Paul Van de Water, Center on Budget and Policy Priorities - Medicare is a success by almost any measure, and there’s no reason to weaken its guarantee of health coverage for older Americans and persons with disabilities.
Medicare provides health coverage less expensively than private health insurance. With 57 million participants, it can demand lower prices from hospitals and doctors, who wield growing market power as part of large health care systems. Medicare also has much lower administrative expenses than private insurers and doesn’t make a profit.
Much more than private health insurance, Medicare has spearheaded reforms in the health care payment system to improve efficiency and control fees. Partly due to these reforms, Medicare has outperformed private insurance in limiting the growth of health costs. Since 1987, Medicare spending per enrollee has grown by 5.7 percent a year on average, compared with 7 percent for private insurance.
Health reform has improved Medicare’s financial outlook, contrary to House Speaker Paul Ryan’s claims. Its hospital insurance trust fund is now projected to remain solvent 11 years longer than before the Affordable Care Act was enacted. Even in 2028, when the fund is projected to be depleted, incoming payroll taxes and other revenues will still be sufficient to pay 87 percent of hospital insurance costs.
Medicare leads the way in slowing the growth of health care costs while improving the quality of care.