M
edicare’s Rollout vs. Obamacare’s Glitches Brew
http://healthaffairs.org/blog/2014/01/02/medicares-rollout-vs-obamacares-glitches-brew/
The smooth and inexpensive rollout of Medicare on July 1, 1966 provides a sharp contrast to the costly chaos of Obamacare.
As of March, 2013, federal grants for Obamacare’s state exchanges totaled $3.8 billion. Spending for the federal exchange is harder to pin down because funding has come from multiple accounts, including: the $1 billion Health Insurance Implementation Fund; DHHS’ General Departmental Management Account and General Departmental Management Account; CMS’s Program Management Account and the Prevention and Public Health Fund. CMS estimates fiscal 2014 spending for the federally-operated exchanges at $2 billion. So it’s safe to say that the costs of getting the exchanges up and running, and (hopefully) enrolling 7 million people in the program’s first year will exceed $6 billion.
Bear in mind that the exchanges won’t actually pay any medical bills, just sign people up for coverage. So billions more in overhead costs will show up on the books of the private insurers and state Medicaid programs that will actually process medical claims.
Back in 1966, Medicare started paying bills for 18.9 million seniors (99 percent of those eligible for coverage) just 11 months after Pres. Johnson signed it into law. Overhead costs for the first year totaled $120 million (equivalent to $867 million in 2013). But that figure includes the cost of processing medical bills, not just the enrollment costs.
Signing up most of the elderly for Medicare was simple; they were already known to Social Security Administration, which handled enrollment. To find the rest, the feds sent out mailings to seniors, held local meetings, and asked postal workers, forest rangers and agricultural representatives to help contact people in remote areas. The Office for Economic Opportunity spent $14.5 million to hire 5,000 low income seniors who went door-to-door in their neighborhoods.
Obamacare’s byzantine complexity reflects the contortions required to simultaneously expand coverage and appease private insurers. And private insurers will exact a steep ongoing toll. Medicare’s overhead is just 2 percent, vs. an average of 13 percent for private plans (on top of the Exchanges’ costs, roughly 3 percent of premiums). A single payer plan that excluded private insurers could save hundreds of billions in transaction costs.
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“Obamacare is a giant workaround crafted to keep private insurers at the center of the health care system,” said co-author Dr. David Himmelstein, a primary care physician, professor of public health at the City University of New York and lecturer in medicine at Harvard Medical School.
“The simple single-payer, Medicare-for-all approach would save more than $400 billion annually on bureaucracy, enough to give every American first-dollar coverage. But to get those savings you have to break private insurers’ stranglehold on health care and on Washington,” he said, adding,
“The glitches in Obamacare’s rollout don’t come from government incompetence, but from political cowardice.”
