Now it’s time to play “Spot the Fallacy”. First, read this statement from a Reuters story about reforming the U. S. healthcare system to provide universal coverage:
“The really important numbers are the effects on national health expenditures. Ultimately, that determines the growth of the national health care budget,” she said.
The plan that offers the greatest potential to ensure health coverage for all is proposed by Rep. Pete Stark, a Democrat from California, which would broaden access to Medicare.
It would cost the federal budget $188.5 billion in 2010, but would cut national health spending by $58.1 billion by covering more people under Medicare, which has far lower administrative costs than private insurance plans.
Now, spot the fallacy! (highlight the area below for the answer)
They are assuming that administrative costs of private insurers remain constant on a per case basis. It’s possible that when you remove cases from private insurers to administer them through Medicare the lost revenue will be made up by increasing the costs to the remaining insureds.
Dave:
Are the Medicare costs incurred by state and local government included in the total administrative cost cited in the article. Also, I belive doctors charge higher fees to private insurers to offset Medicares lower payment structure.
The people quoted in the article do not say how they arrived at their numbers. I, too, believe that charging different patients different rates is something that’s done. That’s another way of saying what I said in the hidden part of my post.
All of that having been said there’s pretty good reason to believe that substantial economies can be achieved at the administrative cost end of things. At this point administrative costs constitute about $.30 of every healthcare dollar. That’s twice as much as Canada, for example.
It’d be interesting to compare that with the Single-Payer costs of France, since the Canadian system more or less bans duplicate private insurance coverage of treatments on the list of federally covered treatments so as to prevent “queue jumping” (basically, the rich paying more to get ahead). The French system seems like a more likely outcome for American universal health care than the Canadian system, since it also has simultaneous private insurance.
I wonder if there’s another benefit in a Canada-style system from that type of re-organization of health insurance administration that isn’t readily apparent, a sort of psychological benefit. After all, if you go to the Doctor in Canada, while you might have to wait longer for certain treatments if your problem isn’t immediately harmful, there’s no mystery about what is covered by Canadian Medicare, and unless you live in a rural area, you know that you can get it ultimately without arguing with insurers over the cost.
That latter part is speculation, so take it with a grain of salt.