November 24, 2013

Remember the Birth Pangs of Medicare!

The remembrances of JFK this week focused, understandably, on his great promise and how an assassin’s bullet burst the bubble of optimism and exhilaration generated by his election. Implicit in this perspective, however, is the suggestion that all that came after Kennedy was pessimism and gloom, epitomized by the Vietnam War. What is ignored by claims that it-was-all-downhill-after-JFK is that for all Kennedy’s youth, his oratory skills, and his brilliance, he was in many ways not a terribly effective president. Left largely unsaid is that it was under LBJ, the consummate politician, that progress was made on the liberal agenda. It was LBJ who pushed the Civil Rights Act, Head Start, the Food Stamp program—and Medicare and Medicaid--through Congress.

For 50 years, America had resisted national health insurance. Theodore Roosevelt (yes, the Republican Roosevelt) supported national health insurance in the election campaign of 1912, arguing that no society could be strong whose people were sick and poor. But he lost the election and the issue largely faded from the national agenda until a different Roosevelt became president in 1932. While enthusiasm for national health insurance grew within FDR’s administration, the president himself never championed it as he faced relentless opposition from the AMA and state medical societies.

Truman picked up the baton after WWII, but again confronted insurmountable opposition from the AMA as well as other powerful health care organizations such as the American Hospital Association. Thus, despite continued public support—polls every couple of years between 1936 and 1945 showed a large majority of Americans supported government health insurance—Congress balked. The passage of legislation providing comprehensive national health insurance for the poor (Medicaid) and the elderly (Medicare) during the Johnson Administration in 1965 was an extraordinary achievement, launching a very popular program from which older people continue to benefit today.

Just how important Medicare is to the health and well-being of the 47 million people (8 million disabled Americans and 41 million older individuals) now covered by the program was brought home recently by the publication of an article reminding us that access, affordability, and insurance complexity are generally worse in the US than in 10 other developed countries. 

American's poor access and affordability arise largely because of the enormous uninsured population in the US—a situation that does not affect older people, thanks to Medicare, and that will be less of a problem if the Affordable Care Act is allowed to go into effect. Even among insured adults in the US, however, high out-of-pocket spending was a problem, chiefly because of the high deductibles and cost-sharing in many US insurance plans. This problem is less likely to affect older people in light of Medicare’s comparatively modest cost-sharing. 

Access to primary care was less good in the US than in many other developed nations, a problem that was particularly severe for the uninsured. This is one domain that also affected the insured, including those with Medicare, because of a relatively poorly developed primary care infrastructure in the US. 

In the area of administrative costs and complexity, the US was an outlier, with US health insurers spending $606 per person on administrative costs, more than twice as much as the number 2 spender, Switzerland, and 17 times as much as  the number 11 spender, Norway. While there is considerable debate about just how to compute administrative costs of a health insurer, some of the best estimates indicate that Medicare spends less than 2% of its operating expenditures on administrative costs, compared to 11% for Medicare Advantage Plans (the private Medicare spinoffs) and 12% or higher for other private insurers. 

Let us celebrate what Medicare has achieved—reasonably good access to comprehensive care at an affordable price for consumers—and make sure that we do not sacrifice these accomplishments as we improve Medicare to make it more responsive to contemporary medical problems and to slow the rate of rise of health care costs. And as we pay tribute to Medicare, with all its imperfections, let us also recognize that the Affordable Care Act, with all its imperfections, aims to do for the rest of the population what Medicare has done for the elderly and the disabled. Obamacare is not national health insurance--it is as its core a plan designed by Republicans, supported by big business, and relying on private rather than government insurers--but its intent is to extend the indubitable benefits of health insurance to another 30 million Americans.

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