How To Fix Medicare And Beyond

I have written quite a bit about health care reform over the past few years, including my last post of 2011, which received this comment from the always thoughtful and thought-provoking Jim Wheeler:

My conclusion: the present system, including the ACA, is unaffordable and the Paul Ryan plan is even worse. Extending Medicare to all ages, sorry Duane, would have the same problem, unless that is, if the government were given pricing power in the medical market, but it seems to me that such would be equivalent to the Public Option, the only solution that makes sense to me. The bottom line is a tough one in that any viable solution will have to slash industry profits by half, which is why industry lobbyists sank the Public Option in the first place.

My response is necessarily lengthy because the issues are obviously difficult.  But let the following stand as my current, if somewhat tentative, endorsement of what to do to fix what is wrong with our health care system, despite the passage of the Affordable Care Act:


As you know, I was a proponent of the public option. But the kind of public option I would favor was found in H.R. 4789, which had 82 co-sponsors. It amended the Social Security Act “to authorize an option for any citizen or permanent resident of the United States to buy into Medicare.”

I choose Medicare-for-all not because it would be the best possible system, but because it seems to me to be the only politically possible system that would also be a considerable improvement over what we have now. I say that because most people already have a high opinion of Medicare and would, with gentle persuasion over time, be open to applying it to all people.

My own personal choice—I want to make clear—would be a complete government health care system, similar to the VA system, or even expanding the current VA system to include all people.  It turns out that since the late 1990s—contrary to what most people believe—the VA system—socialized medicine—is the model of efficiency and effectiveness. (And, of course, the “moderate” Mitt Romney wants to privatize it.) It also has the power to negotiate discounts for prescription drugs, which is essential to control costs.  This kind of truly socialized medicine would be my “public option.”

But I recognize the near-impossibility of such a move, given our politics and our historical national aversion to such things, even though it appears to me that conservatives would have a hard time labeling the VA system as dangerous European socialism and the military veterans who use it as scary socialists. But I digress.

Let’s talk first about the possibility of fixing or improving the current Medicare system, before extending it to all people. Without the fix, I agree that it would be a problematic option for all people.

To begin, let me get this out of the way: As a rule, I believe choice and competition are good things and serve us well as Americans. But let us keep in mind that they ought to be our servants and not our masters.

I also believe the profit-motive is indispensable for a society that seeks a general prosperity that benefits everyone, even if there are some inequities necessarily arising out of a system that values the concept of making gobs of money. (Severe inequities, though, should be addressed via a progressive tax system, but that’s for another day.)

But those who believe that increased choice and competition and profit-opportunities in the health care system overall will lead to greater efficiency and reduced costs don’t understand how the American health care system works or how it has worked in the past. (Phillip Longman does; read here and here for the details.) What this choice and competition leads to most often is inefficiency and wasted resources, often at the insistence of the health care consumer, who doesn’t mind all that much in times of dire need if, for instance, the specialist orders extra—and profitable—but unnecessary treatment.

Look at this graph, which I know you are familiar with:

The idea here, of course, is that as Americans (the top blue line) we are spending a lot of money on our private, profit-based health care system, compared with most of the rest of the industrialized world, and we are not necessarily getting our money’s worth. Many unnecessary expenses are built into the kind of system we have, including unnecessary treatment in the form of operations and other costly procedures.  

And, look, I don’t necessarily chalk up everything wrong with this picture to “greedy bastards” in the health care and health insurance business. There are plenty of entrepreneurial reasons why over-treating patients makes $en$e (see, for instance, this New York Times article by Dr. Peter Bach, who criticizes fee-for-service plans because they encourage doctors to quickly move patients through their practices and to order expensive and profitable testing).

And there are plenty of profit-minded reasons, given our capitalist system and what some call “actuarial logic,” why it is that insurance companies charge older folks more for insurance or discriminate against the sick, even though such behavior causes gratuitous harm to society.  They are in business to make money, not to promote the general welfare.

So, it only makes another kind of sense—common sense—to take, or begin to take, the profit-motive out of our health care system. As I said, I would be in favor of a complete government-run, VA-like system, but the second-best in my opinion would be to improve the Medicare system and extend it to all folks who want it.

Based on all that, I suggest considering the recommendations of the above-mentioned Phillip Longman, who says that to improve and make Medicare financially sustainable, we ought to set a date certain for the conversion of that system from an inefficient fee-for-service plan to one that utilizes Medicare-certified nonprofit HMOs.  He addresses the historical problems with Health Maintenance Organizations (there are many) and offers valuable examples of ones that have worked well, including, but not limited to, the VA system. (Among other non-government players, he mentions the Cleveland Clinic and the Mayo Clinic.)  

Longman says:

Approximately a third of all Medicare spending goes for unnecessary surgeries, redundant testing, and other forms of overtreatment, according to well-accepted estimates. The largest single reason for this extraordinary volume of wasteful and often dangerous overtreatment is Medicare’s use of the “fee-for-service” method of compensating health care providers that dominates U.S. medicine, under which doctors and hospitals are rewarded according to how many procedures and tests they perform. To fix this, the federal government should do the following: announce a day certain and near when Medicare will be out of the business of subsidizing profit-driven, fee-for-service medicine.

Republicans, famously, have voted en masse to voucherize Medicare, which would, as Longman says, “lead to seniors paying for nearly 70 percent of the cost of their health care, which is hardly insurance at all.” And certainly not “Medicare” at all.

Democratic fixes, says Longman, are less onerous for seniors, but “don’t necessarily save money” because “profit-maximizing providers remain free to game the system.” And some of the fixes built into the Affordable Care Act, like the Independent Payment Advisory Board, are subject to political demagoguery (“death panels”) and thus reversal, and at best, even if they survive, their ability to do good is “gradual.”

Longman again:

Unless a more immediate and certain reform is applied, most of the Medicare population will continued to be treated—for years if not decades to come—by the status quo of a pattern of deeply fragmented, wasteful, and dangerous fee-for-service care, the cost of which everyone now agrees is unsustainable. If we’re going to avoid financial Armageddon, we have to do better than that.

Phillip Longman’s idea of setting a date “when the Medicare system will stop covering fee-for-service medicine” and instead give seniors a choice “among competing managed care organizations” that do not operate under the profit motive sounds like a good place to start to me, in terms of fixing the Medicare system we have today.

After that, or as part of that fix, we could, if we generated the political will, extend the program as an option to all—even though Longman does not go that far in his proposal.

And speaking of political will, over all this talk of reform hangs the politics. By adopting his proposal, Longman argues, both Democrats and Republicans can declare some kind of victory:

It allows Democrats to say that they will not cut benefits to Medicare recipients. And Democrats should also like that these nongovernmental organizations serving the Medicare population will have the freedom to do things liberals have long wanted Medicare itself to do, like bargain with drug companies for lower prices. Meanwhile, Republicans who support this proposal will be able to boast that it takes vast decision- making power out of the hands of “unelected bureaucrats in the federal government” and puts that power in the hands of private organizations that compete with each other for customers.

Longman closes with this, which will serve as my close:

America is still a rich and productive country. Compared to Europe or Japan, it has a youthful population and no real long-term debt crisis except that caused by huge volumes of wasteful and dangerous fee-for-service medicine. So once again in our long history, Americans can have their cake and eat it too. We can improve our health care while lowering its cost, and in the process eliminate our long-term deficits and resume building for future.

So why don’t we feel more optimistic? Because there is this feeling of despair, especially among policy makers and the chattering classes, that we don’t know how, politically, to bring health care costs in line. We know that all other developed countries get better health care for less money, and that it is no real mystery how they do it. But all their approaches seem—or can be spun as— socialistic, paternalistic, and fundamentally un-American, and therefore impossible to consider.

Yet we have within our reach a solution that is not imported from abroad, and that has been proved on our own shores by all-American institutions, from our best nonprofit HMOs to the VA health system. We may not currently have the political will to use these institutions as the model and means to fix the health care crisis, and hence eliminate our long-term fiscal problems. But we shouldn’t fool ourselves into thinking it can’t be done.

If you want to hear Phillip Longman discuss at length his findings about the VA health system—he started out as a skeptic—here is a video of the talk. His interest in the health care delivery system was related to the unfortunate experience of his late wife, who died of breast cancer:


Previous Post


  1. Excerpts from the comment that the EC still refuses to post in response to an earlier “Medicare for all” suggestion: It is in two parts and has been edited to avoid the excuse of “too long” (Part 1)
    Geoff Caldwell Says: Your comment is awaiting moderation.
    December 29, 2011 at 12:39 pm | Reply
    Dr. Mark Perry, with the University of Michigan, who holds multiple graduate degrees (2 in economics alone) has a ( slightly different take ) on the “profit” of those evil health insurance companies. Of course he uses actual factual data showing the industry profit margin is WAY down the list of industries (86 to 88th) but don’t let that stop the hate machine against them by any means. For you must first demagogue profit if ever the masses are to demand the purity of government.
    Regarding your Medicare for all: What part of Medicare is already not paying an equitable fee and causing the private sector to have to subsidize it through higher premiums don’t you on the left get?
    ……… it is always a good day when someone from the left again opines on “Medicare for all” as the fix for our broken healthcare system. For only in the land of unicorns and honey would it be considered prudent to take an already broken system that is on an unsustainable path and suggest bringing the rest of the country under the “umbrella” of big brother government.
    And let’s not forget that the tax supported portion of Medicare is the smallest part.
    Beneficiaries pay extra in “premiums” for Part B and millions pay thousands of dollars a year for Medi-gap policies to cover what Medicare does not. The basic Medicare offered to all seniors over 65 is anything BUT the utopian all is now covered panacea that the left wing minority wants you to believe.
    In fact the actual “Medicare” as comes from the government has hospital deductibles of $1132 for the first 60 days, a $283 per day copay days 61-90 and then requires a whopping $566 per day copay from 91 – 150.
    So unlike a private catastrophic policy with say a $5000 deductible and then pays to protect a patient from bankruptcy, Medicare actually works in the opposite direction if someone has a long term hospital stay. The hospital co-payment alone amounts to over $8000 dollars for the 61 to 90 days, over $9500 with the first 60 days included, and then puts over $500 smackeroos a day as the patient’s responsibility. Imagine the lead story of every nightly newscast if a private health insurance company tried to do that.
    But of course the left doesn’t tell you those dirty little facts. They get hidden by putting forth to the public that all of those “private” Medicare supplemental policies that pay for what Medicare doesn’t are somehow part of Medicare.


    • Well, it’s back to the same ol same ol. Part one posted but part two is being censored again in perpetual “moderation”. Such a complex issue and as the EC himself has said requires lengthy discussion, yet tis he and he alone that denies that “discussion” by not allowing comments to pass through.


  2. Let’s keep trying: (Part 2)
    Geoff Caldwell Says: Your comment is awaiting moderation.
    January 2, 2012 at 7:27 am | Reply

    Excerpts from the comment that the EC still refuses to post in response to an earlier “Medicare for all” suggestion: (Part 2)
    Continuing on: Let’s just give you your argument for sake of argument. Effective tomorrow the federal government takes over the healthcare system with “Medicare for all”. Any thoughts on what you do with all those previous private sector taxpaying citizens that are now unemployed? What’s that you say? Just bring them into the government administering the “public” system?
    Hmmmmmm, so you destroy hundreds of thousands of private sector, tax paying jobs and throw them onto the public sector payroll thereby causing the taxes of the remaining private sector to have to increase to pay for the huge addition of public employees to bring about the utopian “Medicare for all”. BUT in the end, I suppose it would be all worth it. After all, you’d have gotten rid of a few dozen greedy “executives” and an absolutely evil profit margin of below 4 percent.
    The system most certainly needs reformed, and I and many others have put forth item by item much that could be done without sending the nation down the sinkhole of an English type National Health System.


  3. Let’s Keep trying (Part 3):
    And one last little “fact” to chew on regarding private insurance in government programs: Any of you on the left care to venture a guess as to what is continually credited for holding down the cost of Medicare Part D? It’s competition among private companies competing for customers. A review of how it’s working complete with actual cost facts from the Medicare trustees and Congressional Budget Office:
    For a detailed review of why the left’s siren call of Medicare for all is not at all what it seems:
    So let the name calling begin, the subject changing start, and the attacks be unleashed. Those not pre-disposed to one-payer nationalized medicine at least now know that “Medicare for all” is not the utopia the left would have them believe.
    Putting lipstick on a pig, still leaves a pig. Surrounding “Medicare for all” with opinions of what “might” happened with true Medicare reform from those already disposed to wanting a nationalized system still leaves a flawed system.


  4. Let’s keep trying (Part 4): (Now wouldn’t it have been a LOT simpler and cleaner to just allow the original posts to go through?)
    The link to Mark Perry’s review of the so called “profit” in the healthcare industry that the left continues to attack as a problem:

    And finally, let’s not forget that the ONE state that has the closest to the “Medicare for all” with government heavily involved and trying to set the market also has the HIGHEST healthcare costs in the nation. (But shhhhhhhhh, don’t tell anyone, it kind of blows one huge gaping hole in the entire argument.)

    As a conservative I am in full support of Massachusetts or any other state adopting the healthcare it wishes to try, it’s called the 10th amendment. As that same conservative, it is exactly why I am against any further expansion of a program, Medicare that is already at the verge of bankruptcy by any objective review.


  5. As long as the present system of corrupt lobbying practices is the norm, we’ll see no positive changes in the health care systems.

    As long as the filibuster is a part of the system, the corporate lobbyists will always win and the public will lose.

    The graph speaks for itself.
    All the long rebuttals and vitriol do not change the facts.

    Just hours ago, I spoke with two people who both have BCBS “cadillac” health insurance. Some of the best policies you can get (without being in congress), and both pay about $80-$100 per week for this. Both people are also filing for bankruptcy this week, due to medical bills.

    As soon as you or a dependent becomes seriously ill, the out-of-pocket costs will far outrun your ability to pay.

    There’s huge profit made in the business of death and disease.
    No matter what the political arguments about healthcare are, it’s still immoral to bankrupt these people for being sick or dying.

    The system does not care what your opinion of the cost is. The lobbyists and corporate executives have no interest in your well-bieng. The system only cares about perpetuation of the status quo and maximizing profits.

    The two I mention above are not irresponsible people. They have worked hard, made their payments on time and been good Americans. One is a liberal, the other is an evangelical conservative.
    The ‘system’ does not discriminate.
    Doctors can discontinue your care when it becomes bothersome and time consuming. Health insurance providers can discontinue your coverage.
    It is an immoral and out of control monster.


    • You make some very valid points but it must also be pointed out that that “huge” profit runs basically in the 4 percent range for the insurance companies putting it way, way down on the list of “high profit” industries. (As for down as 86 and 88 in some of the recent data.)

      The bottom line is that we as a country, as Americans want far, far more healthcare than we can pay for. Everyone wants the very best, the very latest, no matter the costs. Truth is that cannot be paid for no matter what system is in place. There just is not enough money to go around.

      There have been and always will be sad stories of those bankrupted in the current system but there are just as many of those who died because of lack of care needed under an English National Health system. I’d rather be bankrupt in our system than dead in theirs.

      The only thing certain in life is death. Somewhere along the way the past forty years millions of Americans have been led to believe that the American healthcare system entitles you to cheat death as much as possible, no matter the cost.

      Over twenty years ago my family faced a terrible choice. Allow surgery to remove a benign tumor on my grandfather’s neck and begin immediate and massive chemotherapy for the lung cancer that had also been found or bring him back to his home town and let him pass in peace.

      We were told that while the tumor could be relieved easily, it was also blocking him from the pain of the cancer. In addition the best outlook was maybe a few more months even with the most aggressive treatment available.We knew his wishes.

      We knew that he had led a good life, and that though we hated the timing and thought it far, far too early (74) it was “his time”. It was a choice no one wanted to make, a choice we all questioned why, but a choice that eventually presents itself to each and every one of us at some point in our lives.

      Many tens of billions of dollars are spent in this country each and every year chasing those last few months in a vain attempt to deny the mortal truth that we all have our “time”.

      Your examples are truly heartbreaking, and I will put those people in my prayers, but no healthcare system, private, public, capitalistic or socialist can stop what we all know is eventually our own “time”.


      • And the ultimate irony of that whole story was that one of the wealthiest men in town, a local banker had the very best care that money could buy, spent months in treatment at M.D. Anderson in Houston, and in the end died on the exact same day as the Kansas dirt farmer and cattleman that he’d approved so many loans for. The churches overflowed for both, for in the end, tis not the money nor the care but how we lived that counts.


        • I did not research and provide numbers or percentages. As you’ve noticed, I’m not into refuting every point anyone make, even if they are incorrect. There’s already plenty of that to read right here.
          I think that generally we can agree that long-term illness, death and dying, should not bankrupt people who’ve played by the rules and worked hard.
          To me, it just feels like an American ideal to have some sort of “safety net” to prevent that.

          With so much disagreement here, I’m just looking to find a few things we might agree on. If I posted some numbers, we’d just start quoting our own sources and the fight is on!

          I hope this new year finds all Americans finding some common ground and making some political progress.
          We can’t survive perpetual gridlock.


          • Tracy,

            Don’t apologize for not engaging in a detailed argument with someone who really values wasting your time over anything else. Trust me on that one.

            As for your statement that “long-term illness, death and dying should not bankrupt people who’ve played by the rules and worked hard,” I, of course, agree very strongly with that. But there are plenty of folks out there who don’t agree. We know they don’t because they will vote for Republicans who can’t wait to get their hands around the throat of “Obamacare.”

            Speaking of bankruptcy and Republicans, back in 2005 the party made it even more difficult for folks to get out of the grasp of the life-killing debt monster by reforming, in favor of the financial industry, our bankruptcy laws. And before the “personal responsibility” moralizing comes oozing from the keyboards of conservative lurkers on this blog, we should all know that most bankruptcies are due to overwhelming medical bills.

            So, the stance of many in the GOP is, as Alan Grayson said, “Don’t get sick.” And if you do get sick, “die quickly.” And, I might add, if you are confronted with unpayable medical bills because of inadequate or non-existent health insurance, then don’t expect much relief from humane bankruptcy laws.


            and , who, in fact, speaking of bankruptcy, made it even harder for people to escape


            • Wonderful left wing DNC talking points all but as usual with the EC it only shifts the focus to the commentators instead of addressing the issue.
              Look at the whole bankruptcy issue another way:
              Just how much money should anyone be allowed to take from their fellow citizens to keep grandma alive? Five thousand, ten thousand, half a million? Because unless you’re writing a check out of your own pocket for the care that’s exactly what you’re doing.
              Either through taxation and premiums via Medicare and Medicaid or via only premiums with private insurance.
              Said taxes and premium amounts being set by actuarial tables and risk management models.
              Is it “fair” to force upon future generations mountains of debt and a lower standard of living in a naive attempt to ensure equal outcomes for all in some utopian healthcare system?
              Is it better or worse to face bankruptcy and at least keep your house and your car or to die awaiting treatment in a nationalized bureaucratic system?
              The underlying problem that no one wants to talk about is the fact that the entire concept of “health” insurance and Medicare has lulled the public into a false belief system that we are all entitled to each and every procedure known no matter the cost, no matter the consequences. No one wants to admit when their or their loved one’s “time” has come. Modern medicine and “society” is supposed to magically step in and postpone that “time” for as long as possible, no matter the cost nor damage to that same “society” from such reckless fiscal policy.
              “Medicare for all” and the “public option” make for nice little sound bytes and rally the minions against the “evil” insurance industry but no matter what side of the aisle you sit in this debate the simple fact is there is just not enough money to give everyone, everything.
              Now while myself and others on the conservative side have put forth real, identifiable ways to lower the cost curve and truly reform the system to make it better for all, the only thing we continue to get from the left and the EC is to tout the Affordable Care Act (with it’s hundreds of exemptions, a long term care portion now forced to be dropped, unrealistic cuts in Medicare payments to physicians and hospitals, hundreds of billions of new Medicaid expenses pushed onto the states, and on and one) and the siren song of “Medicare for All”.
              The dirty little secret we’re supposed to ignore is that people are still dying in Canada, England, Sweden, France, Germany and all those other socialized medicine utopias the left wants to force upon America while the wealthy in those very same countries continue to come to the U.S. to get what they can’t get in their own countries. (But shhhhhhh, don’t want to put forth too much truth at once, the little minds can only handle so much.)


  6. Duane,

    You have put a lot of work and careful thought into this analysis and I need more time to absorb it fully, but my first impression is positive. I do not see where you and I differ in any important way on the matter. I am not familiar with Longman and haven’t read the links to his material yet. But, thanks for the effort here. I expect to comment further after I have absorbed it. Clearly you, Terry, and I all agree that this issue is not only at the heart of the debt problem, but is crucial to the health of the American ethos and way of life.


  7. ansonburlingame

     /  January 2, 2012

    To all,

    I readily admit that the “problem” is very complex and for sure not amenable to solutions, even in well researched and carefully analyzed blogs such as Duane just wrote. He for sure supports nationalization of all health care, eventually, or so it seems to me with “eventually” being undefined. VA, Medicare for All, public option supported by government “rationing” (in price only), etc.

    I give him credit for trying.

    I leave the detalis of rebuttal in links as well as lengthy but pertinent comments to Geoff. He based on 20 years in HC knows far more of the details than I could ever learn now.

    But let me make very clear a very fundamental rebutal to Mr. Longman who is quoted above as saying, “ has a youthful population and no real long-term debt crisis except that caused by huge volumes of wasteful and dangerous fee-for-service medicine…”

    NO REAL LONG TERM DEBT CRISIS is what Mr. Longman said and Duane I assume agrees with.

    Well go read the link posted in previous comments from me or read my recent blog on debt issues and most importantly the link provided by Herb Van Fleet.

    Before anyone ever convinces me that we do not have a “long term debt problem” you must absolutely refute the number $65 Trillion (or current individual debt of $550,000 PER AMERICAN) right NOW, facing us.

    THERE is the cliff, the HUGE debt that is overwhelming us day by day with only arguments from both parties for now how to slow the increase. NO ONE argues over how to make that number come DOWN, anytime, today or in the future.

    Add that to my oft stated “fact” that we spend $2.8 Trillion evey year on HC today in America. THAT is the standard of care that Americans as individuals WANT. And the politcs of taking any of that amount away from some or all Americans is imposstible to overcome,, politically today.

    I could of course go on, almost forever, in such rebutal, based only on sustainablitiy of any HC reform arguments. What we spend must eventually equal what we “take in”. Period.



  8. ansonburlingame

     /  January 2, 2012

    To all,

    Forget the details, the length of replies or all the links pro or con related to HC.

    Geoff just nailed it in my view in his last two posts above.

    All the money in the world will not prevent the pain of death to those still living after the death. But at least the pain of dying has been drastically mitigated by tremendous advances in treatment and pain mitigation over time.

    And THAT system to treat where possible, considering cost as well as other factors, along with the ability to relieve pain and suffering up to the point of death is something we can NOW AFFORD for everyone and provide it as far as I can tell almost all of the time.

    But all this argument over extending treatment to avoid death as long as possible, cost be darned, well it makes no sense to me and I am old now. When my time comes, I am ready for it today or tomorrow and my wife and kids are ready as well, I think.



  9. ansonburlingame

     /  January 3, 2012

    To all,

    Search above for Sekan’s latest reply wherein he said “…we can agree that long-term illness, death and dying, should not bankrupt people ”

    I agree with that but add, emphatically, that it is NOT government’s role to prevent that from happening. It is the role of the individual and the family to make such decisions. Government should have no say in the matter.

    As I have said before, understanding Sekan’s personal family situation with his father, that while I have great empathy for Sekan’s father’s situation, government policy decisions should not be made based on ancecdotes. Use the constitution as your guide for government policy.



    • What? The Constitution has a section about medical care, insurance and bankruptcy? Hmm.

      Strict constitutionalists are like some evangelicals who believe that if it’s not in the Bible, then it’s not real. Kind of like evolution. Not there, doesn’t exist. If it’s not mentioned directly in the constitution, it’s not constitutional to even legislate concerning it. Right?
      Modern laws protect people from modern problems.


  10. “Tracy,

    Don’t apologize for not engaging in a detailed argument with someone who really values wasting your time over anything else. Trust me on that one.”

    I see that. There are worthy blogs all over that are subject to the same thing. I’ve been blogging here and there for 8 years and have seen it all. I could pick a few others and insert them here with the usual couple of names and you’d never know the difference. At one blog I attempted to comment on, the very intelligent host has made the mistake of believing it’s not a waste. The comments will number into the dozens while the host tries to reason with one particular ideologue. The average newcomer is quickly discouraged. It has become pointless. It’s not even entertaining anymore, it’s just sad.
    You’re right. My time is more valuable than that.


%d bloggers like this: