The San Antonio Express News Printed An Article By Me On Healthcare

See Costs mean Medicare, Medicaid may not be best approach. It is below. It was a response to this article Medicare has provided 50 years of health care security for seniors.

"George B. Hernandez’s column on health care (“Medicare, Medicaid offer Americans security,” July 31) touted benefits but made no mention of costs.

These programs and the Affordable Care Act do provide insurance for millions, many with low incomes. Senior citizens no longer live in fear of financial calamity.

But these programs are, partly, economic policies. They all benefit someone, but costs matter, too.

If you take money from people in group A and give it to people in group B, the latter are better off. But does that make it a good policy?

That’s a more difficult question. According to the Kaiser Family Foundation, “Medicare benefit payments totaled $597 billion in 2014.” That report also said “net Medicare spending will grow from 3.0 percent of GDP in 2015 to 4.2 percent of GDP in 2030, 5.1 percent in 2040, and 5.9 percent in 2050.”

The Centers for Medicare & Medicaid Services reported “Medicaid spending grew 6.1 percent to $449.4 billion in 2013.”

A recent Senate Finance Committee report projects that “Medicare’s 75-year total spending in excess of dedicated revenues is $27.9 trillion.” Where will that extra money come from?

Possibly from higher tax rates. One might argue that it would be worth it, but taxes are a negative incentive that slows economic growth. Even if higher tax rates reduced economic growth slightly, over 75 years this becomes a serious cost due to compound interest.

Per capita GDP is about $50,000 now. But if the 75-year growth rate were 1.9 percent instead of 2.0 percent, then we would have a per capita GDP that is about $15,000 lower.

So much for costs. What about benefits?

Did Medicare really change the fear factor for senior citizens? Perhaps. But a chart from the Social Security Administrations shows that life expectancy for women at age 65 was already on a solid upward trend before the existence of Medicare in 1965.

Men were on an upward trend before 1950 that stalled until 1970, when it started a more dramatic rise. So considering both men and women, Medicare’s impact on seniors’ life expectancy is mixed.
On Medicaid, there was a randomized trial experiment in Oregon. Using a lottery, some poor residents got coverage while others did not. After about two years, the health of people in both groups was about the same. That is, those who had Medicaid did no better than those without. But it did help them financially.

If we want to help people financially, a better policy would be to give them money directly. One example, supported by many on the left and the right, is the earned income tax credit.

Medicare has billions of dollars a year in fraud. Malcolm Sparrow of Harvard University estimates that close to 20 percent of claims are improper.

Investigators from the Government Accountability Office posed as applicants for insurance under ACA. They used invalid Social Security numbers or inaccurate citizenship information. They generally were able to get subsidized coverage and keep it.

On health care, we should explore the costs and benefits of many different policy options, not just the benefits of some.

Alternatives include more interstate competition, eliminating the tax deduction for employer-paid insurance and instituting malpractice reform to save doctors money and increase efficiency."