Re: The 2015 Lounge
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
Excerpts:
- Medicare Advantage, which enrolls seniors in private health plans, has failed to deliver care more efficiently than traditional fee-for-service Medicare. Both the CBO and the Medicare Payment Advisory Commission (MedPAC), the commission which advises congress on Medicare's finances, have calculated that Medicare Advantage plans covering the same care as traditional Medicare cost 12 percent more.
- Karen Ignagni, who heads America's Health Insurance Plans (AHIP), the insurance industry's trade association, has admitted that private plans cannot bargain down provider costs and has asked Washington to intervene.
http://www.pnhp.org/news/2013/february/setting-the-record-straight-on-medicare’s-overhead-costs
Excerpts:
The large difference between traditional Medicare's overhead and that of the insurance industry has caused some conservative critics of Medicare to assert that the federal government is ignoring numerous administrative expenditures incurred by various federal agencies that should be attributed to Medicare.
Sullivan's paper, "How to think clearly about Medicare administrative costs: Data sources and measurement," describes this criticism as the second major source of confusion about Medicare's overhead. Sullivan's study reports that the 1 percent figure includes all appropriate administrative expenses incurred on Medicare's behalf, including those by the IRS, the Social Security Administration, and the FBI, as well as the cost of numerous pilot projects that Congress orders CMS to conduct.
http://theincidentaleconomist.com/wordpress/facts-medicare-admin/
http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/?_r=0
Excerpts:
These administrative spending numbers have been challenged on the grounds that they exclude some aspects of Medicare's administrative costs, such as the expenses of collecting Medicare premiums and payroll taxes, and because Medicare's larger average claims because of its older enrollees make its administrative costs look smaller relative to private plan costs than they really are.
However, the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. This is a near perfect "apples to apples" comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population.
http://www.politifact.com/truth-o-m...a-boxer-says-medicare-overhead-far-lower-pri/
Excerpts:
A lively academic debate has broken out over whether Medicare's administrative costs are really as low as 1 percent or 2 percent.
The difference stems from whether Medicare essentially freeloads off other parts of the federal government for services that private insurers have to pay for on their own. Adjusted estimates for Medicare's administrative costs cited by
the Urban Institute, a think tank that does research on issues such as poverty and economics, range from 3.6 percent to 5 percent, rather than the 1.3 percent using the data in the trustees' report.
But Edwin Park, a health policy specialist at the liberal Center on Budget and Policy Priorities, said that the differences are overblown, since Medicare's administrative cost total already includes payments to other agencies for such services.
We won't settle this question, but we will point out evidence that even when you control for the differences, Medicare is still considerably more cost-efficient. In one study, CBO found that privately run Medicare plans had 11 percent overhead, compared to 2 percent for traditional Medicare.
http://www.reuters.com/article/2012/08/15/us-column-miller-medicare-idUSBRE87E15N20120815
Excerpts:
MYTH ONE: MEDICARE COSTS ARE OUT OF CONTROL
Facts: Medicare spending will soar in the years ahead as the number of seniors grows, but its per-capita growth is slower than private health insurance - and it is getting better. "We may be reaching the point now where Medicare healthcare expenses are growing no more quickly than growth of the economy overall," said John Rother, chief executive officer of the National Coalition on Health Care (NCHC). "That's important, but it might as well be a state secret as far as the public and Congress goes."
The average annual per-capita spending growth rate through 2019 is projected at 3.1 percent for Medicare, compared with 4.9 percent for private insurance plans, according to the Kaiser Family Foundation. The 3.1 percent projection even includes higher payments to doctors as part of a long-term solution to the long-running problem of the sustainable growth rate (SGR) used under current law to control Medicare spending on physician services.
The 3.1 percent projection also is smaller than the 3.7 percent annual growth in gross domestic product for that period projected by the Congressional Budget Office.
Although we hear plenty about fraud and abuse in Medicare - which is a legitimate area of concern - the program is dramatically more efficient than private insurance. Medicare spent just 1.4 percent of every dollar on administrative overhead, even including money spent to fight fraud and abuse, compared with 25 percent overhead in private plans, according to Richard Kaplan, a professor at the University of Illinois College of Law who specializes in elder law matters.
So, draw your own conclusion. I think the evidence (not the rhetoric) supports my belief that Medicare costs are far lower than private companies, not higher. Your opinion may differ of course, but if so (especially after reading some or all of the linked articles, I'd love to know why. The data is out there, and is is quite clear. Even taking worst case estimates, and rolling in ALL costs, not just administrative expenses, Medicare is more efficient, and does a better job of controlling costs.
If we had genuine competition, and allowed the free market system to work, with clear pricing (up front, not after the fact) I would argue that privatization might be the way to go. But that is not even remotely the case. It is empirically true that as it stands now, public programs like Medicare cost less than private insurance.
