BOYCOTT WHOLE FOODS

Medicare reform and Medicare finances: 

Medicare is subject to the same cost pressures as the private sector. Yet, Medicare has done a better job of containing costs than the private sector.[1]

Medicare’s administrative costs are approximately 3% compared with the private sectors 15%. Unfortunately, the Bush administration and Republicans pushed Medicare Advantage to get seniors into various forms of managed care. The Medicare Payment Advisory Commission found that Medicare could save approximately $17 billion per year by eliminating this program which, in essence, just gives creates additional profits. The Medicare Modernization Act of 2003 which created the Drug Benefit Program, Medicare Part D, forbade Medicare from negotiating with the drug companies, something that all for-profit insurance companies, the military, the VA, and Medicaid are allowed to do. Estimates put savings at $20 billion per year if Medicare negotiated the same prices as the VA.

Medicare does suffer from fraud; but fraud is endemic to the entire U.S. health care system, far more than in other systems.[2]  

Medicare is not facing bankruptcy. It will, however, have a shortfall, that is, revenues coming in will be less than expenditures in a few years. But our GDP will also have grown so that, as a percentage of GDP, we will manage. On the other hand, our entire current health care system’s projected cost increases are unsustainable.

For those who like to pick on Medicare, a few facts are in order. Medicare covers the most expensive segment of our population: Seniors, AIDS patients, patients with End-Stage Renal Disease, patients with Amyotropic Lateral Sclerosis (Lou Gehrig’s Disease), and people disabled by illness or injury for two years. No for-profit insurance company will cover these people. They represent the quintessential pre-existing conditions. The total number of Medicare Beneficiaries in 2008 was 44,831,390 (15% of U.S. population).[3]  Perhaps, a few may obtain insurance at exorbitant costs, probably with a rider to exclude any pre-existing condition; but the vast majority would not be able to obtain private coverage. Vouchers for private coverage would be prohibitive.

Imagine the consequences if Medicare were to fail. Besides watching our loved ones face premature disabilities and death, anticipating the same for ourselves, our already overcrowded emergency rooms would collapse under the added burden. Medicare pays additional monies under the Disproportionate Share Program to hospitals who treat high percentages of the uninsured and/or poor. These hospitals would be the first to close followed by many more hospitals closing and doctors offices going out of business. And since Medicare pays for all residencies, in the future we would have fewer specialists.

Is Medicare Underpaying Doctors? A doctor at Congresswoman Maxine Water’s town hall August 22^nd in Los Angeles said that Medicare actually pays more for some services than private insurance and that private insurance pays no better overall. However, even if in some instances Medicare pays less, do doctors lose money on Medicare patients? 

Airlines often offer half price or less for standbys for last minute boarding. Since they only need to fill a percentage of the seats to cover costs, another percentage to gain profits, then any monies received from the remaining empty seats just add to their profits. Standard economics says that as the number of patients increase, the average costs, including fixed costs (office expenses, including building, equipment, and staff), decrease. Currently, approximately 10% of doctors’ billings are to cover the excess administrative costs of dealing with our fragmented for-profit system. Why should Medicare fees cover the excess administrative overhead?[4] 

Imagine what would happen if all the patients currently on Medicare ceased to be insured. Would doctor’s incomes then go up? So, as far as I can tell, the claim that doctors lose money on Medicare patients is simply a statement that they don’t make as much as they would like.

Joel A. Harrison, PhD, MPH 

REFERENCES:

---

[1] White, Joseph, “Markets and Medical Care: The United States, 1993-2005,” Milbank Quarterly, 2007, Vol. 85, No. 3, pp. 395-448, http://www.milbank.org/quarterly/8503feat.html

[2] Malcolm K. Sparrow. “License to Steal: Why Fraud Plagues America’s Health Care System,” Westview Press, 1996 

[3] Kaiser Family Foundation. “Total Number of Medicare Beneficiaries 2008,” http://www.statehealthfacts.org/comparemaptable.jsp?ind=290&cat=6 

[4]  Woolhandler, S. et al. “Costs of Health Care Administration in the United States and Canada,” New England Journal of Medicine, Vol. 349, 2003, 768-75, http://www.pnhp.org/publications/nejmadmin.pdf