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Home Publications Blogs Beat the Press Pundits' Misconceptions About U.S. Health Care Costs Make Them More Anxious to Trim Benefits

Pundits' Misconceptions About U.S. Health Care Costs Make Them More Anxious to Trim Benefits

Wednesday, 03 April 2013 10:32

The New York Times ran a piece with a headline complaining "public misconception of government benefits makes trimming them harder." The piece goes on to explain that the cost of the Medicare benefits received by a typical beneficiary vastly exceeds the taxes they will have paid into the system using standard discount rates. The piece tells readers that most readers do not recognize this fact, so they get upset at the idea of cutting benefits.

The desire expressed in the piece to cut Medicare benefits indicates a misconception by the NYT and the experts cited on the nature of Medicare costs. The United States pays more than twice as much per person for its health care as the average for other wealthy countries. If it paid the same amount as Germany, Canada, or any other wealthy country with comparable health care outcomes, most or all of the gap between taxes and benefits would disappear. 

This enormous gap in expenditures is not associated with better care, it is the result of the fact that doctors, hospitals, medical equipment suppliers and other providers get paid far more in the United States than in other countries. In effect, the NYT and the experts cited in the piece want to see Medicare beneficiaries accept lower quality care because we pay too much to doctors and other providers.

It is likely that most people would find their policy prescription somewhat perverse. It is hard to see why Medicare beneficiaries should feel guilty because the specialists who treat them can make $500,000-$600,000 a year. The more obvious response would be to force doctors and other providers to accept compensation that is more in line with world standards. (We could also give beneficiaries the option to buy into lower cost systems in other countries and split the savings.)

Of course the route of cutting payments to providers would mean confronting powerful interest groups. Many policy experts are reluctant to pursue this path. 

Comments (7)Add Comment
written by Bart, April 03, 2013 12:14

Sen Johnson: “I’ll know President Obama is serious about working with us when I start hearing him tell the American people what he told us in private.”

I wonder if the president also managed to mention that we pay twice to three times as much for health care. (Japan pays one third)

I wonder if the president also pointed out that raising the cost to Medicare patients would make us look even worse.
written by jamzo, April 03, 2013 1:06
"cost" is a the stronger voice than "price" in the health care narrative.....

"cost is also a stronger voice than "everyone should have access to good health care" in the health care narrative

written by skeptonomist, April 03, 2013 1:12
Anyone reading Calmes' piece is likely to be more confused than before. There are lots of things that Americans in general do not understand about these programs, but they will not be the wiser from reading the piece. The idea that Medicare is in trouble because its dedicated taxes do not cover the costs is nonsense - there is no reason why it or any other program has to have a dedicated revenue stream. Do we have dedicated taxes for war expenses?

For SS some of the things people need to know are a) the Trust Fund belongs to baby boomers and if it is not paid out by the time they are all gone they will have been cheated; b) after that the tax and benefit levels do not have to be set in advance at all, they could be set by an annual referendum for example; c) high-income people have special selfish reasons for putting an end to SS and/or not paying out the Trust Fund. I don't recall ever having seen any of these things in media stories.
Moochers of Medicare Receive Awareness Therapy, Repent
written by Last Mover, April 03, 2013 1:55
The piece tells readers that most readers do not recognize this fact, so they get upset at the idea of cutting benefits.

Indeed. It's called Blind Moocher Guilt Syndrome isn't it. If Americans on Medicare only looked in the mirror, the scales would drop from their eyes as they recognize themselves as the moochers they are, dropping to their knees begging forgiveness for taking out more than they pay in.

After all, Americans on Medicare are not like the moochers on the other side of the economic fence who know exactly what they're doing in the name of mooching. For them no repentance and benefit reduction is required, because it's legitimatized, moral mooching isn't it.

That would be the the doctors, device makers, drug makers, insurers, lawyers, lobbyists, politicians and media who run the medical-industrial complex as a giant economic extraction mooching machine. No mirror of awareness and repentance required. What they see in the mirror is what they already know is there, accept and have no intention of changing.
So much ignorance
written by Jennifer, April 03, 2013 5:52
It's so frustrating to see the same untruths trotted out again and again. As @skeptonomist says I don't think people really think the Medicare program is completely paid for by their contributions. I would put the average person's knowledge up against the average politician on this any day of the week. Medicare costs are actually slowing, and have been for a few years but stating this fact makes it harder to argue for cuts-numbers have such a bias. Nor is it appropriate to describe Medicare as "fast-growing" as aside from the drug program nothing has much has changed in tems of benefits. As Dean points out, the real problem is that no politician wants to tangle with the medical-industrial complex which is the true driver of increases costs.
written by JP, April 03, 2013 7:39
While Calmes took excessive pains to try to make the point that the word "entitlement" has been in common usage for longer than he can remember and tried to justify its use, what he does not disclose or even hint at,other than to note that it is now perjorative, is its increases usage in the media, especially since it has acquired the negative overtones. I do not have the software to track its usage, but would bet with sincerity, a very large bet, that if the media and the internet were searched over a period of years, he would find a significant spike in the last few years of its usage, especially since it has acquired the negative connotation. I would also contend that this is not an accident.
written by liberal, April 04, 2013 9:22
skeptonomist wrote,
Do we have dedicated taxes for war expenses?

Would that it were so.

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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.