government entities, the cost of benefits
to government workers, or, most importantly, the fact that Medicare doesn’t
undertake half the administrative functions of a typical private insurer.
Also, given that the average cost per
claimant within Medicare is substantially higher than it is for commercial
carriers, it’s only natural to obtain a
lower percentage factor—it requires
far less activity to process large claims
(arising from compact events) than
smaller ones. In other words, translate
to a per-member, per-month basis, and
the comparison narrows materially.
The list goes on and on. Among the
functions that Medicare does not do
for its 1. 5 percent are eligibility, fraud,
and claims control, as evidenced by numerous recent studies and disclosures.
It doesn’t cost much to stamp “paid”
on every bill that comes through, after
making sure it is re-priced to the allowable Medicare schedule.
Secondly, I’m rather surprised at how
the author apparently believes it’s perfectly OK for the government to fix prices
for providers and then essentially compel participation, particularly when those
prices are inadequate as determined by
all relevant studies. This practice not only
has created massive unauthorized taxes
in the form of cost shifting, but it doesn’t
allow for any quality variations between
providers. The author states, “As the single payer, the federal government has the
ability to adopt and enforce effective cost
controls on all providers.” He makes the
statement as if it is a given and doesn’t
justify why this should be allowed in the
first place. Doesn’t he understand the
consequences of such an improper use
of power and that, at best, it’s illegitimate
and, at worst, just plain wrong?
We’ve not had a fair playing field for
decades (if ever), so to put forward the
success of Medicare as evidence that
single payer is superior to a properly
regulated private marketplace (which we
also haven’t had) is totally inappropriate.
Yes, we need reform, but intelligent
reform. While it’s true that private insurers are afraid to compete against
the unfair advantages of a government
plan, the reality is that it’s the government that is afraid to play in the open
market, one where there’s no favored
status for any particular payer, private or public. The government and
private carriers would have to decide
how much they are willing to pay, and
the patient would have to choose an
insurer and provider based on the resulting economic decision. After all, the
fundamental economic transaction is
between the patient and the provider.
Any solution that ignores this reality
ultimately is doomed to fail.
much Better? really?
After reading Edwin Hustead’s com- mentary in the September/October
issue (“National Health Insurance—
Socialism or Realism?”), I was left
pondering how the author defines
“much better” in his statement that the
Medicare system works much better
than the private insurance system that’s
available to people under the age of 65.
Most people would base a conclusion about Medicare’s relative efficacy
on a comparison of benefits and costs.
While Medicare covers nearly all Americans who are at least 65 years old, it
does so by running a huge deficit while
underpaying providers for care.
The 2009 Medicare trustees’ report
indicates that about $342 billion will
need to be transferred from general
revenues to Medicare’s Hospital Insurance fund between 2009 and 2017, and
estimates that the difference between
Medicare’s total outlays and its dedicated financing sources will reach 45
percent of outlays in fiscal year 2014.
Despite general fund subsidies and
provider underpayments, Medicare
leaves significant costs uncovered. For
example, the hospital deductible is over
$1,000 for the first 60 days. Beginning
on Day 61, enrollees are expected to pay
$256 per day for the next 30 days and up
to $512 per day after that. Or consider
that Medicare will pay for a kidney transplant but limits coverage for necessary
and expensive anti-rejection drugs.
If the private insurance market provided such coverage gaps and required
billions of dollars annually from the U.S.
Treasury, it would be accused of either
abusing its customers and the taxpayers
or considered a “much better” market.
While the current private market is far
from perfect because of the numbers who
are left uncovered and the cost, it could
be dramatically improved. Legislation to
preclude exclusions for pre-existing conditions and cancellations due to injury or
illness would be a good start. Adequate
reimbursement rates under Medicare
and Medicaid would eliminate the need
for subsidization by the private market
and should reduce premiums.
Given the government’s track record
with Medicare, I doubt a single-payer
or public option with accompanying
large fiscal deficits would be a “much
the myth of Homo economicus
I never thought anyone seriously believed in Homo Economicus (“
Rethinking Rationality,” July/August
2009). This myth is parallel to the idea
that an unregulated free market works
best because investors know what’s in
their own interest. The key rogue word
is unregulated. An unregulated free
market has (at least) twice been proven a failed system—in 1930 and now.