Medicare for all? How about paying for the Medicare we have now?
A new report from Health Affairs on healthcare expenditures over the next decade and it is not good news.
With Democrats ready to make their single payer, "Medicare for all" plan a litmus test for 2020 presidential candidates, the numbers in this report argue persuasively that the $32 trillion price tag for the Dems single payer plan is not the question. The real question is "How are we going to pay for the Medicare program we already have?"
This week, Medicare's actuaries released a new report projecting that over the next decade, national health spending will grow 0.8 percent faster than the economy each year, eventually reaching $5.96 trillion. As a result, health spending as a percentage of gross domestic product is set to grow from 17.9 percent last year to 19.4 percent in 2027. Health care spending will then consume nearly a fifth of America's total economy.
That figure accounts for both public and private payers, but the government-run programs are the largest drivers of the growth, with Medicare by far the biggest of the bunch. Over the next decade, Medicare spending is expected to rise by 7.4 percent each year, while spending on Medicaid, the joint federal-state health program for the poor and disabled, is set to rise by 5.5 percent annually. Spending on private health insurance is projected to rise as well—but at 4.7 percent annually, the increase won't be as fast. Increased spending on Medicare (and to a lesser extent Medicaid) is the main factor.
That increase is primarily a result of demographic change as more seniors enter the program. More enrollees means higher costs. But Medicare won't just cover more people. It will increase the average amount it spends on each person—and that increase will be larger than the commensurate increase in private health care spending. Supporters of Medicare for All sometimes argue that although the government cost would be significantly higher, total national health spending would decrease. That only holds under the improbable assumption that health care providers could absorb large reimbursement cuts without service disruption. In any case, these estimates suggest the weakness of attempting to control overall spending growth through Medicare, which is expected to substantially outpace private insurance spending growth.
Part of the growth in Medicare spending is being driven by demographics as baby boomers continue to hit age 65 and become eligible. But that only underlines the dilemma. How can we add more people to the Medicare program without bankrupting ourselves? Even less radical proposals that call for offering Medicare to those between 55-65 on a voluntary basis threaten the solvency of the program.
Today, Medicare and Medicaid are widely acknowledged as the biggest drivers of the federal government's long-term debt. Broadly speaking, America's biggest fiscal problems are health care spending problems. And America's health care spending problems are largely problems stemming from increasing spending on Medicare.
And those are problems that approximately no one in national politics wants to deal with, or even meaningfully acknowledge. Although national political figures occasionally nod to Medicare's fiscal challenges and their various economic ripple effects, there is now no significant political movement to address them.
Democrats will continue to demogogue the Medicare issue for all that it's worth. This will prevent any meaningful reform of the program. In fact, Democrats appear to be willing to double down and make Medicare the basis for the most radical expansion of government power in history.
Until someone pins them down and gets them to talk about the massive tax increases that will be necessary to fund a Medicare for all program, they will continue to use their proposal as a political weapon.