However, I've offered solid data that shows where the real problems lie and you won't be able to find a mostly private working system for comparison that controls costs. You basically have to in order to have any credibility at all, because the sick and dying don't want to hear your bedtime death time fairy tales whether you have a personal financial stake in the health care industry or a politician.
They need you to care. They need you to care about Medicare. They don't need to be Medi-Scared going out of the playbook of the tea party and RW.
11:45 AM PT: Clarification: this is not about any one diarist, but more the constant defense of cutting Medicare I see rampant on this site and in the comments section as well. Also "Medicare being on the table" means the Super Congress raising the eligibility age. No sensible Medicare reforms are being considered so it kind of defeats the point to write a defense of Medicare "being on the table" in any context. I have gotten further info and clarifications that were not in the initial diary that I acknowledge but the points in this diary stand.