Back to Work - Bill Clinton [28]
The big problem with the first argument is that Medicare is already less costly than private insurance. One of the big talking points for the voucher plan is that the senior drug plan, Medicare Part D, costs less than its original estimates because of competition among drug providers. This is probably not a good analogy for two reasons. First, there was a large increase in the availability of generic drugs after the senior drug program was enacted that was not factored into the original cost estimates. Second, the more pills you produce, the less it costs to produce one more, and the drug program created new customers for more medicine. So there was a lot of competition to provide the drugs at lower-than-expected prices to millions of new customers. By contrast, the Medicare voucher proposal just switches the same people to a different system that already costs more for the same services.
As to the second argument, let’s concede that some seniors’ visits to the doctor are unnecessary, and many of them could afford to pay a little for the visits they do need to prevent even higher medical expenses later and give them more healthy years. What about those who can’t afford it? For them, raising out-of-pocket costs will reduce the numbers of both unnecessary and needed visits. So if seniors are asked to contribute more to the cost of their doctor visits, it has to be done carefully to avoid hurting those who don’t have much flexibility in their budgets.
To get to the bottom of the Medicare riddle, we have to look at the program’s role in the overall health-care system in the United States and at the innovative practices that are already lowering costs and improving quality. I know it’s hard to believe we could get better health care at lower costs per person, and I don’t deny for a second that those of us who have adequate coverage or can otherwise afford it can get the finest care for many severe problems, including cancer and heart disease.
For example, we rank first in the world in breast cancer survivor rates, a real tribute to the advocates who have worked tirelessly for years for better detection and treatment. And if we didn’t have great people fixing heart problems, someone else would be writing this book! Still, the evidence from our own experience and that of other wealthy nations that spend a far smaller percentage of their national incomes on health care than we do and get overall results that are better than ours shows that we can do it too.
How?
Because our population is aging and older people consume, on average, more health care than younger ones, and because health-care costs are projected to continue to rise much faster than inflation, Medicare and Medicaid are projected to increase their already large percentage of the government’s budget over the next decade. Yet, costly as they are, these programs are less expensive than private insurance coverage.
According to the Simpson-Bowles Commission, total costs for Medicare, Medicaid, and the Children’s Health Insurance Program equaled 6 percent of GDP, or about 35 percent of total health-care spending, which is 17.4 percent of GDP. That’s a lot, but it’s still cheaper than the same coverage would be under private plans. For one thing, administrative costs are far lower—less than half of what private plans cost. Overall health-care spending is $35 to $40 billion lower than it would be if the government’s administrative costs were equal to those of private insurance companies. Even more important,