What is lost in Medicare rhetoric

            

        Just about any time anything related to Medicare is mentioned, alluded to, or considered  for change, we hear the same old tired Greek chorus chant  "We paid into it, it should be there for us!" For many, apparently, this seems to imply that  they believe they actually have a "Medicare account"  consisting of   their own personal contributions which they believe should be held sacrosanct for them.  Reality is much different, however.  As it turns out, Medicare is probably one of the best financial deals available to the vast majority of Americans. Of course, you'd never know it if you listen to some of the political rhetoric of the Far Right (or even centrist right in election years!)

        The National Republican Senatorial Committee recently aired an ad in what has become a close  Iowa Senate race between Democratic Rep. Bruce Braley and Republican state Sen. Joni Ernst. It features a woman named Darlene Blake of Des Moines, Iowa, talking about the importance of Medicare. Ms. Blake states: "Bruce Braley voted to cut $700 billion from Medicare to support Obamacare," Blake says. "That’s just not fair. We paid in. We paid for it. That should be there for us."

        Ignoring the fact that her statements, obviously crafted by those  who hired her to do the spot, are misleading at best and a lie at worst, let's just examine the statement relating to her having  "paid in. We paid for it."  The ad correctly states  that Americans 65 and over have "paid in" to Medicare through the payroll taxes they’ve paid throughout their working lives. Currently, workers pay a 1.45 percent payroll tax for Medicare, while employers kick in an additional 1.45 percent. Self-employed people pay both parts of the tax.

        What is misleading, however, is that  it’s not as if those payroll taxes are placed in an account for that beneficiary’s future use alone. Instead, the proceeds of payroll taxes paid by workers of all ages (combined with the proceeds of current beneficiaries’ Medicare premiums) foot the bill for the Medicare costs of today’s beneficiaries.  The way the math has worked out over the years, today’s beneficiaries have gotten far moreback in Medicare spending than they put into the system through their tax payments.  Researchers from the Urban Institute, a nonpartisan research institute in Washington  figured out what people turning 65 in various years have already "paid in" to the system and what they can expect to "take out" after they reach age 65. Because marital status and family income can significantly affect both the amount paid in and the amount paid out, there are  calculations for various types of family units.

       For those who espouse "privatization" ( whatever that might mean to the individual) in an effort to  make the final amounts comparable to what might have been done with the tax money had it been invested privately, the institute adjusted all dollar figures at 2 percentage points above the rate of inflation, a conservative approach, since in current economic situations results could be greater or less that that projected .

        The study looked  at the statistics for three "cohorts" of seniors -- those who turned 65 in 2000, 2005 and 2010. That means they’re 79, 74 and 69 years old today. It showed that, for Medicare recipients, the "worst" deal for any of these demographic groups is still quite generous. A two-earner couple, with one high earner and one average earner, who both turned 65 in 2010 would have paid $158,000 in Medicare taxes over their lifetimes, but can be expected to be the recipient of $385,000 in Medicare spending. That’s a ratio of $2.40 in benefits for every dollar paid in taxes -- and that’s the least generous ratio found by the study .

The highest such ratio was for one-earner couples in which the earner turned 65 in 2000 and was paid the average wage. Such a couple would have paid $39,000 in Medicare taxes but can expect to benefit from $306,000 -- a ratio of $7.80 in Medicare spending for every dollar the couple paid in taxes.

        Obviously  the ad’s claim -- that cutting Medicare is "just not fair. We paid in. We paid for it" -- is greatly exaggerated. For today’s typical Medicare beneficiary, what they paid into the system represents just 13 percent to 41 percent of what they can expect to get out of it. The rest is funded by younger Americans’ payroll taxes.

        Another far more serious and non political issue that should be addressed is the fact that taxes paid by active workers are supporting today’s generation of retirees. This is a big  reason why some policymakers are concerned about the program’s long-term solvency. In 1950, the average American lived for 68 years and retirees were supported by 16 active workers. Now, the average life expectancy is 78 and just three workers support every retiree. By the time today’s middle-aged workers reach retirement age, only two workers will be around to support their benefits. Promised benefits will exceed revenues by about 30 percent, and there will be no money in the trust fund to rely on. So it's waaay past time to be realistic about both Social Security and Medicare eligibility ages. Medicare and SS could be instantaneously fixed by adjusting eligibility ages upward to reflect the vastly increased life expectancy of Americans today vice in 1936 when Social Security was enacted

          While many Americans relate (largely anecdotal) horror stories about national health care systems like Canada's or Great Britain's, the fact remains that both those country's populations consistently report far higher levels of satisfaction with their health care than US citizens  - and it isn't really close!  

        The graph below clearly demonstrates the far higher per capita spending in the US compared to other developed nations. It must be acknowledged that the graph shows spending from all sources, public and private, although of course all spending in many of these nations is public,  because of  the existence of national health care systems.

  Even though total annual health care spending per capita in the  US is highest of all the developed countries, satisfaction with health care is below that of nations spending far less per capita. The graph below clearly demonstrates this fact. 

How it can possibly be that patient satisfaction is lower overall in spite of  far higher costs is, or certainly should be, a major concern for all Americans. Instead,  we are constantly bombarded with advertising from big pharma, healthcare insurers and even hospitals, loudly proclaiming their deep and abiding concern for us as individuals. The sad reality in America is that we pay more for health care and services and are as a rule less satisfied with what we get. 

       A common anti-national health care complaint is that waiting times for specialist care are too long in those nations with single payer systems ("single payer" is generally used to designate a national health care system with the insurer being the nation). 

The above graph shows that between 2004 and 2010 the gap between the US and NHS  (National health Service) nations have steadily decreased, with Canada as an exception.  In the UK, in fact, waiting times have been halved and are relatively close to those in the US. In Germany, they are lower. Germany. of all the European nations has the system which most closely reflects the aims of the Affordable Care Act - commonly incorrectly referred to as Obamacare.  Germany's system mandates healthcare insurance for all employed persons, but the insurance is privately underwritten. This system has resulted in a NHS which produces lower waiting times for specialist services than the US at a per capita cost half that of the US!

        My bottom line here is that Americans should probably reconsider before complaining about Medicare, since its benefits are generally in excess of what a private insurer could produce. Also worth consideration would be a calm, non politicized reflection upon those  NHSs in the world which accomplish essentially the same results as the US with less than half the per capita cost.  What is lost in the latter discussion, it seems to me,  is that the cost is the cost. It matters little whether it is my money coming from my taxes or my money coming from my pocket. Dollars are dollars.  If decent comparable health care can be provided with half the per capita expenditure, then surely that fact needs consideration, doesn't it?