08/02/2019    Sev Hrywnak, DPM, MD

National Health Insurance? Medicare for all? Not -So-fast.

Democratic candidates for the presidential race
of 2020 are pushing the “Medicare for all” call.
The argument being put forward is that less money
will come out of taxpayers’ pockets to pay for
their healthcare and that turning from an already
heavily regulated healthcare market to much more
government control, would slash administrative
costs. This is just plain false. It all comes
down to “playing” with the numbers.
Administrative costs, as a fraction of total
costs (the typical measure used), is highly
misleading when comparing Medicare to other
healthcare insurance plans. Non-medical
administrative costs are primarily a function of
the number of beneficiaries, not the cost of
their care.

Remember, Medicare patients are far older, less
healthy and more than twice as costly, on the
average, than younger people in private health
plans. Medicare’s reported administrative cost
per beneficiary has consistently exceeded that
for private health plans. Also adding to this
“mismeasurement” is that many of the
administrative costs of Medicare are not counted
in comparisons because they show up in other
agencies’ budgets. Social Security administers
the collection of Medicare premiums.

The IRS collects the taxes. Health and Human
Services pays for the building and marketing
costs as well as accounting and related concerns.
If these costs were attributed correctly,
Medicare’s administrative costs would be double.
So, going forward, when the mantra will be
repeated time and time again that Medicare is
less costly to run than private health plans,
keep in mind that it is not. Those pushing for
Medicare for all rely on the presumption that it
will generate huge administrative savings. What
it will generate, however, is another tax burden
on the tax payer. Also “Medicare for all” would
affect physician reimbursement, this is another
topic worthy of discussion.

Sev Hrywnak, DPM, MD, Chicago, IL

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