Medicaid and Medicare costs are increasing not because the programs are broken and need to be slashed, but because of our out-of-control health-care costs. Health insurance is far too expensive in the US. Other industrialized countries do not pay anywhere what we have to in order to get coverage for their citizens. Institute a true public option, perhaps by allowing younger, healthier workers to opt into Medicare.
What does this even
mean?
Currently, the Department of Health decides how much to reimburse providers for procedures performed under Medicare. These rates are already significantly below the going market rate - so much so, that the system suffers from provider flight. Your argument is that these costs are
still too high. If so, the Medicare advisory board already has the authority to negotiate lower reimbursement rates - why don't they?
Because, of course, reimbursement rates aren't "too high"; in fact, they're too low, from the markets perspective. Other industrial countries pay less because they use non-price determinants of supply; specifically, they make do with less access (first-come first-serve rationing rather than price-rationing) and fewer procedures (the most expensive treatments are priced out of the market and totally unavailable outside the United States). This is less of an option here because the government must compete with private consumers for access to providers - something illegal in places like England and Canada (though I think Canada is flirting with privatization).
So, you've got two options:
Nationalization, so that the government becomes a monopsonist (the sole consumer of the good). It can dictate lower prices to providers (they won't be able to simply turn away the government pool and service a private pool). Many providers will be priced out of the market, reducing the supply and resulting in lengthy wait times for access (or eliminating access altogether, if reimbursement rates won't cover operating costs at even the most efficient firms for the most exotic procedures). This is the British model.
Privatization. Reduce the benefits provided by the Medicare program, and encourage customers to supplement with private coverage, or pay out of pocket. So, for example, Medicare might provide catastrophic coverage, with routine, long-term, maintenance and prescription coverage obtained privately or on a for-cash basis. This is the Ryan model.
In neither case is the existing model sustainable, let alone expandable. Note also, before pushing for the former, that the vast majority of healthcare innovation occures in the United States. Routine access to new procedures becomes commonplace in foreign markets only years after procedure introduction here, when costs have fallen to workable levels, given the lower international reimbursement schedules. It is possible that healthcare innovation would mostly stop if the incentive to innovate - a rich and willing to pay American market - were eliminated.
