Sphere (AOL News), December 9, 2009
(Dec. 9) — Senate leaders are knee-deep in negotiations over the final version of their health care reform bill. Public outcry – and fear of losing the support of wavering centrists – has forced Democratic chieftains to jettison the controversial “public option.” In its stead, they’ve proposed that Americans as young as 55 be allowed to buy into Medicare, the public insurance program for the elderly.
This unprecedented expansion of Medicare, which would add about 2 million to 3 million people to the Medicare rolls, would be disastrous for America’s fiscal – and physical – health.
Already, the program is deep in debt. Medicare Part A, which pays for hospital care, is $36.4 trillion in the hole, according to the latest report from the Medicare Trustees. Medicare Part B, which covers doctor visits, has an unfunded liability of $37 trillion. The trustees have also concluded that the funding source for Part A – the Medicare Hospital Trust Fund – will be insolvent by 2017.
Expanding Medicare to an even greater swath of the population would drown the federal budget in even more red ink. The nonpartisan Congressional Budget Office estimated last year that a Medicare buy-in proposal for patients between the ages of 62 and 65 would cost taxpayers $1.2 billion over 10 years. Obviously, lowering the age threshold to 55 would be even more expensive.
Further, an expanded Medicare program would likely attract Americans most in need of expensive or comprehensive care. Alternatively, many middle-aged Americans might wait until they are sick to sign up for Medicare. These “adverse selection” pressures would ensure that the Medicare population is comprised almost entirely of sick patients – who are obviously the most expensive to cover.
Medicare’s costs are already spiraling out of control despite the fact that the program pays doctors and hospitals artificially low rates. California’s Medicare program, for instance, only pays about 74 cents for every dollar in costs a hospital incurs. Nationwide, the program routinely underpays caregivers by as much as 20 percent.
Health care providers respond to such short-changing by charging privately insured patients more. That means higher medical bills and higher insurance premiums for those without government insurance – particularly the young. In fact, Medicare shifts $49 billion in costs to private patients each year.
Expanding Medicare will only exacerbate this cost-shifting and result in higher health care prices for tens of millions of patients.
Letting middle-aged Americans buy into Medicare would also push the nation even closer to complete government domination of the health care marketplace. A 2002 Urban Institute study found that a Medicare buy-in plan for people over the age of 55 could capture 68 percent of the customers in that age group.
Putting even more patients in hock to the government for their care would create the political capital needed to continuously expand the public insurance system. Lawmakers could incrementally push the Medicare eligibility age downward until, one day, everyone would qualify.
Democrats are right to scrap the public option. But a Medicare buy-in scheme for the middle-aged is just as bad. Americans should see the buy-in proposal for what it truly is – an expensive backdoor path toward government-controlled health care.
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