REF SPEAKS: Will the growth of Medicare and Medicaid ultimately lead to Universal Health Care?


By Robert Field


An article in the March 28th edition of the New York Times, In Health Bill’s Defeat, Medicaid Comes of Age, describes the historic roots of Medicaid and how it has grown to be even larger than Medicare.

“[Over the past five decades, Medicaid has surpassed Medicare in the number of Americans it covers. It has grown gradually into a behemoth that provides for the medical needs of one in five Americans — 74 million people — starting for many in the womb, and for others, ending only when they go to their graves…” 

“Medicaid now provides medical care to four out of 10 American children. It covers the costs of nearly half of all births in the United States. It pays for the care for two-thirds of people in nursing homes. And it provides for 10 million children and adults with physical or mental disabilities. For states, it accounts for 60 percent of federal funding — meaning that cuts hurt not only poor and middle-class families caring for their children with autism or dying parents, but also bond ratings.

“The program is so woven into the nation’s fabric that in 2015, almost two thirds of Americans in a poll by the Kaiser Family Foundation said they were either covered by Medicaid or had a family member or friend who was. The program not only pays for 16 percent of all personal health care spending nationwide, but also accounts for 9 percent of federal domestic spending.”

Our nation has the bizarre situation whereby the elderly receives almost free medical care, regardless of ability to pay; and the relatively poor, working or not, also receives medical care for themselves and children at low, if any, expense.

Meanwhile the so called middle class, including those of relatively modest earnings but yet above the subsidy level, are stuck with high insurance premiums and, worse yet, must pay thousands of dollars in deductible in fees to visit doctors before their insurance co-pay provisions take effect.

People with so called insurance and who need to visit doctors cannot afford to spend over a hundred dollars per visit. So they often go unattended, often resulting in more serious illness including the need to use the emergency rooms at hospitals.

One can argue that our current forms of health insurance are for the benefit of the insurance companies and the hospitals, not patients.

What is surprising and encouraging to us is how the nation is incrementally progressing towards universal health care with a single payer system.   One of these days the middle class, including those who voted for Donald Trump (and perhaps Trump himself), will wake up to the fact that a far more efficient and equitable arrangement would be for all medical care to be provided under a variant of Medicare and paid for, not be employers but through a value added tax which is common in other countries.

Health care costs in the USA are about 18% of Gross Domestic Product, as compared to 9% to 11% for ALL other “advanced nations”, including Canada, England, France and Germany. All have a national health policy featuring a single payer.  Most fund health care with a value added tax, more equitably distributing its cost across the population.

What few understand, in the United States over fifty-percent of health care is already in the form of federally sponsored Medicare, Medicaid, Veteran hospitalization system, and several other programs.   And the cost of the government programs, unlike the private market, are comparable to the low cost of  other nations. That is the proof for “Medicare for everyone”.

How did the U. S. diverge from other nations? Although wage increases were banned during the Second World War, employers were permitted to offer health care benefits and they did to attract scarce labor.   Moreover, tax laws enabled workers to receive their health care without having to pay taxes on its value. If  they purchase health care directly, they use “after tax dollars”.

Not only did this lead to our huge health care bureaucracy for hospitals, providers, and insurance companies, it added half again more cost than a single payer system such as “Medicare for Everyone” would cost.

Then there is the deal the pharmaceutical companies were able to cut whereby the Affordable Care Act (“Obama Care”) prohibits negotiation price with drug companies, unlike what occurs through other government sponsors programs.

The day Congress taxes health care benefits to the recipients, employers will begin transitioning all health care responsibilities to their employees since there will no longer be any tax subsidy to companies and workers.

A side effect if this virtuous change would be a lowering of the costs of U. S. goods and services.  Companies providing heath care insurance add that cost to the price of their products so they are at a competitive disadvantage to China and the rest of the world.   This results in less jobs in the USA and a large trade deficit.

The chief benefit would be the early reduction of health care costs from 18% of Gross National Product to closer to 14%, still high by world standards but a huge improvement  and representing $680 billion reduction in health care costs  per year. When the savings are redirected, funds would become available for improvement of infrastructure, education, overall modernization of our economy, and reduction of the national debt.

Bloated health care costs have long been a huge drag on our economy and until this matter is corrected, our country will continue to stagnate around a 2% growth rate, not only compromising our standards of living but ultimately our national defense.

Updated: March 30, 2017 — 6:35 am © 2016