News Release

Harmful Remedies Prescribed for Medicare, Critics Charge

Experts Say Program’s Troubles Are Due to Private Health Care System

WASHINGTON — Renewed efforts are underway to popularize very damaging “solutions” for Medicare, some experts say.

One influential think tank, the Cato Institute, urged Wednesday that the federal government take major steps toward privatizing Medicare. The group claimed that “successful Medicare reform” must rely on “the efficiencies, incentives, competition and productivity of the private sector.”

But researchers associated with the Institute for Public Accuracy, a nationwide consortium of policy experts, likened the recommendation to putting out fire with gasoline.

Sumner M. Rosen, professor emeritus of social policy at Columbia University, warned Wednesday: “The real objective is to shrink and weaken the role of government, and privatize these enormous streams of funds that are so attractive to the profit-seeking visions of the largest and most powerful economic, corporate and financial institutions.”

According to Mark Weisbrot, an economist at the Washington-based Preamble Center for Public Policy, “The problem is that private health care costs have not been brought under control because health care reform never happened.”

In contrast to the conventional wisdom, Weisbrot added, “the basic problems with Medicare are not demographic.” Medicare’s projected financing problems “have nothing to do with the fact that it is a government program. Nor do they result primarily from the aging of the population. Medicare’s costs are driven by the costs of private health care.”

Weisbrot added: “Over the next 30 years, the effect of medical care inflation will have four times as much impact as the baby boomers’ retirement on the average family’s real income.”

John L. Hess, a policy analyst on economics and aging who covered such issues as a longtime reporter for The New York Times, denounced the Cato Institute’s policy prescriptions for Medicare. “What Cato is proposing would ruin Medicare and pull the plug on needy people,” he said. Privatization scenarios for Medicare “would favor the affluent over the less affluent, the healthy over the sick, and private insurance over public, mutual help. It would of course promote what private insurance specializes in — cherry picking.”

The Institute for Public Accuracy also took issue with Cato’s assertions regarding efficiency. It noted that the government spends roughly 2 percent of Medicare funds for administration, whereas private HMOs average ten times that for overhead and profits.

The Institute for Public Accuracy is a nationwide consortium of policy experts.