I am skeptical of a causal relationship there. In the United States, approximately 2/3 of healthcare costs are already borne by the government. My parents are both enrolled in Medicare and they are very satisfied. Why would it not work if we just dropped the eligible age for Medicare to zero? Hasn't this been extensively studied recently?
In many cases, Medicare doesn't even cover the actual cost to provide the service. The providers make up the shortfall by charging other patients more - including charging uninsured patients a LOT more.
So if everybody was covered by Medicare, either the providers would be going bankrupt left and right, or the Medicare reimbursements would have to rise - i.e., the price to the government would increase, and the only thing to do about that is to pass it on to the taxpayers.
It's a common misconceptions that Medicare is more efficient than commercial insurance, because on paper it looks that way. But in fact they're hiding their administrative expenses by forcing the providers to do much of their bookkeeping. (Source: my wife used to manage the department in the hospital that did that Medicare financial stuff)
That is a pretty bold claim, can you cite someone more authoritative than your wife?
Kaiser, who has a plausible claim to expertise in this field, puts the overhead cost of Medicare at 2%. The raw number is more like 1.4% but Medicare does get to piggyback a lot of the administrative workload on Social Security so perhaps that is why Kaiser's number is higher.
Insurance industry advocates, who are incentivized to provide the lowest number that can be defended, put private insurance overhead at 17%.
The rest of your suggestion -- that Medicare doesn't even pay for the actual cost of service -- is hard to really reason about accurately. Prices and costs are so completely distorted now that I am very skeptical of anybody's estimates of 'actual value.' Things will change dramatically if we eliminate the insurance industry and medical billing field.
Having just experienced first world level healthcare in another country and paying for it out of pocket at 1/20th or less of what it runs in the US, I am certain we are getting shafted.
Kaiser, who has a plausible claim to expertise in this field, puts the overhead cost of Medicare at 2%.
This is exactly what I'm talking about. I'm sure that number is accurate, if you're looking at Medicare's books. I'm telling you that when you look at the way Medicare forces the industry to handle their charges, it makes the industry much less efficient, both in terms of administering the provision of care to Medicare's "customers" as well as more generally across how the industry handles its accounting in general.
Every hospital (and skilled nursing facility) has a small team of people whose job is to compile the statistics that Medicare demands, and report it annually in what's called "The Medicare Cost Report". Add up 1 or 2 or 5 FTEs across every hospital and SNF facility in the country, Medicare's claimed efficiency is quickly turned upside down. There is some work that providers have to do for other payers, but its scale doesn't approach the order of magnitude of what Medicare forces. This isn't a matter of opinion (like my wife's); this is absolutely factual and objective.
It gets even worse than that. Because the care paid for by Medicare together with that of Medicaid (which is a separate program, but rides on Medicare's coattails for a lot of its reporting mechanics) dwarfs any private payer, hospital information systems (at least the parts that deal with finance) are structured around the way statistics need to handled for Medicare. That squeezes out the ability to do any more traditional cost accounting. This is the reason that the fee for a given service varies so wildly from hospital to hospital: because they're not doing normal cost accounting (but instead tracking Medicare statistics) the don't actually have a good idea of what any given thing costs, so their fee schedules are all over the place. (I'm generalizing here, there are hospitals that do it better, but my anecdata from hospitals we've had close association with show that this problem is quite widespread.)
> Things will change dramatically if we eliminate the insurance industry and medical billing field.
It's important to note that this industry is a complete bullshit industry with complete bullshit jobs. Their only job is to say no, to stop money from going out of the insurance companies, in any way possible. That is their entire purpose.
Your medical insurance money props up this industry. Every person working in this industry and receiving a salary, and every person owning shares of companies in this industry receiving profits, are taking money that should have been spent on producing healthcare for themselves.
So however many billions of dollars of revenue this industry makes, we would instantly save most of it by getting rid of this industry.
> Having just experienced first world level healthcare in another country and paying for it out of pocket at 1/20th or less of what it runs in the US, I am certain we are getting shafted.
We are, but not by insurance companies. Their profit margins are thin. The issue is hospitals.
Sarah Kliffs idea to reduce the cost of hospitals is price controls: for the government to tell them they cant choose a price, and to ban them from accepting other insurance.
This should be a highlighted comment in this discussion. My dad just retired and shut down his medical practice. He hated Medicare as a doctor (OK, my words, not exactly his), but now that he's using it as a patient he can see why people like it so much. It really isn't going to work like it does now if it becomes the only option for everyone.
I've heard the 2/3 number (sometimes a little less, most recently slightly over, 68%) from a few reputable sources recently. At the same time, I generally consider Kaiser pretty reliable. I think the discrepancy comes from what is being included in the total -- all costs, direct payments only, tax subsidies, etc. At least from what research I've done.
Even if we take the value to be 50%, my point stands -- the gov't is already heavily involved in funding healthcare in this country. Implementing single payer at this point would simplify quite a lot of bureaucracy.
Medicare has 30 million patients and costs about 3% of gdp. Multiply by 10, and you would need to almost double the tax-base to pay for medicare.
I propose the other thought experiment: why doesnt medicare just compete in the market with other insurance plans: it charges X and provides the service. If its truly more efficient it will beat all the rest.
