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The plan has not yet been fully formulated, but Medicare itself will not be cut, at least not in a way that will hurt recipients. During the Bush years, there was a move to partially privatize Medicare--the so-called Medicare Advantage plans. In these plans, private companies were paid 114% of regular Medicare payments to provide services for the elderly under HMO-style management. Obama is cutting the excess funding out of these plans. Everyone on Medicare will still have the regular Medicare option, and companies will be free to compete to provide health care to the elderly, but they will not be paid a premium above Medicare to do so. Thus the cuts will be to the profits of HMO plans, not to beneficiaries, and the savings will be used to expand coverage to others in ways that are not yet entirely defined.
I think that the most likely outcome of the present negotiations will be a system that leaves the private insurers in the marketplace, but will expand Medicare as a option to everyone. Those under 65 will have to buy in one way or another, possibly through their employers as most of us do now, and maybe with government subsidies for the unemployed or low wage earners. Thus Medicare will become one of the competitive options available to consumers, and the bet (my bet, anyway) is that Medicare will win out in the long run, and will end up being the health care coverage vehicle for most Americans. Medicare operates with about 3% overhead--very efficient--while private insurance companies take about 30% of every dollar for administrative costs and profits.
Actually, if you consider the total that we're paying for health care right now (about 16% of GDP), there is more than enough to pay for everyone if we eliminate the obscene profits and inefficiencies brought about by the insurance companies. For example, I practice in a small outpatient mental health clinic and we have one person in the support staff whose primary job is to fight with the insurance companies over payments. The insurers have a large variety of tricks they keep playing: sending partial payments, "losing" electronically submitted billings, denying services they had previously authorized, ad infinitum, so when you provide a service you never know whether you will be paid, or whether you will get a full payment. Sometimes when you call them, they just put you on Hold and go out to lunch or something. The insurance-company-fighter has to be a special kind of person, with immense patience and the tenacity of a bulldog.
Most providers would gladly take a reduced fee if they could simply be assured that they would receive it without hassle and without battling for it. The problem with single-payer is one of how to get there from here--considering that you would have to totally rebuild the billing systems, re-educate all sorts of people, etc., and do all of this while facing an onslaught of propaganda from an incredibly rich and powerful industry that sees itself fighting for its life--which indeed it would be.
Remember--the rest of the industrialized world provides care for all their people for 8-12% of GDP, not just care for some, at a cost of 16% of GDP like us.
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