SOCIAL POLICY:

MEDICARE AND MEDICAID: SOCIAL INSURANCE OR SOCIALIZED MEDICINE?

KAYJATTA

Is Medicare and Medicaid social insurance or socialized medicine?

Medicare and Medicaid are social insurance, according to Professor Reinhardt. Both are government-run health insurance systems that allow private and public healthcare providers to compete for patients in terms of the quality of services they provide.

Social insurance healthcare systems are large risk pools managed by government so that individuals can shift financial risk of illness with premiums based on their ability to pay. In this system, healthcare is bought from diversified sources including private for-profit and private not-for-profit providers. Medicare and Medicaid systems are similar to the Canadian government-run system rather than the European style socialized medicine often criticized for its rationing and long queues, albeit falsely.

In addition to Medicare and Medicaid, Professor Reinhardt observed the social insurance system in:

·         Employer-provided private insurance market where premiums are community-rated over all the participating employees in the company.

·         A large pool of self-employed private insurance buyers

 However, such private insurance does not protect the insured for the entire lifespan. Coverage is often lost with the job.

According to Professor Reinhardt, social insurance systems have several advantages, as follows:

·         Financial protection for individuals over their entire lifespan

·         Relatively inexpensive to administer

·         Forster the principle of national solidarity through equal access to healthcare

However, one major disadvantage of this system is that it may be underfunded by the government that runs it.

Professor Reinhardt identified the Veteran’s Affairs health system as socialized medicine rather than Medicare and Medicaid. In socialized medicine, the government owns and operates the healthcare delivery system, and additionally organizes and manages the risk pools for health insurance.

THE ECONOMIC FUNCTIONS ANY MODERN HEALTH SYSTEM MUST PERFORM:

Professor Reinhardt identified several economic functions any modern health system must perform. These include the following:

·         Financing health insurance and healthcare- by extracting money in the forms of taxes and or premiums from eligible citizens for that purpose. Medicare and Medicaid are classic examples in this case.

·         Protection of individual citizens from financial ruin in case of illness- by providing health insurance through the organization and management of large risk pools. An example of this is perhaps the Medicare and (to some extent) Medicaid health programs run by the Department of Health and Human Services.

·         Production of healthcare goods and services. This function is probably observable in the Veterans Affairs health system.

·         Purchase of healthcare goods and services on behalf of patients or healthcare consumers. This is probably what the United States government does in the health system of the U.S. Department of Veterans affairs.

·         Regulation of the health system- to ensure quality, safety, and fair play by all actors in the healthcare system. The FDA (Federal Drug Agency) and the Department of Health and Human Services perhaps performs this function in some respect.

In the cases of Medicare and Medicaid, the government performs a complex combination of several economic functions. Some of these economic functions are :

1.      Financing healthcare and health insurance- the government extracts taxes and premiums to pay for Medicare and Medicaid coverage. Currently a payroll tax of 1.45% of employee and employer earnings is assessed, but 2014 that will increased to 3.8% for those earning more than $200,000 per year. A monthly premium of $35 is assessed for Medicare Part D, for example.

In the case of Medicaid, the federal government provides, according to Sabato (pg. 546), 50 to 75% of funding. The national government,. Together with state governments spend $400 billion in 2009 (Sabato, et al, 2010).

2.      Protection from financial ruin-by organizing and managing large risk pools, the government enable individuals to shift their financial risks with premiums affordable to them. For example, in Medicare Part D those with annual prescription drug costs of more than $5,100, get 95% of their costs covered thereby protecting them from financial ruin.

3.      Regulation of the healthcare system to ensure quality, safety, relevance, and fair play. By footing the bill for Medicare and Medicaid, the government, national and state, may exercise control over costs, physician charges, number of hospital visits, and prescription drug charges (Sabato, pg. 547). Perhaps the fear of this governmental control on the part of the American Medical Association (AMA) is what more than anything derailed the Clinton Healthcare reform in the early 1990s.

REFERENCES:

1.      THE TRUE COST OF CARE: The complicated relationship between the market and government health programs ( Uwe E. Reinhardt, 2008).

2.      American Government (Sabato, O’connor, and Yanus, 2010)