Number Crunchers Please Help
I believe that Medicare extended to all that want it could be the best 'Public Option'. I have been looking for statistics covering the current costs per covered person. What I have found is that the budget for 2009 is 413 billion. I also found the number current recipients as 45 million. Divide the two and you get $9700.00 per recipient per year. I work for a company that pays two thirds of the cost of Blue Cross and I pay one third. last year my portion came to $7000.00. If my employer is truthful and actually pays two thirds, the total comes to $21,000.00 per year. If he is fibing and only pays half, the total comes to $14,000.00 per year. If I could buy into medicare at $10,000.00, we could save 4 to 11 thousand dollars per year. Why wouldn't I want an option like this. If I paid another five hundred dollars on top of that, and assuming of course that everyone else that buys in does the same, it would pay for the uninsured folks and help people in between jobs.
I have a feeling that my Medicare budget numbers are actually higher than they really are. So all you folks that love the numbers and know where to find them, please help me get it right.
And by the way, I really do pay $7000.00 out of my own pocket for my SHARE. That is before co pays and deductables. And, yes, I have Blue Cross. And I have ten years till I get Medicare.
That probably isn't too far off. You've also got to consider medicare covers the most expensive patients in the country.
Insurance companies spend like 20% of the premium on health care, the rest goes to overhead and shareholder returns. Which means out of a $21,000 premium, $4200 on average would be spent on health services. So really that seems to be in line with the fact that the Insurance companies don't accept anyone already sick and cancel a high percentage of those with the most expensive claims.
That's why the insurance companies don't want the public option. If there is no shareholder return and the managers are simply paid government salaries (no $750,000,000.00 stock options on top of $75,000,000.00 salaries plus personal corporate jet and vacation condo) the public plan will be booking as total expense what the insurance industry writes off as administrative overhead. There's no way they can compete without giving up a HUGE amount of profit.
August 13, 2009 2:55 AM | Reply | Permalink
Absolutely! Well said!
August 13, 2009 11:16 AM | Reply | Permalink
There's an easier way to get an idea. Medicare has right on its site the premiums that they charge people who haven't paid enough taxes into the system to get the benefit, less than 30 quarters of paying. (I tried imagining who that might be--drug dealers who never held a job, immigrants who miraculously got in and got naturalized at the age of 63? In any case, they got it on their website.)
Wikipedia has a decent summary:
http://en.wikipedia.org/wiki/Medicare_(United_States)#Out-of-pocket_costs
and if you want more exact, go to the site, wikipedia links to it. The Medicare site was were I first saw it.
The main one is Part A, hospitalization. If you've paid enough taxes in, that's free, but if you haven't (if you paid in less than 30 quarters of FICA) it's a premium of $423 per month per individual. It seems pretty clear they think that's its value.
It's a little harder to figure what they think the value of Part B is (medical services) because they've mainly been charging everyone a $96.40 premium a month, and that one is clearly subsidized, but they have tried to apply a means scale to it at times, and when they've done that, they've made the highest premium $308 per month
Then there's the new Medicare Part D, the drug coverage, and I don't have a clue about that one, haven't done much reading on it, you might find more on the site. So leave it out for now.
So without drug coverage, looks like our goverment currently thinks Medicare is worth paying a premium of $731 a month ($423 + $308) for coverage for one individual. Throw in drug coverage, probably $800-$850-$900 a month? That drug part I haven't checked out so well, maybe a senior can tell you what the deal is. But certainly at least $731 a month.
Also, do keep in mind there's a reason people buy Medigap policies and why auto workers fight to keep their health insurance past retirement age: contrary to what seems to be the belief of many people in the blogosphere, it doesn't cover everything. That wikipedia entry has the main items on that front, but you have to go to the site to see the full range of what's covered and what's not. Examples: it's not too good on preventive care like check ups, but I think that is mostly taken care of in that age group because their doctor can code everything like it's treatment of an illness, and not preventive care. And you have to come up with a $1,000 deductible on that first hospitalization, there's some not minor co-pays if you get stuck in the hospital for a long stay, too. It may or may not compare favorably with plans under 65 people have now, but I'd wouldn't call the deductibles and co-pays insignificant. Indeed, for someone subsisting on Social Security alone, they are probably real hard to take some times. (It's my understanding that the $96 premium for Part B is deducted from peoples SS checks. And I do know that Medicaid somehow pays for what Medicare doesn't in some states for those that qualify for both, including the premium, deductible, co-pays.)
August 13, 2009 5:02 AM | Reply | Permalink
Thanks for a very well thought out view of this situation. I surmise from both commentors that adding younger healthier folks to the pool would actually bring down the costs and be more affordable. Not a perfect plan, but maybe an option that could get America over this unnecesarily emotional debate.
August 13, 2009 8:20 AM | Reply | Permalink
They had a bill that suggested this very thing but couldn't make it work from a purely economic standpoint, not to mention all the other things they added to the bill like requiring every single provider in the country to become a non-profit or to be government run.
Medicare is currently unsustainable, no matter how much the people who are on it might like it, and the system will need drastic overhauls to become stable. I agree that adding younger people to the population makes sense. I also agree that allowing the uninsured to "buy-in" at a reasonable rate is a great idea. That is how the reform should have been positioned in the first place as it would have faced almost no resistence from either side of the aisle.
The is when the "public option" becomes the only option, as HR 676 requires, and all of a sudden the whole "reform" thing looks like a huge risk.
August 13, 2009 9:48 AM | Reply | Permalink
Jason, you continually make the argument that Medicare is unsustainable because costs are ranging out of control.
No argument there.
But then again, you conveniently overlook the fact that EVERY sector of U.S. Health care is unsustainable, even the part that is run by the private health insurance industry. It is therefore disingenuous at best to disparage government-run health care for a deficit that is not endemic to that system. Too cute by half on the tactical argument; not enlightening at all in promoting a genuine solution.
The health care system in the U.S., in which nearly 50 million people have no effective coverage, is broke. Let's fix it, and let's do so without presenting false arguments against any plausible solutions.
August 13, 2009 10:12 AM | Reply | Permalink
Love your avatar and you are right about unsustainability. Time to do something!
August 13, 2009 10:17 AM | Reply | Permalink
I am not overlooking that fact. The blog is about extending Medicare to everyone and that is what I was commenting on.
If had to comment on every single piece of the dysfunctional medical system we have on every single comment to every single blog I would never be able to make a specific point. Of course the whole system if FUBAR. Of course the reform legislation has to address a myriad of interconnected problems to reach even a mediocre solution.
I would like to offer the inverse of your argument, because it seems as if you dismiss those very same things in support of HR 676 as the end all solution to our problems. At least I try to ackowledge the fact that this is a multidimensial problem that will need to be addressed over a number of years and through multiple Congresses.
Kind of like the New Deal and Civil Rights.
August 13, 2009 10:25 AM | Reply | Permalink
We have been trying to fix this for forty years. It really is time to stop the debate and start the building.
August 13, 2009 10:32 AM | Reply | Permalink
We actually haven't been trying to fix this for forty years.
We've been applying ideological fixes to a broken system depending on who was in office at any given moment. The problem has only recently (last ten years or so) gotten bad enough that the country as a whole is affected by the dysfunction.
Now that we have finally started a sensible debate and are trying to craft sensible solutions, I think now is the exact wrong time to just start building. Planning is the most important part of any organizational reform and gaining buy-in from a wide-swath of consituencies is essential to success. We can stand to spend a little more time in the effort to lay the proper foundation for reform efforts to come over the next decade or so.
As I alluded to above, Civil Rights and the New Deal were both efforts that extended over numerous years in order to ensure their effectiveness. That they have grown in strength and acceptance is a testiment to their pragmatic implementation.
Slow is fast.
August 13, 2009 11:07 AM | Reply | Permalink
Ummmm..... contrary to numerous assertions made by you throughout these pages, I have never advocated for HR676. That is your strawman, not my "firm solution." Perhaps at the point you offer a complete package that you care to advocate for, I will have settled upon one of my own. Meanwhile, it is not helpful for reason of discussion to waste energy trying to paint others into corners.
I HAVE advocated for single payer, and remain convinced that this is the best solution if we are in fact looking to create a universal health care system. (What "losses" would we "insure against" if we are in fact going to provide health care coverage for all? It's a logical question that remains as yet unanswered.)
My fall-back position is to ensure we AT LEAST get a genuine "public option" in the final bill. Failure to do so simply represents a giveaway to the insurance industry that will only accelerate present problems, not resolve them.
We both agree that it is a complex, "multi-dimensional"problem. But its solution begins with understanding a few basics and moving forward from there. For example, I am unaware of any universal health care system that does not include government-run health care as a critical component. I also understand why that is. I therefore mistrust the suggestion that we need to jettison government involvement simply because the insurance industry will not allow it and has the resources at hand (our insurance premiums!) to organize opposition to it. I have more faith in democracy and the American people than to simply wave the white flag of surrender to these corporations and their high-paid lobbyists.
As somewhat of a sidebar, I would suggest that reduction in "health care costs" could be immediately realized if the insurance industry were compelled to give back to the American People that portion of their premium that is used for lobbying, purchasing Congressmen, and organizing these mal-informed "grassroots" attacks on ANY reform of the health care system. This money is not spent in advocacy of anything other than promoting the interests of the corporations involved - certainly not the interests of their customers upon whom they depend for maximum profit, let health care be damned.
August 13, 2009 11:15 AM | Reply | Permalink
I apologize if I was painting you into a corner, but I assumed support for HR 676 based on your vigorous support of single payer as that is the only single payer proposal currently in Congress, though its passage is unlikely at this point for reasons I have outlined.
By positioning the "public option" as the first step toward single payer, I think some liberals are missing an opportunity to garner moderate support for a strong plan of last resort for those who are uninsured or uninsurable. I think Medicare could have been expanded to be the Public Option by way of the reforms it desperately needs to stay viable. That approach would have had bipartisan support at the grassroots and would have never introduced the spectre, real or imagined, of a "government takeover" of the medical system.
At the end of the day, I suspect we agree on most of what needs to be reformed more than we disagree. Where our impasse continues in how we view the current legislation as being an adequate first step to get there and what the end goal of the reforms should be. I would be happy with a reformed health insurance industry that lived up to its obligations.
Failing in that, I would be willing to consider more drastic options.
August 13, 2009 11:32 AM | Reply | Permalink
Per yohttp://tpmcafe.talkingpointsmemo.com/talk/blogs/bubbalewy/2009/07/simplicity-of-solution-ii-1.php#comment-3541539u previous post
you really do get it, it just seems you want to fuss over the details.
August 13, 2009 11:41 AM | Reply | Permalink
hmmm the link didn't show properly. I'll try again.
http://tpmcafe.talkingpointsmemo.com/talk/blogs/bubbalewy/2009/07/simplicity-of-solution-ii-1.php#comments
August 13, 2009 11:45 AM | Reply | Permalink
Sorry if I think the details matter, but I want the reforms that are passed to be effective which requires an understanding of the details and offering my support accordingly.
I believe the bill that is likely to make it to the president's desk before the end of the year will be a great first step on the road to a more sustainable system. I even suspect it will gain a decent amount of moderate republican support because of their constituents pushing from the grassroots.
What we see on TV is not reflective of the real debate going on in American livingrooms.
August 13, 2009 12:11 PM | Reply | Permalink
adding younger healthier folks to the pool would actually bring down the costs and be more affordable.
Yes but here's the part where trying to figure that gets real sticky, I just don't think it can be figured that easily: for years what Medicare pays providers has gotten cut or they've not been given the raises they want. Some get to the point of opting out of Medicare, but most of them just end up taking it (because they don't feel it right not to accept seniors, or the now seniors are already long-time patients of theirs or they are not allowed to or whatever) and instead balancing costs by charging the younger people more--same way some providers charge cash customers more than insured customers or vice-versa, I've heard tales told of both.
Now one of the reasons those payments from the government are stingy at times is that they are trying to balance the federal government budget, all kinds of factors like that get into play, too.
So you have to play the economy of scale thing, and the idea of it being cheaper if there were more healthy in the pool against thinking about what would happen when the providers would no longer have other income outlets to get money from when the Medicare fee payment is not sufficient. I.E., if all of a sudden everyone is only reimbursing them at Medicare rates, then they might be screaming bloody murder and organizing and lobbying harder that they need more than that.
I think something like addressing the latter problem is actually what is going on now behind the scenes. I think it is why Obama wanted an incremental approach to change from the getgo. For example, you can't expect doctors and hospitals with certain practices and costs and overhead to just switch to accepting current Medicare level of reimbursement for everyone overnight (without rioting or striking, heh.) And I think in the initial proposals of the public plan, the smallness of the group that would be allowed in and the slowness of initiating it shows that. But he and Congress still have had to arm twist and cajole all these provider groups to even be in support of that kind of slow, small transition.
Eventually, the more people that would be included in a "Medicare for all," the more the rates of payment to providers would be adjusted to what they actually had to be to sustain enough providers without just uppping and quitting. It would just happen naturally. But without reform of the our system as to costs and what kind of care people expect in this country, the percent of the budget would get astronomical. I see the reasoning behind the incremental approach as trying to adjust to that without major upheaval, too. If we did it overnight, then many would blame the government for not being able to handle it right. If it is a mixture of public and private, but with a more even playing field, people would understand it not so much the government's fault as that of the kind of medical system we have come to expect.
I really do think the reform bills are trying to build in starting to address this. One of the key things is to have a better panel suggesting fees and treatments associated with the public plan, that is better than what Medicare now has. That's because, even if there is no public plan, they want private insurers to start to use those suggestions, too, by their own choice, to have a standard. That way, they can start to reform the system itself, to get payments and fees and what insurance covers and what it doesn't all basically much more in sync, the idea of what basic coverage is and what it costs all much more in sync.
An important thing to do is to stop the whole constant merry-go-round of everyone robbing Peter to pay Paul when something changes. If no one gets a handle on that, they can't really even get to what actual costs really are in order to reform in a way that looks right and fair to the general public. And without the "looking right and fair" thing, in a democracy you can have a big risk of a counterreaction that takes you three steps back from the one step forward you make.
August 13, 2009 3:20 PM | Reply | Permalink
You point out a great many of the incredible challenges we face in this effort.
If we are truly serious about universal health care reform, we must learn to "take our medicine." This means an acceptance up front that any reform will require additional resources (i.e. tax dollars) to make it work. Alot can be gained in efficiencies, but it must be understood that even doing nothing to cover the additional 50 million without present coverage will still result in bankruptcy of this economy.
This increase in expenditures can be shown to be a remarkable investment that can preserve the U.S. as a first tier economy. But the challenge will come in confronting those political opportunists who even now are sharpening their knives to carve up "tax & spend libruls" at the moment someone suggests we need to pay for any fix.
"We will place a man on the moon by the end of the decade."
I remember the challenge issued by President Kennedy as I was coming of age in the sixties. No one said that was ever going to be cheap. And we paid the bill that was required, despite those who tried to demagogue it as another wasteful, socialist program.
But imagine just where our economy - and this nation - would be now if we hadn't joined together to successfully take on the challenge. The project we propose undertaking now is every bit as expensive and expansive as our effort to place a man on the moon. But the rewards of being successful in that effort will be even more rewarding and sustaining to this democracy than perhaps anything we've attempted in our history. Let's get on with it, and leave the demagogues and the profiteers of obstruction behind in our dust.
Blast off!
August 13, 2009 10:36 PM | Reply | Permalink
Hey, fun to see someone on the same wavelength, I thought of exactly the same thing 10 days ago, inspired by a comment by destor 23!!!
I think the parallels to that are strong. I really think it's too bad that Obama is not selling it like that, like this is a competition to do it new and different and better than all the other countries and that it's something we all have to will to do, that it's really that important, more important than showing the USSR back then that we had better space technology. (After all, the future of health care costs are a big scary problem for ALL countries.)
And I think most people were ready for it, too, it's kind of like they are still waiting since 9/11 for instructions on what they can do to help their country. I understand his political reasoning for doing it by seeing what happens with Congress leading the way, but I think that's chickenheartedness on his part. I do think he could have done the JFK thing, calling the whole medical profession to the front lines as soldiers or whatever, all the while stressing that "it's the economy, stupid, we have to save it for the future." And I suspect that a lot of people are turning a bit sour on it precisely because it is being left to sausage making by Congress, and while they don't understand what the real problems are, they do understand it's a big complex one, the type of thing Congress doesn't do well. Without someone leading a charge and plan with a purpose, they don't trust sausage making from Congress to end up well, that's why they revert to "what's in it for me?"--it's like they know it will once again be some folks winning and some folks losing and not a hell of a lot changing very soon.
August 13, 2009 11:02 PM | Reply | Permalink
Talking on that reminded me of something else. In reading over so many Mahar blog posts and the comments on them, many from doctors, there was this overriding theme that keeps coming up, that many doctors really seem to mourn the loss of respect they used to get from society and don't get anymore. They have this attitude like "I worked so hard to get here, and then I don't get any respect, and can't practice like I'd like, and I'm so sick of it, well then fuck you all, I am just going to get mine." (I've had run ins in personal life with the same syndrome from docs.) That's part and parcel of the whole "money driven medicine thing that Maggie rags on." If the medical profession was actually put at the front lines of a symbolic fight, I think many of them might rise to it, and be happy about it, it's like so many of them are aching to get that respect back, they only resort to the money-grubbing mentality because they have been frustrated achieving what they thought practicing would be.
August 13, 2009 11:11 PM | Reply | Permalink
I can't believe it. A sensible conversation among thinking human beings. It is possible!
August 13, 2009 10:41 AM | Reply | Permalink
Love your avatar, too.
August 13, 2009 10:49 AM | Reply | Permalink
Imagine you purchase an island in the Pacific. You then invite people from around the world to immigrate to your island as you're building a new country. Imagine that after a time your new country has 300 million people.
Now imagine you go to your first assistant and tell him/her to create a health delivery system for the public.
Now imagine three months passes and he/she comes into your office with the plan and its as follows;
Create 1300 to 1500 for profit middlemen called Insurance Companies who will offer the public 10 plans each. Each of the 10 plans will have different coverage, different co-pay, different deductibles. Each different insurance company will also have their own list of "approved" Physicians and pharmaceuticals.
Many, if not all, will have a little known lifetime limit on the amount of money they pay out to each subscriber, and in many, if not all circumstances, will continue to collect premiums well after the lifetime limit has been reached, in effect, having the subscriber pay for coverage he won't get.
Anyhow, what would your reaction be to this plan?
August 13, 2009 12:10 PM | Reply | Permalink
You make an excellent point here. What would we be considering if we started the universal health care effort from a blank slate? Why are we fixated on something else, like "insurance reform?" (It's improbable we would invent an insurance industry if we were building a universal health care system from scratch.) Does the insurance industry have a legitimate role to play as "middle-man" in a universal health care system? Or are they superfluous? Are the objectives of "insurance reform" complementary to health care reform? Or are we compromising the effort simply to protect and preserve a politically powerful "interested party?"
These are neutral questions that should be asked. Unfortunately, there seems to be no way to engage neutral considerations in our present pay-to-play politics.
Thanks for the interesting perspective here, JohnW. I think it should provoke thought in whoever encounters it with an open mind.
August 13, 2009 10:56 PM | Reply | Permalink
Medicare is not an entitlement, it is an insurance program. So, extending it for 'buy in' would simply be a matter of costing out the premiums. Any bean counter can do that. Why make it harder than it is?
As far as being unsustainable, it would be sustainable if more, younger and healthier people were paying into it. Isn't the problem right now the number of baby boomers retiring and the smaller number of people paying into the program through their payroll deductions?
With the insurance companies in the drivers seat, I don't see the light at the end of the tunnel. They will continue to gouge us and not cover us when we need it most. They need to go or have some serious rules set down.
August 13, 2009 12:22 PM | Reply | Permalink
Not sure if somebody mentioned this yet. But to know what Medicare REALLY costs, you need to subtract the subsidies that Medicare currently gives to insurances which are supposedly "competing" by having "private Medicare". The subsidies were to "enable the private competition" - which not only costs us taxpayers more on the front end. But the insurance companies often skim off the least sick folks into their plans. And thus that deprives the "regular Medicare" in terms of the outlay for those sicker individuals.
The main savings is in the fact that Medicare does not use tons of money supervising every aspect of care in order to deny payment. Thus overhead is very tiny.
Good luck with your effort here!
August 13, 2009 1:43 PM | Reply | Permalink
To add to my comments above...
I was going over many of the old posts on Maggie Mahar's Healthbeat blog last night because I think she is someone who is expert at understanding our problems.
Many of the things I read clarified for me what I sense is the reason for the exorbitant premiums that are being paid for someone like you. Like it or not, reality is that it is not so much the profiting of the health insurance industry and the constantly shifting robbing Peter to pay Paul syndrome that the whole system operates on. And the real problem of the skyrocketing costs is not insurance profits, which are just a minor part, but profit-driven practice of the art of medicine. We have to slowly gravitate away from the latter somehow in many areas.
Maggie says it pretty clearly here. I know its not something progressives like to hear, it's an incovenient reality:
The other posts in that series for those interested are here:
January 18, 2008
Health Care Spending: The Basics; How Much Do We Spend on Physicians Services? Could We Spend Less?
http://www.healthbeatblog.org/2008/01/health-care-spe.html
(I'll have to break them up into replies because of the spam filter)
August 13, 2009 3:34 PM | Reply | Permalink
January 22, 2008
Health Care Spending: The Basics; Spending on Physicians' Services-Do We Spend Too Much? Part II
http://www.healthbeatblog.org/2008/01/health-care-s-1.html
April 04, 2008
Health Care Spending: The Basics; How Much Do We Spend on Hospitals? Part I
http://www.healthbeatblog.com/2008/04/health-care-spe.html
August 13, 2009 3:37 PM | Reply | Permalink
April 08, 2008
Health Care Spending: The Basics; How Much Do We Spend on Hospitals? Part II
http://www.healthbeatblog.com/2008/04/health-care-s-1.html
August 13, 2009 3:41 PM | Reply | Permalink
And BTW, from reading a lot of her work, I think she pretty strongly believes that our real problem lies at the feet of fee-for-service medicine. And Medicare is a fee-for-service model. She thinks that that is the one key thing that helps make our system so profit driven.
I've never seen her speak against making Medicare available for all, that's not how she argues it, it's more like she is always generally supportive of any and all baby steps in the right direction and that that might be one. But she sees the true cure in shifting away from fee for service, in just letting people chose any new treatment willy nilly, no matter how crazy, and have it paid for, that that is what has made the whole system inefficient and have so many duplications of the wrong things and lack of the right things.
These are the two main posts I have found so far by her on Medicare costs, though I haven't gone through the more recent archives yet:
December 10, 2007
Reform under the Radar: What Medicare Needs to Do to Control Costs
http://www.healthbeatblog.com/2007/12/reform-under-th.html
December 13, 2007
Complaints about Medicare Advantage Mount...While Congress Contemplates Slashing Fees Traditional Medicare Pays Docs
http://www.healthbeatblog.com/2007/12/complaints-abou.html
August 13, 2009 4:33 PM | Reply | Permalink
And here is one where she digs into the relative success and failure with Medicare results in different states:
August 13, 2009 4:41 PM | Reply | Permalink
This is a really good paragraph from the first one above, "What Medicare Needs to Do to Control Costs" which gets at the heart of our cost problem:
August 13, 2009 4:55 PM | Reply | Permalink