Here's Who Really Benefits When Republicans Change Medicare


Photo: Flickr via artwork_rebel

An AP story on September 2nd, “In Florida, Medicare Is Not a Senior-Only Issue,”  reports that there is pervasive public scepticism about both Parties, such as: “‘How do you know who to trust in this?’ frets Ed Galate, a few months from Medicare eligibility.He declares the entire debate to be poisoned by “craven politicians.”

Mitt Romney, Paul Ryan, and congressional Republicans want to replace government Medicare with government-subsidized private insurers doing the job.

This subsidy would be called “premium support,” instead of “vouchers.” This would indeed be a fundamental change in Medicare.

However, as will be documented here, the historical record is clear that Republican politicians do not push privatization in order to provide more services to the public at lower cost, but instead to provide new taxpayer-subsidized profit-centres for Republican-donating corporations. This was why George W. Bush and congressional Republicans overcame almost solid Democratic opposition and wrote, and passed into law, the Medicare Part D privatized drug and insurance options that “added $15.5 trillion (in present value terms) to our nation’s indebtedness” according even to Republican economist Bruce Bartlett.

George W. Bush and congressional Republicans also tried but failed to add a privatized option to Social Security, in order to give their Wall Street donors more business. Republicans say that the aim here is to make these government programs, such as Medicare and Social Security, more cost-efficient, but Medicare and Social Security are already far more cost-efficient than private insurance plans are. (Seniors cost lots to insure; that’s why private insurers won’t do it without their receiving huge subsidies.)

The first major emergency endangering the continuance of Medicare occurred in 2008, when President Bush and the Republicans in Congress tried to block Democrats from halting a 10.6% cut, which Bush’s plan forced in the rate-schedule that traditional Medicare paid doctors for their services to their patients under Medicare. This pay-cut to doctors was expected to cause so many physicians to abandon traditional Medicare patients, that the traditional Medicare program would likely collapse. This pay-cut to doctors was scheduled to start on July 15th; but, just days earlier, on 9 July 2008, Bloomberg News bannered “Senate Votes Reversal of Cuts in Medicare Doctor Fees,” and reported that, “The Senate voted final passage of legislation that would halt a 10.6 per cent cut in Medicare reimbursements to doctors.”

The cause of the 10.6% cut that the Republicans sought was in order to pay for the rising taxpayer-subsidy going to private insurers in Bush’s “Medicare Advantage” program—the Bush-initiated Part D private competitor to Medicare Part B. Democrats wanted to salvage traditional Medicare, not to cut it in order to add to the high government subsidies already being paid to those private insurers, which were huge financial backers of the Republican Party.

“The [Part D] insurer payment cuts [sought by Democrats], which would total [cuts of] $12.5 billion over five years, include fees paid to private insurers.” The Congressional Budget Office had reported to Congress on June 24th that the cuts to private insurers (otherwise called “Medicare Advantage”) that were in the Democratic bill would more than pay for abolishing the 10.6% pay-cut to the doctors who participate in the traditional Medicare Program (Part B).

This report said: “New spending under the bill would be offset largely by reductions in payments to Medicare Advantage plans,” and that “Other savings would come from modifications” to Medicare’s astronomically high pay scales for equipment such as “home oxygen therapy” and other medical devices, by introducing “competitive bidding for durable medical equipment.” (Medical equipment manufacturers were also huge supporters of Republican candidates, as compared to Democratic candidates.)

The only reason enough Republicans voted, July 9th, for the Democratic bill, H.R.6331, so that it passed, was that 2008 was an election year: Millions of seniors would otherwise have voted Republicans out of office in November 2008, on account of their physicians dumping them. Because of this imminent electoral danger, President Bush’s veto of the Democratic bill was overridden—but just barely. Traditional Medicare was thus barely salvaged.

On 25 July 2008, the Los Angeles Times bannered “Medicare Part D a Boon for Drug Companies, House Report Says: Taxpayers pay up to 30% more for prescriptions under the privately administered program” than under the publicly administered one. Nicole Gaouette reported that, “U.S. drug manufacturers are reaping a windfall from taxpayers because Medicare’s privately administered prescription drug benefit program pays more than other government programs for the same medicines. …In the two years Medicare Part D has been in effect, drug manufacturers have taken in $3.7 billion more than they would have through prices under the Medicaid program.”

For example, “Bristol-Myers made an additional $400 million from higher prices for a single drug, the stroke medication Plavix.” I looked up the political-contribution record of Bristol-Myers at it was about 75% Republican, an investment which had now been returned to Bristol-Meyers hundreds-fold. The Republican minority on the House committee that issued this report (big beneficiaries of those same corporations) objected to it, saying many seniors had “learned to love Part D,” the Republican Medicare-supplement.

No wonder big business loves Republicans. But taxpayers and voters would hate them if only they knew the corrupt reality that stands behind conservatism (otherwise more honestly called “crony-capitalism” or “plutocracy”).

The first study of the cost and efficiency of the “Medicare Advantage” or Part D health insurance plans came from the Congressional Budget Office on 28 June 2007; and, of course, the nation’s major “liberal” “news” media ignored this devastating study, because it found that, “Medicare’s payments for beneficiaries enrolled in Medicare Advantage plans are higher, on average,” than in the traditional government-operated plan [‘FFS’] … so shifts in enrollment out of the FFS program and into private plans increase net Medicare spending.”

In fact, this increase in Medicare costs was accelerating the fiscal problems that Medicare caused for the Federal Government. This CBO study, “Medicare Advantage: Private Health Plans in Medicare,” also found that, “The additional cost to the government for Medicare Advantage plans subsidizes the beneficiaries who enroll in such plans.” Those beneficiaries were the people who had responded to the rush of advertisements on television and elsewhere and dumped their existing government-operated Medicare Part B insurance and replaced it with one of these private for-profit “Medicare Advantage” “Part D” alternatives. Basically, these people were Republicans, since Republicans hate government (in a democracy).

They love “the private market” in all matters; many Republicans aren’t just conservatives, they’re “libertarians.” They favour “liberty,” such as was propagandized by Milton Friedman’s 1962 Capitalism and Freedom, and 1980 Free to Choose.  (After all, conservatives in Chile’s dictatorship loved Pinochet whose economic system was designed by Milton Friedman; conservatives in Germany’s dictatorship loved Hitler who started the privatization-craze; conservatives in Spain’s dictatorship loved Franco; conservatives in Italy’s dictatorship loved Mussolini; etc.)

Thus, everybody else (that is, non-Republicans) were now paying hefty subsidies to those corporate-operated insurance plans, in order to prevent these for-profit plans from being obviously uncompetitive with the government-operated Medicare Part B insurance. In fact, the CBO study, under its sub-head “Medicare Advantage Plans Cost the Government More Than Traditional Medicare,” said: “In 2007, CBO estimates, the average payment to such [Part D] plans is 12 per cent above what traditional FFS [Part B] costs.”

Moreover: “The extra benefits and rebates offered by Medicare Advantage plans attracts enrolees, and the rising proportion of beneficiaries enrolling in the plans will add to the growth in Medicare spending.” Consequently, “The higher costs of Medicare Advantage plans add about $2 to the monthly premium for Part B,” and this would rise over time as more and more people signed up for Part D.

The government was thus blatantly becoming socialism for the rich (here for the stockholders and executives of those private insurance corporations) increasingly replacing what had previously been socialism for everyone and especially for the poor. In other words: It was fascism replacing progressivism (democratic socialism, such as in Scandanavia and in today’s Germany). It was government for the aristocracy, instead of for the public. But no major “news” medium covered this devastating report.

However, courageously, in the 22 December 2003 Newsweek, Jane Bryant Quinn had already dealt with a major portion of the conservatives’ hoax that stood behind Bush’s and other Republican health-care bills: the widespread false belief, promoted constantly and incessantly by Republicans and their medical industry sponsors, saying that privatizing social services such as medical care is necessarily inclined to make the delivery of these services more efficient. She pointed out that, “Contrary to myth, private insurers add to the cost of Medicare.”

She explained how this happens: “In traditional Medicare,…overhead runs at a superlow 2 per cent, leaving 98 cents out of every dollar for patient care.” She pointed out that publicly traded HMO’s and private healthcare firms have vastly higher administrative costs, due to sales, advertising, the need to process multiple different insurance companies’ forms, and other such “free market” inefficiencies (including corruption, kickbacks to Republican and the few conservative Democratic politicians), so that, “After all costs, they spend only 76 cents of every dollar on care.” (Obamacare will force that up, to at least 80%, for each and every insurer, unless Republicans succeed in abolishing it. No wonder that Democrats are having trouble fundraising during this election-cycle.)

Furthermore, this 76 cents was evidently shrinking. Just a few weeks later, on 16 January 2004, a study by Harvard Medical School and Public Citizen was published in the International Journal of Health Services (amplifying upon a study that the same authors had published on 21 August 2003 in the New England Journal of Medicine) which showed that only 69 cents out of every dollar spent in the U.S. on health care was now going toward health care. The remaining 31% of America’s health care expenditures were devoted to such matters as the paperwork chaos of innumerable competing health insurance companies, each of whose policies cover and exclude different health services, at different rates, and thus confuse consumers so as to make this “competition” confusing.

And as the executive bonuses to the CEOs whose corporate PACs were paying conservative politicians and lobbyists to do their bidding. Health insurers in the United States were spending nine times as high a percentage of their gross income on overhead as was the Canadian government-run health insurance program, and yet Canadians were outliving Americans by two years.

Now, after the Republican U.S. Supreme Court, in 2010, finally unleashed unlimited corporate political spending via their Citizens United decision, voters in Florida and elsewhere are being inundated with shady political commercials to confuse and deceive them so they’ll vote now to lock in this corruption via a Republican House, Senate, and White House. The kleptocrats are hoping that there will be enough suckers for it all to work.

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