What’s the matter with Medicare?

Medicare has been treated as a whipping boy in the discussions around reforming our current healthcare financing system. I maintain that most of the criticisms are flawed, and don’t stand up to critical scrutiny. Medicare is a fundamentally sound program, which has been compromised both by unaddressed demographic changes, and by intentionally unfunded program expansions.

Among the unavoidable challenges Medicare faces, most have nothing to do with program efficiency, and everything to do with the demographics of the beneficiaries: 
 High-cost population. Older people are simply more expensive to cover. Medicare disproportionally covers these populations. These people were not covered before, which is why Medicare was developed, and why it’s so popular.
 Increased expectation of heroic life-extension measures. Dying people seeking to extend their lives are very expensive.
 Fewer workers support more beneficiaries. Longevity increases, shifts in the demographic age profile of our population, further magnify the first two imbalances.

Despite this, by most key metrics, Medicare operates far more efficiently than do private insurance companies. Critics state that because of the client base, its 75% administrative cost advantage may be somewhat overstated. But even if we adjust for these concerns, Medicare is still much more efficient.

Among the other obstacles, some have the specific intention of driving Medicare to bankruptcy – and discrediting the idea of any public approach to insurance:
 A steadfast refusal to adapt the funding model to address the looming demographic imbalances listed above. A system designed in the 1960s, with contemporary life-span and treatment expectations, needs updating to reflect current and future realities.
 Medicare Part D. (See Below)