• Medicare: Marketing malarkey Medicare: Marketing malarkey By the St. Louis Post-Dispatch – September 10, 2004 Elderly and disabled Americans will pay an extra $139.20 next year for the government-sponsored insurance that covers their visits to the doctor. That 17
• Medicare: Marketing malarkey
Medicare: Marketing malarkey
By the St. Louis Post-Dispatch – September 10, 2004
Elderly and disabled Americans will pay an extra $139.20 next year for the government-sponsored insurance that covers their visits to the doctor. That 17 percent increase, an extra $11.60 a month, is the largest premium increase in Medicare’s 39-year history. Deductibles and other out-of-pocket expenses also will rise.
It’s too much. Coming on top of a 14 percent increase this year – a year in which Social Security’s cost of living adjustment was a meager 2.1 percent – it amounts to a benefit cut for millions of retired Americans on fixed incomes.
Then there is what you might call the “ideology tax.” About 15 percent of this year’s increase will go to cover the billions of dollars Medicare is paying big insurance companies just to entice them to offer private Medicare plans. That’s some lug.
Late last year, when he announced that rates for 2004 would increase by 14 percent, Bush administration appointee Thomas A. Scully urged Congress to give private insurance companies a greater role in Medicare. He insisted that private companies could offer Medicare recipients “lower premiums and lower costs.” That’s long been a central tenet of the conservative ideology.
It’s also demonstrably false. Otherwise, insurance companies wouldn’t need billions in government subsidies – and higher rates than Medicare normally pays – to offer the plans. But the Medicare “reform” bill that narrowly passed Congress last year calls for paying private companies 109 percent of Medicare’s costs – plus billions more in subsidies – to entice them to market private Medicare plans.
Even more complicated than that arrangement is the logic behind it: Competition and market forces will hold down costs. That hasn’t worked so well in the private market. Premiums for employer-provided family coverage jumped an average of 11 percent this year – the fourth consecutive year of double-digit growth.
A peer-reviewed study published last year in the journal Health Affairs compared per-enrollee costs of services covered by both Medicare and private insurance plans. It found that over the past 30 years, Medicare – not those private plans – has done a significantly better job of holding down costs.
Industry analysts agree that the higher Medicare premiums and co-pays announced last week will likely encourage more elderly Americans to switch to private health plans. Those plans have been available for years, but as Congress reduced their subsidies, more and more companies stopped offering them. That left millions of Medicare patients in a lurch.
So, in the name of saving money and holding down future spending, Congress and the administration are pushing more and more elderly Americans into private health plans that will cost taxpayers more than traditional Medicare. Does that make sense?
It helps to see the big picture. Since the 2000 election cycle, insurance companies have donated about $104.5 million to candidates for federal office. Of that, 67 percent has gone to Republicans and 33 percent to Democrats.
Perhaps that’s what our friends in Congress mean when they talk about the magic of the marketplace.
