- Malcolm Getz is a professor emeritus of economics at Vanderbilt University
Expanding Medicare is a good idea. The total costs count what we pay for healthcare through taxes, insurance and cash.
In the US, healthcare is 17% of everything we produce, but we only insure 90 percent of Americans. Canada, on the other hand, spends 36% less of its output on healthcare, but insures everyone with Medicare. If the US did 36% less, we would save $ 1.3 trillion a year.
Canada achieves a better result. Life expectancy in the US is 78.7 years. Canadians are on average 82 years old.
Medicare is insurance that pays private doctors and hospitals. With a 55-year history in the US, Medicare serves 17.8% of Americans. Medicare uses simple systems to keep overheads low. Private insurance, on the other hand, thrives on complexity with high overheads.
Here are three examples of problems that Medicare addresses:
No. 1: consumer information
Private markets work when consumers are informed. However, patients are often misinformed. Consider screening for colorectal cancer, the second-highest cause of cancer death.
Canadian officials recommend and their Medicare pays $ 20 for a bi-annual home test kit for blood in the stool. The test takes five minutes. After a lab finds blood, most patients agree to a follow-up colonoscopy as the next step.
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The US, on the other hand, puts an emphasis on a colonoscopy every ten years. A colonoscopy costs an average of $ 3,000. This procedure involves cleaning the colon so that a professional can use a video camera to look for cancer. A patient devotes a day to the procedure with anesthesia. However, American consumers often refuse a colonoscopy. With inconvenient screening, colon cancer survival rates in the US are lower than in Canada.
No. 2: spread of prices
The spread of prices is a second example. Informed shoppers are pushing prices to the bottom with competition. However, analysis of the prices of a general complete blood count shows that insurers pay vastly different prices, a sign of ineffective competition. In Miami, the price ranged from $ 149 to $ 725, compared to $ 14 to $ 50 in Bridgeport. US Medicare pays $ 10 to $ 20. Private insurers are often ineffective shoppers.
No. 3: Competition
Monopoly is a third example. Consumers need easy access to competitors for markets to work. However, an integrated regional care network can set high prices. In Western Pennsylvania, UPMC is almost in a monopoly position. UPMC is pushing prices up 40 percent. Medicare, on the other hand, sets prices, a common way to limit monopoly overload.
Medicare addresses fundamental problems in the medical market. Expanding Medicare is a worthy, cost-effective idea.
Malcolm Getz is a professor emeritus of economics at Vanderbilt University.