Listening to the Washington debate about Medicare (here, here, here, here, and here) one would think the program is in trouble because it's a government entitlement program that is handing out free health care to underserving freeloaders. And, if that is the problem, then the solution is to privatize the program (according to Rep. Paul Ryan, R-WI in the video below).
First, Medicare is not an entitlement program, it is a social insurance program that people pay into during their working years so they can have health insurance in retirement. The only sense it which it is an entitlement is that we are entitled to the care that we payed for with our payroll deductions. It is an insurance program because some people will need more care than others even though there have been relatively equal contributions.
Medicare, however, is in trouble because payed-out benefits exceed collections. This problem could be solved in two ways: increasing payroll deductions or decreasing payouts.
On the payout side, Medicare is in trouble partly because of private sector billing practices. The DHHS Inspector General released a report last December documenting Questionable Billing for Medicare Outpatient Therapy Services. The graphic above, from the report, shows the "high-utilization" counties, counties that supply up to eight times the level of services per beneficiary and thus services about eight times the level of payment for services.
Of these counties, Miami-Dade is the worst having "the highest average Medicare payments per beneficiary among the high-utilization counties and the highest total Medicare outpatient therapy payments in 2009." The higher payments are not going to produce better health for Medicare patients but are going to increased physician payments and higher executive salaries in the private health care sector.
Privatization will only make the problem of over-billing worse. And, strangely enough, all but one of the high-utilization counties is in a state with a Republican governor.
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