Thursday, August 27, 2009

Shocker: Medicare not that efficient

The Heritage Foundation notes that "administrative costs" as a percent of total costs is a grossly misleading calculation given Medicare's skew to the older, care-intensive population. Figuring administrative costs on a per person basis, Medicare has greater costs than private insurance.

Is "per person" the correct metric? Maybe not, but it sure ain't percentage of total costs.

More analysis and linkage (including some back and forth between Paul Krugman and Heritage) via Nate Benefield at the Commonwealth Foundation.

Can we now dispense with this "Medicare for all" nonsense?


Anonymous said...

Well as long as Heritage Foundation says it...

My question for Heritage Foundation is why do we spend more money for worse health outcomes than any other industrialized country? What are your thoughts/explanation for this? Just saying "markets are more efficient than gov't" has not brought down costs...


JoeCollins said...

I'd suggest reading the Atlantic piece linked in a previous post.

Anonymous said...

Are you referring to the prior post? I read that article and it doesn't really describe a viable approach. The basic premise he opens with his wrong - his dad was an octagenarian with pneumonia - the mortality at that state (severe enough to require hospitalization in that age group) is significant. The part about clots is also somewhat misleading (even with perfect prevention the rate is not reduced to 0 - so using the total of 200,000 deaths is misleading). I think many of the items are interesting (there was actually a RAND study several years ago that addresses many of these issues) - and I wouldn't be opposed to many of the ideas - but I think that the spin from both the left and the right makes it an untenable solution. I think it also underestimates the inherent costs of treating chronic illness and frequent f/u(diabetes in particular). Also over-estimates the degree of control people have over their health (shit luck plays a huge role). I think it also fails to recognize the contribution that defensive medicine plays in driving up costs - I think if you built malpractice caps in it would help significantly (use expert boards/panels to assign penalties rather than juries). I think the other challenge is that medical illness is already a leading cause of bankruptcy and I think that he is overly optimistic about people's ability to pay 20,000 for a random shit luck heart attack or 40,000 treatable cancer. I also don't see how credit is viable (people are defaulting on mortages - what would credit agency do if they defaulted on a pacemaker, artifiical hip?)
- Matt

JoeCollins said...

In the debate about elasticity of health care demand, I think both sides are going too far. You're right that there's some shit luck, but I there is a much greater degree of patient-price disconnect than some people think, and I think that shows in the relative rates of inflation.

I like the idea of medical panels for tort awards... actually more in keeping with a "jury of peers".

I don't like everything the Atlantic writer suggests... A deductible of $2k sounds about right to me. But maybe that's just me. A real market would set a deductible much better than I could, and better than the writer could.

The bigger point is that the market, such as it is, is highly distorted by a number of government policies, and gov't currently accounts for something like mid-40's percent of all h/care spending. Hard to pin all that trouble of a market that's so bollixed up.

Defaults on hips? I dunno, people finance boob jobs... What happens then, they yank your tits out?