By OccupyWashingtonDC
OccupyWashingtonDC.org, Nov. 17, 2011
[Note: The following is an excerpt from a much longer report titled “The 99%’s Deficit Proposal: How to create jobs, reduce the wealth divide and control spending,” which is available in full here. The authors write, “This report should not be considered the demand of the Occupy Movement. It was prepared by one occupation, Freedom Plaza in Washington, D.C., and it does not reflect even that occupation’s full demands.” Among those coordinating activities at Freedom Plaza are Dr. Margaret Flowers, PNHP’s congressional fellow, and Kevin Zeese.]
Improving Medicare and Expanding it to Provide Health Care to All in the United States
- Former Labor Secretary Robert Reich writes “Medicare isn’t the nation’s budgetary problems. It’s the solution. The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles. Medicare offers a means of reducing these costs.”
- Medicare bears the burdens of existing within an insurance-based health care that fails to control costs and creates tremendous bureaucracy. While there are short-term fixes to Medicare, what is needed is an end to the current insurance-based approach. The United States spends the most per capita per year on health care yet a third of the population is either uninsured or underinsured so that they face financial ruin if a serious accident or illness occurs. Health care spending in the U.S. is rising 2.5% faster than GDP.
- Expanding and improving Medicare so it covers all in the United States is a key component to controlling health care costs and government spending; as well as ending the deficit problem of state and federal budgets. Estimates of how much would be saved on administrative costs alone by extending Medicare to cover the entire population range up to $400 billion a year. This savings plus the inherent cost-controls of a single payer health system would offset the cost of providing everyone in the United States with access to lifelong, comprehensive, quality health care. Controlling health care costs would sharply reduce the long-term budget crisis, as well as foreclosures and bankruptcy.
- Even without improving and expanding Medicare to cover all, the program is not in crisis. The Medicare Trustees say that the program faces a modest shortfall over its 75-year planning horizon. The projected shortfall is around 0.3% of GDP or less than one-fifth of the amount that annual military spending was increased since September 11th, 2000.
- Economist Jack Rasmus points out that all it takes to cover the Medicare shortfall is a mere 0.25% increase in the Medicare share of the payroll tax for the next ten years and another 0.25% starting in the eleventh year. The Medicare tax rate is currently 2.9% for the employee and the employer. These tiny tax increases would make Medicare secure.
- In fact, the Congressional Budget Office (CBO) calculates that the Medicare system in its current form is far more efficient than the privatized system advocated by a bi-partisan consensus of political elites. CBO’s projections show that switching from Medicare to a privatized system would add $34 trillion to the cost of buying Medicare-equivalent policies over the program’s 75-year planning period.
- Medicare provides efficiency. Reich reports: “Medicare’s administrative costs are in the range of 3%. That’s well below the 5% to 10% costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25% to 27% of premiums). And it’s way, way lower than the administrative costs of individual insurance (40%). It’s even far below the 11% costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.”