Ethics Beyond Compliance

Medicare was born on July 30, 1965 primarily to help provide medical insurance for Americans over 65. As of 2012, Medicare covered more than 50 million people and it has succeeded in preventing many people from falling into extreme poverty in their old age. And of the 50 million covered, about 8.5 million are people with disabilities, who would not be insurable through private insurance plans.

Despite a few arguments, from the for-profit insurance industry, Medicare is financially more efficient that public plans (see a discussion here ). Even pro-industry arguments tend to highlight some of the advantages of Medicare. In this defense by Merrill Matthews for The Council for Affordable Health Insurance  of private sector insurance, for example, the author says, “Executives and boards of directors consider, debate and decide company policy; in Medicare that function is often handled by Congress and its legislative staff. “ The authors point out that the time of Congress is also of some value, but the cost is borne by taxpayers. Of course, the time spent by private-sector administrator is also borne by those who enroll in their plans, but private-sector administrators are not accountable to taxpayers in the same way members of Congress are expected to be. The CAHI defense also points out that private insurance companies must raise money and include the cost of raising capital in their administrative costs estimates while Medicare does not include the cost of raising capital as that is done through Congress.

The real difference, according to Matthews’ argument, though, is in the amount of money spent on patients. Matthews points out that private insurance companies spend more money on administration because “they scrutinize individual provider claims much more closely, challenge questionable procedures and determine whether, in the company’s opinion, a claim is valid or needs to be reconsidered.” In other words, private insurers spend a lot more money denying claims. If you’ve ever experienced a major illness or injury, you have been bombarded with paperwork explaining why you will have to pay your own way with no reimbursement from your insurance company.

Matthews said that in 2003, Medicare spent $6,600 per patient paying claims, while private insurance paid only $2,700 per patient. This hits consumers in two ways. First, if you’ve already received treatment and the bill is denied, you are on the hook for payment. Second, the price of your premium includes the salaries of the administrators who are committed to denying your claims, so you are paying them to refuse payment for your treatment. If you think it is good that your claim was denied, leaving you with enormous medical bills after a serious illness, private insurance is the way to go. If you want to have some peace of mind that your bills will be covered, expansion of Medicare is certainly the best choice.

Nonetheless, it is true that Medicare payments need to be lowered. The costs of Medicare payments reflect the costs of for-profit healthcare. The costs can be lowered by enabling Medicare to negotiate the costs of medicine (drugs, hospital equipment, and other medical technology). The costs of common medical procedures vary wildly from city to city in the United States (to see a comparison of four services, look here). By bringing more transparency to healthcare costs, Medicare can pay providers what is reasonable, rather than what is currently possible. While many say that markets create competition that will lower prices, this is simply not the case. The reason it isn’t the case should be obvious to anyone: patients who need healthcare are in no position to shop around. After I had knee surgery in 2001, I had complications that some blamed on my choice of doctor. When asked why I chose this particular surgeon, I said, honestly, that I lay in bed with a shattered tibia, calling doctors for appointments. The doctor I “chose” was the seventeenth doctor I called. No, I did not carefully research his credentials, prices, or hospital admitting privileges. Even at that, I had to wait two days with a shattered tibia to get an appointment. This is the reality of for-profit healthcare and for-profit insurance. It is a nightmare. While Medicare may not be a blissful dream, it leaves fewer patients with healthcare induced night terrors.

Many people seem to have a false sense of security with their employer-sponsored health insurance. In the first place, they overestimate how much of their care will be paid for by the insurance. Then they seem to forget that any serious illness or accident that makes them unable to work will also make them unable to maintain their insurance coverage. The fact that your employer provides insurance today is no guarantee that it will be there when you need it. Further, under the Affordable Care Act (ACA), employers may reduce employees or hours to avoid providing healthcare, as discussed in this article in the Wall Street Journal. And finally, under the ACA may further restrict patient choices of providers, as noted in this piece in the New York Times.

Should anyone be at the mercy of employers for healthcare? Should small-business owners and the self-employed have to shoulder a disproportionate burden for healthcare? Medicare for All is an equitable solution that is fair to everyone and enables us all to pursue our vocations according to our dreams and talents rather than our fear of medical bankruptcy. The time to expand Medicare was 49 years ago, but let’s do it now. Support H.R. 676.

Additional Reading: For more resources on this topic, see the Public Health and Social Justice website.