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Home Publications Blogs Beat the Press Catherine Rampell Is Right: Medicare Is a Steal, but for Whom?

Catherine Rampell Is Right: Medicare Is a Steal, but for Whom?

Thursday, 10 April 2014 23:20

Catherine Rampell used her column today to defend an earlier column complaining that baby boomers are taking from young people through Social Security and Medicare. She acknowledges that most baby boomers will not come out ahead on Social Security (actually they come out somewhat behind in the source she cites) but then tells readers:

"Medicare, on the other hand, is pretty much a steal no matter when you turned 65."

This is true, but it's hard to argue that it is the beneficiaries who are doing the stealing. We pay more than twice as much per person on average for our health care as people in other wealthy countries. We have little or nothing to show for this extra spending in terms of outcomes. For example, every other wealthy country has longer life expectancies than we do. It therefore is hard to argue that seniors are the beneficiaries of the exorbitant spending on Medicare.

On the other hand, we know who does benefit. The Centers for Medicare and Medicaid Services released data this week showing that a small number of doctors account for a grossly disproportionate share of Medicare's payments to doctors, with many collecting more than $1 million a year from the system. The top earner, a big campaign contributor, pocketed more than $20 million in a single year.

Doctors in the United States earn more than twice as much on average as their counterparts in other wealthy countries. We also pay more than twice as much for our prescription drugs and for medical equipment. If one were to look for people stealing from Medicare, these and other health care providers would be the obvious candidates.

It is also worth noting that the well-being of people of Rampell's generation (her explicit concern in the piece) will depend far more on stopping and reversing the pattern of upward redistribution of income that we have been seeing since 1980. If this is not reversed then millennials will see little of the 50 percent growth in real compensation over the next three decades that is projected by the Social Security trustees. If millennials are able to secure wage gains that track the economy's productivity growth then their gains in compensation will be an order of magnitude larger than any possible tax increases associated with Social Security and Medicare. 



Comments (10)Add Comment
written by urban legend, April 11, 2014 1:08
We should wait until we hear the whole story. How many of these are a multi-physician practice, just for one thing. When you hear things that sound outrageous, there's usually some backstory. Think Benghazi and the IRS "targeting" conservative organizations.
Reductio Ad Absurdem of Stealing
written by Last Mover, April 11, 2014 8:26

Stealing? A wide swath of Americans have been brainwashed by sock puppets paid by the 1% to preach the "taking" of Medicare and SS by the older generation from the younger "maker" generation ...

... is equivalent to shoplifting by the old in stores owned by the young.

This is the extent of their economics. Zero-sum tradeoffs. No free lunch. Something went down somewhere and these willfully illiterate clowns of economics sit back in their Monday morning quarterback chairs and decide what went up somewhere else.

There you have it America. All of economics reduced to the making and taking of real value in and from a retail store.
written by skeptonomist, April 11, 2014 10:08
Rampell obviously hasn't been reading Dean's posts, in which he regularly explains how productivity increases should swamp the demographic effects - if it were not for the upward redistribution. She also does not seem to grasp that SS and Medicare are basically unfunded programs - I think that is the main thing preventing understanding of SS especially.

The Medicare scams illustrate how important it is to have central control of all health care. Because docs have the option of pulling out of Medicare they have leverage to control what they are paid, although in this case there are clear indications of quid pro quo monetary influence on politicians. Other countries don't seem to have these problems, so pointing at Medicare or single-payer systems as fostering corruption is invalid. Other countries presumably don't have Supreme Courts in the service of big-money interests.

Obamacare does not really improve the situation, so will have little effect on compensation in all health-care industries.
written by djb, April 11, 2014 10:41
"a small number of doctors account for a grossly disproportionate share of Medicare's payments to doctors, with many collecting more than $1 million a year from the system. The top earner, a big campaign contributor, pocketed more than $20 million in a single year."

its not twice as much for primary care docs

it is for scam artist doctors like those mentioned above

also i agree lets have docs make less but lets pay for their training like they do in france and india and many other coutries

as it is now, unless your parents are rich, you come out of training owing 200,000 to 300,000 dollars (after 12 or more years in training)

and by the time your debt is paid off say a decade more or later, and you get back to zero half your working years are over

in which if you dont make more than other workers who say just have a college degree, then you never catch up

and why would be people go into a field that has such brutal training for such a long time, if they cant even catch up to those who they went to college with who only have a college degree???

not all physicians are created equal Dr. Baker, most are not in it for the money

What about the hospitals and drug companies?
written by Ellis, April 11, 2014 3:09
The Obama released information about Medicare payments to doctors. But what about payments to hospitals and drug companies? They always complain about Medicare reimbursement rates. But they must profit from it greatly. Is there any info, or is it a secret?
Right you are
written by Floccina, April 11, 2014 3:27
Clearly our Governments Fed and local should combine all Medicare, Medicaid and all Government employees into one insurance program to maximize buying power and:
1. Squeeze providers.
2. Refuse to pay for care that has not shown strong evidence of net benefit.

But our politicians are so corrupt (and fearful of seniors and Government employee unions) that they will not even do that.
Administration is a big and growing part of healthcare
written by Floccina, April 11, 2014 3:48
We cannot blame only Doctors and nurses administration is a big and growing part of healthcare:

Paul Solman: Why does health care cost so much in America?

David Cutler: Let me give you three reasons why. The first one is because the administrative costs of running our health care system are astronomical. About one quarter of health care cost is associated with administration, which is far higher than in any other country.

Paul Solman: What’s the next highest?

David Cutler: About 10, 15 percent. Just to give you one example, Duke University Hospital has 900 hospital beds and 1,300 billing clerks. The typical Canadian hospital has a handful of billing clerks. Single-payer systems have fewer administrative needs. That’s not to say they’re better, but that’s just on one dimension that they clearly cost less. What a lot of those people are doing in America is they are figuring out how to bill different insurers for different systems, figuring out how to collect money from people, all of that sort of stuff.
written by Larry Signor, April 12, 2014 7:30
"Money for other worthy, traditionally liberal causes — education, infrastructure, children, the deeply poor — is being gobbled up by increasingly expensive and unfunded promises to the old."

I am tired of being blamed for the failure of a system I have paid into for 45 years. Rampells barely concealed internecine prejudices are gratuitous and unhelpful. Insurance actuarials are what they are, determined by demographics, subscriber base and liquidity. SS has no problems with any of these factors. I won't go all stylistic with the argument, but who do these "millenials" turn to when their car payment is late? Mom and Dad, the evil "Boomers". Enough said.
Question about doctors' compensation.
written by dbc, April 12, 2014 3:04
Regarding the following:
Doctors in the United States earn more than twice as much on average as their counterparts in other wealthy countries.

Is that gross income or income net of liability and malpractice insurance? I sometimes hear doctors complain they can't make a living given the burden of malpractice insurance costs so I'd like to know the details of how that figure is calculated.
Malpractice insurance
written by RW Force, April 14, 2014 2:46

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.