Why Medicare is a beloved fraud

August 18, 2009

First a few numbers on U.S. healthcare, courtesy of Ed Yardeni:

1) Federal spending on Medicare combined with Federal and State spending on Medicaid over the 12 months ending July totaled a record $923.5bn.

2) Medicare totaled $439.9bn. Federal spending on Medicaid was $241.8bn. To derive the grand total, we doubled this last number to reflect that Medicaid spending is split roughly evenly between the Federal and State government.

3) Personal consumption expenditures on health care services and prescription drugs totaled a record $1,837bn over the 12 months through June, and the government picked up a record 48.6% of the tab.

4) Medicare outlays per senior citizen totaled a record $11,582 during July, up 50% since July 2000. Over this same period, the CPI rose 24.2%, while the CPI for medical care goods and services (covering urban workers) rose 43.9%. The PCED for medical care goods and services (covering all consumers) was up 31.5% from July 2000 through June 2009.

Yardeni’s bottom line:

Proponents of ObamaCare repeatedly ask senior citizens if they are happy with Medicare. Not surprisingly, they love it. It’s free, and places few restrictions on the services and drugs that are covered by the program. Medicaid works the same way for non-senior citizens who are too poor to pay for health care insurance. So why don’t we all get Medicare? Because it is a fraud.

Ask doctors and hospital administrators about Medicare and Medicaid and they will tell you that it amounts to a theft of their services because the government doesn’t pay them enough to cover their expenses for the care they provide. So they pass those costs on to patients covered by private health insurance. This is why medical care prices are rising faster in the CPI–which includes workers’ out-of-pocket expenses, but not the government’s costs of coverage–than in the PCED, which includes both. Then the audacious proponents of more government in health care have the audacity to claim that costs are rising too fast because of waste, inefficiencies, and fraud in the privately-run system!


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It is obvious you are misinformed. First medicare is not free it costs and individual approximately $90.00 per month. Secondly there are deductibles which must be met. Thirdly, every pay check 1.65% is taken out of my check.

Posted by Ed | Report as abusive

The only fraud is this article. Medicare costs are high because the government doesn’t clamp down HARD on insurance companies, so the insurance industry (which has to make money) forces doctors to charge more for services and the result is Medicare has to pay more to take care of the elderly. The doctors are pressured by the insurance companies to charge more and take smaller profits, and the government pressures doctors to accept lower payments.

The big losers here, doctors, the government, the elderly.

The winners? The for-profit insurance companies. Thats the 800 pound gorilla in the room nobody wants to talk about. Is insurance even needed? Actually…not it isn’t, but the obsession with the golden calf of the “free market” means we feel that every service under the sun must make SOMEBODY money. In the end the biggest loser is the person at the end of the food chain of profit and thats the health care recipient.

Posted by Rick Cain | Report as abusive

[…] Why Medicare is a beloved fraud Reuters Blogs Because it is a fraud. Ask doctors and hospital administrators about Medicare and Medicaid and they will tell you that it amounts to a theft of their … See all stories on this topic […]

Posted by Fraud | All Days Long | Report as abusive

Both of you commenters are mis-informed.

1st Commenter, just becuase there is a premium doesn’t address the article. The 1.65% is for Medicare Part-A insurnace which is free to the person using it and that you pay for someone else. The premiums are for Part-B & Part-D which are not paid for by the 1.65% but instead about 20% is from permiums and the 80% is charged to the exploding defict of the General Fund and to our children and granchildren.

2nd Commenter, No Insurance comapny tells a DR to charge more, that cuts into their profits, in fact they are always telling DRs to charge less becuase they the DRs have to charge more that want the service is worth to cover the loses they incur in the very low reimbursements for the Ponzi Scheme called Medicare Part B. So the more they can get the Drs to lower their costs the more the Insurance can make, my DR and my wifes DR refuse to take any new Medicare patients. Any controlled cost system like an HMO, all of those DRs to charge lower prices to reflect tthe true cost of bussiness has to refuse Medicare patients.

Posted by Terry | Report as abusive

Don’t be naive

Doctors whine about everything.

They make PLENTY of money on Medicare patients.

Posted by DoctorsAre Whiners | Report as abusive

Jimmy P is correct.
Most people do not know they pay for Medicare Part B – the part that covers dr bills. It is almost always deducted from their social security check. So it seems free.

Second, I recently checked how much I + my employers paid into Medicare. It was over $150k (+ that is NOT in 2009 dlrs) for me + 80k for my wife. So the govt took $230k from us, plus we must pay $96/mo each for Part B + $44/month each for Part D (drugs) + we need to get a supplemental plan to cover what Medicare does not cover etc – for another $125/mo each.

So I need to spend approx $275/mo per person for Medicare + about 20% of drs will not take any new Medicare patients bcs of the low reimbursement rates from the govt.

Here is the kicker: My HSA plan costs me at age 64, $279/mo + allows a $3000 per person tax deduction if we put those funds into an HSA savings acct for future bills.

Now, which system is better? Which gives me more choice? Which is cheaper (don’t forget about the $230k taken from my check + my employers)?

Jimmy P has it 100% correct.Medicare is a fraud + the p/r tax will only rise to pay today’s Medicare beneficicaries with p/r taxes taken from younger people.The system is actuarily a disaster.

Posted by Evinx | Report as abusive

NO CO-OP’S! A Little History Lesson

Young People. America needs your help.

Our last great economic catastrophe was called the Great Depression. Then as now it was caused by a reckless, and corrupt Republican administration and republican congress. FDR a Democrat, was then elected to save the nation and the American people from the unbridled GREED and profiteering, of the unregulated predatory self-interest of the banking industry and Wallstreet. Just like now.

FDR proposed a Government-run health insurance plan to go with Social Security. To assure all Americans high quality, easily accessible, affordable, National Healthcare security. Regardless of where you lived, worked, or your ability to pay. But the AMA riled against it. Using all manor of scare tactics, like Calling it SOCIALIZED MEDICINE!! :-0

So FDR established thousands of co-op’s around the country in rural America. And all of them failed. The biggest of these co-op organizations would become the grandfather of the predatory monster that all of you know today as the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry. And the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry.

This former co-op would grow so powerful that it would corrupt every aspect of healthcare delivery in America. Even corrupting the Government of the United States.

This former co-op’s name is BLUE CROSS/BLUE SHIELD.

Do you see now why even the suggestion of co-op’s is ridiculous. It makes me so ANGRY! Co-op’s are not a substitute for a government-run public option.

They are trying to pull the wool over our eye’s again. Senator Conrad, if you don’t have the votes now, GET THEM! Or turn them over to us. WE WILL! DEAL WITH THEM. Why do you think we gave your party Control of the House, Control of the Senate, Control of the Whitehouse. The only option on the table that has any chance of fixing our healthcare crisis is a STRONG GOVERNMENT-RUN PUBLIC OPTION.

An insurance mandate and subsidies without a strong government-run public option choice available on day one would be worse than the healthcare catastrophe we have now. The insurance, and healthcare industry have been very successful at exploiting the good hearts of the American people. But Congress and the president must not let that happen this time. House Progressives and members of the Tri-caucus must continue to hold firm on their demand for a strong Government-run public option.

A healthcare reform bill with mandates and subsidies but without a STRONG government-run public option choice on day one, would be much worse than NO healthcare reform at all. So you must be strong and KILL IT! if you have too. And let the chips fall where they may. You can do insurance reform without mandates, subsidies, or taxpayer expense. Healthcare reform should be 100% for the American people. Not another taxpayer bailout of the private for profit insurance industry, disguised as healthcare reform for the people.

God Bless You

Jacksmith — Working Class

Twitter search #welovetheNHS #NHS Check it out

(http://krugman.blogs.nytimes.com/2009/0 7/25/why-markets-cant-cure-healthcare/)

Posted by jacksmith | Report as abusive

Most private insurance payments to providers (doctors and hospitals) are based on medicare rates – and are sometimes below medicare rates – so that family practice docs in private practice are forced out of business by large group practices which can negotiate higher rates from insurers.

Posted by ARTBLUM | Report as abusive

Here audacious audacity! Ya really know how to write (nearly as well as you think).

Posted by miguel | Report as abusive

[…] Yardeni’s bottom line: Proponents of ObamaCare repeatedly ask senior citizens if they are happy with Medicare. Not surprisingly, they love it. It’s free, and places few restrictions on the services and drugs that are covered by the program. Medicaid works the same way for non-senior citizens who are too poor to pay for health care insurance. So why don’t we all get Medicare? Because it is a fraud. […]

Posted by James Pethokoukis: Why Medicare is a beloved fraud | The Kansas Progress | Report as abusive

Do your research. Medicaid and Medicare do not use the same payment schedules. The “fraud” you are talking about—if indeed it is a fraud—occurs on Medicaid because of its significantly lower payment schedule. But many doctors do not accept Medicaid because of this … and they are free to not do so … so where is the fraud?

I won’t even get into the fact that medical inflation has been WAY above other inflation for 35 years, so someone is getting filthy rich in the medical field. If it ain’t the doctors, I’d suggest that they start bitching at their business partners instead of trying to continue to jack off the American taxpayer.

Sorry, the only fraud is the myth you’ve apparently swallowed hook, line, and sinker.

Posted by Benedict@Large | Report as abusive

I am a physician. There is no question that Medicare is the problem. For instance, the fee that medicare paid me in 1989 to remove a rectal cancer was 1800.00(3000.00 in inflation adjusted 2007 dollars). In 2007 the fee that medicare paid was down to 1400.00(in 2007 dollars)! Name one expense for me that has gone down by 50% in those 18 years. Malpractice,rent,salaries,benefits,fuel? My costs then have to shift to patients with insurance other than medicare. Medicaid is a joke; most physicians will not even accept it because it pays about 1/4th of medicare! I do accept it out of altuism only. The system is bankrupt; it would be very dangerous to turn the whole system over to the government. Furthermore the salary that a phsician makes is imaterial to this discussion. I have worked 60-70 hours, 7 days a week for 25 years. This is not a complaint; this is what dedicated physicians do all over this country. Most physicians in the world, work 8 hour shifts with a general loss of professionalism because of socialism and an inability to take care of patients the way they see fit.

Posted by Tim | Report as abusive

[…] Someone I’ve heard of placed an observative post today on James Pethokoukis Blog Archive Why Medicare is a beloved fraud …Here’s a quick excerpt […]

Posted by James Pethokoukis Blog Archive Why Medicare is a beloved fraud … | Elderly Fun | Report as abusive

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Posted by Why Buy A Kitchenaid Pasta Roller / Cutter? Pasta Maker? The Difference? | Pasta Maker Sale | Report as abusive

To state that Doctors and healthcare suppliers are underpaid by the goverment insurance programs demonstrates ignorance on the issue. the us spends more money per capita than any other country in the world. I assure you that Medicare beneficiaries are not happy with the level or quality of service.

Posted by Harrell Matute | Report as abusive

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Posted by Why Is My Pasta Maker Tearing My Dough?!? | Pasta Maker Sale | Report as abusive

[…] This chap added an interesting post on James Pethokoukis Blog Archive Why Medicare is a beloved fraud …Here’s a small excerptWASHINGTON — In a bid to confront criticism of his health care plans directly, President Obama has invited conservative talk-radio host Michael Smerconish to. August 19, 2009 based conservative radio talk show host Michael Smerconish. who will talk about problems of health-care access, and then detail his the president plans to sit for an interview with the conservative radio host. Let’s take the profitable host and right next to that Americans ‘distrust’ gov’t to run big healthcare. listeners with “pointed direct and substantive questions about Health Care,” he. WASHINGTON In a bid to confront criticism of his health-care plans directly, President Barack Obama has invited conservative talk-radio host Michael Smerconish to. (MYFOX NATIONAL)- Conservative talk radio host Rush Limbaugh compared President Barack Obama’s health care logo to Nazi imagery Thursday on his afternoon show. President Barack Obama plans to discuss his push for health care overhaul Thursday when Philadelphia-based conservative radio […] […]

Posted by James Pethokoukis Blog Archive Why Medicare is a beloved fraud … | Elderly Quicken | Report as abusive

I am so over all of this drama and b/s. It seems to be never ending and no one seems to care about the people this is all effecting. Who can we trust now? Our government is spending us into the ground FAST and they want to turn our health care into a socialistic event. Well no thank you! Don’t make something new, fix what we’ve got!

Thankfully I’ve got friends who have referred me to someone I can trust. I only wish everyone had the same. Maybe you don’t.. so here’s my contribution to society (while it still stands) www.nationalmedicareservicecenter.com/

Posted by Francis | Report as abusive

why do you say Medicare is free? We are charged $90.00 each a month. It’s taken from our social security

Posted by Joan Laconca | Report as abusive