Forums of the Libertarian Left

What's with the Progressive talking point about medicare being uber efficient and cost effective vs this? Is there any site with non-ideological information about Medicare?

The Unhealthy 'Public Option'
Using government-run health insurance to fix the status quo is like using a brick to improve a window
Steve Chapman | October 29, 2009

If Medicare were a bank, federal regulators would be closing its doors, selling its operations, and sacking its managers. Thanks to soaring costs, the program is fast running out of money—even though it pays such low fees that many doctors refuse to take Medicare patients. Meanwhile, Medicare fraud costs taxpayers some $60 billion a year, according to a report by CBS's 60 Minutes, making it among the most profitable fields for felons.

That's our experience with government-run health insurance for the elderly. So what do congressional Democrats propose to do? Offer government-run health insurance to everyone else.

Senate Majority Leader Harry Reid capitulated to his party's more liberal elements when he said he will insist that health care legislation include a "public option"—a government insurance plan—to bring "meaningful reform to our broken system." But deploying a version of Medicare to repair the status quo is like using a brick to improve a window.

President Obama says it would help consumers by giving private insurers some real competition. But the typical state has 27 companies competing in the small-group health insurance market. If there were insufficient competition, the health insurance sector wouldn't rank 86th among American industries in profitability.

Health care plans average profits of just 3.3 percent. In wireless communications, a vigorously contested market, profits are 11 percent. Does Obama think we need a government cell-phone company to compete with Verizon and AT&T?

The proponents also believe that, like Medicare, a new government plan could be run far more efficiently than private firms. Don't make me laugh. Medicare, keep in mind, is going broke. And its alleged efficiencies are illusory or nontransferable.

Health economists Regina Herzlinger of Harvard and Robert Book of the Heritage Foundation note that on a per-person basis, Medicare has higher administrative costs than private firms. They look smaller only because the average Medicare patient uses more services than the average private insurance patient. "Expressing them as a percentage makes Medicare's administrative costs appear lower because they are spread over a larger base of health care costs," write Book and Herzlinger.

A "public option" might duplicate one of Medicare's means of saving money: limiting reimbursements to doctors and hospitals to far less than what private insurers pay. But 19 health-care organizations that support reform, including the Mayo Clinic, explained the flaw in that approach.

"Under the current Medicare system, a majority of doctors and hospitals that care for Medicare patients are paid substantially less than it costs to treat them," they said in an open letter to Congress. "Many providers are therefore already approaching a point where they can not afford to see Medicare patients." Last year, the government's Medicare Payment Advisory Commission reported that 29 percent of recipients who were looking for a primary care physician had trouble finding one.

Skimpy reimbursements lower Medicare's costs. But if a new government-run plan tries the same trick, it will have trouble attracting providers and therefore patients. If it pays the same rates as private insurers, on the other hand, it will lose that big competitive edge.

Fortunately for disciples of government expansion, the "public option" insurance has other advantages. Obama insists it will have to cover all its costs. Oh, really? When Medicare Part B (which pays doctor bills) was set up in 1966, premiums paid by retirees were supposed to cover 50 percent of its outlays. Instead, Congress limited rate increases so that before long, premiums were covering just 25 percent of the bills, a practice later written into law.

If the Washington-run plan charges too little to pay its expenses, will it raise rates, thus antagonizing what could be a sizable group of voters? Or will Congress cough up the money to keep it going? You know the answer.

In the end, the key to the success of this program, writes Cato Institute analyst Michael Cannon, is that "government possesses both the power to hide its true costs (which keeps its premiums artificially low) and to impose costs on its competitors (which unnecessarily pushes private insurance premiums higher)." Private insurers will be "competing" against a team that gets to write the rules, run the draft and hire the referees.

With those artificial advantages, the public option could eventually become the only option. If that happens, a lot of Americans will be surprised. But I suspect Harry Reid and Barack Obama will not be among them.

I'd be surprised if health care reform actually ended up having a public option in it. It's the only part that wouldn't just be a bail out for America's corporate overlords.

Somewhere I read a claim that there is no statistical improvement in life-expectancy that cannot be attributed to other factors than the availability of Medicare, the point being that we are paying quite a bit for something that doesn't improve one of the most relevant health factors (the other probably being quality of life). Not sure how good the study is but it's out there somewhere.

a bail out for America's corporate overlords

Really, the corporations do not rule America (that went out in the Golden Age of Plutocracty, late 19th century). America is ruled by Columbia University, the New York Times and the Beltway bureaucracy. And, I might add, ruled in a way that makes one long to have Surplus Value exploited, rather than have to deal with the interminably sadistic State department; much less Paul Krugman.

America (or anywhere) is ruled by whoever at the time has accumulated the most differentially in terms of capitalization. Capital is power now and capitalization came of age only in the twentieth century. Just find the capital and you'll find the leader.

I must admit, the fiery debates that have been going on regarding the proposed medicare system have left me rather bored, if only because medicare operates in Australia for years and has seen hardly as much outrage. It's a proposed mechanism for Government and State, something we generally oppose, period. I'm not sure what the current method of providing healthcare is in the States, but it stands to reason that's just as flawed as the new system; particularly the way Intellectual Property works to grant monopolies to pharmaceutical companies by allowing them to reserve all the variations of their one product, patent them to limit competition, and then charge extravagant prices.

Then there's the shameless throwing around of words that seem like leftovers from the cold war. There's only so many times I can read titles denouncing 'socialism' without rolling my eyes right out their sockets.