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Why Don't We Just Expand Medicare?

"There are times when I wonder if the right thing to do on health care reform is simply to raise the Medicare tax rate and drop the Medicare eligibility age to 50," muses Brad DeLong. This is the "single-payer incrementalism" approach, and it's popular. After you drop the age to 50, then you try to drop it to 40. And then to 35. And so on, until you've eventually backed into Medicare-for-All.

There are two problems with this strategy. First, if you can't pass Medicare-for-All, what makes you think you can pass Medicare-for-More? The industry stakeholders won't be confused about where this process is going. Nor will Republicans. The opposition will react with exactly the fury you'd see directed against a single-payer proposal. But far fewer people will benefit. The opposition, in other words, would mirror the opposition to single-payer, but the potential support is a lot smaller.

The second problem is that this probably reduces, rather than expands, the constituency for health-care reform. You're seeing this now with health-care reform. As Friday's Gallup poll showed, seniors are the least supportive constituency for changes to the health-care system. They worry it'll mess with the comfortable arrangement they already have:


Passing Medicare and S-CHIP were clearly the right things to do. But the reason it was possible to cover seniors and children was that seniors and children were the most sympathetic segments of the population. Taking them out of the constituency for reform, and in fact making it possible for seniors to believe that further reforms would injure their single-payer system, has made further reforms harder, not easier.

By Ezra Klein  |  August 3, 2009; 9:23 AM ET
Categories:  Health Reform  
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I think lowering the retirement age would have the effect you describe, but creating a medicare like program for people between 18 and 30 would have a very different effect. These people would want the age increased so they could stay in the good program. The costs of such a program for the government would be fairly low which would make it harder to oppose.

Posted by: CraigMcGillivary1 | August 3, 2009 9:48 AM | Report abuse

But DeLong's attacking the problem the wrong way. Instead of moving the age down, what if we were to start at the bottom, with Medicare for Kids? Much cheaper, and we're already paying for most of the cost of children's health care publicly already. Then when they become old enough to vote, they lose their health care.

Posted by: BobN1 | August 3, 2009 9:49 AM | Report abuse

I was jsut about to say the samething as Bob- if Democrats were smart you would start with covering kids. Republicans would not be able to stand in the way of that and the numbers wouldn't even be particularly costly.

Posted by: spotatl | August 3, 2009 9:56 AM | Report abuse

We could drink Drano too. Stay loud.

Posted by: Dermitt | August 3, 2009 10:00 AM | Report abuse

Adding more people to a bloated and inefficient system is a recipe for disaster.

That's just not the change we need right now.

Posted by: anne3 | August 3, 2009 10:05 AM | Report abuse

We are NOT adding people, except newborns!
The people who are "outside" the system, DO get Health-care. We are all paying for it!
Get the idea of "adding people" out of your heads. Get your heads out of the sand!

Posted by: teganmcdonough | August 3, 2009 10:23 AM | Report abuse

"The people who are "outside" the system, DO get Health-care."

We hear this all the time, but it is simply false. 22,000 died last year because of lack of health insurance (Urban Institue). You can't get a hip replacement in an emergency room; I can't get my leukemia treated in an emergency room.

Furthermore, suppose you are treated in an emergency room and you can't pay. Your credit rating goes to 0. Try and rent an apartment or buy a house then.

Get yout head out of whatever substance you have stuck it.

Posted by: lensch | August 3, 2009 10:31 AM | Report abuse

"Adding more people to a bloated and inefficient system is a recipe for disaster."

What are you talking about? Overhead rates of the Federal part of Medicare are are 2% like all single payer systems. Canada's is 1.3%. The large private insurer have overhead rates of 20% - 25%, plus they waste over $150 Billion each year on compliance costs of physicians and patients.

""Here’s the raw fact, from the National Health Expenditure data: since 1970 Medicare costs per beneficiary have risen at an annual rate of 8.8% — but insurance premiums have risen at an annual rate of 9.9%. The rise in Medicare costs is just part of the overall rise in health care spending. And in fact Medicare spending has lagged private spending: if insurance premiums had risen “only” as much as Medicare spending, they’d be 1/3 lower than they are." - Paul Krugman

If you want efficiency, look abroad. Other countries with national systems get better health care as measured by all the basic public health statistics (there are 16), and they do it at less than half the cost per person.

Posted by: lensch | August 3, 2009 10:40 AM | Report abuse

Did this fact come from you Ezra?

"Medicare is so popular that most Americans support expanding its coverage to Americans aged 55 to 64. According to a recent Kaiser Family Foundation poll, "over half of Americans (53 percent) 'strongly' support such a proposal and an additional 26 percent say they support it somewhat, totaling 79 percent backing."

Posted by: lensch | August 3, 2009 10:43 AM | Report abuse

Medicare for More would be immensely popular for the 50-65 (or 55-65) crowd, who are getting their retiree medical benefits hacked away at with each passing day due to the accounting rules of FAS 106. Also, business would be a big supporter of this for the very same reason---you would be taking a big problem off their hands.

I have not seen any figures on this, but if we raised the Medicare tax rate (which will eventually have to happen anyway---you can not leave it the same forever with rising medical costs and a shrinking workforce) and have premiums for 60-65 yr olds that are 150% of the 65+ rate, and premiums for 55-65 yr olds that are 200% of the 65+ rate, would we have a fiscally reaasonable approach? I think we could.

Posted by: scott1959 | August 3, 2009 10:43 AM | Report abuse

I know you don't believe in the distortionary effects of taxation but that doesn't change the fact that increasing the cost of employment via increased payroll taxes is a pretty stupid thing to do during a recession. That's not going to help the employment numbers.

Medicare needs to be able to shift costs to private insurers. If you decrease the base of the privately insured then you make Medicare even more unsustainable.

Posted by: fallsmeadjc | August 3, 2009 12:09 PM | Report abuse

1. We waste $100 - $200 Billion a year on the high overhead of insurance companies.
2. We waste $200 - $300 Billion a year on doctors filling out forms for insurance companies.
3. I don't know the compliance cost of patients fighting with insurance companies, but it must also be in the 100's of Billions.
4. We pay the highest drug cost in the world to drug companies that spend twice as much on profit and three times as much on "marketing" as they spend on research. This is about another $100 Billion each year.
5. Because of the above, we could give Super Medicare (few limitations, no co-pays, no deductibles and complete drug, dental & mental coverage) to everyone at no more cost per person than we are now paying.

Other countries with single payer systems get better health care as measured by all the basic public health statistics and they do it at less than half the cost per person. If we build on our rotten system, we will get a health care system with rotten foundations.

Posted by: lensch | August 3, 2009 12:18 PM | Report abuse

Yea, scott1959! A premium based on income!

I'm a sole proprietor, 60, in NH, who has bought my own insurance for years, or did. About 2 years ago my insurance went up about 35%, after years of double-digit increases. I went "naked" for about a year. State insurance laws allow insurance companies in the small group market (which in NH includes self-employed) to cost rates on the basis of age, among other criteria. So no matter what your health, as you get older you will be charged at an increasing rate. When I hit a bad year, plus rate increase, I had to drop out. Private insurance left me, priced me out of the market.

But I'm also a State Rep, so I was able to buy into (at over $500/month, not cheap) the State employees plan, once I could (barely) afford it again. The state has kept admin cost below 5%, and kept rate increases well under 10% for the last few years. In June I had a $300 premium holiday, because the State plan had kept costs down for the previous year. (I'm trying to get this option opened up to all small NH businesses.)

If I could buy into Medicare right now I'd do it in a minute. So I think that there would be lots of fifty- and sixty-somethings, especially those shoved out of corporate jobs, or those who have small businesses and are especially vulnerable to high-cost insurance in a down economy, would do it, too.

It seems curious to me that this big push for health care/insurance reform comes at a time when the first bulge of the Boomer generation (those 50-60s) are finding themselves especially at risk to the practices in our current private insurance market. Chronic health conditions that go untreated at this age mean sicker individuals hit Medicare at 65, costing us all more.

If there is an individual or employer mandate, and if low income individuals get subsidies, then I would want to apply that subsidy to a public plan, such as I have, that is doing a good job; let the tax dollars that support that subsidy go to expanding good coverage to more low-income people; and save taxpayer dollars as well.

Posted by: jshafham | August 3, 2009 12:22 PM | Report abuse

To Lensch - I'm not at all opposed to health care reform. I'm privately insured and have a huge stake in this issue.

To remove another class of people who statistically need more health care from the private health insurance sector - and put them on the public roster is not the reform we need right now. In fact, this would the the private sector's dream scenario - they get to keep collecting money from the young and healthy and the government takes over when they become middle-aged and prone to high drug costs, etc.

The system we have now is grossly inefficient - that's what needs to be addressed. Bringing the age of entry to Medicare down to 50 does nothing to address the horrible inefficiencies built into a system that pays docs to test, not treat. For this scenario, read Atul Gawande's article for more on this:

Posted by: anne3 | August 3, 2009 12:50 PM | Report abuse

Right. Stretching Medicare to incrementally include the next youngest group is bad politics. The next youngest group to be covered will always be the next most expensive group, inclusion of which will seem to "prove" the idea that government insurance is more expensive. And each incremental stretch of Medicare eligibility would increase the number of people who are insured until death and so motivated to resist stretching eligibility to the next cadre.

Better to add eligibility at the other end of the life chain. Adding young adults would be relatively low cost, and every young adult covered would be highly motivated to see the next older age group added to eligibility.

Posted by: gbpuckett | August 3, 2009 12:52 PM | Report abuse

But anne3, you make it sound like you don't want to add more people to Medicare because it is less efficient than private insurance when it actually is more efficient. I agree that adding groups slowly to Medicare is nowhere near as good as adding everyone to Medicare, but it's a start.

As for Gawande's article, sure, there are lots of other ways to improve our rotten system, but they will be very difficult because they are complicated and because physicians will strongly resist. Look at how the doctors of McAllen have fought back.

If we would pass Medicare for All, we would have a national system to gather data and put pressure on the medical profession, and people would not be dying or going bankrupt because of a lack of decent health insurance.

Posted by: lensch | August 3, 2009 1:51 PM | Report abuse

I'm not sure you get it, anne3 and gbpunkett.

For small businesses and especially middle-agers who must buy their own, the costs of private insurance are fast becoming insupportable. Even if we can afford the premiums, the co-pays and deductibles are often 5k or more. "I can't afford to use my insurance!" is a cry I often hear.

Our options are to go "naked" till we hit Medicare age, hoping we stay healthy. If not we are at the mercy of the care providers, that they won't take all our assets and/or bankrupt us if we do have a costly medical problem or chronic condition.

The private insurance market, from where I view it, has totally abandoned primary and preventive care with high deductibles and co-pays.

If reforms close the loop holes of pre-existing conditions and require primary/preventive care, I assume that premiums will go through the roof. I don't believe the private insurance industry has any vested interest in keep costs down--they just want lower medical loss rations and higher profits.

If reform only means that low-income people get subsidies to buy private insurance, and there is no public option, we are guaranteeing that private insurance gets to make and keep lots more profit.

I believe only a public option, like expanded Medicare, will have the leverage to make payment reform--move away from fee-for-service--that Guwande refers to in the New Yorker article. I'm very familiar with the Dartmouth Atlas research he cites, and I'm very encouraged that that research is what is informing Peter Orszag's efforts.

Posted by: jshafham | August 3, 2009 2:04 PM | Report abuse

Lensch - Medicare for all (single payer? Is that what you mean?) is very very different than putting 50 - 65 yr olds onto Medicare.

And I have never suggested that private insurance is more efficient than Medicare. All insurance - private or public - is terribly inefficient right now.

I want real reform - and to me, real reform must address the inefficiencies in the health care delivery and payment systems. Adding the 50 - 65 crowd to Medicare is not real reform. No way you can convince me otherwise.

And it will serve only to maximize profits for private insurers by ridding them of the costliest pool of patients they're required to cover now. That's ugly - and not at all the reform we need - ever.

Posted by: anne3 | August 3, 2009 2:09 PM | Report abuse

To jshafham: you're wrong when you say that I don't get it.

I am one of those privately insured people for whom insurance has made health care unaffordable - for my twins health care visit, my ped billed insurance more than $1K for a visit that lasted no more than 30 minutes total to see both children.

In my opinion, we need to remove private insurance companies from the health care business altogether.

But that's not what Ezra was referring to in this post. Just the cutting and pasting of the highest cost patient group out of the private insurance sector and inserting them into the public sector.

That's a really bad idea that rewards private insurers - at least until the creeping incrementalism works its way down the line and reaches the youngest and healthiest patients.

Posted by: anne3 | August 3, 2009 2:24 PM | Report abuse

anne3 - I think we mostly agree. I don't like the idea of adding the 50-65 group, but it has something going for it in that fewer people would be subject to the wastful practices of private insurence. What about adding the 0 - 25 group if we can't add everybody at once?

"I want real reform - and to me, real reform must address the inefficiencies in the health care delivery and payment systems."

But how can we implement this? If you think the private insurers are nasty opponents, remember there are a lot more doctors.

While we work on it, why not give everyone Medicare? It won't cost anything.

Posted by: lensch | August 3, 2009 2:33 PM | Report abuse

Your assumptions here are generally wrong. The Administration has failed to make a case for expanding public insurance. The idea of using a public option "to keep private insurers' honest" is a round-about way to regulate the private insurance industry. The fear of taking a stance in favor of public insurance has helped stir up these fears. Obama seems SCARED when he talks about the public option. He makes a lousy case for a rickety reform effort. We are applauding him because he is not stupid and insensitive like George W. Bush but he is not a particularly vigorous or convincing reformer...yet. So it is no surprise that various groups then become anxious about reform because the man leading the charge, Obama, shows so little conviction and belief in government's role to get it right.

A fairly simple case can be made for expanding Medicare to different age groups AS PART OF A PLAN TO EXPAND PUBLIC INSURANCE to EVERYONE. I agree with some of the commenters here that a terminal expansion to let's say 50 or 45, will be simply a giveaway to private insurers.

For someone who is so articulate it really bothers me that Obama has not used his communication skills to sell these huge reform packages that he seems to want to create but then allows our "bought-and-sold" Congress to construct. There's a huge disconnect there which is being justified by reference to Clinton's experience. In 1993 there was only a small potential for a social movement for health care reform; in 2009 there is large potential with which Obama has fumbled around. Without that movement, no much of substance will be passed this year.

Posted by: michaelterra | August 3, 2009 5:37 PM | Report abuse

Chronic care coverage and Long term care are both left out of the discussion. Instead much discussion is expended on Medicare as a model for expansion. Medicare only covers chronic care through outpatient visits and Part B. No one is looking at the existing infrastructure of Title X1X or Medicaid Program. Over the years there have been numerous waivers in different states to expand covered services.
The famous example of Walmart not providing coverage and having employees use the Medicaid system was wrong, but turn the perception around as an opportunity. Why not expand eligibility to 300 % of Federal Poverty, and open it up to the working poor with a cap of income. At the same time, created an pool of employer contributions as an alternative to private insurance. Rather than have low wages paid by small business and larger retail outfits pass the costs to Medicaid for health care, tax these businesses to allow for employees to use that system. At the same time as the pool of employer contributions grows, increase the reimbursement to providers to reasonable levels. I don't know all the implications of such a superimposing of a public insurance model on Medicaid Program, but it seems better then creating a whole new Public Plan, to exist adjacent to the Medicaid Program. At the same time all the waivers for long term care, could be reconfigured to focus on long term care coverage for the increase in the various cohorts of old age. Expand Medicaid in terms of eligibles and expand the employer funding stream for increased revenue, as one option among the existing ones.

Posted by: SFOMB | August 3, 2009 10:09 PM | Report abuse

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