Pay Now or Pay Later

"If Medicare would pay the health providers' costs so they could break even," my friend the expert said, "then one analysis by a major health system in this area shows that our insurance premiums could drop by 34%." Now whether it really is that much of an effect, not many doubt that Medicare pays below the going rate. The rest of us make up the difference.

This conversation occurred when I asked a candidate what cuts he would make in the federal budget for three areas that comprise nearly 75% of the total: defense, healthcare and pensions--three areas that most politicians are afraid to touch. After he started rambling about welfare fraud with food stamps, I cut him off because he wasn't answering my question and asked my friend his perspective. Earlier in the conversation he had pointed out how insurance premiums for families have doubled in the past 10 years. If increases stay the same, they'll double again by 2020.

From his startling statement at the top, two choices seem to be available:

1) increase government spending in Medicare, which would increase the deficit, which isn't viable to many politicians. But our health insurance premiums would go down and we'd have more money in our individual and corporate pockets to help stimulate the economy. Perhaps creating some additional tax revenue (and I will not make a prediction how much it would be or whether it would be enough to offset the extra spending in Medicare).

2) maintain or decrease Medicare spending, which all politicians have affirmed, which means our health insurance rates will stay high. Corporate America will be less able to afford this benefit. More people will be uninsured or paying the whole premium themselves. There will be less consumer spending and more pressure on the insured because there will be more hospital and doctor bills that are written off and need to be covered by the fewer and fewer 'people' who are 'able' to pay.

To the politician's credit, he mentioned an option that would save roughly 15% on Medicare spending: elimination of fraud in billing practices. Maybe his numbers are right. If so, that would help. However, I'm too tired to check his facts. I know the Dept of Health and Human Services task force has recovered $4 billion in fraudulent charges.