Thursday, June 23, 2011

Medicare - insurance SHOULD be non-profit and gov run

Medicare Saves Money -
The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.

But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse.

For-profit insurance is simply a wasteful model: it necessitates "more" spending on administrative overhead (to vet subscribers) -- and moreover defeats the entire purpose of insurance. Insurance is about shared risk. If you try to manage your risk pool such that you only have people in that pool who are the LEAST likely to use the benefit -- sure, you increase profits, but you leave those who NEED the insurance out of game: or at least make them pay a LOT more (which again, defeats the purpose of insurance as "shared risk".

By the way, we have direct evidence about the higher costs of private insurance via the Medicare Advantage program, which allows Medicare beneficiaries to get their coverage through the private sector. This was supposed to save money; in fact, the program costs taxpayers substantially more per beneficiary than traditional Medicare.

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