Medicare is more efficient than the private healthcare sector?

It would not be uncommon for one to hear or read somewhere about the great efficiencies of the Medicare system when compared to the private sector Healthcare industry. Why those private company's have to advertise, and pay evil corporate executives that fly around the country instead of directing money towards taking care of people.

Researchers at the Heritage Foundation have looked at bit closer at those claims, and surprise, surprise surprise. Even if you add up the marketing costs, employee salaries, the corporate executives, and then total up the non-benefits administrative costs, private insurance companies still spend less than Medicare per beneficiary (Heritage, 2009b). And keep in mind, private insurance pays taxes while Medicare is exempt, and they cover 515% more people than Medicare, and private insurance still manages more efficiently.

Total per-beneficiary health care costs for Medicare patients are growing faster than private insurance patients (Book, 2009; Heritage 2009a & 2009b). The only way that one can arrive at figures that remotely give the impression that Medicare is more efficient than private insurance is with a bit of rhetorical sleight-of-hand with fuzzy math.

The fuzzy math proponents take the administrative costs of Medicare and divide it by the total costs of running Medicare which is a misleading number that has nothing to do with efficiency. The fuzzy math proponents should look at how much the administrative costs are per beneficiary in the program.

If you have a credit card from company A with a limit of $5000, and I have one with a limit of $2000 from company B and it costs $10 per year in administrative costs for either company to administer our credit card accounts, company A is not more efficient just because your credit card limit is higher.

Additionally, one has to totally ignore the fact that the Medicare program is simply electing to pay less and less of beneficiaries total health care costs. It’s sort of like getting your electric bill in the mail for $100, and sending in $50 and telling the electric company to take a hike. Consequently, the electric company has to make up for the loss by passing the missing $50 onto others. Sure you are forcing the electric company to take less, but that is not reducing the costs of operations, services, and R&D for the electric company.

Health care delivery innovation historically is led by the entrepreneurial spirit of the private insurance sector, not public health care plans (Book, 2009). Private sector innovations have led the way in healthcare quality-improvement methods, new customer services, disease management and preventive care (Book, 2009; Turner, 2009) Examples include “MinuteClinics, TelaDoc, specialty hospitals, innovative medical practices, and employer plans that empower consumers” to be engaged in their health care and spending decisions (Turner, 2009)

Let’s take a look at how well Medicare--the model for the public option--runs its signature healthcare program today. Estimated annual fraud and waste $60-$120 billion (Center for Health, 2009), that’s $600 billion- $1.2 trillion dollars over 10 years that could be diverted to preventive and quality care.

Medicare trustees warn alarmingly of the fiscally un-sustainable nature of Medicare, and how it pays for the number of services without any regard to the quality factors (Hilzenrath, 2009).

Over $100 billion per year is gobbled up by defensive medicine practices (American Medical Association, 2008). That’s $1 trillion dollars over 10 years that can be diverted to efficient and effective healthcare delivery practices that work, or preventive care to eliminate, reduce or delay the onset of chronic care disease and ailments which consume ~75% of all spending on healthcare (Baker, Daschle, Dole, 2009).

Why not nudge government a bit to the side to be an effective umpire and allow insurance companies to compete across state lines (Gratzer, 2009; Tanner, 2009) using a common sense regulatory and benefits coverage reporting framework so that consumers can make easy comparisons and choices between plans based on their needs? Why is this not being discussed by the majority in congress?

Why not allow small business to pool together so that they can purchase insurance in bulk like large corporations do (Gratzer, 2009; Tanner, 2009)?

These measures alone are likely to create more competition and reductions in the cost of care. Add the waste, fraud and medical liability reform savings and you’d have a pretty good plan


References
American Medical Association. (2008). Medical Liability Reform Now.

Baker, Howard; Daschle, Tom; Dole, Bob (2009). Working Together To Reform The US Health System.

Book, Robert. (2009, June 25). Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance.

Center for Health Transformation (2009). Healthcare Fraud.

Enzi, Mike (2009, July 13). A Public Option Won't Work--Government-Run Healthcare Plans Are Flawed: The free market has issues, too, but they can be fixed in the long run

Gratzer, David (2009, July 17). A Medicare-Style Public Option in Healthcare Would Kill Private Insurance: What works in higher education won't work in healthcare.

Heritage Foundation (2009a). Outlays per Beneficiary: Medicare v Private Insurance.

Heritage Foundation (2009b). Administrative cost of Medicare and private health insurance.

Hilzenrath, David. (2009, June 16). More Problems Than Solutions in Medicare Report.

Tanner, Michael (2009, July 6). Obama Doesn't Have the Only Prescription for Healthcare Reform.

Turner, Grace-Marie (2009, January 13). The Value of Innovation in Health Care.

What is the healthcare reform alternative?

There is no disagreement from reasonable American's that the current system is too expensive and needs reform.

The alternatives are not only 1) Current system as is, or 2) Rush and spend a trillion dollar government controlled plan supported by the President and the Democratic majority in Congress

Here are common sense practical principles for a bi-partisan solution that a majority of American's are likely to support.

Focus on better health and reducing waste and fraud

Root out Medicare and Medicaid fraud and abuse that could save $60B-120B per year

Reform medical liability laws to discourage frivolous lawsuits, and save up to $100B per year in defensive medicine practices

Reducing fraud and frivolous lawsuits could save $1.6-$2.2 trillion dollars over the span of 10 years

Encourage and incentivize well coordinated care, wellness and preventive services that can delay the onset of chronic care which accounts for 75% of all health care costs

Allow small businesses to ban together to purchase health insurance like large corporations do

Allow health insurance to be portable across state lines to increase choice and competition

Encourage and incentivize movement to a health based style of health reform of maximizing and finding the best outcomes in America, learning how to share those with everyone, and having every hospital and doctor move to an improved and better outcome system

Allow for health savings accounts (HSA) so that families can benefit from tax savings

These kinds of changes do not require a government takeover of the healthcare system or massive new spending, or job killing taxes or rationing of care as is found in the current plan before congress

Why are the President and Congressional Democrat’s advocating this kind of unprecedented government intervention?

The President and his supporters claim 40-50 million people in America (13% to 16.5% out of 300 million American’s) are without health care and or do not have access to affordable health care

Is the number really that high, and are there really no alternatives to their plan?

The National Center for Policy Analysis has researched this in more detail, below are their highlights and some of my stats.

The Census Bureau estimates the uninsured to be 45.7 million, of which 10 million are not citizens; any politicians and media claims above 35.9 million are inflated
o 17 million (37%) of the uninsured make at least $50,000 per year
o 8.4 million (18%) make $50,000 to $74,999 per year
o 9.1 million (20%) make $75,000 or higher

The National Center for Policy Analysis estimates that uninsured people receive $1,500 of free health care per year, $6,000 per family of four

Urban Institute found that 25% of the uninsured already qualify for existing government health insurance programs

The Liberal Kaiser Family Foundation reports that Americans who do not qualify for government programs and make less than $50,000 a year are between 8.2 million and 13.9 million.

Were going to radically transform the entire system into a government run bureaucracy for 95-97% of the population in order to solve issues related to 3-5% of the population?

Why not focus on the real problems associated with the 3-5% that may not have coverage, versus radical government control on the other 95%-97% that have coverage?

The Congressional Budget Office says 45 percent of the uninsured will be insured within four months (changing jobs)

Up to 36 million people would elect to remain uninsured even if the current $1.6 trillion health care plan is passed

This means 79% of the un-insured would elect to remain un-insured, they just don’t want to sign-up for a plan

I remember when I was a teenager and in my early 20’s, I never signed up for a healthcare insurance plan, even though I could have afforded to pay for one

Current Healthcare Plan on Capitol Hill

The current plan in Congress fully supported by President Obama would increase spending by $2 trillion dollars when fully implemented.

Didn’t we just spend over $800 billion on a Stimulus package that hasn’t delivered what they said it would deliver?

Over 2.3 million expected jobs never materialized, even the New York Times had to acknowledge this fact NYT's article

Is this the kind of change folks thought they’d be getting?

According to the Congressional Budget office the current Healthcare plan will add additional and burdensome costs onto an already unsustainable system

The current plan would empower Washington, not doctors and patients to make healthcare decisions. This is a link to the new bureaucracy that would be created -- visual of the plan

It would impose new taxes on working families during a recession

A research study conducted by the Lewin Group shows how the current healthcare plan will move millions of people happy with their current insurance to a government run plan

The current plan will be funded by dramatically raising taxes on small business owners, small businesses typically create 2/3’s of all new jobs

In our current economic situation and an urgent need for new jobs, the last thing the President and Congress should do is impose additional taxes on top of already struggling small businesses. This would cripple job creation, especially for low wage earners

The Congressional Budget Office Director recently testified before congress and told the Senate budget committee that the healthcare plan drafted by the Democratic majority would worsen the U.S. economic outlook by increasing deficits and driving our nation more deeply into debt

The Healthcare Debate

The current healthcare reform plan produced by Congressional Democrats and supported by President Obama would be a disaster for the economy, and result in an unprecedented government encroachment on the healthcare industry. You can follow the bill at OpenCongress.org -- HR 3200

Global warming debate: Scientist who lack intestinal fortitude

There are respected scientists who endorse the global warming alarmist position even though their respected scientific work has nothing to do with global warming; they endorse global warming alarmism because it makes their lives easier.

Where is their intestinal fortitude?

A recent speech by Dr Richard Lindzen at the 2009 International Conference on Climate Change (ICCC) enlightened the audience by providing examples of professional scientist who seem to be riding along with the bandwagon of global warming alarmism.
Lindzen speech excerpts:

“my colleague, Kerry Emanuel, received relatively little recognition until he suggested that hurricanes might become stronger in a warmer world (a position that I think he has since backed away from somewhat). He then was inundated with professional recognition.”

“Another colleague, Carl Wunsch, professionally calls into question virtually all alarmist claims concerning sea level, ocean temperature, and ocean modeling, but assiduously avoids association with skeptics; if nothing else, he has several major oceanographic programs to worry about. Moreover, his politics are clearly liberal.”

“Perhaps the most interesting example is Wally Broecker, whose work clearly shows that sudden climate change occurs without anthropogenic influence, and is a property of cold rather than warm climates. However, he staunchly beats the drums for alarm and is richly rewarded for doing so.”

“For a much larger group of scientists, the fact that they can make ambiguous or even meaningless statements that can be spun by alarmists, and that the alarming spin leads politicians to increase funding, provides little incentive to complain about the spin.”

Reference
Lindzen, R. (2009, March 8). Climate alarm: What we are up against, and what to do. The Heartland Institute. Retrieved April 9, 2009 from http://www.heartland.org/full/24841/Climate_Alarm_What_We_Are_Up_Against_and_What_to_Do.html

Amen to Daniel Hannan's speech

Amen to the speech given by Daniel Hannan the British Member of the European  Parliment (MEP) who basically dressed down Gordon Brown--the Prime Minister of Great Britain--about out-of-control government spending and largess. 

Neil Cavuto described Mr. Hannan's speech as the "Shout heard round the world" in response to the viral phenomenon that occured once it was posted on YouTube and linked from the DrudgeReport and other sites in the blogosphere. 

The speech has had over 1.4 million views since its posting March 24, 2009.