It appears that House Republicans may soon be launching an attempt to privatize Medicare. House Budget Committee Chairman Paul Ryan (R-WI) is testing support for his idea to replace Medicare with a so-called “voucher” system that would require recipients to purchase coverage through a private medical plan.
According to Michael Steel, spokesman for Speaker John Boehner (R-OH) — as of Thursday, “No decisions have been made . . . there are a lot of ideas out there.” So, we’ll have to stay tuned to see where this goes, but in the meantime, a closer look at the situation is definitely in order.
So, let’s see: the problem is that we have rapidly escalating healthcare costs and a growing population of elderly who will be reliant upon Medicare. Either situation would present a major economic issue by itself, but taken together the impact is of historical proportions.
Looking at the cost of healthcare, we have soaring premiums, deductibles, and copayments. Premiums alone nearly doubled between 2000 and 2008, and the total out-of-pocket for the average family climbed by more than 30% just between 2001 and 2006. The problem is so large that healthcare spending as a portion of GDP jumped to 17.3% in 2008 — the largest increase since 1960 — and it’s expected to climb to over 19% within the decade. We’ll be spending nearly $1 out of every $5 on healthcare.
Meanwhile, in spite of spending levels that are more than twice the OECD (Organization for Economic Cooperation and Development) average ($7,538 per capita in 2008) we trail most other developed countries in health outcomes. OECD data shows the U.S. ranking 26th amongst 34 nations in life expectancy and 30th for infant mortality. We may have the best healthcare available for those who are either wealthy or well-insured, but for the rest of us, we simply pay more and get less.
But alas the news isn’t all bad. All that money we’re spending is providing a great deal of benefit . . . for the bank accounts of the medical insurers and pharmaceutical companies. The 10 largest insurers are reaping a plentiful harvest. They’ve seen their profits soar over 250% from 2000 to 2009. In fact, they’re doing so well that despite a struggling economy, the top 5 insurers still managed to book a 56% jump in profits during 2009 alone.
So, what’s the GOP solution for this mess?
Well, we need look no further than the last major healthcare legislation authored and passed by Republicans to understand their priorities and strategy. That effort brought us Medicare Part D as part of the Medicare Modernization Act of 2003. The bill was passed with the support of only 11 Democrats in the Senate and 16 in the House. It was completely unfunded, and in fact piled on the deficit only a few months after the second round of Bush tax cuts were passed by an even slimmer partisan margin.
Medicare Part D has obviously had its positive impact, providing much-needed prescription drugs to America’s seniors. But with expenditures of nearly $50 billion in 2008 and projected expenditures in the next decade of around $1 trillion, it is without doubt a major source of our nation’s expansion of unfunded liabilities. The sad truth is that these costs could have been contained, but not without price controls. And with corporate profits being sacrosanct to Republicans, the program was designed to prohibit the federal government from negotiating prices with the drug companies. The result is that Medicare Part D pays a 58% average premium on the same drugs purchased by the Veterans Administration, which is allowed to negotiate prices.
So, with anything that might reduce corporate profits off the table, there’s really little latitude for alternative action. Since the federal deficit has already been ballooned to record levels in order to save Wall Street profits, another Medicare Part D unfunded gift to the healthcare industry won’t fly. Add in the strict Republican prohibition against any tax increases that could increase revenues, and the GOP is left with but a single path of action — reduce services.
Vouchers are the answer for maximizing government funding of healthcare industry profits without increasing expenditures. It’s the GOP’s way of saying, “Here you go Cigna. Uncle Sam just can’t afford anymore, but we’ll make sure you get every penny available.”
Of course, the countervailing message to America’s elderly is akin to “Thanks for your contribution. You’re on your own now. We hope you won’t become ill, but if you do, may you die quickly.” But, oh well, that’s life; resources are limited and somebody has to make a sacrifice.
As with most things, the choices we make usually depend on our priorities, and healthcare in America is no exception. There are those who believe that a person who has worked their entire life deserves for the society they’ve supported to reciprocate with this most basic of humanitarian services. These people believe that one of the other variables, corporate profits or tax revenues, should be adjusted to fulfill this duty. Their belief is that we are not only the United States but also a united people.
Then there are others who don’t see American society as a union of all the people. They believe in division instead of unity, in winners and losers. For these people, there is no shame in runaway corporate profits or the skyrocketing wealth of the top 1%, because that’s the way the game is played. They view society as a competition, not a brotherhood. Exploitation is the path to victory, and to the victor belong the spoils.
Everyone understands that healthcare in America is on an unsustainable path. We’re in desperate needs of solutions, and whatever they are, sacrifice will be required. The decision to be made is who will bear the burden. Will we as a nation ask for the wealthy to give out of their abundance or will we take from those least able to fend for themselves?
The answer is all about priorities: people or profits. Each of us must answer for ourselves where we place our values.
