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Opinion: The high costs of Medicare's low prices

The Washington Post, March 11, 2013

Steven Brill's recent Time magazine cover story, "Bitter Pill: Why Medical Bills Are Killing Us," is an extraordinarily well-reported look at medical pricing, demonstrating that high health-care prices have little relationship to underlying cost. For many commentators, the much lower prices paid by Medicare suggests an obvious solution to our health-care problems — "Medicare for all." There's only one problem with this "obvious" solution: Medicare has been a primary driver of the explosion of health-care costs in the United States despite — and perhaps because of — the low prices it pays. Over the past decade, Medicare’s spending per beneficiary has risen at roughly the same rate as spending for privately insured patients. Medicare's supporters have a simple explanation: Americans are living longer, and this is driving up the program’s costs. But Medicare's own data say that a much more important factor is the growing intensity of use: more demand for care at every age.