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Fri Apr 27, 2012, 03:08 PM

Government-Run Healthcare is More Efficient Than Private Healthcare

Can the government provide healthcare more efficiently than the private market? There's no simple answer to that, but a couple of recent data points suggest the answer is yes.

First there's Medicare. It's true that long-term Medicare costs remain our most critical budget problem, thanks to aging baby boomers and ever-expanding treatments for chronic illnesses and end-of-life care. But per-capita Medicare spending has been on a long downward trend, and that trend has been so steady and predictable that a recent study suggested that spending growth per beneficiary over the next decade would be close to zero. Earlier this week we got some confirmation of this when the annual Social Security Trustees report was released. Most of the media attention focused on Social Security, whose financial position deteriorated compared to last year thanks to a slowing economy and an aging population. But using the same economic forecasts, the trustees nonetheless projected no deterioration in Medicare's financial picture. Why? "Once you dig into the numbers," says the Washington Post's Sarah Kliff, "the most plausible explanation is a pretty encouraging one: Our health-care system is getting better at delivering the same medicine more efficiently."

And there's more. On Wednesday, Austin Frakt and Aaron Carroll reported on a new study of Medicaid spending by states. Despite years of horror stories about Medicaid bankrupting state budgets, the study found that most of the increase over the past decade has simply been due to inflation and population growth, not the rising cost of medical care. Adjusted for inflation and population, it turns out that Medicaid spending rose by less than 4% between 2002 and 2011. (That's the dotted line in the chart on the right.) Why has Medicaid done so well? The study quotes Vernon Smith, former Medicaid director for Michigan:

http://www.motherjones.com/kevin-drum/2012/04/government-healthcare-more-efficient-private-healthcare


Poll: Can the Federal Government provide healthcare more efficiently ?




9 votes, 0 passes | Time left: Unlimited
Yes, we have perfect examples of that happening right now.
9 (100%)
No, private healthcare is the best system.
0 (0%)
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Arrow 11 replies Author Time Post
Reply Government-Run Healthcare is More Efficient Than Private Healthcare (Original post)
MindMover Apr 2012 OP
Turbineguy Apr 2012 #1
Egalitarian Thug Apr 2012 #5
Scuba Apr 2012 #2
Egalitarian Thug Apr 2012 #4
Egalitarian Thug Apr 2012 #3
xchrom Apr 2012 #6
sendero Apr 2012 #7
subterranean Apr 2012 #8
zorahopkins Apr 2012 #9
aratinga Apr 2012 #10
Ruby the Liberal Apr 2012 #11

Response to MindMover (Original post)

Fri Apr 27, 2012, 03:14 PM

1. Repubs aren't interested in efficiency

they are interested in the profits of political donors. If more ordinary people would give them more money, they would do what's good for the ordinary person.

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Response to Turbineguy (Reply #1)

Fri Apr 27, 2012, 03:18 PM

5. True but not exclusive to the republicans. n/t

 

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Response to MindMover (Original post)

Fri Apr 27, 2012, 03:15 PM

2. Medicare overhead is a fraction of commercial insurance. I have data somewhere, but don't have time

to look.

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Response to Scuba (Reply #2)

Fri Apr 27, 2012, 03:17 PM

4. Slightly less than 1/10th the cost. 3% vs. 25% - 40%. n/t

 

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Response to MindMover (Original post)

Fri Apr 27, 2012, 03:16 PM

3. There can be no substantial debate of this. But because of where an actual debate would inevitably

 

lead, neither side wants to engage in it.

And so we get to watch both teams fling feces at each other while some of us are left waiting to see if we will get no care or horrible care. the party of bad ideas and the party of no ideas screech and yell and we are fascinated by all the pretty colors.
K&R

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Response to MindMover (Original post)

Fri Apr 27, 2012, 03:20 PM

6. Du rec. Nt

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Response to MindMover (Original post)

Fri Apr 27, 2012, 03:33 PM

7. Medicare and Medicaid have 2 trememdous advantages.

... first, by eschewing the ridiculous negotiation of prices that hospitals engage in at great cost, they have an immediate advantage of lower overhead.

Second, by setting prices they can control costs, something the managed care insurance companies have very little incentive to do. After all, the more they pay out the higher their profits. Insurance is a cost-plus business. The only impediment is that eventually if you raise prices too much people will drop out.

Most people don't want to say it, but most of our medical providers are seriously overpaid. I'm not talking about primary care physicians, the insurance cos squeezed them dry. I'm talking about just about everyone else. Surgeons name their price, if they want $20,000 for a 1 hour surgery they will get it. Specialists of all kinds charge ridiculous rates and they get them.

Drug and device makers, same deal.

Medicare/Medicaid puts an end to that by saying "we will pay this". Of course, some Drs will choose not to take M/M but that's only because there is a ready supply of folks whose insurance will happily reimburse $500 for a wart removal or somesuch.

It's all going to fall apart eventually.

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Response to MindMover (Original post)

Fri Apr 27, 2012, 04:39 PM

8. VA health care is even more efficient than Medicare.

The VA has done a far better job of controlling costs than the private health care system, which Medicare relies on. Some of its innovations, such as its electronic medical records system, are being adopted by private hospitals. It also outperforms private health care in terms of patient satisfaction and treatment outcomes.

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Response to MindMover (Original post)

Fri Apr 27, 2012, 04:46 PM

9. Even If It Were Not "More Efficient", ...

I really think this (Can the Federal Government provide healthcare more efficiently") is not the correct question to ask.

I think the real question is, "If the Federal Government does NOT provide healthcare, then will the poor, the chronically ill, and those most in need of healthcare have affordable access to quality, life-saving healthcare?"

It may well be (although I really doubt it) that the private sector (with its profit motive) provides "efficient" health care (whatever that means).

But I want a healthcare system that provides affordable, life-saving healthcare to those in our society who cannot afford insurance, or who, because of chronic health issues, cannot even get access to affordable healthcare.

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Response to MindMover (Original post)

Fri Apr 27, 2012, 04:51 PM

10. It's not the private healthcare, it's the profit motive

There are a great mix of health care providers, public and private, in the various Universal Health Care schemes in Europe and elsewhere, including Canada and Australia. All these systems work pretty well because profit is not allowed. Our system is corrupted by the invisible hand of Adam Smith, which leads everyone toward maximizing profit. This leads to inefficiency at the least, and fraud ultimately.

Efficiency can be realized by the efforts of the participants, once the profit motive has been removed from the mix.

For an old and interesting mix of health care, see Germany:

[link:http://en.wikipedia.org/wiki/Health_in_Germany|

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Response to MindMover (Original post)

Fri Apr 27, 2012, 06:26 PM

11. There is efficient and there is cost effective.

I don't know that I am in a position to say that the government would be more efficient (needs to be defined), but they would without question be more cost effective. Even taking out the profit motive, the NFP health insurers (like Blue Cross) still pay their executives in the millions of dollars in annual salary. That money could be going to care rather than lining pockets.

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