So I was talking with a friend of mine earlier today about health care, Medicare, and the Paul Ryan plan to privatize Medicare. One important point came up that I think should be discussed more because (i) it points out how dangerous the Ryan plan is to everybody, including those already 55 or older, and (ii) it provides a simple illustration why a single-payer system (i.e., "Medicare for All") would actually do more to curb rising health care costs in this country than any other proposed health care reform. And that point is this: Medicare is entirely voluntary, not only for the patients being treated under the program but also for those physicians who provide the treatment.
The way things stand, a lot of health care providers (physicians, private hospitals, HMO's, etc.) don't really look forward to treating patients covered under Medicare. This is because the government has limits on what it is willing to pay for any particular procedure, and these payment limits make treating patients covered by Medicare less lucrative than treating patients who have a private insurance plan. However, many - if not most - of the country's health care providers cover Medicare patients anyway, simply because there are so many people in the country reliant upon Medicare. In other words, the health care providers make less per Medicare patient than they would treating patients covered by private health insurance, but there are so many Medicare patients out there who need treatment that it doesn't make financial sense to turn them away: "How can I sell these [health care services] so cheap? Volume!"
Now as to one reason the Ryan Plan is so bad . . . consider what happens to those currently 55 or older who would still remain eligible to participate in Medicare as it exists today. Everybody else would be forced to purchase private insurance in the market when they turned 65; Ryan's Plan would have the government give you a voucher to help defray the costs of that private insurance, but the voucher would be capped and -- even assuming you could find an insurance company willing to insure you at a rate you could afford after you turned 65 -- the voucher would be worth less and less each year as health care costs went up. Which means that, year after year, seniors would be forced to pay more and more just to have insurance coverage (which would not include co-pays or deductibles, which means the cost of actual health care would increase even more).
But for those 55 and over today . . . eventually, their even older cohort (say, those who are 70 and older right now) would die off. Which means that, with no additional people joining the Medicare ranks, the pool of Medicare patients needing treatment would inevitably shrink. At some point it would not be unreasonable to expect health care providers to refuse Medicare patients outright; they would be too small a pool of patients to justify the lesser charges the health care provider could expect. Which means, of course, that a significant portion of even those the Ryan Plan says could remain with Medicare as it is now can still expect, before they die, not to have access to any entity willing to treat them under that plan.
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Which brings me to the second reason this is a good point to keep in mind when discussing the benefits of a single-payer (i.e,. "Medicare for All") plan. Unlike the Ryan Plan - which does nothing to curb mounting health care costs, a single-payer system actually does do something about those costs.
It is very simple. The Ryan Plan proposes to save the government money by having the government refuse to cover increasing health care costs and instead pushing those costs back onto the country's seniors. Health care costs will continue to rise just so long as increasing prices make more net profit for health care providers, only now seniors will be directly responsible for paying those increasing costs every year. The government saves money, sure, but only because now all of these costs will be borne by those among us least likely to bear them. An increase in poverty, illness and death among the country's seniors is sure to follow.
On the other hand . . . under "Mediare for All" the government would be in a position to limit what it is willing to pay for various health care treatments just as it does now. Keep in mind what that means. Today, health care providers are not losing money on their Medicare patients; if they were losing money on each patient then they wouldn't be accepting Medicare patients at all. They just aren't making as much on these Medicare patients as they would like to make.
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(Also remember, private insurance companies don't pay what the health care industry "charges" either. Take a look at your most recent hospital, doctor's, various health care provider's bill. Odds are you will see a figure quoted as your "charge," another figure quoted as the amount the insurance company is willing to pick up, and a third figure quoted as the amount that was "written off" because the insurance company refused to pay the "full amount." I've long thought that this is a sort of collusion between the insurance companies and the health care providers with whom they contract: the hospital agrees to quote you a price that it knows won't be covered, so the insurance company can show you how much the insurance company saved you; this, in turn, is evidence of the value you are receiving from the insurance company, so perhaps you won't squawk so much when your premiums increase next year by another 23%; in the meantime, the hospital has access to all of the insurance company's insureds, and since most insurance companies operate de facto monopolies in a given geographic area, that includes most every insured person.)
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But think about what this also means . . . health care costs would, in fact, be kept down because the government would be in a position to set the prices for medical treatment.
Now, before anybody starts screaming "Socialism" let's remember that bit about how insurance companies have de facto monopolies in most geographic areas in this country. Let's also remember that in every geographic area of this country there is at least one other monopoly, and the government regulates the prices that monopoly can charge, and nobody ever, ever, ever complains about that because that is The American Way. I refer, of course, to utility companies.
This is basic microeconomics and is covered in any first-year Economics class. Basically, the cost of building a power plant to service, say, a small town is very high. This means that in order for that plant to make money, it has to charge high prices to make up for the sunk capital costs. But, fortunately, the power plant has huge economies of scale, which means that it costs very, very little extra to build a plant capable of servicing, say, two entire counties. Then the cost to produce that electricity - include the sunk capital costs - can be spread over a much larger number of people, meaning that each individual person will end up paying less.
But note . . . once the first plant is built, it will never face competition. This is because electricity is electricity, you can't sell it at a higher price merely by marketing it as "Extreme Electricity" or "Mountain Dew Red Electricity." So the only way for a new plant to compete against the first plant is to offer electricity at a lower price. This will inevitably lead to a price war until both plants essentially are offering electricity for no more than the cost to produce it and neither one is making a profit. Of course, the people contemplating building a second plant know all of this, and so they never bother to invest money to build that second plant. This is why, wherever you go in this country, you will never, never, never have a choice about from whom you wish to purchase electricity. There is and always will be only one such provider.
But what this means is that in the absence of government price regulation, the price charged by that utility will be the absolute highest price possible to maximize the utility's profit. As prices keep rising, more and more people will be unable to afford to pay those prices and so more and more people will find themselves without power at all. But so long as the higher prices paid by those remaining customers outweigh the money lost by those customers who drop out of service, the price will continue to rise. This will increase until you have a situation where a lot of people are living in the cold and the dark, and everybody else is paying out the nose for the luxury of having electric lights.
We -- long ago -- decided that this was not the outcome we wished for American society. And so in every community in this country the government stepped in and said to the utilities, essentially: "Hey, we get it. You need to make a profit, you need to make a decent return on your investment, and so you should. But -- so-called "free market principles" be damned -- the public good outweighs your desire to maximize your private profit. You want to make money, fine -- but not too much. Not so much that half the populace freezes to death during the winter, and the other half remains impoverished. You've got a monopoly, fine, but we will not let you take advantage of all the potential benefits that monopoly might otherwise provide you if the community didn't step it."
And not a single person in the country thinks this is Socialism, or evil, or un-American. (And if you know somebody that does, just ask how much their "free market principles" are worth? Living without electricity because you can't afford it? Paying 5 times your current electric bill because you can? How far is that person really willing to push these principles?)
Well the same thing would apply here. Just as with the individual Medicare patients whom hospitals and doctors currently accept, profit would be made, but not so much profit that half the country was unable to afford health care, and the other half was paying through the nose for it.
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Oh, and one more thing about a single-payer system. Obviously, Medicare taxes would have to go up to pay for all the new people enrolled in the program. Now, there is a loud contingent out there that view any increase in taxes, for any reason, in any way, as EVIL. But look at how that would play out -- sure, taxes go up, but this is offset by the fact that no one enrolled (i.e., everyone) would have to pay insurance premiums (unless, as in most single-payer states, they wanted to have supplemental insurance). That alone would surely offset any Medicare tax increase.
Because just think about how slight that increase is likely to be. "Medicare for All" essentially works as a giant insurance pool, one in which everyone joins. This means that -- just as in private insurance pools -- the young, healthy individuals who don't need a great deal of health care basically are subsidizing the older, less health individuals who do. (And, of course, as these younger, healthier Americans got older and sicker, the next generation would help to subsidize their care. And so on.) Health care costs would essentially be spread out among the entirety of the American taxpaying public, which means that the amount of cost falling upon any single individual would be quite low. This isn't revolutionary and it isn't Socialism; this is exactly the way private insurance pools work today. Except there would be no way for this federal insurance pool to kick you out if you had a pre-existing condition or if you ever subsequently got sick, the way private companies do under our current system.
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These are, of course, quick sketches of some of the good points that argue in favor of "Medicare for All." But still, if you take nothing else away from this post, take away this: the Paul Ryan plan to privatize Medicare and turn it into a voucher system would be terrible for those under 55 and for those over 55. And 98% of the Republicans in the House voted in favor of it anyway.