Those who support a government-run health plan often hold up Medicare – our largest existing public health plan – as an example of how the government can do healthcare more cheaply than private companies. Here are some of their claims:
- They claim that the government has superior bargaining power that allows Medicare to achieve lower costs and that the government could achieve the same thing with a public plan for the general population.
- They claim that competition from a government-run plan would reduce private-sector health care costs by forcing private insurers to reduce costs.
- They claim that if the entire privately insured population were switched to a public plan, enough could be saved in administrative costs alone to insure all currently uninsured Americans.
The problem with these claims is that all are demonstrably false:
- Total per-beneficiary health care costs are growing faster for Medicare patients than for private insurance patients.
- Medicare’s per-beneficiary administrative costs are substantially higher than the administrative costs of private health plans.
- It is true we can probably save some money with electronic records and standardized claim forms, but the benefits are not great. Claims processing accounts for only a small portion of administrative cost. In 2005, Medicare spent $805 million processing claims, only 4% of Medicare’s administrative costs and a miniscule 0.23% (23 cents for every $100) of total Medicare spending.
Anyway, ask yourself what the federal government has ever done that was cheaper and more effective than private free enterprise? Nothing springs to mind.
Supporters often hold up the Massachusetts state government plan as a model for the rest of the country. The plan was supposed to make health insurance more affordable, but according to a Cato study, insurance premiums have been increasing at nearly double the national average, and health insurance in Massachusetts costs an average of $16,897 for a family of four, compared to a national average of $12,700. (Source: The Freedom Workbench).
Healthcare reform in Massachusetts has also led to a shortage of doctors. http://www.npr.org/templates/story/story.php?storyId=97620520