Sometimes
newspapers raise more questions than they answer. In the case
of this WaPo editorial about Medicare, I find myself wishing that they
had done a little more research.
href="http://www.washingtonpost.com/wp-dyn/content/article/2007/05/04/AR2007050401871.html">Unsustainable
Medicare
Fixes
for the program's funding will be needed soon.
Saturday,
May 5, 2007; Page A16
THE
RELEASE last week of the annual report of the Medicare trustees
underscores an unavoidable fact that too many politicians have
nonetheless been avoiding for too long: Of all the entitlement
programs, Medicare is on the most dangerously unsustainable financial
course, squeezed simultaneously by rising health-care costs and an
aging population...
...The
administration can be faulted for insisting on retaining an expensive,
lopsided payment scheme by which private insurance plans "competing"
with traditional Medicare receive a government subsidy for doing so.
These private plans have been growing rapidly, and they now cover one
in five beneficiaries. That would be fine if such "Medicare Advantage"
plans were competing on a level playing field, but they're not: The
government is paying them on average 12 percent more than traditional
fee-for-service providers. The Medicare policy board that advises
Congress has endorsed leveling this playing field. The higher payments,
according to the Congressional Budget Office, amount to $65 billion
over five years, and $160 billion over 10...
The original rationale for having private companies compete with
Medicare was to see if the ingenuity of the marketplace could lead to a
more efficient was of delivering services. The editorial
reveals that
the plans are subsidized, thus more costly. It does not say
whether
the plans are more, or less, efficient. Is there are evidence
that the
plans, while costing 12% more, are providing more than 12% of
additional value? Personally, I think that the subsidies are
corporate
welfare, and should be abolished. But it would be interesting
to see if
anything can be learned from how they have done business.
It looks as though we have already spent billions on these subsidies,
so we may as well see if it has done any good.
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Speaking from the point-of-view of a Medicare "Advantage" consumer, I'd have to say that at least some of those plans are by-and-large definitely good for the consumer. They result in significantly reduced out of pocket expenses for many routine and specialized services -- adding up for even a reasonably healthy person to more savings than the annual cost of the coverage.
Whether the expense for the federal subsidies gets shared out among insurers and providers is unknown to me. If it's only going to the insurers, then we just have one more argument in favor of a nationalized single-payer system.
If [t]hey result in significantly reduced out of pocket expenses for many routine and specialized services -- adding up for even a reasonably healthy person to more savings than the annual cost of the coverage, then the insurance programs are losing money by themselves. For the average consumer, the subsidies must be keeping somebody afloat. Yeah, real efficiency in the free market.