Lousy Medicare Insurance Is Worsening Outcomes For All Patients
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Medicare’s long-term financial outlook is in dire straits. While spending is already historically high, the Congressional Budget Office (CBO) projects that, without fundamental reform, things will only get worse. According to the CBO, total government spending will grow from 23.3% of GDP in 2025 to 26.6% in 2055. Almost two-thirds of this growth is expected to come from out-of-control Medicare spending. In short, on its current trend, Medicare is simply unaffordable. It is also undermining the viability of the broader healthcare system. Such a dire outlook seemingly contradicts patients’ view of the program. According to KFF, 91% of beneficiaries over 65 rated Medicare’s overall performance as excellent or good. Of course, why wouldn’t they? Beneficiaries are satisfied with Medicare because the program notoriously underpays providers. Imagine how satisfied you would be with your car insurance provider if the company could pay the auto shop less than 40 cents on the dollar for the costs of repairs. This is precisely what Medicare does. As a 2024 RAND research report documented, “across all hospital inpatient and outpatient services (including both facility and related professional claims), employers and private insurers paid, on average, 254% of what Medicare would have paid for the same services at the same facilities.” The 254% premium that private insurers and employers pay is not representative of the actual cost of care. The costs that the private sector must pay doctors and hospitals are higher than they would otherwise be due to Medicare’s uneconomical compensation levels. In other words, patients with private or employer-based insurance are subsidizing the costs for Medicare patients – not to mention the uninsured and Medicaid patients, who also have uneconomical reimbursement rates. This cost shift makes Medicare seem like it is better insurance than it is; but at the expense of worsening the healthcare…
