Health care reform – Where the Democratic candidates stand

3 thoughts on “Health care reform – Where the Democratic candidates stand”

1. Why would anyone believe that a government run system for universal health care will work better than what the government has done at the VA, FEMA, IRS, State Department (just to name a few).
   Please, name one federal program that works. NASA? Hardly, based upon the billions needed for one launch and the thousands of otherwise unemployable engineers.
   The State Department? Need a Passport? Good Luck!
   Can we not acknowledge history? Why would any rational individual believe the government will do a better job at managing their health care?
   It is amazing that so many in this country have bought into the so-called “Health Care Crisis” and wish to give up control for theirselves and families.

2. Aubrey – as much as I appreciate comments, yours are getting somewhat tiresome. If you want to argue that government is inefficient, you may want to examine the admin expense of Medicare and compare it to private insurance admin expense.
   Re other governmental organizations, there are many that do excellent work.; I would note that the ones you have listed worked well under prior administrations. My sense is your perspective may be tainted by the inability of the current administration to do things right. As an example, the VA before the Iraq war was an excellent example of the way health care could be delivereed – efficiently and quite effectively. Unfortunately its budget has not kept pace with the demands placed upon the organization, with the results obvious to all.
   Other governmental agencies that have solid reputations in the health sector include the CDC, AHRQ, and NIH.
   If you do believe government is completely incompetent, please provide specific examples in the health sector and refer to primary sources so readers can pursue if they so desire.
   Joe Paduda

3. “If you want to argue that government is inefficient, you may want to examine the admin expense of Medicare and compare it to private insurance admin expense.”
   Joe I know you know the following 4 things, but sometimes it appears as though you forget.
   1. Medicare provides a single, national, uniform plan for an enormous population. It does not support a portfolio of different plans that provide benefit choices tailored to the preferences of large and small companies and labor unions. OK, so economy of scale means Medicare is “efficient” in terms of spending less money. But one could think of other ways for Medicare to spend less money – say, reduce its budget by 50%. That tactic would not make Medicare more “efficient” – any more than the natural economic advantage of large-scale uniformity proves that Medicare is “efficient”.
   2. Medicare recipients are high utilizers and that drives higher costs of administration vs non-Medicare populations. It also means that Medicare premiums are much higher. The net result is that the Medicare admin cost as a percentage of its premiums is significantly smaller than for non-Medicare populations. The percentage is smaller because the denominator (the premium) is much bigger. That says nothing about efficiency. You could make the percentage admin cost for Medicare as small as you like, by raising the premiums even more. A smaller percentage of premium going to Medicare admin costs proves nothing useful about Medicare “efficiency.”
   3. It’s my understanding that the often-quoted figure of “2% of premiums” for Medicare admin includes the direct cost of Medicare vendors (see 4 below) but does not include the cost of CMS itself – or an appropriate share of the cost of other federal agencies whose work is necessary to Medicare administration. Accordingly, the true cost of Medicare (the numerator in the percentage mentioned above) would be significantly understated.
   4. Finally, private sector companies – Aetna, Blue Cross CIGNA, Nationwide, Principal, United, etc – actually administer Medicare benefits under contract to CMS. These companies are no less efficient on their private business than on their government business. A universal health plan would either outsource to these vendors – as Medicare does today – or hire staff and manage its own operations – as the NHS in U.K. does today.
   Some people really believe that the federal government can be more “efficient” than private companies who specialize in benefits administration. IMO these people misinterpret the factors mentioned above that do not imply Medicare “efficiency” – such as economies of scale, low admin ratio to premiums, undercounted Medicare admin costs, and the current role of the private sector. There are other factors, too, for example the importance of having a choice of benefits, and the effect of federal civil service rules and culture on productivity of government staff.
   Some people really believe that if the opportunity to make a profit is sharply reduced, the cost of health insurance will plummet and private companies will respond by working harder rather than by finding something else to do. I have worked with three of the largest Medicare vendor companies and I can tell you that debate about resigning from the Medicare program is an annual occurrence and the debate is always about whether return on investment is adequate.
   I think this country needs universal health insurance in some form and I think that the time when health insurance can effectively be tied to one’s employment – is at an end. That model was useful for decades but has outlived its usefulness. But – as we consider the alternatives – it’s dangerous to believe that “Medicare is more efficient than the private sector” because that is not necessarily true and may be absolutely false.

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