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Although some people who have problems with arithmetic (it's not their fault, it's our educational system) still insist that Social Security is headed for serious trouble, it's our health care system that is truly broken. We spend more than twice as much per person as other high-income countries, and yet they have better health outcomes (life expectancy, infant mortality). And to top it off we have 47 million Americans without health insurance, while the other high-income countries (Europe, Japan, Canada) insure just about everyone.
It's obvious that we need a universal health care system that can hold down costs, as in the rest of the industrialized world. But how to get there? The pharmaceutical and insurance companies don't agree, and in our "one-dollar, one-vote" system of political campaign financing they have a lot of clout. The major media have also been unhelpful, ignoring some of the most important facts – for example that more than three-fourths of our future federal budget deficits are due to spiraling health care costs (not demographic change).
One way to get a foot in the door would be to expand Medicare – our federal program for the elderly and disabled -- to the rest of the population. This could be done on a voluntary, pay-your-own-way basis. Individuals would be allowed to buy insurance from Medicare by paying a premium that would cover the expected costs of their health care. As in the private sector, the premium would increase with age. But it would still be considerably cheaper than private insurance, because Medicare has much lower administrative costs: about 2 percent, as opposed to 15-20 percent for the private insurance sector.
Employers would also be able to buy in. This would be a great benefit for small businesses, some of whom have been hit with health insurance premium increases of 17-18 percent a year over the last three years.
The private sector in health insurance has proven to be much more inefficient than the public sector. This is not surprising, since individual firms often find that the easiest way to make money is to devote resources to insuring the healthy and avoiding the sick. Not to mention all the marketing and administrative waste associated with having hundreds of competing companies.
Medicare can also use its bargaining power to hold down costs, especially with the pharmaceutical companies. This is something that it should do anyway, to make the recently begun Medicare prescription drug benefit affordable. Canada pays about half of what we do for prescription drugs, and Medicare is a bigger buyer than Canada.
Of course, the Medicare program would have to be altered to provide the benefits now provided by private insurance companies to people under 65: for example, Medicare does not currently provide maternity care. And there would have to be caps on co-payments required of individuals. But these details can be worked out, and since individuals and employers would be paying for the insurance, the federal government wouldn't pick up the tab.
A Medicare buy-in option wouldn't make health care affordable for everyone and wouldn't immediately fix our broken health care system. But it would get us moving in that direction, perhaps irreversibly. And it would be difficult for the pharmaceutical and insurance lobbies, and their allied right-wing ideologues, to mount a scare campaign against it. After all, we're just talking about giving Americans, including employers, a choice. And introducing some badly needed competition to an industry where rampant inefficiency threatens to bankrupt the country. Who could be against that?
Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C., and co-author, with Dean Baker, of Social Security: the Phony Crisis (2000, University of Chicago Press).