Social Security & Medicare Notes: September 2011

Saturday, September 17, 2011

Which is cheaper - public health care or private health care? Here's some facts.

What are the facts about the costs of publicly paid health care and privately paid health care? Consider these facts with links to the backup data:

If the Medicare age is raised to 67, it will save the government $5.7 billion in 2014 but cost others twice that amount.
Government payments to private, comprehensive Medicare plans (Medicare Advantage) have been well above the cost of the program’s public option (traditional Medicare) for years.
The rate of growth in per person spending by private health care plans has exceeded that of Medicare for 40 years.
Private, per person growth in physician spending has exceeded that of Medicare in the last decade, if not longer.
The CBO has scored a public option as cheaper relative to a private-only exchange system.
The CBO and other organizations have scored single payer proposals as cost savings (system wide) relative to the status quo.
The VA (and Medicaid) purchase drugs far more cheaply than Medicare’s private drug plans.
Our wealthy, peer nations have a greater proportion of their health spending funded publicly and spend dramatically less on health care than we do, even as a proportion of their economies.

All of that is consistent with the hypothesis that public health financing programs can control costs at least as well, if not better, than private ones. In addition to that and as Yglesias wrote, there are the decades of statements by health industry leaders and proponents of private health care that suggest they all know this to be true. You can’t argue low public payments stifle innovation if public payments aren’t below those of the private sector. You can’t argue that low public payments lead to cost shifting if public payments aren’t lower than private ones.