Bernie Sanders doesn't seem to know what Medicare is

1/20/2016 09:11:00 AM
In my last post I analyzed whether Bernie Sanders's claim that medicare-for-all would save the average family $5,000 a year was realistic, and ended up concluding that it was at least plausible, and that some amount of savings is likely, due to the lower administrative costs and in particular the lower rates Medicare pays to healthcare providers.

Ezra Klein has some tough criticism of Sanders's plan though. Here's the part that stands out:
Sanders calls his plan "Medicare for all." But it actually has nothing to do with Medicare. He's not simply expanding Medicare coverage to the broader population — he makes that clear when he says his plan means "no more copays, no more deductibles"; Medicare includes copays and deductibles. The list of what Sanders's plan would cover far exceeds what Medicare offers, suggesting, more or less, that pretty much everything will be covered, under all circumstances.
Klein concludes that Sanders has done a bait-and-switch, calling his plan a simple expansion of Medicare, while actually proposing something that works very differently than Medicare. I think the truth is worse than that.

Sanders commits the classic liberal fallacy of assuming that Medicare is great health insurance. He doesn't seem to realize that Medicare has copays, co-insurance, and deductibles, that it doesn't cover everything or every provider, that it still denies a portion of all claims.

Medicare is actually fairly crappy insurance. Here's a break down: Medicare Part A is insurance for hospital in-patient stays, Part B is insurance for "outpatient" care (which, confusingly, includes a lot of in-hospital care, even short stays and many kinds of surgery), while Part D covers prescription drugs. Part C is Medicare Advantage, which is an alternative to Parts A and B.

On deductibles, Medicare is pretty reasonable: $1,288 deductible for Part A and merely $166 for Part B. It's everything after the deductible that's crappy. For Part A, after the deductible your out-of-pocket costs actually grow as the severity of your condition worsens: after 60 days of hospitalization you pay $322 per day, and after 90 days you pay full cost (there are an additional 90 "lifetime reserve days" you can apply there though). Part B is actually worse: you pay 20 percent of all costs after the deductible.

This made some amount of sense when Medicare was designed. Back then doctors typically didn't even bother charging patients for outpatient care, because almost everything was done inpatient and outpatient stuff was just insignificant. But because of technological improvements, healthcare overall is shifting from inpatient to outpatient. Currently, Medicare spends about as much on outpatient care as inpatient, and that ratio is growing—CBO projects that by the end of this decade, outpatient care will exceed inpatient care. My point here is that while you could argue that hospitalizations longer than 90 days are very rare, that 20 percent on the other half of your health costs is extremely expensive. Seniors can easily find themselves owing $20,000 on a $100,000 outpatient surgery. Considering that the average social security benefit is only $14,169.60 per year, I don't know many seniors who can bear that kind of medical bill.

The simple truth is that Medicare is no longer sufficient insurance because it does not cap seniors' outpatient expenses. The program has totally failed to modernize in the face of dramatic changes to healthcare delivery. As a result, the vast majority of seniors—86 percent to be exact—purchase additional insurance to cover the rest of what Medicare won't pay. Some seniors qualify for both medicare and medicaid, so medicaid does actually cover these additional costs. But the rest, a solid majority, purchase private insurance one way or another. This includes Medicare Advantage (Part C), which is a private alternative to Medicare and generally has much better coverage, as well as employer-sponsored insurance (the most common option, typically offered as a retirement benefit), or "medigap" policies which are simply private supplemental insurance coordinated through federal exchanges.

Sanders undoubtedly has supplemental insurance as it is an employment benefit he would have received as a result of his years in the US Senate. He doesn't seem to realize that that's not medicare, and that he in fact relies on private insurers for much of his medical coverage.
Anonymous 1/20/2016 10:22:00 PM
Medicare denies claims for unnecessary claims. Part B copay is 20% of approved charges; MRI approved charge is $420; I'd say $84 for an MRI is a bargain to the patient. Part A does have copay after 60 days but how many patients stay over 60 days? It also resets after 60 days. And Medicare requjires no precertification for any test or surgery. If it is medically necessary, they will pay for it. Can you say that about any commercial insurance company?
Anonymous 1/21/2016 10:38:00 PM
i don't trust you cause your blog is so poorly formatted: white text on black background, etc
Anonymous 1/23/2016 10:48:00 AM
Name one single $100,000 outpatient surgery! You are a shill for the greedy insurance companies selling crappy Medicare replacement policies