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Sanjay Gupta Says Medicare Is Going Bankrupt
CNN’s health care analyst is now telling people that Medicare is going bankrupt. What does this mean? Medicare’s costs are projected to exceed its revenue and drain the surplus from its trust fund in a bit over a decade, but this has been true at several points in the past. Did Congress tell tens of millions of beneficiaries to get lost? No, Congress appropriated the money needed to keep the program going.
Is Congress going to be likely to scrap Medicare a decade from now when beneficiaries are going to be a far larger share of the voting population than they were in the past? That doesn’t seem likely. So the idea that Medicare will actually run out of money, as Dr. Gupta’s claim that Medicare is going bankrupt would seem to imply, is just not plausible.
If Dr. Gupta meant to imply that Medicare, as a government program is uniquely inefficient, then he is way off the mark. According to the Center for Medicare and Medicaid Services (Table 13) per beneficiary costs have risen in nominal dollars by 519.5 percent since 1980. By contrast, the cost per enrollee of private insurance has risen by 676.6 percent over this same period. In fact, with administrative costs that are just 2 percent of spending, Medicare is the most efficient part of the U.S. health care system (with the possible exception of the Veterans Administration health care system). Eliminating Medicare would raise health care costs, not lower them.
So what does Dr. Gupta mean when he says that Medicare is going bankrupt?
--Dean Baker
COMMENTS (12)
Michael Gupta? I can't blame you for the brain lapse, given the current battle between the two.
Posted by: patient renter | July 11, 2007 6:25 PM
I guess I thought that they had merged -- thanks patient renter for the correction.
Posted by: Dean Baker | July 11, 2007 7:15 PM
Sanjay Gupta! Go over to Max Sawicky's place where he had to referree a blow-up between Dr. Gupta and Michael Moore over whether the per capita health care expenses in the US are really that high compared to other nations. Max proves Dr. Gupta doesn't know squat.
Posted by: pgl | July 11, 2007 7:58 PM
Dean, Medicare financing is as simple as A, B, C, hmm and now D. Well now that I think of it it really is not simple at all.
Though to boil it down to "Medicare is going bankrupt" is worse than simplistic.
People who know a little about this are wondering how Medicare Part D, funded by the general fund, may or may not reduce costs for Part A, which is funded by payroll taxes. But to discuss that would require something more than soundbites and so is not likely to be highlighted on Situation Room.
Posted by: Bruce Webb | July 11, 2007 11:49 PM
Going bankrupt is just a way of saying the same thing- it will someday take in less money than it pays out, will run out of savings and will either need to reduce what it pays out or raise taxes.
Sure the geezers will vote to raise taxes on the young people but everyone must admit that there comes a point that taxes cannot be raised anymore.
No one thinks that medical costs will literally bankrupt the US. The pressures will increase long before that happens and require reform.
Posted by: Erik L | July 12, 2007 9:56 AM
it will someday take in less money than it pays out
Gee, the Defense Department is paying out more money than it takes in. So it must be bankrupt as well.
Posted by: Sven | July 12, 2007 11:19 AM
In more ways than one, Sven.
Posted by: Aunt Deb | July 12, 2007 12:26 PM
Which is what I meant by 'as simple as A, B, C, and hmm D'
"it will someday take in less money than it pays out"
It already does take in less. The Medicare Trust Fund (HI), funded by payroll tax only finances Part A (Hospital mostly). Parts B & D, physician and drug coverage are paid from the Supplementary Medical Insurance fund (SMI), 79% of which ($163 billion) is funded from the General Fund with less than $45 billion from premiums.
HI did increase its assets by $20 billion this year, which combined put Medicare $143 billion on the red side of the ledger.
2007 Medicare Report page. 5
There is a sense in which you could say Medicare Part A's HI Trust Fund was "heading for bankruptcy". It would be misleading but not detached from reality, but trying to mix the financing of Part B and D into that is literally nonsense.
As an example I hear people on what I would consider the good side of this debate say that the Bush Drug Plan was designed to accelerate the crisis. Well no, not only don't they draw from the same set of funds, there is every likelyhood that Part D (87% funded by the federal and state government) will actually relieve pressure on Part A by reducing hospital utilization going forward.
It is this kind of thing that makes Michael M tear his hair out, you don't need to be a health wonk to understand all this, but you do need to know your A, B, D's.
Posted by: Bruce Webb | July 12, 2007 2:46 PM
What Dr. Gupta means is that the commercial interests that drive his show and his network are unhappy with Michael Moore's convincing argument to extend Medicare to the entire US population.
Posted by: AnonE.Mouse | July 13, 2007 9:06 AM
So what does Dr. Gupta mean when he says that Medicare is going bankrupt?
It means that the system is constantly depleting its supply of revenues and will eventually have to reduce benefits (not likely) or go into even greater deficit spending mode, you moron. The government is going to be outlaying more and more money over the next 75 years to quote the current US Comptroller:
"By that I mean that the Medicare problem is five times greater than the Social Security problem."
"With one stroke of the pen, Walker says, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years."
Posted by: tmfa | July 16, 2007 1:05 PM
You've missed the point tmfa. SOMEONE has to pay for health care. Whether it's private insurance companies, public insurance companies, or individual citizens, the cost is going up. Increased costs are partly a function of demography (which is invariant to administration issues) change in epidemiology (fatter Americans) and advances in health technology. Take away medicare, the costs don't change.
The debate boils down to increasing costs of care, not the system of delivery.
Posted by: who's the moron? | July 18, 2007 5:15 AM
Big Pharma wins again. When will people learn that medical care will be reduced greatly if we implement preventative health care in this country.
Posted by: Carol | December 12, 2008 10:26 AM