Election Year: Get Ready for the Medicare Fabrications

[Adam's Apple]

The Incalculable Costs of Medicare
Michael Arnold Glueck, M.D., and Robert J. Cihak, M.D.
January 25, 2006

Now that Mrs. Bill Clinton is trying to resuscitate her health-care proposals that died a decade ago, it's time to remember some of the socialistic fallacies proposed and exposed at that time and to report some recent research.

One such falsehood is that Medicare is a good deal because its administrative costs are only 2percent of claims. The context for presenting this factoid is usually an attempt to make private health insurance and managed care look bad by comparison.

Trying to compare the costs and results of government with private ventures is more difficult than comparing apples with oranges; it's more like comparing house cats with elephants. Where do you start? And what difference does the comparison make?

Why is this comparison so difficult? One huge problem is that governments at all levels often excuse themselves from disclosing actual costs and other information about their activities.

Another problem is that governments require private ventures to spend a lot of resources that the government doesn't require of its own functions; these are often called "unfunded mandates" because the government requires somebody else to do something but doesn't pay for it.

For one small example, the government requires doctors to tell it about every charge a doctor makes to every Medicare recipient, even if the service isn't covered by Medicare or the patient doesn't want Medicare to be billed. Patients and taxpayers pay these costs but the government doesn't want us to consider them costs of the government.

Furthermore, the government certainly doesn't reimburse doctors for this superfluous paperwork expense. Multiply the cost per report times the hundreds of millions of reports required and we're talking about a lot of wasted resources.

Despite these profound differences, Mark Litow, a consulting actuary with Milliman, a firm of consultants and actuaries, calculated overall administrative costs of Medicare and Medicaid, including hidden costs and some of its unfunded mandates in a 1994 study. He found these administrative costs of these government programs to be 27 percent of total claims costs, compared with 16 percent for private insurance.

for full article:
http://www.newsmax.com/archives/articles/2006/1/24/161041.shtml

 

[Mariner]

shown that Medicare's costs are less than half those of private insurers.

Then consider the fact that any one hospital--one where I work, for example, might have to fulfill the differing requirements of as many as 1500 different private insurance plans (with overheads of 30%, paying their CEO's, in some cases, over $100 million a year), and the costs multiply.

There is little doubt that an expansion of Medicare would lower costs for hospitals. Yet, even as a physician, I'm not sure I support it--it sounds too liberal even for me. I would wish for a simplified, regulated system of private insurance that covered everyone.

Bush's drug benefit--written by a pair of drug company people who quickly turned around and returned to private industry so they could profit from the giant funding they'd just created for themselves--seems to be a messy disaster. I hope the shoddiness of it connects in people's minds with the shoddiness of "heck of a job" Brownie and lax mine safety enforcement, and helps people to see that government doesn't need to be big, but it needs to consist of quality people doing quality--important--work. The midterm elections are going to be interesting. Between Mission Unaccomplished in Iraq, Katrina, the mine disasters, Abramoff, and Enron, the Republican party is going to lose some seats, and may lose Congress--but only if Democrats can offer a solid alternative vision, which they've been lousy at so far.

Mariner.

 

[Hobbit]

I think health insurance would be more streamlined if the government regulated it less. In some states, you cannot refuse somebody health insurance, meaning lots of people wait until they're sick, then pay for a half a million dollars worth of medical bills with one month's payment, driving up costs. Some states require that health insurance cover aromatherapy and accupuncture. The only regulation I can see is forbidding health insurance companies refusing picking your doctor. I think not covering certain procedures is plenty, but as long as he has a liscence to practice medicine in that state, the insurance company shouldn't be able to refuse him.

 

[Adam's Apple]

It has been shown repeatedly that Medicare's costs are less than half those of private insurers. Mariner.

The Milliman study referred to in the article did not support this claim. Anyone who has ever studied a Medicare bill is amazed at the greatly padded costs for the services provided. Any time you bring "big government" into the equation, prices just have a way of compounding themselves many fold. Government would work better if it regulated the services provided, rather than actually providing the services (entitlement) itself.

 

[Mariner]

I'm not sure if you've had any experience in the health care field, dealing with private insurances. In general, they do anything possible to avoid paying a claim, and expend vast resources in mailing out complex formulas and descriptions of their various plans, what they will and won't cover, etc. etc. Meanwhile, they pay their top executive exorbitant sums. Medicare, by comparison, has an enormous, uniform system where hospitals can bill easily and get paid predictably. The numbers I've seen repeatedly over 18 years as a physician are around 10% for Medicare overhead and 16-30% for private insurances. If you want to calculate "hidden" costs for Medicare, then calculate the "hidden" costs for private insurances, like the hours I spend as a physician arguing with them to provide one of my patients care, filling out a huge variety of incompatible insurance forms, creating "cheat sheets" that help me know which insurance covers what, and the enormous managed care office that my hospital has to staff in order to deal with their mega-beaurocracies.

Mariner.