Health Care or Health Careless?

Guest Commentary

Volume CIII, No. 11November, 2003

Bob Hayes and Ben Peck

A core group in the House of Representatives no longer wants Medicare to run as a government program that guarantees a set of health benefits at a known price. Instead, they want to establish a government-financed voucher system in which private, for-profit H.M.O.’s and other private insurers offer a multitude of varying policies for sale at varying prices.

People with Medicare overwhelmingly approve of the way the traditional Medicare program is structured. They value Medicare’s reliable coverage, wide choice of doctors and hospitals and guaranteed benefits. Most people with Medicare do not like the plans offered by private insurers, mainly H.M.O.’s, that are available to them. About six in 10 people with Medicare have the choice to enroll in an H.M.O., but only about one in 10 actually do.

It’s not cost-effective for private health plans to run Medicare. Nonpartisan data show that the government pays more to offer the same benefits to people with Medicare through private plans. For example, in 1998, the government paid H.M.O.’s $5.2 billion more to cover health care costs for people with Medicare than it would have cost through traditional Medicare.

For-profit plans have much higher administrative costs than the government-run Medicare program; advertising, high executive compensation and profits to shareholders drain money from a health-care system.

Private insurers cannot negotiate the best prices with health care providers like Medicare can because each private insurer has a much smaller market share. According to the Medicare Payment Advisory Commission, which advises Congress, private health plans pay about 15 percent more than Medicare to purchase similar services from doctors and hospitals. So why are the ideologues demanding an overhaul of Medicare that is neither popular nor cost effective? Maybe it is faith trumping objective evidence. A true believer in markets will believe no matter what the facts are.

Gutting Medicare is a bad deal that will erode the nation’s health security.

Or maybe it is something more sinister.

A cultural war rages in Washington over the role of government as an activist force to improve the quality of life for the American people. A core group continues to believe that both the New Deal of Franklin D. Roosevelt and the Great Society of Lyndon B. Johnson are drags on our national, market-based destiny.

Medicare, with all its imperfections, represents a governmental success, a kept promise that society will devote the resources to assure that the elderly and the disabled have good health care. It is successful, it is popular and it drives market ideologues wild.

Having private plans run Medicare would not be more efficient, but it could provide political cover to gut Medicare’s guarantee of reliable health care. Once private plans are in place it will be much easier for politicians to cut Medicare spending by giving seniors and people with disabilities a voucher to buy health insurance in the marketplace.

Then insurance companies, not politicians, take the blame for cuts in benefits. That, as much as anything, is what the ideologues want.

On a daily basis we work with older Americans who cannot afford the medicines their doctors prescribe. Beverly Lowy, 70 years old and a former writer and editor, recently stopped taking medication for osteoporosis due to the cost, $125 a month, although her vertebrae had collapsed in 2001.

Mrs. Lowy suffers from end stage obstructive pulmonary disease, along with osteoporosis. Her husband suffers from end stage renal disease and heart disease. A once comfortable couple, they now face nearly $12,000 in annual drug bills, and their savings are evaporating.

Gutting Medicare is a bad deal that will erode the nation’s health security. It is an unacceptable human cost.

Bob Hayes is president of the Medicare Rights Center, a national consumer organization; Ben Peck is the center’s Washington Policy Director. For more information, see This commentary first appeared in longer form at