Mr. Wulsin reports the Congressional Budget Office’s conclusion that private insurers pay providers 20 percent to 30 percent above their costs; Medicare’s payments lay somewhere above or below the line; and Medicaid pays about 20 percent below costs.
We call this the cost-shift, which increases private health insurance premiums by about 15 percent, according to a December 2008 study by Milliman, Inc., a firm of actuarial consultants.
Mr. Wulsin is tempted by a new “public option” designed after Medicare, because stingy Medi-Cal (California’s Medicaid program) would face some sort of competitive pressure: people who would have enrolled in Medi-Cal would go to the federal public plan instead, relieving pressure on providers’ revenue and somewhat averting the crisis.
Fortunately, he rejects this temptation for operational reasons: local governments have been more able to tailor effective health programs than Medicare, which usually relies on a fee-for-service model with prices fixed by bureaucrats in Baltimore.
But there is another reason that a “public option” for all would not succeed in covering the uninsured effectively: we just can’t pay for it. Certainly, Californians’ defeat of tax hikes this week means that fewer providers (or managed care plans) are going to want to contract with Medi-Cal, and its beneficiaries will jump at the chance to bail into a federal “public option” bolted onto Medicare.
But the taxpayers simply could not cope with it. Medicare is perfect for the political class, because they rely on seniors’ votes. So the political class has designed Medicare to maximize seniors’ support. Think about it: you start paying into the Part A (hospital) fund as soon as you start working, without any enforceable guarantee describing what it will pay for once you turn 65. Once you retire, you pay a premium for Part B (physicians’ services), which covers only one quarter of the total cost of Part B. Originally, it paid for half the costs, which had been whittled down to a quarter by 1980. Don’t get me started on the Medicare Part D drug benefit, for which premiums cover only 10 percent of the costs.
Who pays the rest? The working-age taxpayer, of course, whose income taxes bail out Medicare every year. Incredibly, despite collecting premiums from beneficiaries for almost half a century before they receive services, massive subsidies from working-age taxpayers, and barely covering providers’ costs, Medicare still has an unfunded liability of almost $90 trillion looking forward to infinity. It is unreal that people are still talking about a “public option” after the latest Medicare Trustees’ report, released earlier this month.
The only reason Medicare “works” is because of a continuous bailout from non-beneficiaries (including generations yet unborn) to beneficiaries. Its ability to execute this fiscal raid shrinks dramatically once the state enlists every citizen as a potential “beneficiary.” The result is denial of care. When I lived in Canada, the “crisis” was a lack of high-tech diagnostic machines. Now it’s much more basic: about 15 percent of the population has no access to a primary-care doctor, according to the College of Family Physicians of Canada.
So, I think it’s great that Mr. Wulsin advocates local control of health-care dollars. But there’s no need to stop at the county or municipal line. Continue to the property line and give families and individuals control of health care dollars.