Medicare is discussed across three episodes of The Bob Zadek Show as a government program that combines price controls, centralized coding, and intergenerational wealth transfers. Guests and host treat it not as a neutral insurance scheme but as a political mechanism that determines how medical services are defined, valued, and paid for. The episodes span 2013 and 2014 and feature Dr. Jeffrey Singer, a physician, and Burton Abrams, an economist.
Coding and price controls
Dr. Jeffrey Singer describes the first structural feature of Medicare as a coding system that began in the early 1980s. According to Singer, the American Medical Association lobbied Congress and obtained a monopoly over the codes used to bill Medicare. The AMA designs the coding system each year, a list of thousands of codes that break down every procedure, service, and diagnosis and assign each a computerized number. Hospitals have a similar system. Singer says physicians were told they would have to submit bills to Medicare using this coding system, which meant letting their services and diagnoses be defined by a bureaucratic entity rather than individualizing care. If a code did not describe a patient’s problem or the service rendered, physicians had to find the closest fit in order to get compensated. Singer notes that the AMA receives payment from Medicare and insurance companies to develop the codes, and that a significant portion of the AMA’s income comes from this rather than from membership dues Will Americans Accept Second Class Medicine? (2013).
Bob Zadek frames the consequence in his exchange with Singer: in the old days a patient would see the doctor, time would be spent as needed, and a bill would be determined. Now, Zadek says, the patient is not a patient but a series of codes, and the office must develop the skill of converting treatment into as many codes as possible to maximize payment from Medicare or insurers. Singer agrees and adds that in the mid-1980s, during the Reagan administration, Medicare instituted price controls on top of the coding system. A commission decides what each procedure code is worth. Singer says he receives a book every October from Medicare listing the reimbursement for each code. The same amount is paid regardless of whether the physician is the best in the world at a procedure or performing it for the first time. Singer contrasts this with other professions where excellence can be rewarded by charging more. Zadek notes that lawyers can raise their hourly rates and are tested against the market daily, while Singer says he cannot reduce his fee for a patient with limited income because Medicare rules treat that as discriminatory. Singer describes hiring certified coding specialists who advise on how to code a service to receive higher reimbursement, and says this affects physicians’ mentality as they try to fit patient diagnoses and services into codes designed by a commission. He also says epidemiologic data becomes suspect because physicians must assign a diagnosis code to get paid even when the examination is normal, giving the example of coding a normal breast exam as breast pain Will Americans Accept Second Class Medicine? (2013).
Perverse billing and hospital consolidation
In a later segment of the same episode, Zadek and Singer discuss how Medicare’s billing rules push physicians out of private practice and into hospitals. Zadek gives the example of laser eye surgery: if an ophthalmologist performs the procedure in his office, Medicare reimburses $389, but if the same doctor with the same machine performs it in a hospital, the hospital receives about twice as much, $738. For an echocardiogram, Zadek says the average private practice reimbursement is $143, while in a hospital it is $319. He says this costs the system about one billion dollars more by forcing doctors to leave private practice and work for hospitals. Singer confirms the pattern in cardiology, saying Medicare pays cardiologists so little for stress tests and echocardiograms that many send those procedures to hospitals rather than lose money doing them in the office. He says hospitals are increasingly hiring specialists, and that when a surgeon in private practice performs a laparoscopic gallbladder operation, the surgeon gets paid a certain amount, but if the surgeon is a hospital employee, the hospital bills about double for the same procedure. Zadek summarizes the point: the same person, Dr. Jeffrey Singer, does the same procedure with the same scalpel, and the cost to society is double, forced by the government’s system. Singer attributes the disparity to the Hospital Association’s lobbying success relative to medical societies, and says that without a market, the only alternative is politics, where payment depends on how well one lobbies regulators Will Americans Accept Second Class Medicine? (2013).
Medicare as a retirement program and wealth transfer
In a 2014 episode, Burton Abrams tells Zadek that Medicare, rather than Medicaid, is the real economic folly among the two programs. Abrams describes Medicare as a retirement program that replaces private retirement planning with a government-paid-for program. Money put into Medicare is money not saved for retirement, and it is consumed rather than saved, which Abrams says has a long-run detrimental effect on the economy. He distinguishes Medicaid, which he says was originally set up for people clearly in poverty and primarily benefited their children, and which he would not call folly, from Medicare, which he calls the real folly Worst Ten Economic Mistakes of the 20th Century (2014).
Zadek characterizes Medicare as a wealth transfer from working Americans to retired Americans, and notes that retired Americans as a demographic class are the wealthiest by age group, making it hard to justify transferring wealth from productive workers to those who comparatively do not need it. Abrams agrees that Medicare transfers wealth but raises the difficulty of measuring wealth. He says many current recipients believe they paid for the program through FICA taxes and anticipated a nice retirement, and that telling them they will not receive what was contractually agreed to because they own a house or have some wealth is a disturbing change of plan. Abrams says he would have preferred the program to be fully funded, and that a more reasonable outcome would be to tax back a portion of retirement income through the income tax. He describes the current arrangement as almost class warfare, with young people paying taxes transferred to the elderly. Abrams also discusses measurement problems, noting that a family with one income earner making $43,000 has an adult doing untaxed work at home, while a two-earner household pays twice as much Social Security tax and more income tax but does not receive twice the benefits, and may have additional costs for household chores or child care Worst Ten Economic Mistakes of the 20th Century (2014).
Zadek takes issue with the idea that retirees are entitled to benefits because they paid into the system. He says what they paid in is minuscule compared with what they took out, and that what one pays in is unrelated to what one gets out. He calls it a pay-as-you-go system, and says paying a few pennies of Medicare taxes should not entitle them to enormous benefits. Abrams agrees in part but says that was true mostly for earlier retirees. He cites Harry and Bess Truman, who paid nothing into Medicare and were cards number one and two in the system, as major beneficiaries who received much more than they paid in. Abrams says current retirees have paid in during their working lives, and that a reasonable accounting would include accrued interest on those taxes, which would have been what they received had they saved privately. He says early beneficiaries like the Trumans and his own parents received far more than they paid in, but that current retirees on average have not paid in much more than they receive, unless they are both high-income earners. He notes that two high-income earners in a household pay two sets of taxes but receive the same Medicare benefits as a low-income family, and that Medicare is being somewhat means-tested, with high retirement income from private savings requiring higher Medicare payments and likely reduced Social Security payments in the future Worst Ten Economic Mistakes of the 20th Century (2014).
Across episodes
The 2013 episode with Dr. Jeffrey Singer focuses on the mechanics of Medicare reimbursement—coding, price controls, and hospital billing—while the 2014 episode with Burton Abrams focuses on Medicare as a retirement program and wealth transfer. The excerpts do not show the same question argued in more than one episode; each guest addresses a different dimension of the program. No development or change in treatment between episodes is evident from the excerpts.
What the sources do not cover
The excerpts do not state the founding date of Medicare, the name of the legislation that created it, or the specific statutory basis for the coding system or price controls. They do not describe the administrative structure of Medicare, its eligibility rules beyond general references to age and retirement, or the details of Medicaid beyond Abrams’s brief comparison. The excerpts also do not cover Medicare Advantage, prescription drug benefits, or any proposed reforms other than Abrams’s preference for full funding and transparent subsidies.