The Republicans are demanding $600 billion in Medicare cuts over the next 10 years. Their only concrete proposal is to deny Medicare coverage to Americans during what is now their first two years of eligibility, at ages 65 and 66. But their official offer isn't even that specific. It just throws out that figure: $600 billion. But you can't get there from here.
At least you can't do it their way -- not without causing enormous hardship, and not without costing the public twice as much from other sources as would be saved in government spending.
In fact, there are only two paths to $600 billion in savings. One's macabre and morbid,and is offered here only to make as a Swiftian "modest proposal." The other would take a chunk out of corporate profits.
Which path do you think the GOP would prefer?
This entire Medicare debate's being held under false pretenses. Here are four multibillion-dollar Medicare secrets they don't want you to know -- along with that funereal "modest proposal":
1. Runaway corporate profits are squeezing medicare.
Republican Sen. Bob Corker echoed the party line today when he said that cutting "entitlements" was needed in order to "save the nation." But benefit cuts aren't where the money is: profits are. We did some rough calculations to show you just how much profit is involved:
Roughly $200 billion in Medicare spending will go to drug company profits in the next 10 years. (We got that figure by averaging the profit margins for large pharmaceutical corporations by projected Medicare drug expenditures.) And yet the Republicans have blocked legislation that would allow the government to use its purchasing power to negotiate for a better deal. So the drug companies can charge us whatever they want -- and we pay it.
Medicare has reportedly underpaid for hospital services at times. But for-profit hospitals have an average profit margin of 5.5 percent. What they're not receiving from Medicare is "cost-shifting" to private health insurance. We pay for that, too -- in insurance premiums and tax concessions for employer-sponsored coverage. With Medicare hospital expenditures likely to approach $2.5 trillion in the next 10 years, that's costing society a fortune.
And that doesn't include high margins in the non-profit hospital field, where CEOs frequently earn more than a million dollars as a reward for maximizing revenue. Nor do these figures include the profits received by a whole range of other for-profit health providers ranging from diagnostic centers to ambulatory surgery clinics.
2. We receive far too much unnecessary care, and are often fraudulently billed for the care that is given.
Then there's what may be the most expensive effect that greed has on Medicare: overtreatment. A series of exposes (some of which we discussed in "Sick Money," a review of Bain Capital's health investments) have revealed gross patterns of fraudulent Medicare overcharging.
Even worse is the overtreatment that's done to boost profits. Unnecessary procedures are difficult and uncomfortable at best, and at worst they can lead to pain, disability, even death. This overtreatment's been documented in both academic studies (John Wennberg's Dartmouth Atlas is a great resource) and some excellent journalism.
And it's getting worse. Now hospitals are buying physician practices and exerting financial pressure on doctors to perform more surgeries. But the truth is that doctors have always been under financial pressure to overtreat. They graduate from medical school with tons of debt and must then maintain a profitable practice, including everything from equipment to office staff.
And yet Republicans have beaten back attempts to control this overtreatment with their "death panel" hoax. That myth is only slightly less believable than "black helicopters." There are death panels -- but they're manned by insurance executives, not bureaucrats. Republicans have fought Medicare by telling us that doctors shouldn't be "employees" of the government. Now they're employed by MBAs who want a fat bonus.