Peter Suderman @ Hit & Run:
In The New York Times, columnist Paul Krugman dubsthe GOP ticket “Medicare Killers” and attacks proposals to integrate private insurance competition into the public health system:
Still, wouldn’t private insurers reduce costs through the magic of the marketplace? No. All, and I mean all, the evidence says that public systems like Medicare and Medicaid, which have less bureaucracy than private insurers (if you can’t believe this, you’ve never had to deal with an insurance company) and greater bargaining power, are better than the private sector at controlling costs.
When he said “all,” I’m sure he meant some, because there are in fact studies showing that private insurers do a better job of keeping both administrative costs and premiums in check. For example, a 2009 metastudy of high-quality research consumer driven health plans (CDHPs) by the American Academy of Actuaries found that private, consumer driven plans pairing high-deductible insurance with health savings accounts found substantial first-year savings and the potential for additional savings in successive years. This is spending that actually dropped, which is a huge departure from most health plans where the only question is how much spending increases. By engaging people as health care consumers, the private, market-driven CDHP plans helped keep costs down.
What about bureaucracy? A study by consultants at Millman for the Council on Affordable Health Insurance, an industry group, looked at all the ways that Medicare hides its administrative costs, for example by shifting many expenses to other parts of the federal budget. The study found that private insurance administrative costs are actually a lot more competitive than is commonly thought. And taken on a strict per-person basis, rather than as a percentage of the total budget, Medicare’s administrative costs are actually higher than private sector counterparts. No matter what, it’s hard to respect the efficiency and effectiveness of a set of programs — Medicare and Medicaid — that the government’s own watchdogs say blow about $65 billion every year on improper payments, everything from mistaken billing to outright fraud. That’s $65 billion in taxpayer money that these programs are paying out that they shouldn’t.
So how does Krugman explain away the fact that medical costs didn’t start rising faster than inflation until the late 60’s, after Medicare and Medicaid started the ball rolling?
“Krugman Lies” – is NOT news.