One of the talking points used by those favoring a single-payer health care system is that Medicare's administrative costs are FAR lower than those of private insurance companies. Here's liberal columnist and writer Joe Conason (whose latest book was titled 'The Right-Wing Propaganda Machine and How It Distorts the Truth') parroting that point at Truthdig.com:
Private insurers consistently spend more on overhead and administration than Medicare. To anyone who shares the broad prejudice against government, the difference will be startling, although these numbers are very well known to health experts. The average overhead cost of Medicare is roughly 2 or 3 percent, far below the administrative costs of private insurers, which range between 27 and 40 percent.
Wow. According to Conason, there would be a 25-37% savings in overhead if we go to a universal Medicare-type government single-payer insurance plan. That's GREAT ! Sign me up !
Well, there is one teeny weeny little problem with Conason's statement…
It's a big ole pile of stinking cow flop. Not even remotely factual. For a guy who wrote a book about right-wingers distorting the truth, Conason is distorting the bejesus out of the truth. Here's why:
First of all, the 2% figure for Medicare's administrative costs comes from a Congressional Budget Office (CBO) estimate. That much is true. However, the CBO expresses administrative costs as a percentage of Medicare's total patient costs. Because Medicare patients are elderly and suffer from more health issues than the general population, Medicare patients incur a lot more per patient expense than the general population demographic that is covered by private insurers. That distorts the real administrative costs of Medicare. Here's the Council For Affordable Health Insurance (CAHI) to explain:
Medicare calculates administrative costs as a ratio of identified administrative costs divided by claims. In 2003, the average medical cost for Medicare was estimated to be about $6,600 per person per year (because of the nature of Medicare’s beneficiary pool of older and disabled people), while the average medical cost for private health insurance, excluding out-of-pocket cost, was $2,700 per person per year. Because of the higher cost per beneficiary, Medicare’s method of calculation makes administrative costs, albeit unintentionally, appear to be lower than they really are. Indeed, if the numbers were adequately “handicapped,” they [Medicare] would be in the 6 to 8 percent range.
To illustrate this, let's assume that both Medicare and private insurers have a fixed per patient administrative overhead of $132 per patient, exactly the same. If we express this as a percentage of patient costs, that makes it appear to be a 2% administrative overhead for Medicare (based on $6600 spent per patient), and a 4.9% overhead for private insurers (based on $2700 spent per patient), 2 1/2 times as much. This would make Medicare appear to be more efficient from an administrative standpoint even if their administrative costs were identical to those of private insurers. That's the first way administrative costs are skewed.
Second, Medicare doesn't include everything as administrative cost in the same way that private insurers are required to do. These are Medicare's hidden costs that don't appear in the CBO estimate. Here's more information from CAHI:
Company Policies — Executives and boards of directors consider, debate and decide company policy; in Medicare that function is often handled by Congress and its legislative staff. Setting program policy requires time and money not reflected in Medicare’s official administrative cost estimates. Just imagine all of the congressional and administrative staff time and effort devoted to creating, debating, promoting, opposing and ultimately passing the Medicare Modernization Act of 2003. One might compare it to a huge new corporate venture or restructuring. Yet not a dime of the money and time spent on that months-long public debate appear in Medicare’s administrative costs.
Management — Businesses must include management costs in their administrative costs: Medicare doesn’t. The salaries of those professionals at the Centers for Medicare and Medicaid Services (CMS), from Dr. Mark McClellan down, are excluded from Medicare’s administrative cost estimates, as are the building costs to house that part of the leadership team. Private insurers don’t have that luxury.
Raising Capital — Private industry has to raise capital, usually by selling stock or borrowing funds. And if an insurance company borrows money to pay for a building, it must pay interest on the loan. In other words, in the private sector there is a cost of capital. Of course, the federal government also raises capital and borrows money to pay Medicare claims, and it even pays itself interest on some of that borrowed money. But it includes none of these costs in its administrative estimates; it simply takes (or will take) the money from taxpayers. And while Medicare’s “cost of capital” is big now, it will grow exponentially in the future as Medicare outlays grow faster than the Part A payroll tax [the Medicare/SocSec unfunded liability has reached $107 trillion].
Premiums and Commissions — One of the most common complaints is that the private sector has to pay agents to market and sell its products, which, critics contend, the government doesn’t have to do. Well, not exactly. You may have noticed that CMS has been heavily involved lately in promoting the new Medicare drug benefit. Nothing wrong with that, but those are marketing costs, which are ignored in Medicare’s administrative numbers. Premiums are the primary way private insurers obtain the funds they use to pay claims. But the government also has to bring in funds in order to pay Medicare claims. How does it do that? Through taxes. Employers, the IRS and the Social Security Administration are, in effect, the sales force and collection arm for the Medicare program. Workers and employers currently split the 2.9 percent payroll tax that funds Medicare Part A. Employers, of course, have to handle the administrative functions of getting that money to the government. Thus, that part of Medicare’s “premium collection” actually shows up in employers’ administrative costs — including, ironically, those of insurers collecting that 2.9 percent for the government — rather than Medicare’s. Revenue to pay the government’s share of Part B — 75 percent of the program’s costs — comes from general revenues collected by the IRS. And the Social Security Administration collects the 25 percent of the Part B program that comes from seniors’ Social Security checks. Yet again, those “collection costs” are ignored in Medicare administrative cost estimates.
Claims Processing and Fraud — Medicare pays claims, millions and millions of them. The claims volume is so heavy that there is little time to do anything else — like scrutinize and review the providers’ bills, check with providers if something looks amiss and withhold payment until discrepancies have been resolved. Rather, Medicare is set up to catch problems primarily in cases of massive fraud and abuse, and it does that through the Inspector General in the Department of Health and Human Services, not CMS. In other words, while insurers see claims oversight as responsible stewardship and a collaborative effort to ensure proper payment, HHS operates more as a policing effort [Medicare fraud is estimated at $60 billion per year].
Premium Taxes — Every state imposes a tax on premiums collected, usually running in the 1 to 3 percent range. Those taxes are factored in as part of a company’s administrative costs. Obviously Medicare has no equivalent. But it highlights the point that part of the insurance industry’s administrative costs are not because the private sector is inefficient, but because government is taxing it and imposing regulations and unfunded mandates (that is, it tells the private sector to do something, but doesn’t reimburse its costs). There is something a little disingenuous about imposing unwanted taxes and regulations on an industry and then criticizing it because its administrative costs are higher than the untaxed government program.
Now you know a little more of the truth about administrative costs, and how the numbers are so heavily skewed in the government's favor. But the question remains, does Medicare have lower administrative costs than the private sector ? With all it's unfair advantages, you'd think so. CAHI admits it's very difficult to estimate the true costs of administering Medicare. In a 1994 study, CAHI found Medicare's administrative costs to be significantly higher than those of the private sector, but CAHI came up with a the following results in it's 2003 study:
we calculate Medicare’s administrative costs to be 5.2 percent in 2003, while the private sector runs 8.9 percent when commissions, profit and premium taxes are excluded, and 16.7 percent when those factors are included.
Medicare is still less by 3.4% according to CAHI's 2003 study, until profit and taxes are added in. Because profit and taxes are fluid, obviously those number can change, but they are still a factor. Yahoo Finance shows the average net profit margim in the health insurance industry to be 3% right now, for what it's worth.
A recent article by the Heritage Foundation actually showed that the per patient administrative overhead for Medicare was higher than the equivalent private insurance overhead from the years 2000-2005. Heritage based it's numbers on CMS (Medicare) data and Census Bureau extrapolations. There's a graph at the link explaining the numbers. After Heritage published it's results, the worst economist in the world and former Enron adviser, Paul Krugman of the NY Times, attempted to refute the Heritage Foundation with some statistics of his own (while ignoring Heritage's actual data and simultaneously launching ad hominem attacks against Heritage). Then Heritage attempted to refute Krugman's refutation. And so it goes.
Are Medicare's administrative costs cheaper ? I don't know. Maybe a little, or maybe not at all. Beats me, but I know one thing for sure. Guys like Joe Conason are lying through their teeth. Where did he pull those figures about private insurer overhead being 27-37% from anyway ? I never could find any corroborating info on that. Maybe he pulled it from his "anal"ytic file.
{ 43 comments… read them below or add one }
So an elderly hip replacement is cheaper than a 13 yr old's leukemia treatment? It's also interesting to me, that you continuously pull off the cost of doing business for the private sector to get your number down close (but not to) the Medicare cost.
Just saying your argument is weak.
I don't want fully public health care. But having a government run Safe Auto style healthcare option would benefit everyone.
Just trying to show both sides of the argument, G-Mann. I didn't say private insurance administration was cheaper. It probably isn't. There just isn't as big a gap as the single-payer advocates would have us believe.
And no, an elderly hip replacement isn't cheaper than a child's leukemia treatment. It's just that there are a lot more of the former than the latter. That's why the cost is so much more.
Yeah that's what I got out of it: that the "savings" aren't really savings at all, so it's not accurate to say that government-run insurance is much- if at all- cheaper than private. Nowhere here does it say private insurance is "cheaper" than Medicare, but certain liberals will have you believe the opposite is VERY true. It's along the same lines as the argument that Canada's healthcare system is better than the US based on the world health rankings, when in reality, Canada is just slightly ahead of the US in those rankings with about a tenth the amount of people (about as many people live in Canada as the state of California). If we're going to overhaul the system, the benefits to the new system need to be far greater than the ones it is replacing, otherwise what's the point of changing?
Wow, new comment-ers and they are much more coherent than the usual suspects. Very nice. I may read the comments more often if this trend continues.
Good post King, I wasn’t aware of CAHI’s data and appreciate that you spared me from having to do all the math. I also like these kinds of posts. You could have buried data (since the data didn’t refute the claims about Medicare costs) but you laid it all out in a way I wish actual reporters should. Here’s the data, here’s the assumptions that goes into the data, here’s the reasons… reader, you decide.
It’s a sad testament to today’s journalists and reporters that one of my trusted sources for analysis is some blogger in Akron (no offense).
There's no argument here at all. Insurance is about risk. Pooling risk is the only real means of controling costs…..make the pool bigger, control your risk. One American pool which includes all citizens would be the most efficient way to deal with the risk of health care.
And King agrees.
Don't worry, Reverend. Administrative costs used to be frank's talking point as well but now he says the numbers don't matter, too.
My post just addressed the administrative costs of Medicare. While those may or may not be cheaper than private insurance, if we look at the total cost of Medicare health services compared to private health services, Medicare is certainly cheaper, because the government dictates lower prices for Medicare patients. The government, as always, uses force to get it's way. The problem here is, doctors then charge higher prices to all non-Medicare/Medicaid patients to make up the difference. Doctors also limit the numbers of Medicare patients they treat, which diminishes patient choice. If we went to a national single-payer Medicare-type health care system, this could become a significant problem, because doctors wouldn't have a way to make up the difference. That could cause health care availability to decline at the same time that health care demand increases substantially due to all the new people entering the insured health care pool. The end result could be – England, with reduced access to health care services, long waiting lines, rationing. We better be real careful what we ask for, because we just might get it.
Rev says, "Pooling risk is the only real means of controling costs…..make the pool bigger, control your risk. One American pool which includes all citizens would be the most efficient way to deal with the risk of health care. And King agrees."
No, I don't agree with that. Pooling all insurance into one big group won't do anything to control costs. It will only allow us to spread the costs among more people. With single-payer, the total costs would actually go way up, because the demand for health care services would increase as the uninsured became insured. Single-payer also eliminates competition, so there would be no downward pressure on price that comes naturally from a free market. That would have to be replaced with government diktat. Renowned health care experts like Al Franken and Nancy Pelosi would then decide.
dd20,
No offense taken. That was a compliment. Thanks.
And I feel the same way you do. If our media was doing it's job, there would be no need for someone like me. I could go fishing.
"Pooling all insurance into one big group won't do anything to control costs. It will only allow us to spread the costs among more people."
The cost of coverage would go down. Spreading coverage costs to all would lower the coverage cost.
"the demand for health care services would increase as the uninsured became insured."
Conservatives tell me that those 45 million uninsured don't want health care, yet you are saying all 45 million will make doctors appointments the same day they're covered. Which is it?
And this is ridiculous…
"Single-payer also eliminates competition, so there would be no downward pressure on price that comes naturally from a free market."
Like we've been experiencing the last 20 years? You must be joking.
I strongly suspect that "pooling all insurance into one big group" isn't going to spread coverage costs to all, Reverend. The supposed 45 million who can't afford insurance now won't be able to afford insurance or higher taxes in two years, either.
I think it's getting time to put the dishonest "cheaper" argument to bed in favor of the "expensive but worth it" argument. Not many Americans are going to believe the government is efficient, but even most conservatives would like to see all Americans covered.
It's actually, and I know there'll be disagreement, both cheaper and worth it.
And, what are you talking about? Right now a half dozen big health insurers divide and conquer the market. Consolidation, something GOP Wall Street boys usually just love, would make the industry more efficient, no? Then single payer is more efficient….it consolidates the market.
larry d.,
Thanks for trying to spare me the time and bother of expressing myself, but you should get it right. A while back, I commented on the disparity in overhead costs between Medicare and the private insurers. You asked about the methodology of the comparison. I didn't know, and suggested that if the figures sounded hinky you do the research to dispute them. Mr. King has finally done that for you. Of course, you could depend on the Heritage to find that up is down if that would support a right wing position.
But if you still doubt that Medicare has lesser overhead costs, why is the insurance industry spending over $1 million per day (aka their profits,aka your premiums) to ensure that they don't have to compete with a public option?
Rev,
If universal health care is going to be cheaper, why is Congress trying to figure out HOW TO PAY FOR IT right now ? You don't have to raise taxes to pay for something that's going to be cheaper.
Rev says, "Conservatives tell me that those 45 million uninsured don't want health care"
Conservatives are telling you that many of the uninsured could afford insurance now if they wanted it, but choose not to buy it. That is true. Under ObamaCare, all will be forced to buy it (breaking another Obama campaign promise).
Regarding consolidation of the health insurance market (into one entity w/ single-payer), don't we have laws against monopolies in this country ? Why do we have those ?
This "research" has been all over the internet for a long time, frank, for anyone who thinks administrative costs is an important factor and wants to use them as an argument for Obama's health plan. For those who want to parrot a talking point regardless of the facts there's no need to find out. I suspected you fell into the latter camp and have learned my suscipicions are correct.
I noticed that frank used liberal argument #2 to discredit Heritage – attack the messenger, without actually disputing the message.
Mr. King and larry d.,
I apologize for using what you call "liberal argument #2". I was trying to be brief. By the way, I think this tactic is a bit too widespread to think of it as a "liberal" problem.
That being said, let's talk about the "messenger". I remember when the Heritage Foundation was set up. It was funded and founded by right wingers to provide intellectual rationale to right wing positions. It was never meant to be nor functioned as an objective source of information. As far as I know, it has never produced an opinion which didn't support the right wing.
So, I don't discredit Heritage. They do a very good job at what they do. What I do object to is portraying an advocate as a disinterested party.
p.s.
My other question still holds. If the overhead costs disparity is not real, why is the industry spending nearly $1.4 million a day (their profits, your premiums) to avoid the competition of a public option?
I thought #2 was the race card and mistakenly said so on another post, King. My apologies. The race card must be #6, just before, "I'm really a conservative."
As far as Heritage, I've never been to their website or read any of their literature and don't see what they have to do with anything, frank.
The insurance industry is spending money because they don't want to be put out of business by a rogue federal government. That's a pretty easy one.
larry d.,
I mentioned Heritage because it was cited by Mr. King. His other organization, CAHI, appears to be an insurance industry front. As such they are advocates of having the government subsidize insurance coverage to make it more affordable. Both are set up to be advocacy groups, not dispensers of objective information. But if you wish to believe their numbers, be my guest.
So if you accept Mr. King's contention that the overhead disparity is being overstated, won't private insurers be better able to survive? You do realize that no one is proposing to put the insurance companies out of business, don't you? No one is even talking about limiting your choice. If they fail it will be because they are unable put out a competitive product.
If you think the numbers King and Heritage provide are incorrect maybe you could dispute them head on somehow? First you said it's no matter, now you attack the messenger. It's lame.
If a business can get away with not providing insurance to its employees because the government will, many will do so no matter what the costs are to the government. Over time, almost all will do so. How is that so difficult to understand?
larry d.,
I have already provided the numbers that I have found. As I have said before the figures were from a variety of sources. Mr. King's sources are professionals whom are paid to sell you on their position. As I said, believe whom you wish.
Surely you know that business already "can get away with not providing insurance to its employees".
Lame.
Well now larry….
"If a business can get away with not providing insurance to its employees because the government will, many will do so no matter what the costs are to the government. Over time, almost all will do so. How is that so difficult to understand?"
You're saying that unless insurance companies can keep their monopolistically high prices…..employers will just have to bail on providing health insurance benefits to their employees?
The only reason many employers provide coverage now is because it saves them money by reducing the share of payroll tax the employer pays.
Many businesses, right now, get away with not providing health insurance. So that dog won't hunt.
Now, pray tell, why would employees rush to buy government coverage rather than purchase private insurance? Better deal?
Did Social Security eliminate, you know, in a rush, the purchase of IRA's and private retirement accounts?
Employees will rush to gov't insurance because employers will stop providing it, because they'll already be paying for it through taxes and because eventually it will be all that's available to all but the most wealthy.
Employers provide insurance because employees expect it, except those who work for minimum wage, etc.
The argument that the government will be more efficient on the one hand but won't put insurance companies out of business doesn't make a lick of sense, Reverend. Neither does the SS analogy, unless you're saying the government is going to provide coverage that is woefully unsatisfactory.
frank,
You keep attacking the messengers (while saying you are not attacking the messengers), but I haven't seen you provide any figures about medicare administrative costs vs. private insurance costs.
My objection to your portrayal is, you never address the source of Heritage's numbers, which are compiled from Medicare's own figures and the U.S. Census Bureau's figures. You just dismiss Heritage out of hand because it's right-wing. That isn't fair. I take it as a given that you aren't going to get the info I presented from any left-wing news source. The left is going to keep using Medicare's 2-4% overhead cost number, and I have provided several reasons why that number is not accurate.
Who IS giving out unbiased data without any agenda these days, anyway ? I used references to Joe Conason and Paul Krugman in my post. Are THOSE the people giving us the straight info ? How about the NY Times or the Obama administration ? Is their data unbiased ? Do they promote an agenda ?
In answer to your question about why the insurance industry is against the public option, that should be obvious. It's because private industry cannot compete with the federal government (and it has nothing to do with administrative costs). One reason among many is that government doesn't play by the same rules as private industry. They can, for instance, set their insurance rates anywhere they want, far lower than private industry can, and then just make up the difference with various taxes (like the cigarette tax that funds SCHIP). Or the government can run in the red for a long period of time, or they can print money. They can drive the private sector out of business easily, and that's what the insurance companies are afraid of. That's also the ultimate goal of the Obama administration, in my opinion. The public option is the Trojan Horse to bring it all about.
larry,
I don't really remember the numbering of the liberal arguments either. I just know them when I see them. I tried to find the list online, but so far it's been in vain.
Mr. King,
I don't dismiss Heritage's data. I don't necessarily accept Conason and Krugman's either. My point is while most of the authors use their data as tools to advance their positions, C and K aren't directly compensated for their opinions. Heritage is paid to come up with the arguments for others. And they do a very good job. So does CAHI. The article you cite shows important cost differences for a public versus a private entity. But it represents one side of an argument. For example, insurance companies have an advantage over the government in that they invest the premiums for a profit, thus offsetting costs in a way unavailable to a government entity, like Medicare. So, I take all studies like these with a large grain of salt. But trusting Heritage and CAHI is like trusting a used car salesman to give you an accurate assessment of the car he is trying to sell to you.
But the issue is not whether its fair compare Medicare's overhead costs to industry figures. The issue is cost vs. service. It's obvious that the insurance industry considers government competition as an existential issue worth spending over a $1 million per day to defeat or water down.
And they should. If government competition is successful, insurance companies will be on the fringe of health care, if one compares our relative cost to service to countries which provide government programs.
One of the main reasons for founding the country was for the common defense. We don't limit that to mean foreign armies at our borders. For the common defense we have government involvement in defense against fires, business frauds, crimes, and even in health through government paid research, the CDC, disaster relief, etc. In the globalized economy, we no longer have the option of shifting these costs to the private sector.
Perhaps the best feature of the public option is that oldest of conservative desires, letting the market decide. If the public option does not deliver better care cheaper, it will die.
What if the "relative cost to service" numbers in other countries are presented using the same kind of selective accounting the Medicare administrative costs are tabulated here in America? I'd guess they are.
The "common defense" argument seems dishonest to me, frank. Promoting the common welfare seems much more to the point, and "promote" is a lot weaker term than "provide."
larry d.,
What I meant about relative cost to service was this: Compared with the rest of the industrialized world, we spend significantly more while at the same time providing less service than most countries. I have no numbers, just an observation that if other countries can achieve more with less, than we should at least expect one or the other, more service or less cost.
I see nothing dishonest about my interpretation of health care as part of the common defense. I see nothing in the Constitution or tradition to limit defense to external enemies. I gave examples of how the government has in the past and in the present provides defense against other threats and even in the area of health. What I find dishonest is nearly a trillion bucks a year spent ostensibly on defense and no border security.
frank says, "C(onason) and K(rugman) aren't directly compensated for their opinions."
Like hell they aren't. Krugman is PAID by the liberal NY Times to write a liberal op-ed column. He's also arguably the biggest liar I have witnessed among op-ed columnists, but that's another story.
Ditto for Conason (about the paid liberal part. Not the liar part).
frank says, "One of the main reasons for founding the country was for the common defense. We don't limit that to mean foreign armies at our borders. For the common defense we have government involvement in defense against fires, business frauds, crimes, and even in health through government paid research, the CDC, disaster relief, etc. In the globalized economy, we no longer have the option of shifting these costs to the private sector."
Because the subject is health care, the common defense analogy does not apply. We aren't in globalized competition for health care insurance. We can't even pursue health insurance options outside of our own states, due to government interference in the market. If we could, the price would go down. And your statement about "we no longer have the option of shifting these costs to the private sector" is downright scary. It's a call to communism, though I assume you didn't intend it to be.
franks says, "Perhaps the best feature of the public option is that oldest of conservative desires, letting the market decide. If the public option does not deliver better care cheaper, it will die."
I have tried to explain many times on this blog why the public option will kill the private options. It has nothing to do with better care or cheaper care. It has nothing to do with the market. Not at all. Just the opposite. It has everything to do with the government being able for force people into adhering to it's wishes. The government MAKES THE RULES. You can't compete with that. Public versus private isn't about better or worse. It's about force versus voluntary (remember that whole "free country" concept we used to cherish ?). But if it was about better or worse, let's look at the few areas where government competes with the private sector. Which schools are better, public or private ? Who does a better job of delivering packages, the U.S Postal Service or UPS ? There is nothing the government can do better than the private sector, though there are areas where it makes more sense to let the government handle them (such as the military). The government is a slow-moving tangled web of massive bureaucracy that changes politically every two or four years. They are the last ones we should be entrusting large segments of our economy to. They aren't equipped. Government run health care becomes a nightmare virtually everywhere it is tried. And if you want to know why health care is so expensive in this country, it's because we have gotten AWAY from free market principles. Today, people aren't even concerned about costs, because everything is insurance driven. The consumer is completely disconnected from costs. If we used a similar method for other things, say to purchase food, where the consumer was completely disconnected from costs, everybody would be eating steak and lobster every day. Then the costs of food would skyrocket too. It's basic economics. You can't remove the free market from health care, as we have done, and then say the free market doesn't work. How could it ? It isn't there.
frank, my point is that, since we can't even nail down what the administrative costs are for Medicaid, I doubt we know what the real costs are for healthcare in foreign countries. All the numbers we are being fed seem to be bogus. Unfortunately, Obamacare lemmings don't seem to mind–parrot the numbers then when they're called into doubt say they don't matter or kill the messenger.
Mr. King,
C and K are paid to provide their opinions, CAHI and Heritage writers are paid to provide justification for others' opinions. I think that is a whole different level of advocacy.
You say that "we aren't in a global competition for health insurance". I disagree. GM's products bore an additional $1500 cost that manufacturers in countries with public health care didn't. But the competition here is part of the "free" trade paradigm we have accepted, it's the race to the bottom in wages, compensation, etc. Most governments of industrialized nations have already absorbed that cost, and it is crippling US manufacturers.
I think the defense analogy is apt. Most people think of defense as an existential struggle against an enemy. I can think of nothing more existential than the health care that saves and extends lives.
The public option simply adds a layer of competition to the industry. According to free market economics, it is the only way to reduce costs. Those who cannot produce those cost savings go out of business. Sort of like what happens to American workers when forced to compete with child labor, slave labor in other countries.
You start with two biases; government cannot do anything as well as private enterprise and that government run healthcare is a nightmare everywhere it is tried. It seems a contradiction to say that government by its nature has advantages that private insurance can't compete with and then claim that they can't do anything well. Again, according to free market economics, the one which provides the best service at the lowest price will thrive.
If government run healthcare has been a nightmare everywhere it's been tried, please tells us which countries have ditched public care for a private system.
C and K are paid to give their opinions, as long as they are the opinions of their liberal employers. It's no different from CAHI or Heritage at all. C and K are paid spinners and liberal advocates. CAHI is giving the perspective of the private insurers. Heritage is giving the perspective of conservatives. They are neither more nor less credible than C or K. The arguments must be decided on their merits, not upon who is making the argument. That's why the "attack the messenger" tactic is deplorable if it is not combined with EVIDENCE that the message is bogus. It's like all the lefties who dismiss Fox News just BECAUSE it's Fox News. It's anti-thought.
Good point about GM's health care costs carrying over to it's ability to compete globally. That's true for all our businesses. You're right about that, which is why I advocate getting rid of employer based health insurance. Health insurance should be the responsibility of the individual, not their employer. There is NO reason the employer should carry that burden. It's an artificial construct, and it's counterproductive, as you pointed out. It's also part of the dynamic of individuals not being concerned with health care costs that I pointed out before. I also agree with you that employer-based health care holds down wages. Employers can't afford to give out higher wages when health care costs are exploding. I bet if you looked at employee wages and added in all the benefits that employer's are required to provide, then wages will have gone up. They just aren't in cash form.
And again, the free market does not consist of private enterprises trying to complete against the government. That's ANTI-free market thinking. You can't have it both ways.
Once an entitlement program is started, it's almost impossible to end it, no matter how badly it is run. Look at Social Security. It's the single worst program the government has ever devised, a direct ripoff of the taxpayer and the largest ponzi scheme scam ever, but if someone tries to change it, there's an uproar. The reason these sorry programs stay around forever is because THEY MAKE PEOPLE DEPENDENT on them, and dependent people are scared people. If we make the mistake of going for nationalized health care, it will never end. It will only get worse and worse and worse.
C and K's success is much more reliant on their accuracy than an anonymous author paid to come up with justifications. C and K are much more likely to lose their readership and therefore their jobs by being innacurate. If anything, the authors at Heritage are paid to be misleading and prosper for it.
I can see how you might think that employer based insurance is an artificial construct, but with the failure of FDR, Truman, LBJ, and Clinton to achieve alternatives, insurance became a benefit for employers to offer. Because of the volume of their employees, they supply insurance cheaper than raising wages for the individuals to buy their own policies.
You claim that government cannot participate in the free market. Sez who? Isn't a free market one which doesn't limit its participants?
You also take your usual tirade against Social Security. SS was a Ponzi scheme for nearly 50 years. Since government was able to set the rates of money coming in and going out and had a stable population, it was successful. In 1982, it was changed from a pay as you go system, to one which accumulated surpluses to accomodate the baby boomer bubble. Once again, it worked as it was supposed to. So there's nothing wrong with SS. What is wrong is that the federal government ran deficits year after year until it has become difficult to now repay what it has borrowed from the SS surplus. So, it is not SS's fault. It has performed as expected. But when Republicans made fiscal integrity a lesser priority than rewarding their wealthy contributors, they spent it.
frank,
If you can show me a Krugman column that is accurate, I'll eat my hat. His columns are nothing but spin, lies, and economic mumbo-jumbo. I don't know that I've ever read one I could call accurate (but in fairness to Krugman, I haven't read them all. Maybe he got it right once or twice by accident).
I've already tried to explain several times why private competition with the government isn't possible. You just aren't listening. So be it.
I have no idea where you got that bilge about SS. I assume some liberal spin website, since you affixed the time SS stopped being pay-as-you-go as 1982, when Reagan was in office, and then blamed the rest on Republicans without saying a harsh word about the Democrats. Astounding.
But you miss the essential ingredient of what makes SS an immoral Ponzi scheme (which should be illegal and properly categorized as THEFT). It's that the government takes in our payroll taxes, pays retirees, and then SPENDS THE REST OF THE MONEY. There is no trust fund and no investment, because you can't save money and spend it at the same time. It's an impossibility. The only good thing I can say about it is, FDR didn't design it that way. It was about three years into the SS program before Congress decided to steal our money. And now we're supposed to entrust 16% of our economy to that same Congress by handing them health care ? Count me out.
Mr. King,
Ok. We'll go over SS again. 1982 was the year that SS was "reformed". It was recognized that the number of retirees would temporarily overwhelm the number of payers when the baby boomers reached retirement age. Therefore SS witholding was doubled, the cap was raised, and the retirement age were raised, resulting in a huge surplus to be used to cover this shortfall. That surplus was invested in government bonds, the surest of all investments. My comments about Republicans is that it was Republican fiscal policy which caused the deficit, with Clinton being the one to attempt to balance the budget. The money invested by SS was squandered during Republican rule and will have to be paid back just like our indebtedness to other countries.
I don't always agree with Krugman or Conason, but I know whose opinions they espouse. Their own.
frank,
SS has been "reformed" about 18 times. It started out as a 1% tax. Due to it's Ponzi nature, and due to the fact that there is no SS trust fund (just IOU's in the form of treausry bonds, which are nothing more than a claim on future taxpayers), the SS rate must be raised and raised and raised, with no end in sight.
If there really was a trust fund, there would be an enormous amount of money earning interest, the SS payroll tax could have stayed at 1% forever, and annual federal deficits would make absolutely no difference. Your argument about deficits only confirms the fact that SS ISN'T a trust fund. SS payroll taxes are treated as general revenue. That should be illegal, as it would be in the private sector. It's an example of our gangster government that I wrote about yesterday.
Heritage espouses their own opinions as well. There is no doubt of that.
Interesting conversation….well, not really a conversation….more like two trains passing each other.
However, the laugh of the thread is this by larry,…
"Employers provide insurance because employees expect it,"
Yep, that's because employers do exactly what their employees want. Funny.
Employers provide health care, and are willing to do it, because they save freaking money. The cost of the health insurance is made up by keeping wages decreased….and the employer doesn't have to pay their share of the payroll tax on health care costs per employee.
Always funny when employers are portrayed as altruistic….especially big employers.
Employers are not the enemy, Rev. They provide jobs, which create our economy and provide a decent standard of living for our citizens. You always miss that part.
Employers started offering health insurance during WWII as a way to get around the wage and price freezes mandated by the government. It increased employee compensation at a time when wages COULDN'T be increased. Altruism wasn't the motive of the employers, but it's a lot better than a sharp stick in the eye.
Companies don't exist to be altruistic. Companies exist to make a profit. The altruism comes as a result.
Mr. King,
You really don't understand SS. You call it a Ponzi scheme. It was pre-reform of 1982, but given government's ability to control the tax rate and the rate of dispersal, and a relatively stable population, it worked. Any overages or shortages were relatively minor. Pre-1982 there was no trust fund or need for one. Pre-1982 the amount SS deducted from paychecks was relatively small and most blue collar workers reached the cap where they stopped paying SS taxes during the last half of the year. Apparently, SS can be changed back to its pre-1982 state when the baby boomers die off.
I have never seen any estimates, but the surplus generated by the 1982 reforms is huge and has as a piece of accounting fiction been counted as an asset of the federal government, thus masking the true size of the debt. The Federal government now has the obligation to repay these funds. Ergo, as long as the federal government does not default on its debts, SS is sound. With the death of the baby boomers, payroll deductions and benefits should return to historic levels.
I have no problem with the fact that the surplus funds are (SS witholding still produces a surplus) invested in T bills. They are considered one of the safest investments in the world. They are an investment that cannot be used to any political or economic favoritism. The practice of investing SS surpluses in T bills also lowers the cost of government borrowing. The only thing damaging has been the use of this accounting fiction to mask the true size of the nation's debt. It should be illegal and so should any idea of SS recipients or payers giving up benefits or increase in rates of taxation to replenish SS coffers.
SS requires constant investment (payroll taxes) from current workers to pay for retiree benefits. There is no investment happening (the excess payroll taxes are spent as general revenue). That is the definition of a Ponzi scheme.
Everything else is immaterial, and a smokescreen. SS is criminal.