Wednesday, April 27, 2011

Republican and Democratic Plans for Medicare and Medicaid Misguided: Push for Privatization Will Accelerate Costs and Deaths

Republican and Democratic Plans for Medicare and Medicaid Misguided: Push for Privatization Will Accelerate Costs and Deaths

by Margaret Flowers

Leadership in Washington recognizes the damage our soaring health care spending is doing to our entire economy. Although their rhetoric differs, recent budget proposals from both Republicans and Democrats mistakenly place the blame on Medicare and Medicaid. Cuts to and privatization of these important public insurances will place us on a dangerous path that will leave health care costs soaring and more patients unable to afford necessary care.

Medicare and Medicaid must be left out of the discussion entirely until leadership has the courage to address the real reasons why our health care costs are rising, the toxic environment created by investor owned insurances and the profit-driven health care industry.

Health care spending in the United States is the highest in the world and in some cases is two times higher than spending in other industrialized nations, which achieve nearly universal coverage with better health outcomes than the U.S. Our soaring health care costs outpace our growth in GDP, inflation and wages. By any measure it is an unsustainable situation.

If we look at the various health care models in the United States, we find that the rise in spending is lower  for traditional (non-privatized) Medicare and Medicaid than it is for the private sector. Our public insurances are our most efficient insurances with administrative costs of around 3%, despite the fact that they cover our most vulnerable and least healthy populations. Administrative and marketing costs for private plans are 15% or more, and the plethora of private plans further increase cost and complexity as patients and health professionals try to navigate their arbitrary and ever-changing rules.

Medicare and Medicaid are the victims of our current fragmented and profit-driven model of paying for health care which has resulted in high prices for health services and medications.

Private health insurers are financial institutions designed to create profit by obstructing, denying and restricting access to health care. They add no value to our health and in fact their business practices have polluted health care financing causing all insurances to adopt their practices in order to ‘compete’.  They have also fragmented the health care market and thus the ability to negotiate for fair prices for goods and services leading to the highest prices  for pharmaceuticals and procedures.

The commonsense solution is to eliminate wasteful and costly private health insurance and adopt a universal health care system modeled on the strengths of Medicare and given the power to negotiate for reasonable prices.

It is counterproductive to even discuss cuts to Medicare and Medicaid before addressing the fundamental reasons for rising costs. Yet, both Democrats and Republicans have focused on cuts to Medicare and Medicaid in their budget proposals.

The Ryan budget proposal, the Path to Prosperity, would fully privatize Medicare by moving to a voucher system in 2022 forcing all seniors to purchase private insurance. The vouchers are not designed to keep up with the rate at which health care costs are increasing so that over time seniors will either have to pay more out of pocket for health insurance premiums or will choose skimpier insurance plans that leave them unprotected should they have a serious illness or accident. Nearly half of Medicare enrollees have an income that is less than twice the federal poverty level and so have little room to absorb an increased share of health care costs.

Medicaid is significantly limited under the Ryan budget proposal which plans to cut overall Medicaid spending by $800 billion over ten years and change to block grants for each state. Block grants will mean that individual states will continue to be under economic pressure to limit who and what services are covered. As fewer are covered by Medicaid, they will have to either purchase private insurance through the exchanges or either seek a waiver from or be penalized for not purchasing insurance.

The Obama administration supports cuts to Medicare through the Independent Payment Advisory Board (IPAB) which is tasked with keeping per capita Medicare spending below a target level which is set to be lower than the current rate of health care cost inflation. Rather than blatantly privatizing Medicare as called for in the Ryan proposal, the President’s plan will slowly strangle Medicare leaving seniors struggling to find physicians able to care for them.

The IPAB was actually created in the Affordable Care Act (ACA). The President’s budget proposal would increase the power of the IPAB to cut Medicare costs. Medicaid spending is also capped under the President’s budget.

Sadly, the Peoples Budget  put forth by the Congressional Progressive Caucus rubberstamps the President’s approach to cutting Medicare and Medicaid spending.

Underneath cuts to Medicare and Medicaid is a dangerous trend of increasing privatization of health care in the U.S.

There is a growing trend to put more of our population into private insurances and a growing privatization of our public health insurances. Over the past few years as the number of people able to afford employer sponsored health insurance has fallen, private health insurance profits have continued to grow as they move into providing insurance to or administering plans for the Medicare and Medicaid populations.

The ACA puts more people into the private insurance market by mandating that all uninsured who do not qualify for public health insurance purchase private insurance through the exchanges starting in 2014 and subsidizes the purchase of private insurance using public dollars.

Half of the newly insured under the ACA are eventually supposed to come from an expansion of Medicaid eligibility. However, the Department of Health and Human Services has already allowed state expansions in Medicaid coverage to lapse. A recent White House Fact Sheet  also supported allowing states to place their Medicaid population into private insurance through the health insurance exchanges.

Privatization of health care is a failed experiment in the United States.

The United States differs from other nations in allowing investor-owned corporations to profit at the expense of human suffering and lives. After decades of experience with this unique privatized model of financing health care, the results are clear and startling.

The United States has the highest per capita health care costs, the highest prices for medical goods and services (and lower overall usage rates) and no control over health care spending. Despite attempts to patch the current health care situation, the number of uninsured and those with skimpy health insurance that leaves them unable to afford health care or at risk of medical bankruptcy continues to grow. Suffering and preventable deaths are higher in the U.S. than in other industrialized nations.

In addition, there have been no significant gains in important measures of health such as life expectancy and infant and maternal mortality rates. Our health disparities continue to grow, especially for those who have chronic conditions. And our health care workforce continues to be inadequate as health professionals quickly burn out from trying to practice in our complex and irrational health care environment.

It is time to recognize the failure of the market model of paying for health care and embrace comprehensive and effective health reform. The model for our ‘uniquely American’ solution lies in traditional Medicare, a single payer health system for those who are 65 years of age and over.  Since its inception 45 years ago, Medicare has lifted seniors out of poverty and improved their health status.

Physicians for a National Health Program advocates for an improved Medicare for all health system, one that builds on the strengths of Medicare such as its universality, administrative efficiency and the patient’s freedom to choose a health provider, and also corrects the weaknesses of Medicare such as the lack of comprehensive benefits, out of pocket costs and low reimbursement rates.

Both Democrats and Republicans are missing the point by putting the emphasis on controlling Medicare and Medicaid costs without effectively addressing the reasons for our rising health care costs. Rather than embracing the Republican rhetoric which blames our public insurances, Democrats would do well to call out the real reason for our health care spending crisis, our current fragmented and profit-driven model, and advocate for a national improved Medicare for all.

Margaret Flowers

Dr. Margaret Flowers is a congressional fellow with Physicians for a National Health Program and a pediatrician based in Baltimore. She is also a board member of Healthcare-Now. She can reached by email at:

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Posted by donna

Apr 27 2011 - 1:57pm

Democrats and Republicans are not really missing any points--they're purposefully ignoring them. According to their free market ideology, it really doesn't matter if costs go up for the middle class or if people die from lack of health care. The market will weed out the weak and reward the strong. The only ones who are "missing a point" are the American people--they're missing the point that as long as they continue to vote for the rich, and as long as they defend their market system as though it were a democracy, their infrastructure will continue to decline, their health care will disappear, their old-age security will evaporate, their jobs will go overseas, and their schools will close. Capitalism is not democracy--in fact, it's showing its ugly fascist face in state Republican governors, who are taking over entire cities and handing them over to appointed consultants with the right to sell off municipal assets and silence elected officials. The American ignorant and obsessive fear of socialism will assure the death of the middle class and the deprivation of future generations.

Posted by Siouxrose

Apr 27 2011 - 2:07pm

DONNA: You laid out all the relevant points with precision. Thank you.

I would add that when a nation's key export is death (by militarism), further profits drawn from a health "care" model that intentionally leaves out the sick (or ones in need) makes perfect sense. So much about the nation's current policies reflects sheer moral depravity. In contrast with this fact is the majority's self-proclaimed religiosity. Wow, the gap between genuine spiritual realization and what passes for religion could not be vaster.

Posted by rodent

Apr 27 2011 - 2:40pm

Donna: You are brief, to the point, and right on! I will use your facts as talking-points in letters/emails to the White House and Congress (for all the good that will do), adding when 2012 comes around, I'm holding each and every one of these corporate servants accountable (for all the good that will do).

Posted by Stanley1979

Apr 27 2011 - 2:17pm

Public or private, all insurance is a SCAM. Until the US understands the true meaning of health care as done in other countries, nothing will change and we will be stuck with political circuses year after year. As it is, the majority of Americans are already stuck with private insurance and even those with public insurance do not feel much different about their dissatisfaction with the current health care system. Such is the result of a capitalist system that rewards profits and materialism while punishing those who care.

Posted by GoingGreen

Apr 27 2011 - 2:56pm

Public insurance is not a scam.

Posted by Stanley1979

Apr 27 2011 - 4:08pm

I find the term "public insurance" to be an oxymoron. Public care is a better term. See, the words public and insurance just don't mix. The minute the word insurance is uttered, the word public gets weakened and private takes a stronger hold. I also am under the impression that "public insurance" is more centered towards materialism and money than what our goal should be, health care for everyone.

Posted by gardenernorcal

Apr 27 2011 - 8:29pm

I am with you. It's either health care or it's insurance. This hybrid animal should never have been allowed to breed and multiply.

Posted by matti

Apr 27 2011 - 4:28pm

It is only in the sense that it is purported to be "providing health care" when it is really PAYING for health care provided privately and on a for-profit basis.

Medicare has some bargaining power with the doctors and hospitals and pharmacies because of its size. And Medicare for All -the long held down H.R. 676- would increase that size and hopefully that bargaining power as well.

But this is nothing like the "universal health care" approach of France, Britain, or most other industrial countries. In those places an entire separate system of pharmacies, hospitals, and doctors and other caregivers was put into place operated by some level of Government on a non-profit, low-cost basis.

Single-Payer is often presented as putting us on par with Britain, when really it leaves us below Canada.

Now, how important this all is in a situation where actual Coporatist take-over of health care where no one is even allowed to NOT buy private insurance is routinely call "Socialism", I'm not sure. ;(


Posted by gardenernorcal

Apr 27 2011 - 8:27pm

"Now, how important this all is in a situation where actual Coporatist take-over of health care where no one is even allowed to NOT buy private insurance is routinely call "Socialism", I'm not sure. ;("

Not exactly "free" market capitalism is it?

Posted by gardenernorcal

Apr 27 2011 - 8:22pm

"In an insurance contract, one party, theinsured, pays a specified amount of money, called a premium, to another party, the insurer. The insurer, in turn, agrees to compensate the insured for specific future losses. The losses covered are listed in the contract, and the contract is called a policy."

I fail to see how insurance provides anything in the way of health care. How they became the gatekeepers for our medical needs is beyond me.

"Government-issued insurance is regulated like private insurance, but the two are very different. Most recipients of government insurance do not have to pay premiums, but they also do not receive the same level of coverage available under private insurance policies. Government-issued insurance is granted by the legislature, not bargained for with a private insurance company, and it can be taken away by an act of the legislature. However, if a legislature issues insurance, it cannot refuse it to a person who qualifies for it." (same source)

In that sense you might be right in that public insurance is not a scam.

Posted by Brian Brademeyer

Apr 27 2011 - 3:20pm

Increasing costs and deaths is the underlying premise of this bipartisan scam.

Posted by Demonstorm

Apr 27 2011 - 4:23pm

Unfortunately, the U.S. is a country that worships at the altar of unbridled, unfettered capitalism - its government, its economy, its citizens. And since the U.S. is now an oligarchy - the richest of the rich own our politicians in "both" parties, and write the legislation that benefits them, rather than the common good - the destruction of medicare/medicaid/SS/any and all other "public" services are the inevitable outcome. This is just a fact, not conjecture; when a country becomes so insanely beholden to corporate profit, Profit, PROFIT to the exclusion of all else, as America is clearly, it is natural evolution that the common good will be destroyed - the environment, wages, jobs, benefits, health - EVERYTHING - will be sacrificed on the altar of Mammon. Profit brooks no barriers in a society that literally lives, breathes, eats, sleeps, and craps total capitalism.

When profit is no longer a factor in healthcare (ditto education, ditto so many other public services), we will have achieved a major victory. Unfortunately, America is going the opposite direction - profit/privatizing is accelerating in every state at every level in every industry. Look at Michigan, Wisconsin, Ohio, Illinois, Arizona, etc, etc. Fire departments, parks, sanitation, public schools, highways, even city governments are being sold or contracted out to for-profit corporations. profit, Profit, PROFIT!!

That is the name of this country now - greed in all its abject forms, at the expense of - literally - everything and everyone else.

Posted by backuninvited

Apr 27 2011 - 4:24pm

Yes, Dr Flowers is too kind to the powers that be, who have decided to lower the cost of medical care by letting the sick die, while forcing everyone else to tithe to the insurance companies.

I think that we should expand our public health clinics. They provide care for women and children, public health services against TB and STDs. Let them do more.

Let's have clinics in walkable distance to every person in a town or city, like they do in Cuba. Of course, we'd have to train more doctors to provide care. There are plenty of smart young Americans who would love to be doctors, but can't afford it, or can't make it through the AMA restricted keyholes. Open up the process and allow more doctors!

Care should be free, and based on prevention and good health habits.

Trauma and emergency care can be provided by hospitals.

Many people don't realize that Medicare also pays for kidney dialysis, which was invented around the same time.

Dialysis is very expensive, yet people can't live for more than a few days without their kidneys.

(Which, by the way, shows that the "hunt for Osama BinLaden" is a farce, since he was on dialysis!).

Medicare picks up the bill, no matter how old the person is. No private insurance would want to cover kidney failure patients.

Posted by gardenernorcal

Apr 27 2011 - 7:54pm

" or can't make it through the AMA restricted keyholes" That's a key factor in the shortage of doctors. It's a closed club for a specific reason in order to keep the salaries high.

Posted by matti

Apr 27 2011 - 4:47pm

From Physician's for a National Health Program website:

"Physicians for a National Health Program is a non-profit research and education organization of 18,000 physicians, medical students and health professionals who support single-payer national health insurance."

Unfortunately, "single-payer national health insurance" is not anywhere NEAR a real "National Health Program"!

There must be actual public caregiving as well, and generic medicines produced, and patents waived on key medical implements.

The public funding for research and education we already have, though the benefits to dot accrue to the public yet.

Single-payer does not go far enough.

Without public care, single-payer really IS vulnerable to the over-cost argument. Projections showing it will reduce costs do not account for deliberate price manipulation by the private care givers. But one look at the way corporations operate today will show you that price manipulations are inevitable. Just wait and see what is done if Obamacare stands.

But Single-Payer plus a job-creation public care plan might fare better.

I think H.R. 676 should be ubdated to include funding for public clinics, pharmacies, and ambulance and trauma units, public scholarships for doctors and nurses and other care workers, FDA assesment of "alternative" and herbal remedies, and public funding for "alternative" or "health maintenance practices like herbalism, yoga, osteopathy, accupuncture, massage, etc.



Posted by gardenernorcal

Apr 27 2011 - 7:38pm

I've been following their site for quite awhile. It makes sense if you want the best care you cut out the middle man and let physcians and patients make the choices when it comes to treatment.

Posted by wcdevins

Apr 27 2011 - 4:57pm

As far as I know, the Progressive Congressional Caucus proposes single-payer, Medicare-for-all as a big part its forward-thinking deficit-cutting budget proposal. Of course, you won't hear about that on the "news", which proclaims Ryan's "let the poor die while the rich get richer" plan as "courageous".

The American people have been sold the idea that The Common Good = Communism and Capitalism = Democracy. Neither is true, of course, but any whiff of instituting ideas of the first or toning down the excesses of the second brings the threat of communism in the eyes of mainstream America. The idea that corporate crony casino capitalism is the foundation of democracy has to be challenged and exposed at every level before we can get near to improving the lot of the vast majority of Americans, who have been duped to vote against their very own survival so that the rich, connected and powerful can maintain their hold on this country's wealth, government, and future.

Posted by NMLib

Apr 27 2011 - 5:16pm

If the plan is so good-- and needed-- why does it not take effect until 2022? Because the people it affects right now would never vote for these idiots... but don't these people care enough about their kids and grandkids not to vote for these idiots? Will it make a difference who they vote for? I'm starting to think it won't, we're all screwed.

Posted by Grumpygramma

Apr 27 2011 - 7:27pm

Great article! For too many years the rising costs of healthcare have been tsked tsked at, with little else done. We are being robbed blind by big business insurance and medical suppliers.
The thing that I don't I don't understand is how they edge out any competition. How does that work? I suspect it's something like my last job which was semi- gov't contract.
Staff would order supplies from the warehouse and the costs were astronomical. I asked the warehouse guy once why I had to take 5.00 out of my budget to 'buy' and inkpen from him. I said you can get the same exact brand pen at the office supply store for 5.00 an entire package!
He informed he was not allowed to buy supplies for us except from one source and 5.00 what they charged him.
Another item was a wall clock available from a dept store here for 29.00 and the identical item was listed in their catalog for 500.00 and I'm not kidding.
Is there a practice of signing contracts to only buy from a certain supplier? I'm serious would really like to know.
It seems to me the way to stop it is some serious competition and no contracts involved.

Posted by gardenernorcal

Apr 27 2011 - 7:50pm

I wish someone would name for me one experiment in privatization which hasn't failed miserably.

Health care costs started to skyrocket when all the state and county hospitals were closed on the premise that the private sector could do it better. Will we never learn? How long does this experiment have to go on before we call it a failue? I remember when HMOs were tauted as the solution...didn't quite fill the bill did they. We ended up paying more and receiving less in return (both the patients and the doctors).

Posted by jlohman

Apr 27 2011 - 8:05pm

Generally I prefer privatization of elastic products and services (like buying toasters and cars), but prefer public when inelastic (like healthcare). But with regard to forcing all seniors to purchase private insurance, remember that insurers can give campaign bribes and Medicare can't. So politicians obviously prefer the former.

Jack Lohman

Posted by gardenernorcal

Apr 27 2011 - 8:19pm

I meant the privatization of previously developed public infrastructure, services and utilities, not goods and services that have always been provided through private enterprise.

If private business is so innovative and savy why do they need to acquire public functions in order to maintain growth and profitability? Can't they come up with something of new benefit to the world on their own? Anymore it seems to me that they are parasitic cancerous growths seeking to invade the last healthy or semi healthy functions of our society. And we don't even appear to be looking for a cure. Some aren't even aware we are infected, even when symptoms like the financial collapse are fairly obvious.

Posted by Mathew Scott Fi...

Apr 27 2011 - 8:44pm

Right on ! Medicare for all is the best way to go. The US has already invested in a medical system the stretches around the world, from Guam to Puerto Rico. And it works. Try to find a candidate for president who will support teachers, police, firemen, sanitation workers, environmental justice and health care for all. If you can't find one, write in Nunuv Theabove.

Posted by fedup2

Apr 27 2011 - 9:02pm

Hope you all don't mind a re-posting of a my comment from another thread. It is as pertinent here, if not more so, than where it was...

One hears a lot of noise about paying for health care. WHO will pay? HOW much will it cost? CAN it be done without increasing the deficit? Will MORE TAXES cover singe-payer? Who's taxes are going to pay for it? Who can best administrate it? How do we prevent abuse of WHATEVER system is in place?

All good questions. KInda makes me queasy to keep hearing them.

Those questions being constantly thrown in our faces...and the talking head responses. We CAN'T do's just not feasible! The US is just TOO BIG for THAT to work here! NOBODY wants MORE TAXES to pay for it! Look how many PEOPLE will be PUT OUT OF WORK if you cut out the insurers!!



All right. Now that I'm done shouting. How in any kind of sane world could the very same group of people who (a shockingly large group, it seems), even if they don't approve of our going about bringing death and devastation to untold millions of lives, go along, complacently and rather quietly accepting it all as somehow reasonable and patriotic. War is just what happens. We have to protect ourselves and the world from the bad guys, you know.

Just imagine, if you will, the abundance of amazingly high quality health care and education one could get here in the good ole US of A if we had all that WAR MONEY invested in health care and education! Why, we might actually again be the envy of the world!!! If the continued malfunction of nuclear reactors doesn't make everything else a non-issue, that is...but that's for another time.

I have personally gone from full, top of the line Blue Cross/Blue Shield coverage that COST ME NOTHING (it used to be one of the 'perks') to being completely uninsured...that last part occurring because I just couldn't keep working 40 hours a week at the kinds of jobs I've done all my life in order to have barely affordable group health insurance. I briefly paid almost $400 a month for continued Cobra coverage years ago...was an incredible financial hardship, but I luckily found another low-paying tech job so I could get back into a group plan. A bad joke on us all these years...that employment based group health care thing. Keeps a person kind of wrapped up in that corporate web.

I'll stop whining, but I want to stress again...


How can those two things co-exist in a supposedly Christian, Democratic and very wealthy country?

Seems if we don't start insisting that these two issues are always in the same will never sink in that we really need to switch around some of our priorities before we will get anywhere towards a reasonable solution to our health care dilemma.


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