Kevin Drum Astonished That People Disproportionately Like Subsidized Stuff

Satisfaction levels of Medicare beneficiaries are pretty high. This surprises Kevin Drum:

There’s a pretty obvious political dynamic that’s responsible for this. Seniors, who actually use Medicare, know perfectly well that it’s a good program. They can see any doctor they want, they get care when they need it, and the quality of service is high. So why do younger Americans have such a negative attitude toward Medicare?

Answer: because conservative politicians have been bellowing for years about what a terrible program it is. And since younger workers don’t actually use it themselves, the bellowing works. They figure it must suck.

In reality, Medicare works fine. Not perfectly, but fine. It offers service at least as good as private insurance despite serving the highest-risk population there is, and it does at least as good a job of reining in costs — slightly better, in fact. Sure, it could be improved, but it’s already probably better than the employer insurance that you have right now. I’d switch in a second if I could.

Medicare isn’t a bad system at providing medical care. Most doctors/hospitals accept it, as they typically know that they’re not going to get into fights with the government over whether or not they’ll get paid. Seniors thus don’t have a lot to worry about — they can go to the doctor whenever they need and get the care they require.

All that, for a Medicare Part B premium of a mere $96.40 per month. That’s roughly 1/10th of the premium my [large multinational] employer pays for my healthcare, and smaller than the additional portion I pay out-of-pocket for coverage of my wife and kids.

Does anyone think that the $96.40 premium covers the cost of insuring the average senior? I don’t think so. If it did, we wouldn’t be calling it an “entitlement” or worrying about the unfunded liabilities of Medicare going out over the next few decades. We wouldn’t be getting hit as workers with 2.9% of our incomes taken in taxes to pay for the Medicare system.

So are seniors pleased with the system they have? They get cheap premiums and adequate care, all on the backs of the taxpayers. Who wouldn’t be pleased?

  • Alice H

    The problem is, each generation figures that since they paid for the previous generation, they’re owed. And I’m not sure how to argue against that other than on the moral principle that nobody owes anybody anything.

  • VRB

    I guess it would be nice for all those on medicare who have children to be taken care of by them. Also those who have been vehemently oppose to Medicare to give it up, especially all those politicians who parents are using it.

  • Vast

    Just a theoretical math question…

    If you stopped taking medicare taxes out of everyone’s paycheck, and just charged them the 96.40 a month, putting everyone in the country onto medicare (which would be a revenue of somewhere around $28 Billion a month from 300 million people) would that provide care for every American without them needing private insurance companies at all?

    I guess what I am asking is how much money would it take to provide health care to every American every month?

  • Brad Warbiany


    We currently spend about $2.4T (2008 numbers from here) on healthcare in this country. That’s nearly 10 times what your proposal would bring in.

    Further, from that link:

    The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007.

    $96.40 per month is about $1150 a year. If you take the $12.7K number above and divide by four, you get over $3K per person — about three times the $96.40 premium.

    And as someone whose wife recently had to make a visit to the emergency room and just got an $800 bill for the co-pay, I can tell you that the premiums charged are only a portion of what the out-of-pocket cost would be.

    So even if you believe Barack’s claims about reining in the cost model (which I don’t, unless they’re willing to significantly limit — i.e. ration — care), it will still be fabulously more expensive than a $96.40 premium.

    And that doesn’t take into account that of 300 million residents, only somewhere in the neighborhood of 150 million draw a paycheck. Others are kids or getting social security or other welfare programs, but you can expect that the burden on the taxpayers will be significantly higher than $96.40 per month to cover it.

    (This further underscores, of course, the ridiculously low $96.40 premium, which is charged to seniors — a group which spends disproportionately higher than folks in my demographic on health care).

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  • tarran

    Vast, the high prices are due to a combination of restricted supply and subsidization of demand.

    Hopey McChange is not offering a greater supply, and he is offering to subsidize demand even more. Guess what that’s going to do for spending?

  • Vast

    Just to clarify, I’m not trying to argue that is the way to go. I’m just trying to wrap my head around the math.

  • Vast

    I that the lack of competition between insurance carriers in geographical regions has a lot to do with the high price of health care.

  • TerryP

    My guess is that the lack of competition in some areas is mainly due to government (both federal and state) regulations.