Does Medicare Work?

Here is what Paul Krugman says about Medicare:

For Medicare, with all its flaws, works better than private insurance. It has less bureaucracy and,… has been more successful in controlling costs. … And … Medicare-type systems in other advanced countries have much lower costs than the uniquely privatized U.S. system…

I never had a problem with a claim and this year alone there were tens of thousands of dollars in claims. Everything that was submitted was paid without question.  Medicare applied substantial reductions to all billed fees cutting one fee from $18,000 to $750, its payments are low.  This quick processing of claims is no doubt a reflection of the less bureaucratic nature of Medicare, there is little if any review for medical necessity or anything else, and it simply processes claims.  In addition, Medicare sends you an explanation of benefits only once every three months.  You have little chance to review charges or possible errors in claims until long after the event.  If private insurers did this Congress would be screaming about transparency and disclosure.  All this a good thing?   I guess if you are the patient all this is a good thing, as far as managing costs, not so good.

Less bureaucratic; Professor Krugman should take a look at the proposed rules for Accountable Care Organizations or perhaps the formulas used by Medicare to determine the fees it will allow for different services.  When was any government bureaucracy less bureaucratic than a private company?  I guess it depends on your point of view.

Medicare has been more successful in controlling costs you say?  Medicare is only successful in not paying more than it does because it has the safety valve of the private system and of Medigap coverage.  Medicare is able to simply set fees and shift the differences to the private sector and to individuals.  Those who want a Medicare type program for all should make it clear to Americans exactly what that means to them and to health care providers.  Using other “advanced countries” as an example is a good place to start.  A government-run plan keeping to a budget means, less patient flexibility and more wait times, it means far lower incomes for health care providers, lower hospital standards than Americans are used to and less use of the latest technology.   And by the way, these other advanced countries are struggling with health care costs and cutting back on their programs as well.

Does Medicare work?  Well, it certainly works in terms of providing coverage to Americans 65 and older, but beyond that determining if Medicare works is more difficult.  It is not affordable or sustainable, it is a growing financial burden on younger Americans, changes around the edges of the program comprised the bulk of the Affordable Care Act so I guess there is a question even among bureaucrats and politicians whether or not it works.

Some day Medicare may look and operate like those other advanced countries out of necessity and Americans may come to realize they can no longer have the type of health care system they enjoy today, but you see that is never what the Paul Krugmans of the world tell you.  Do they really think we can have it all if only everything is provided by and run by government?

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• Paul Krugman: Messing With Medicare (economistsview.typepad.com)