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  • Medicare Costs Are Higher, Not Lower

    In his testimony before the House Education and Labor Committee on the Tri-Committee Health Care Reform bill, Dr. Jacob Hacker (the architect of the now famous “public plan option”) continues to suggest that a public plan has the benefit of lower administrative costs compared to private coverage:

    Perhaps the most pressing of these problems is skyrocketing costs. Public health insurance has much lower administrative expenses than private plans, it obtains larger volume discounts because of its broad reach, and it does not have to earn profits as many private plans do. Furthermore, experience suggests that these lower costs are accompanied by a superior ability to control spending over time.

    Dr. Robert Book, in a new Web Memo entitled “Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance,” argues against the claims put forth by Dr. Hacker:

    Health care reform is a complex problem, of which administrative costs is only one component. However, for policymakers and ordinary Americans to understand these issues, journalists, analysts, and advocates have an obligation to avoid “playing with numbers”–either through inadvertent misunderstanding of what the numbers represent or through a deliberate choice of misleading numbers that appear to support a desired policy.

    The fact is that, in recent years, Medicare administrative costs per beneficiary have substantially exceeded those costs for the private sector, this despite the fact that, as critics note, private insurance is subject to many expenses not incurred by Medicare. Contrary to the claims of public plan advocates, moving millions of Americans from private insurance to a Medicare-like program will result in program administrative costs that are higher per person and higher, not lower, for the nation as a whole.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to Medicare Costs Are Higher, Not Lower

    1. Frank Wasicki says:

      If my memory is correct, Adm. costs of social security are in the 20% range. I doubt insurance companies cost of Adm. is that high.- Frank Wasicki

    2. Spiritof76 says:

      Common sense is lost in this country. Please tell me that the Post Office is operating successfully. Please tell me that Amtrack is operating in the black. Please tell me that both Social Security and Medicare are in sound financial condition. The common thread here is all those organizations and programs are operated by federal government. Efficiency and government are oxymorons. They will screw up the health care for everybody except for themselves. Why didn't Kennedy opt for a garden variety treatment just like millions of Americans? Why was he able to receive experimental treatment adminstered by the country's best while denying the same opportunity to other Americans under his government care? Reminds me of the Soviet Union.

    3. Thomas Lanphier, Tra says:

      I would so love to see the research behind the numbers…I have even heard recently from a supporter of Obama-care that, "…costs for Medicaid are much lower than in the private sector".

      No matter how outrageous the lie, repeat it often enough…

      Thanks to all of you for your great work,

      Tom Lanphier

    4. Todd Walker - Mounta says:

      Have not read or heard any comments on COBRA under the stimulus package that, signed into 2/17/2009, retroactive to 9/1/2008 and goes to 9/1/2010, that allows all COBRA participants to pay only 35% of the premium. ER's pay the other 65% and then pay the Fed Gov't for FICA (Soc Sec and Medicare) and take that discount of 65% of all COBRA participants. It puzzles me why the the media doesn't understand that Medicare is now bankrupt 2014 instead of 2017. We have, what 3M people unemployed, and now only have to pay 35% of the premium? Since the FICA is not really funded, it is a shell game. Crisis, chaos and we have to move now!!!

      Todd Walker


    5. Marsh, Wisconsin says:

      It is unfortunate, one of the most likely outcomes of a government plan will be even more limited benefits for those on Medicare. Additional reductions in Medicare benefits have already been proposed to help pay for the bill should it become law!!

      A government plan will likely include limited or no treatment for a second occurrence of a disease like cancer.

    6. Barb -mn says:

      Dr. Hacker, the ARCHITECT of this "public plan" is deliberately misleading.

      Not to mention "government" hires people at their (governments) will, not according to qualifications or requirements necessary in the health care OR ANYTHING GOVERNMENT RUN industry. "Government" is never "practical" as it isn't THEIR money or health they lose. In turn, less or no accountability.

      Dr. Hacker, you are now labelled untrustworthy.

      Thank you, Dr. Book, for sharing actual facts and logic to how this public health plan will result. A future of more government driven manufactured crisis' like this one.

    7. hoads says:

      How about the fact that Medicare's claim processing is outsourced to Blue Cross Blue Shield? Imagine if it were done by government. The government knows it can't do what BCBS does more efficiently and I assume the "public plan option" will also be outsourced to private entities.

    8. BruSays says:

      Folks, we're not inventing the wheel here. If we want to lower costs and improve our health care (we pay on average twice what other industrialized countries pay and yet we rank #36 in the World Health Organization's list) we need to secure a Single Payer (or Universal Health Care) program like one of these nations ALREADY have:




      Bosnia and Herzegovina







      Costa Rica


      Czech Republic









      Hong Kong























      Saudi Arabia






      South Korea


      Sri Lanka









    9. Glen, FL says:

      When private companies stop screening out preexisting conditions, stop denying care and coverage, stop limiting the doctors you can use, and stop spending billions to deny claims, maybe we can compare them to a government plan.

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