Monday, April 27, 2009

Medicare, public option - The Goverment Has a Plan

The government has a plan – a “public plan” to compete with private plans. The public plan will supposedly be more efficient than private plans.

The comparison is worthless. Unlike Medicare, private plans must,

• build private networks;

• negotiate rates;

• combat fraud or fact the consequences of being put out of business.

Medicare doesn’thave to worry about any of these things. The networks are a given. The rates are what Medicare wants them to be. Its record on combating fraud is abysmal. And when it comes to administering its public plan, it will simply contract out that function to private plans as it does now.

And as far as competing, the government now pays its Medicare drug plan recipients 30% below what private plans charges – without assuming any of the marketing and administrative costs. Medicare simply pays the bills and assumes none of the overhead headaches.

If the public plan were to be open to everyone, hospital net revenues would drop $36 billion and physician net revenues would plunge $33 billion. Presumably, medical care would then be “affordable” but your options would be limited. You could consider those options while waiting in line for care and wondering whether that care is now available or rationed.

When the government "competes," guess who wins. It isn't necessarily you - the patient, doctor, or hospital.

1. “The End of Private Health Insurance,” Wall Street Journal, April 12, 2009.

2. “Is Government Health Insurance Cheap?” Wall Street Journal, April 14, 2009.

3. “The Cost and Coverage of a Public Plan: Alternative Design Options, “ The Lewin Group, April 8, 2009

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