Eric Zuesse

Part of the Obama Administration’s promise to the American people regarding Obamacare was that the enormous waste in America’s medical expenses would be reduced. The reversal of that promise has already begun.

Estimates of this waste already range generally around 40%. On 15 May 2007, Reuters headlined “US Health Care Expensive, Inefficient: Report,” and announced: “Americans get the poorest health care and yet pay the most compared to five other rich countries,” according to a study by the Commonwealth Fund. “The U.S. health care system ranks last compared with five other countries on measures of quality, access, efficiency, equity, and outcomes.” In other words, the U.S. was paying gold for garbage. “Canada rates second worst. ... Germany scored highest, followed by Britain, Australia and New Zealand.” Moreover: “Per capita health spending in the United States in 2004 was $6,102, twice that of [top-rated] Germany, which spent 3,005. Canada spent $3,165, New Zealand $2,083 and Australia $2,876, while Britain spent $2,546 per person.” On top of that: “U.S. doctors are the least wired, with the lowest percentage using electronic medical records or receiving electronic updates on recommended treatments.” The conservatives’ myth that “free market” healthcare is more efficient, or is better, or is even more “wired,” than socialized health insurance, benefits only the corporate providers within the system, and the stockholders of those corporations. Everyone else loses.

On 14 March 2012, the Journal of the American Medical Association, headlined “Eliminating Waste in US Health Care,” and estimated that the waste amounted to somewhere between 21% and 47% of the total U.S. medical expenses, mixed public and private.

One of the most wasteful parts of the entire system now is Medicare Part D “Advantage” private supplemental insurance plans, which are heavily subsidized by U.S. taxpayers, and yet, on average, still are costlier to Medicare recipients than is the government-run Part B program. On 25 July 2008, the Los Angeles Times bannered “Medicare Part D a Boon for Drug Companies, House Report Says: Taxpayers pay up to 30% more for prescriptions under the privately administered program” than under the publicly administered one, and Nicole Gaouette reported that, “U.S. drug manufacturers are reaping a windfall from taxpayers because Medicare’s privately administered prescription drug benefit program pays more than other government programs for the same medicines. ... In the two years Medicare Part D has been in effect, drug manufacturers have taken in $3.7 billion more than they would have through prices under the Medicaid program.” For example, “Bristol-Myers made an additional $400 million from higher prices for a single drug, the stroke medication Plavix.”

Part D, including “Advantage,” was sold by President George W. Bush to Congress on the basis of the President’s estimate that it would add “only” $395 billion to the deficit during its first ten years. Douglas Holtz-Eakin, who had previously been the head of Bush’s Council of Economic Advisors, was now the head of the Congressional Budget Office, and on 20 November 2003, right before the crucial House vote, he wrote to Congress, “CBO estimates that enacting the legislation would result in direct spending outlays totaling $395 billion.” This figure was crucial, because opponents had already said that any such legislation which would cost more than $400 billion (these were ten-year estimates, 2004-2013) would be unacceptable. Two months after the legislation was passed, the White House Budget Director revised that cost-estimate upward to the range of $534-$551 billion. Then, on 11 March 2004, Tony Pugh of Knight Ridder Newspapers headlined “Bush Administration Ordered Medicare Plan Cost Estimates Withheld,” and he opened: “The government’s top expert on Medicare costs [Richard S. Foster] was warned that he would be fired if he told key lawmakers about a series of Bush administration cost estimates that could have torpedoed congressional passage of the White House-backed Medicare prescription-drug plan.” On 2 April 2004, the Los Angeles Times headlined “Medicare Secrecy Inquiry Is Silenced: House Republicans stop Democrats from delving further into why the prescription drug bill’s true cost estimates were kept from Congress.” On 9 February 2005, the White House re-estimated what this legislation would cost the federal Government over ten years: $720 billion. That’s $320 billion more than congressmen had been promised when they voted to pass the legislation. (Almost no Democrats voted to pass it, but Republicans needed this cover from the Administration – “only $395 billion” – so that they could justify this program when speaking about it to their constituents.)

So, now with a Democratic President, on a 15 February 2013 Friday night news dump, the Center for Medicare and Medicaid Services (CMS) announced a 2.3% reduction in subsidies to insurers who provide plans under Part D. This was supposed to be part of the cost-efficiencies in Obamacare, and an important part of the projected reductions in the growth of the federal debt. But then, after lots of lobbying by those insurers, CMS reversed itself on April 1st, and said that instead those subsidies would increase 3.3%. Reuters headlined on April 2nd, “In Reversal, US to Raise Medicare Advantage Payment Rate,” and announced, “In a reversal that followed intense lobbying from the health insurance industry,” the CMS “said on Monday it will increase the rate by 3.3 percent in 2014, reversing a 2.3 percent cut announced in February.” The many “free market” fans of increasing this Republican federal subsidy to big businesses were applauding. At fool.com, Sean Williams bannered “The Insurance Industry Shows Obamacare Who’s Boss,” and exulted “The insurance industry effectively dictated itself a raise.” He pointed out that Humana, Universal American, UnitedHealth, and Health Net, “generate 63.5%, 75%, 25%, and 25%, respectively, of their revenue from Medicare Advantage.” He didn’t note, however, that this “revenue” comes from enormous subsidies that are paid by U.S. taxpayers to those companies. CNN headlined on April 2nd, “Health Insurance Stocks Surge on Medicare Rate Hike,” and reported that all insurers jumped at least 4%, and “Humana, which has the greatest exposure to Medicare Advantage, jumped nearly 10%.”

This is how America’s “free market” works. But it is also how Americans spend twice as much per person and receive inferior health care, as compared to other industrialized countries. And now, with Obamacare, it is how these subsidies will be increased, not reduced, and the federal government’s debt will rise even higher than is being projected, while the largest corporations will thrive.

So: President Obama is working, as he has since he first became President, with Republicans in Congress to cut Social Security, Medicare, and Medicaid. After all, Humana, UnitedHealth, and other health insurance companies – and the mega-banks on Wall Street – all need that money. “Entitlement” recipients shouldn’t be so “greedy.” They need to share more of it with the mega-banks and the corporations in the DJI and S&P.

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Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010 , and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.