Government Health Insurance: What many may not know about Medicaid and Medicare

As a lawyer who has had hundreds of clients insured by these two programs, I have seen up close how these programs work. Medicaid insures the poor and Medicare insures the elderly. For brevity I’ll refer to both programs as Medicare.  For those of you who favor  single-payer insurance paid by the Government, here are a few facts that you may not know:

   The Government unilaterally decides what it will pay for medical goods or services received by a Medicare recipient. The Government pays rates that are severely below market-rates.  For example, Medicare might pay for an $7.50 for an x-ray that might cost $50 for a paying customer (numbers are made up but in my experience both programs often pay a guestimate of less than 20% of the normal rate for medical goods or services; this is an educated guess, not trying to get bogged down in details here). 

     The fact that the Government pays less than market rates sounds good in theory, but in fact leads to higher costs for the rest of us and poorer service–or no service–for medicare recipients.

   Because the Government pays below-market rates, and because health care providers are in the business of earning a profit, many health care providers simply refuse to treat Medicare recipients rather than to take a financial loss by providing them services.  Others pass the loss that they take on Medicare patients on to their other paying customers by charging more.  One reason medical costs have risen so fast is because of these Government run programs.  “Sorry, Charlie, gotta raise your rates because the Government refuses to pay me a fair price.”

    And those insured Medicare receive inferior service as a result of the Government paying less for their treatment. “A paying customer and a medicare customer in the waiting room? Sorry, Charlie, I’ll take the paying customer first. And maybe get around to you when I have the time.” It’s only human nature.  This is one reason why many Medicare recipients purchase “supplemental” insurance to cover costs that are not sufficiently covered by Medicare.

    When the Government decides to “cut” Medicare costs for goods or services, the cost of the good or service is not affected. If the cost of providing the good or service has risen but the Government will not pay the real cost, the provider has two choices: pass the difference on to other patients or stop treating people on Medicare. And many doctors have stopped treating people on Medicare for that reason.  

    Finally, dealing with the Government run bureaucracies that are Medicare and Medicaid is not easier than dealing with insurance companies.  “Need some help, Charlie? Take a number, we’ll get back to you in a few months, and don’t call us, we’ll call you.”

   I believe that the current Medicare system gives us a good idea of how single-payer Government run health insurance will work in the future, and it is one reason why I do not favor such a system.  I believe that we should rather work to fix the current system.  The Government can help lower the cost of health care by increasing the supply of physicians.  More physicians equals more competition and less waiting. If you have to wait several months to see a specialist, that should tell you that there are not enough of that particular specialist in the medical profession. The Government should lower the standards of those who seek to enter the profession, and help lower the cost of their education.

   The Government should also ensure that all private insurers treat every person similarly situated in an equal manner. It is grossly unfair for a private person to be charged twice as much for the exact same insurance as another person who happens to work for a large employer.  1,000 persons who work for the same employer have the same insurance needs as 1,000 individuals who are each self-employed.  

    Nibbling around the edges, we can make the current system better and avoid falling into the trap of socialized medicine.

One response to “Government Health Insurance: What many may not know about Medicaid and Medicare

  1. Good blog! I

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