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Con: GOP plan for Medicare is a nonstarter

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Rep. John Conyers Jr.
May 21, 2011
EDITOR’S NOTE: The writer is addressing the question, Should Congress pursue Medicare overhaul?

Medicare is arguably one of the nation’s most successful and cherished public insurance programs. The program covers 47 million elderly and disabled Americans, and it helps pay for hospital, physician visits and prescription drugs. It is truly hard to argue with success.


The traditional Medicare program, coupled with a supplemental private insurance policy, covers most of our seniors’ medical bills, with far less co-pays and out-of-pocket costs than private insurance.


Therefore, proposals to privatize Medicare—like Rep. Paul Ryan’s—have been met with such fierce opposition because it was revealed in the national media that privatization meant much higher out-of-pocket costs for seniors. National polls have shown strong general support for maintaining Medicare or even increasing funding for it.


However, Medicare costs are projected to increase from $519 billion per year in 2010 to $929 billion in 2020.


The simplistic argument we often hear from conservatives is that Medicare is a costly federal government program because all federal government programs are inefficient and therefore costly. According to their line of reasoning, privatization is the only way to save money.


The truth is that there are several other ways to strengthen Medicare, but there has been a false debate in the nation regarding the rising costs of Medicare.


This might be partly due to not understanding a fundamentally key concept regarding current health-care policy—there are no effective cost-containment mechanisms in place to control the private market costs of prescription drugs, corporate hospitals and medical technology which are the main drivers of Medicare costs.


Research by respected economist Dean Baker shows that the federal government and Medicare beneficiaries would save $600 billion between 2006 and 2013 if Medicare were allowed to directly negotiate prices with pharmaceutical manufacturers.


One study by Families USA found that the Veterans Administration was able to negotiate substantially lower prices for the top 20 drugs used by seniors, compared to private Medicare Part D plans.


It would only make sense for bipartisan support for Medicare to use the full faith and credit of the federal government and negotiate down the rising costs of prescriptions.


According to Forbes magazine, hospital charges represent about one-third of total health-care spending—$718 billion altogether. Twenty-four hospitals in this country with more than 200 beds make an operating margin of 25 percent or more—a profit margin that compares favorably to drug giants such as Pfizer and easily beats the operating profit margin that General Electric reported in 2009.


We can no longer continue to have America’s hospitals make these kinds of large profit margins, when the health of our senior citizens and the fiscal health of our nation are at stake. It will take much-needed political courage to address the root causes of rising Medicare costs—a Wall Street-dominated health-care system.


America must transition to a nonprofit improved Medicare-For-All program, if we are to have any chance of realistically containing overall health-care costs. That’s why I have reintroduced H.R. 676, the Expanded and Improved Medicare For All Act, that would provide for a single-payer health-care system, providing all Americans with health-care coverage.


Japan, Taiwan and countries in Europe have been able to effectively contain their health-care costs for decades through their very successful universal health-care systems—without waiting lines, rationed care and out-of-control taxes.


America can learn invaluable lessons from other nations on how to control health-care costs, and the time has come to be open minded about their success and honest about our need to change course from our corporate-dominated and inefficient healthcare system.


Rep. John Conyers Jr., D-Mich., is the ranking member of the House Judiciary Committee. Readers may write to him at 2426 Rayburn House Office Building, Washington, D.C. 20515.

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