Medicaid/Medicare Medicare

Medicare: Expert vs. Public Opinion

A great article from NEJM summarizes the differences on the problems Medicare faces as seen by experts and the public.  This press release summarizes the results.

One reason that many Americans believe Medicare does not contribute to the deficit is that the majority thinks Medicare recipients pay or have prepaid the cost of their health care. Medicare beneficiaries on average pay about $1 for every $3 in benefits they receive.  However, about two-thirds of the public believe that most Medicare recipients get benefits worth about the same (27%) or less (41%) than what they have paid in payroll taxes during their working lives and in premiums for their current coverage.

Differences between experts on the financial condition of Medicare and the public can also be seen when examining the reasons for rising Medicare costs and ways to reduce future Medicare spending. Unlike many experts, the public does not see overuse of medical care and the cost of new medical technologies as among the most important reasons for rising Medicare costs. Only one in six Americans (17%) believes that “people receiving drugs and medical treatments they don’t need” is one of the most important reasons why Medicare care costs are rising, and only 6% see “new drugs, tests and treatments being offered to the elderly” as one of the most important reasons. The three reasons cited most often by the public are poor management of Medicare by government (30%), fraud and abuse in the health sector (24%), and excessive charges by hospitals (23%).

Many experts believe that one of the most important reasons for rising Medicare costs is unnecessary care provided to patients. The public, however, sees the bigger problem for people on Medicare as not getting the health care they need (61%), rather than receiving unnecessary care (21%). Many experts see capitated payments (doctors getting paid a fixed amount of money so they can manage all of a patient’s health care for the year) as a preferred way of reducing future Medicare spending. However, a majority of the public favors continuing fee-for-service payments (65%) rather than changing to capitated health care arrangements (30%). This resistance to change may be related to the fact that a majority of the public sees Medicare in some cases already withholding treatments and prescription drugs to save money, including 63% who believe this happens very or somewhat often.

HT: Amitabh Chandra, Tyler Cowen



  1. “Medicare beneficiaries on average pay about $1 for every $3 in benefits they receive.”

    Could you clarify what you are counting? Are you counting Parts C and D? Are you counting copayments beneficiaries pay directly? Are you counting Medigap policies?

    Just for Parts A and B together, the ratio of premiums paid by Medicare beneficiaries to total Medicare premiums on average is about $1 for every $8.

  2. This is the ratio of the amount of Medicare taxes beneficiaries pay into the government over their lifetime to the total lifetime benefits (not including copayments/premiums) that they receive.

  3. Thanks – how could I forget taxes?

    Still, it seems to me the individuals’ ultimate cost is the sum of their Medicare taxes paid plus their own Medicare premiums paid . . . unless you count the individuals’ own premiums as “taxes” (which is plausible, I suppose).

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