Wednesday, June 17, 2009

A thoughtful comparison of Medicare and private insurance

Medicare: comparing before and after

by Stephen Gregg

Tomorrow is my 65th birthday. I just left my private-sector health insurance roots behind and enrolled in Medicare. I'm both pleased and troubled by the transition. That split attitude was striking for me, given my long-standing philosophical and ideological commitment to "private" and "free market" views. How could I possibly view participation and dependency on a government-run Medicare program as an improvement?

Well, Medicare is a very sweet deal.

The Social Security Administration indicates my Medicare tax contributions over my working career have been $57,700. That seems far less than the costs my wife and I are likely to incur over the remainder of our lives. Surely, it will be convenient to allow politicians, lobbyists and organizations such as AARP to run the show, no matter the larger consequences. I know politics offers considerable protection of my interests. In large part, this is not a story about how the government has taken over yet another sector of our society, but how far the private sector has wandered from steadfastly serving its customers.

Turning 65 is a rare moment, allowing one to contrast before and after. "Before" meant buying individual private insurance for the past 15 years. Employer group insurance is far more benign financially. The dominant characteristics of individual insurance included:

--Volatile premium increases.

--Benefit designs loaded with popular fluff, while leaving me wondering whether coverage for the unanticipated and serious was there.

--Insistence on using predetermined provider networks irrespective of better or cheaper alternatives.

--Spotty administrative support. Changing insurance providers during those 15 years was always an iffy exercise.

The "after," of course, remains to be fully appreciated, but the initial Medicare signals seem favorable, bordering on a breath of fresh air:

--Stable premium increases.

--Ubiquitous access to almost any provider in the country.

--Assurance that the best price has been extracted (extorted?).

--Standardized supplemental insurance policies covering super-catastrophic and first-dollar coverage for just slightly higher premiums.

--A wide range of supplemental insurers.

--Ability to switch carriers, no questions asked, once a year.

--So far, decent public-private customer service throughout.
--Very little uncertainty as to whether I am covered for all the possibilities.

It's a challenge to argue that Medicare is an inferior alternative to a more responsive and dynamic private sector.

This is disturbingly superficial and self-centered, but it's where I fear many people are today. It's no one's fault in particular, and all of our faults collectively. Certainly there is near universal acknowledgment that the math of Medicare just does not work in the mid to long term.

But as disastrous as the future financial plight of Medicare is, it may prove to be secondary to political demands to reform a health care system that isn't meeting many people's needs.

Do I think the private sector has a grasp of all this? I don't see it. Perhaps you do. What a predicament we have.


Stephen Gregg is a retired Portland (Oregon)-area managed-care and hospital administration executive.

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