Don’t Privatize Medicare

From Ida Hellander, Director of Policy and Programs at Physicians for a National Health Program, appearing in Truthout
March 26, 2015

The bipartisan “Doc Fix” legislation (H.R. 1470, now H.R. 2) and proposed amendments will undermine traditional Medicare and advance the goal of privatization, according to Dr. Don McCanne in a series of posts to his popular health policy blog, the Quote of the Day. If enacted as it presently reads, it will:

1. Limit choice of physician in traditional Medicare. Physicians in traditional Medicare would be subject to onerous new documentation requirements for payment and financial incentives to avoid complex patients under the proposed “Merit-based Incentive Payment System.”  The additional paperwork burden will push physicians to stop seeing patients with traditional Medicare, retire, avoid older and sicker patients, or go to work for large organizations using “alternative payment models” (which are exempt from the requirement and more likely to have contracts with private Medicare plans).

2. Reduce access to care in traditional Medicare. Imposes a deductible that cannot be covered by Medigap insurance (starting in 2020) to encourage patients to join a private plan. The current Part B deductible is $147 annually, although that figure has been rising in recent years; 95 percent of traditional Medicare beneficiaries have supplemental insurance that covers the deductible and other cost sharing in Medicare. The only way to avoid the deductible in the future will be to join a private Medicare Advantage plan.

3. Raise Medicare’s costs by driving more patients into private MedicareAdvantage plans. Private plans have already cost Medicare an excess of more than $282 billion since 1985. Mandatory deductibles and reduced access to physicians in traditional Medicare will drive more patients into private Medicare Advantage plans, which are more costly than the cost of caring for patients in the traditional fee-for-service program. Although Obamacare was supposed to reduce the amount the private plans are overpaid (the “Medicare cuts” in Obamacare), these have been mostly offset by “adjustments” and “quality awards” by the Department of Health and Human Services.

4. Undermine Medicare‘s popular support by requiring higher income seniors to pay higher premiums (means testing). Under means-tested premiums, higher-income individuals will be required to pay larger premiums, undermining the support of this influential group for Medicare program. Although the income subject to extra premiums is high, it can always be reduced in the future.

5. Ending the SGR should cost $20 billion, not $210 billion. These drastic measures aren’t even necessary. According to Bruce Vladeck, a former top administrator at Medicare, “Since the Sustainable Growth Rate (SGR) was implemented in 1998, total Medicare physician expenditures have exceeded the allowed amounts by only $20 billion (on a total of almost $1 trillion). To recoup that all in one year would require a 21 percent reduction in fees for one year. And those reduced fees would then become the base for payment levels in all subsequent years. In a rational world, Congress would write off the $20 billion as a relatively small policy error and establish a more realistic prospective formula. But under Congressional budget rules, the cost of doing so is not $20 billion, but $20 billion per year, compounded by inflation, times 10 years.”

6. The GOP sees this bill as a step towards their longer-term goal of turning Medicare into a voucher program for private plans, shifting more costs onto patients. Rep. Mick Mulvaney, R-S.C., a staunch conservative, told the Washington Post he is supporting the bill because it will lead to much greater savings beyond the traditional 10-year time frame for estimating costs. Newt Gingrich stated the GOP’s goal succinctly in 1996: “Now, we dont get rid of it [Medicare] in round one because we dont think that that’s politically smart, and we dont think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.”

7. Other features:

Continues funding for safety-net programs
* Two-year extension for CHIP
* Two-year ($7.2 billion) extension for Community Health Centers

Restricts abortion, adds funds for war
* Makes Hyde Amendment permanent law. Since the ACA is a permanent statute, any amendment to any part of the ACA becomes part of U.S. Code.
* $94 billion in additional military spending in an “off-budget account.”

Dr. Ida Hellander


  1. Loren Herrigstad on April 16, 2015 at 3:29 pm

    You make a compelling case, Dr. Hellander.

    But please, will both you and Healthcare-Now tell the rest of us what to do or support at this point? This article and case needs a response plan forward, along with a call to action.

    Thank you though, and keep up the good work!

    – Loren Herrigstad
    Centralia, Washington USA

    • Jan on April 16, 2015 at 7:17 pm

      Loren, the bill, as of April 16, 2015, has passed out of the House of Representatives and is now in the Senate. Today, April 16, a bunch of amendments were voted upon. So I think the action required is to email or call or write to your Congressional senator about H.R 2. Urge your senator NOT to vote for this bill or any of its amendments. Instead, we need Medicare for all, which is what all wealthy democracies already have, except us. Medicare has a 5% administrative cost. Private insurance has a 17% administrative fee. So 17 cents of each premium dollar goes to those golden parachuttes and the skyscrapers where their corporate offices are.

      • SinglePayerCentral on April 17, 2015 at 6:21 pm

        What Jan said. Amen…

  2. bill shaver on May 1, 2015 at 1:20 am

    well well, guess we’ll all have to wit till jan 2017 & implementation of sect 1332 of the aca to rectify this….shamefull behavior by those who want to privatize medicare it will only fence out people who do not have the where withall to afford going to the doctor when they need it most….