SULLIVAN'S SALVOS
August 15, 2019
Sullivan’s Salvos 8/20/19
In this edition:
*Happy Birthday BJ!
*Medicare For All
*Did You Know?
*Happy Birthday BJ!
My son BJ turns 23 on August 22. He has already had several adventures, and there are no doubt more to come. BJ is a full time student at Kirkwood right now.
BJ is funny compassionate, kind, and all around wonderful! I am very proud of him! Happy Birthday, BJ! I love you!
*Medicare For All
All the Democratic Presidential candidates are talking about Medicare For All (M4A). Some are in favor, and others are not. This is a topic I know quite a bit about, as I spent 7 years working with the Iowa Medicaid Program. So let’s talk a little bit about M4A.
First: Why are we talking about this at all? The answer is simple – our current system of healthcare is badly broken! Our healthcare outcomes are bad – The United States ranks last overall among 11 industrialized countries on measures of health system quality, efficiency, access to care, equity, and healthy lives, according to a recent Commonwealth Fund report.
But not only are our outcomes bad, we are spending the most money! According to data from the OECD, the US spent $10,209 on healthcare per person in 2017. That's more than any other country in OECD's 36-country consortium, and over $2,000 more than Switzerland, the second-highest spending country.
So we spend the most money, yet get some of the worst results. And everyday Americans know this. Too many people lack coverage. If you can get coverage, it is too expensive, and comes with many out of pocket costs. And even if you have coverage, it is often limited. Finally, every coverage comes with a byzantine set of rules, procedures, and red tape. It is the number one cause of bankruptcy in the US. It leads to increases in stress, divorce, depression, addiction, and suicide. We are sick, and our broken healthcare system is making us sicker.
So most Democrats agree that our broken healthcare system is right near the top in terms of issues we need to address. And many of them are talking about doing so through some type of M4A.
Next, some background on Medicare. The most succinct description I could find came from Wikipedia: Medicare is a national health insurance program in the United States, begun in 1966 under the Social Security Administration (SSA) and now administered by the Centers for Medicare and Medicaid Services (CMS). It provides health insurance for Americans over 65.
In 2018, Medicare provided health insurance for over 59.9 million individuals—more than 52 million people aged 65 and older and about 8 million younger people. Medicare is funded by a combination of a payroll tax, beneficiary premiums, co-pays and deductibles, and general U.S. Treasury revenue.
Any discussion of Medicare (or M4A) must also include a discussion of Medicaid. Again, tapping Wikipedia: Medicaid in the United States is a federal and state program that helps with medical costs for some people with limited income and resources.
Medicaid is the largest source of funding for medical and health-related services for people with low income in the United States, providing free health insurance to 74 million low-income and disabled people (23% of Americans) as of 2017. It is a means-tested program that is jointly funded by the state and federal governments and managed by the states, with each state currently having broad leeway to determine who is eligible for its implementation of the program.
About 35% of all Americans are on either Medicaid or Medicare. Throw in Veteran’s coverage, and 40% of all Americans have public health care coverage. That does NOT include Federal employees, such as postal workers, and their families, who are also on government-provided healthcare. That is another 10 million people.
One consideration when discussing M4A – You have to pay extra for the prescription drug plan (Medicare Part D.) Also, Medicare does not pay for vision, dental, hearing aids, and a few additional services. This is why most Medicare recipients purchase some type of Medicare supplement – additional, private insurance for which they pay out of pocket. Medicaid DOES cover these services at no additional cost.
Another big concern that I hear is that Medicare only pays between 20-80% of the actual cost of most medical services. While this is true, the cost of those services is driven in large part by the overhead. Our current healthcare system is full of people who do insurance, accounting, billing, collections, and other related jobs. Those do nothing to improve care. Under private insurance, those costs account for about 15% of the cost of care. Under Medicare, that number is about 3%.
It is true that Medicare patients use more costly services, meaning that 3% is a percentage of a higher number. But comparing admin costs is a small portion of the actual money being spent here! Private insurance pays hundreds of millions in marketing costs. More importantly, they suck billions in profits out of the system. None of that is included under “admin”. Clearly, it is cheaper to go the route of the government-run Medicare program, which does not require as much marketing and needs only to break even.
There are several versions of M4A out there. Do you include private insurance companies? There is an argument that some people like their insurance. I call bullshit. No one likes their insurance. They simply fear the unknown. But be forewarned - once you take on the insurance companies, you are in for a huge and expensive fight. Just ask Barack Obama! If it comes to a choice, most members of Congress are going to choose the interests of insurance companies over the interests of the people they represent.
Some candidates promote an incremental response – some of these ideas include expanding Medicaid to 200% of poverty; requiring every state to comply with Medicaid expansion; enrolling all newborns in M4A; allowing people 50 and older to buy in to Medicare; and many more. Realistically, M4A will not happen overnight. We will require some time and some incremental steps to make it work. No one knows what those steps will be.
Medicare for all will cost $32 trillion over the first ten years, depending on how you proceed. But the current system will cost $60 trillion! Most people will actually spend less, even if some see higher taxes.
This points to a concern I have with some Presidential candidates. For example, Kamala Harris’ insistence on a “middle class” tax cut is very misguided. First, like most people, she grossly overestimates exactly who is in the “middle class”. Tax cuts for families who earn $100,000 annually? Those folks earn almost DOUBLE what is actually the median family income – about $59,000. Secondly, she simply cannot pay for everything she is promising while also doing big tax cuts. The math just doesn’t add up.
Overall, M4A will be good for the economy. Take the state of Montana, which expanded Medicaid in 2016 to more than 90,000 people. A study out this month from the University of Montana’s Bureau of Economic Research shows the expansion of Medicaid generates a half-billion dollars a year in healthcare spending. Of that, 70%, or $350 million, is new money in the economy.
I have always thought our current system is holding us back. We all know lots of people who are stuck in jobs because of the health insurance. Imagine freeing entrepreneurs up to leave jobs they are keeping just for the insurance!
So – will Democrats get M4A done? Language matters. People know Medicare. They all know people who use it, and they all know it works. The bottom line? What we are doing now is failing miserably. We can and must do better!
*DID YOU KNOW? Contrary to statements by some Presidential candidates, the National and Iowa AFL-CIOs support Medicare For All!
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---Rod
posted by Rod Sullivan @ 1:07 PM
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