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A private Medicare system would be a costlier Medicare system

One of the big Republican ideas for reforming Medicare is to turn it into a program of vouchers that beneficiaries can use to purchase private insurance. You see this in Paul Ryan's plan, for instance. But that's not how these reforms save money. They save money by limiting the generosity of the vouchers. Because the dirty little secret is that turning Medicare into a voucher program would actually make it cost much, much more. How do we know? Well, putting aside the fact that Medicare currently costs much less than private insurance, we actually have a private voucher program in Medicare as we speak. Austin Frakt explains what it's taught us:

Though rarely described this way, the private Medicare Advantage plans are a (voluntary) voucher system. When covering a beneficiary, an Advantage plan receives a fixed monthly payment from Medicare that depends on the beneficiary's county of residence and health status. That fixed monthly payment is tantamount to a voucher. With it, beneficiaries can select from any Advantage plan operating in their county. They can also stick with traditional fee-for-service Medicare -- and about three in four beneficiaries do so.

But today, the market-based arm of the program costs more, not less, per beneficiary. Those fixed monthly payments to Advantage plans are, on average, 13 percent above fee-for-service Medicare costs. ...

What's going on? Why is the market-based Advantage voucher system not helping to control Medicare costs? The answer is that health care cost control is tough, technically and politically. Provider groups typically resist it. When it pertains to Medicare, beneficiaries resist it too. By adding another private-sector layer to the program -- health insurers -- the Advantage program invites a third source of political pressure. Rent-seeking by providers and insurers, as well as the power of the beneficiary constituency, align in their encouragement of higher Advantage payments. Congress, apparently, is willing to yield to that encouragement.

By Ezra Klein  |  August 20, 2010; 9:46 AM ET
Categories:  Health Reform  
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Comments

There are two ways federal policies and reduce the spiralling cost of healthcare:

1. Expose the real world cost of requesting medical services and products to the consumers who use them, perhaps with tax-payer subsidized vouchers for the poor/elderly. (i.e. Milton Friedman's idea, best implemented with Marty Feldstein's healthcare plan).

OR

2. Full-blown government control of 99% of healthcare transactions such that the federal government can simply dictate how much doctors & drug providers get paid and dictate what consumers can access services/products and when.


Obama chose door number 2.

There is no compromising the two paths. Its one or the other.

A voucher program for Medicare that doesn't address the dysfunctional compromise we already have today will not show any results.

Posted by: FastEddieO007 | August 20, 2010 10:04 AM | Report abuse

I notice that Ezra doesn't follow the observation about the rent-seeking behavior of private providers and insurers to its logical conclusion. If their job as they see it is to skim wherever they can and drive up costs, why should we mess around with these guys at all, including Ezra's beloved exchanges? If the private market in health care has failed to deliver affordable care, which it has by every known metric relative to other Western countries, why do we keep giving them chances to loot us? I'm sure Ezra will explain how this history of market failure will be breathtakingly defied by the magical-mystical exchanges, but I'm not holding my breath.

Posted by: redscott1904 | August 20, 2010 10:54 AM | Report abuse

The options FastEddieO007 mentions above do seem to be the two available options. Without generating a riot, I'd argue that the first is constitutional while the second is currently constitutional only when the word "state" is substituted for "government" and/or when "inter-state" is inserted before "transactions". Further, I'd agree that option 2 (without the changes in wording) is currently selected.

If option 2 is really the choice everyone wants, it could easily become constitutional -- amendment IS possible, given enough agreement: getting to the agreement is the tough part. The good news is that discussions are sharpening on a variety of topics -- health care, immigration, federal spending, etc. The partisan lines are blurring in some small measure, with true points of long-term agreement and disagreement becoming clearer.

Six months, few would have expected to see a Washington Post headline read "Paychecks to shrink because of higher health premiums". The evidence was always there, but the un-sophist-icated, non-rhetorical discussion wasn't.

Posted by: rmgregory | August 20, 2010 11:00 AM | Report abuse

I have read that the fraud losses for regular medicare are many times higher than for Advantage plans. The regular medicare administrative costs are low, but so is the supervision of claims. The government won't tell you what the losses are for regular medicare because they don't keep the stats that way, they track only a gross number. Advantage programs keep fraud to about 3%, and this is part of the 13% you site, which based upon various sources I have read is about right. The fraud the government talks about is regular medicare fraud. When you assign this cost to regular medicare there is vitually no difference between the costs of regular medicare and Advantage plans.

As an Advantage member I need approval for each procedure, and I have never been turned down. When my mother-in-law was clearly dying, her unconscious body was blood in the water for shark doctors looking for someone to bill for things totally unrelated to her situation. I finally had to tell most of them to not come back. Clearly this is also a form of fraud, and it is not controlled under regular medicare.

The other thing you don't talk about is that regular medicare covers only 80% of costs, while Advantage covers 100% minus some small deductibles. The medigap policies that cover the additional 20% of regular medicare costs have virtually no deductibles, but has substantial costs. In New Jersey, where I live, it costs $262 per month for someone aged 65-69, the same policy in Florida or Pennsylvania costs about $172 per month. These cost differentials are partially the result of social engineering by the states, not actual costs. This will be made worse by the cost shifting accounting methods the states will adopt when they get stuck with Obama's cost shifting of healthcare costs to medicaid which will sorely test the states.

Posted by: lydog26 | August 20, 2010 11:25 AM | Report abuse

@rmgregory:

What's unconstitutional about the federal government providing socialized insurance (i.e. Medicare for all)? I'm pretty sure what makes Medicare for seniors constitutional would make this constitutional. The commerce clause allows the government to regulate commerce as long as what they do affects all the states. Healthcare obviously falls into this category.

@Fast Eddie:

I doubt option 1 would solve the problem, it would just delay it. When people bear the costs of their healthcare directly they tend to spend less, but not more efficiently. In other words, this wouldn't bend the cost curve just translate it down.

Posted by: DKOSullivan | August 20, 2010 11:36 AM | Report abuse

lydog,

you're correct in everything you say but you also forget that Medicare part B also carries with it a cost that ranges up to $300+ per month per covered person.

oh and its not as if regular medicare factors in its capital costs. When that's factored in Medicare isn't quite as efficient as most liberals want to say it is.

Posted by: visionbrkr | August 20, 2010 11:40 AM | Report abuse

@lydog:

You need to stop listening to Newt Gingrich.

The fraud argument makes literally no sense. If fraud was so rampant in regular Medicare the cost per beneficiary would be higher. It's 13% lower. It's possible that we could reduce fraud in Medicare and that would make it lower still, however that's not an argument for switching over to vouchers.

Even assuming the reason private insurance costs so much more is that they spend so much effort checking for fraud that's not an argument in favor of private insurance. It means they're misallocating their resources. If it's cheaper to let some fraud go we should just let it go.

Posted by: DKOSullivan | August 20, 2010 11:44 AM | Report abuse

Yeah, but what if the voucher was actually a Health Savings Account and you could still get Medicare Part A for extraordinary care?

Posted by: staticvars | August 20, 2010 11:44 AM | Report abuse


You guys should stop complaining cuz one the health care we have now isnt as good as it was supposed to be. also the law has just been signed give it a try u guys are too hard on democrats they went to college and we voted for most of these people.so if u want to say u have the right to choose tell that to ur congress men or state official. as for obama people are just tryin to make it look like america made a mistake he has done things to help us and we had a full 8 years of a terrible president and i will be so as happy as ever when a obama fixes bush's mistakes. You can find full medical coverage at the lowest price from http://bit.ly/9fDY7U obama has to put up with the wo0rld judging his every move and trying to fix the mess we are in we are lucky anyone wants to be our president. STOP COMPLAINING AND GIVE HIM A BREAK. i wanna see one of yall do what he sas done. some people are just so ignorant.

Posted by: caryblair | August 20, 2010 11:51 AM | Report abuse


You guys should stop complaining cuz one the health care we have now isnt as good as it was supposed to be. also the law has just been signed give it a try u guys are too hard on democrats they went to college and we voted for most of these people.so if u want to say u have the right to choose tell that to ur congress men or state official. as for obama people are just tryin to make it look like america made a mistake he has done things to help us and we had a full 8 years of a terrible president and i will be so as happy as ever when a obama fixes bush's mistakes. You can find full medical coverage at the lowest price from http://bit.ly/9fDY7U obama has to put up with the wo0rld judging his every move and trying to fix the mess we are in we are lucky anyone wants to be our president. STOP COMPLAINING AND GIVE HIM A BREAK. i wanna see one of yall do what he sas done. some people are just so ignorant.

Posted by: caryblair | August 20, 2010 11:52 AM | Report abuse

DKO Sullivan,

last I knew Newt wasn't a reporter for 60 minutes.

http://www.cbsnews.com/stories/2009/10/23/60minutes/main5414390.shtml

Posted by: visionbrkr | August 20, 2010 11:57 AM | Report abuse

Medicare Advantage is not a voucher program, and it is not very similar to what Paul Ryan is proposing. Medicare Advantage pays insurers directly, and the amount of those payments is determined using a benchmark system that is setup in a way that the gov't will pay more than they do for traditional Medicare. The higher cost is not because it uses private insurers, the higher cost is by design!

Ryan's proposal on the other hand would give Medicare beneficiaries a voucher directly, a voucher that they use to buy private insurance. The voucher grows slower than health care costs. The only way what you and Austin are saying would be correct is if Congress stepped in and increased the value of the vouchers.

There is no "dirty little secret" here, and comparing this to Medicare Advantage is just silly, the two are not really similar at all.

Posted by: ab_13 | August 20, 2010 12:03 PM | Report abuse

@visionbrkr:

I wasn't saying Medicare fraud doesn't exist, or isn't a serious problem, I was saying that reducing fraud wasn't a reason to switch to a private system. If regular Medicare has more fraud, but still costs less than vouchers using vouchers isn't a good idea.

Posted by: DKOSullivan | August 20, 2010 12:06 PM | Report abuse

DKOSullivan,

uh, YES you did say that.

"If fraud was so rampant in regular Medicare the cost per beneficiary would be higher"


I'm sorry but I consider 60-90 billion a year as rampant.

Consider for a moment that medicare by contract pays providers within 15 days. Medicare can then not legitimately and does not contract with providers. You or I could send claims to medicare for any amount of money and expect payment in 15-25 days (depending on mail time) as long as we put the correct codes on a proper billing system. Personally, the way its set up I'm surprised that medicare fraud isn't MORE rampant.

Posted by: visionbrkr | August 20, 2010 12:20 PM | Report abuse

@DKOSullivan, the only way vouchers can cost more than Medicare is if we explicitly make them cost more. If Medicare costs say, $5000 per beneficiary now, we can decide to give vouchers of $5000, $4000, $6000, etc. If it costs more it is because the voucher system was designed to cost more. There is nothing about vouchers themselves that would make them more expensive.

In the case of Medicare Advantage, they pay the plan based on a benchmark, but they set the benchmark to $5500 (the benchmark design is a bit more complicated than that, but you get the drift).

Posted by: ab_13 | August 20, 2010 12:24 PM | Report abuse

I don't know why we can't seem to figure out the real problem with health care in America. It's not providers or insurers. It's the high production costs we all pay for delivery. Simply put, your primary doctor must get three or four times as much for an office visit as anywhere else in the world. This excessively high charge is not pure profit. American doctors have a much higher nut. They can't and won't keep their doors open if they lose money. Until we address this problem, all else is just pissing in the wind.

Posted by: bobsteph1234 | August 20, 2010 12:32 PM | Report abuse

I don't know why we can't seem to figure out the real problem with health care in America. It's not providers or insurers. It's the high production costs we all pay for delivery. Simply put, your primary doctor must get three or four times as much for an office visit as anywhere else in the world. This excessively high charge is not pure profit. American doctors have a much higher nut. They can't and won't keep their doors open if they lose money. Until we address this problem, all else is just pissing in the wind.

Posted by: bobsteph1234 | August 20, 2010 12:32 PM | Report abuse

"It's not providers or insurers. It's the high production costs we all pay for delivery. Simply put, your primary doctor must get three or four times as much for an office visit as anywhere else in the world. This excessively high charge is not pure profit. American doctors have a much higher nut."

Does anyone know if there is good data somewhere that breaks this down into component parts?

It would be interesting to know what percentage goes to billing, what percentage goes to other administrative tasks, what percent goes to maintaining and acquiring technology, paying malpractice premiums, support staff salaries, rent and utilities, etc. And how that compares to overhead in other countries.

I also wonder if we might succeed in lowering costs by graduating more doctors, nurses, and other health care providers, thus increasing supply (and boosting competition), and thereby motivating a drive toward increased efficiency at the providers' end.

Posted by: Patrick_M | August 20, 2010 2:43 PM | Report abuse

I didn't know Newt had stated an opinion on this issue, and couldn't care less about his thoughts. And never watch 60 minutes. In fact I'm not totally against a government controlled healthcare system. What I am against is Obama BS. His plan will not save us money, and the govt will control our lives. Read up on the French Healthcare system on the link provided. The patient selects the doctor, the doctor determines treatment, and the govt makes sure everyone is served, and it probably is hated by every attorney in the land, which is partially why it costs much less than ours.
http://www.medicalnewstoday.com/articles/9994.php

Posted by: lydog26 | August 20, 2010 2:51 PM | Report abuse

Under option 2, price control works like this....if a doctor wants to make a living providing medical services, they do it the way the government says (i.e. for the price they say and when they say its approved by them)


Under option 1, price control works like this, if a doctor wants to make a living providing medical services by working at a price that consumers can/will pay...if he charges more there will be no one who can pay more and he will not make anymore....unless he is so good he can get away with people looking for his premium services......

So which way sounds better.

Posted by: FastEddieO007 | August 20, 2010 4:01 PM | Report abuse

FastEddieO007, your analysis of how each option must function is a little bit simplistic.

For example, in our current private health care system, most doctors want to be "in network" for at least one of the major insurers, because of the large books of business that insurers bring. In theory a doctor is free to fix their own rates, in reality they will adjust their billing to fall within the defined "in network" services of that insurer. So we already have a type of privatized set of price controls, although we all agree it has not been very effective at containing rising costs. And of course the insurance system itself imposes a cost of its own on the system.

If government steps in, there is an array of different models for determining a doctor's income or fee for services. Options range from something like the British system (or our own VA) where the health care professionals are employed by the government and paid a salary, to systems where all of the physicians would remain independent private operators billing fees for services rendered, but their rates would be subject to public regulation, just as we regulate taxi cab rates in our cities or the rates charged by private utilities.

There is more than one model of "government-run" health care, and the current private insurance model is not quite the simple patient-driven free market dynamic that you descibe.

Posted by: Patrick_M | August 20, 2010 4:54 PM | Report abuse

To take the above comment a step further, would you rather have a review board that fixes rates for taxi cabs in your city, so that you know that rates will be consistent and fair? ...or...

Would you rather have no government involvement in the pricing, but be given a pile of vouchers and then be forced to hunt for the best deal on your ride to the airport in order to stretch your fixed set of vouchers as far as it can go?

Posted by: Patrick_M | August 20, 2010 5:02 PM | Report abuse

@Patrick_M

"in our current private health care system, most doctors want to be "in network" for at least one of the major insurers, because of the large books of business that insurers bring. In theory a doctor is free to fix their own rates, in reality they will adjust their billing to fall within the defined "in network" services of that insurer. So we already have a type of privatized set of price controls....."


I agree with all that----the problem is that our current system is made dysfunctional by the tax benefit of employment-based healthcare insurance which promotes comprehensive insurance to get the most from the tax write-off....

Thus though insurance companies are exposed to the real world cost of providing services, individuals still aren't....to reduce the cost, every individual must feel a proportional economic cost everytime they request a service/product.

Our comprehensive insurance still has a detrimental effect.

Posted by: FastEddieO007 | August 20, 2010 10:03 PM | Report abuse

FastEddieO007,

"the problem is that our current system is made dysfunctional by the tax benefit of employment-based healthcare insurance which promotes comprehensive insurance to get the most from the tax write-off...."

Say what? The fact that there are tax credits for employer-based health plans does not have any impact at what happens at the market level. The insurance companies contract for services from providers at the lowest rates, and the providers push for the highest rates they can collect from the insurers. If an insurer's reimbursements are too low, the doctors exit the network and the quality of that insurer's network goes down leading employers to shop elsewhere. If network rates are too high, then the cost of the insurance goes up, and again employers will hunt for a better deal from another company. The tax break exists in the background, and does not play a part in the market dynamics of the buyer (employer), the seller (insurer) and the assets the insurer offers (the providers in the network).

"Thus though insurance companies are exposed to the real world cost of providing services, individuals still aren't....to reduce the cost, every individual must feel a proportional economic cost everytime they request a service/product."

Eddie, I van't even tell what you are arguing for. The only way to make the patient have to experience different pricing from various providers (so that the patient will have an interest in comparison shopping) is to require that all plans cover only a certain percentage of all services, so that a certain percentage is out-of-pocket. That has nothing to do with whether the plan is "comprehensive" -- it just relates to the deductible. And there is limited comparison shopping one can do when one is within the limited set of providers in a private insurance network, no matter how high or low the deductible may be.

And if you live in a rural or less densely populated area, you have little opportunity to comparison shop at all. There may only be one or two providers for the entire area.

So I don't think the road to making health care more affordable comes by forcing consumers to pay higher deductibles following a government ban on low deductible private insurance plans. That sort of government intervention in the free market doesn't sound much like the old FastEddie I remember.

Posted by: Patrick_M | August 20, 2010 11:10 PM | Report abuse

@Patrick_M

Why might you decide to opt for taking your familiy to Friendly's for dinner over going to that premiere 4 star restaurant downtown?

Why do you opt to buy the 1lb package of chicken thighs over the lobster or filet mignon?

You NEED nourishment as much as you NEED miedical care....but why do some people opt to spend less than others?


Now imagine if we all had food providers who shielded us from specific meal costs...well then maybe YOU WOULD go for that lobster on a few more nights?

Right?

Under Marty Feldstein's plan, you would have to pay out of pocket for every medical procedure you requested, up until you've spent 15% of your income. Now there will be some people who get up to their 15% very quickly, at which point they no longer feel the consequences and overuse more expensive medical care....

We need to get out of our stupid dysfuntional healthcare "insurance" model.....why in the world do we call it insurance anyway...its not...its just healthcare installment plan where you never have to balance your book individually.....only at the community level.


Imagine how the price of everything in the United States if our credit card companies simply tried to make the use of their card a "insurance" plan...and at the end of the month, the only means that credit card companies could use to balance their books was to cancel members, tell merchants to get lost, and/or raise rates.

Posted by: FastEddieO007 | August 20, 2010 11:59 PM | Report abuse

Eddie:

If you want to impose an edict that insurance will cover nothing unless and until a consumer has spent 15% of his or her annual income on medical expenses, your government intervention in the private insurance market will mean:

-if you have to pay 15% of your income before the rest of the year is "free" (covered by insurance), you will want to hit the 15% target as soon as possible, and thus you will be more inclined to pay a HIGHER rate for services. "Give me a $10k tongue depressor, Doctor, then my family can come here as much as we need for the rest of the year at no cost."

-the least affluent insured Americans won't be involved in much or any comparison shopping, since 15% of their income does not cover much medical attention. One surgery and they're over the hump.

-the most affluent won't comparison shop either, since they are affluent and can afford to pay for the price is no object care. So the most uninsured dollars being spent are the least likely to care about low price.

-people in rural and low density areas will have less opportunity to comparison shop, as I mentioned before, and the existence of insurance networks limits the ability to shop around anyway.

-you have just given every insured American a 15% salary cut -- that hardly reduces medical costs for American citizens.

Chicken thighs and filet mignon are two different products, and it is logical that they have different prices and that I can choose which to buy. But a mammogram at one clinic should not cost three times as much as a mammogram at another clinic. They are the same product, and both a private insurer or a government regulator is far better able to determine a fair value for that procedure than I am.

"why in the world do we call it insurance anyway...its not...its just healthcare installment plan where you never have to balance your book individually.....only at the community level."

We call it insurance because it insures individuals against undue financial burdens arising from poor health by pooling risk. Ask uninsured Americans who get sick and thereby end up in bankruptcy about why it is called insurance.

It is no different from pooling the risks of drivers to protect the few that become involved in costly collisions. Or pooling the risk of homewoners to compensate the few whose homes burn down. All insurance collects revenue from a "community," and pays out to cover the costs of the claims.

And I can't follow your credit card analogy at all. The credit card companies all offer insurance plans that will keep a cardholder's payments covered in case the cardholder becomes disabled or loses his or her income due to a job layoff. Insurance is sold for credit card balances too.

Posted by: Patrick_M | August 21, 2010 3:36 AM | Report abuse

Medicare Part DE gaps, also known as the donut hole will be shrinking, but at what cost. Medicare keeps getting more expensive, and spending more and more, especially withe baby boomers retiring. . Medicare part B cost just went up this year too Medicare supplement insurance, known as medicap coverage keeps going up too, I switched my medicare supplement plan just this summer, and lowered the monthly amount I pay by over 50 a month, and this was for the same plan, just with a different insurance company. I used National Medicare Supplements at http://nationalmedicaresupplements.com/index.htm but there are many good ones online, just do a search online.

Posted by: jackchoice | August 21, 2010 10:53 AM | Report abuse

Patrick_M - you are right....Marty Feldstein's plan doesn't even really cut it.


Until doctor's can realistically factor in "what people can afford" into what they charge, and until consumer's are in touch with "what things cost" when the elect to pursure services...until then prices will skyrocket.

Even Mary Feldstein's plan doesn't go far enough.

Posted by: FastEddieO007 | August 21, 2010 11:38 AM | Report abuse

FastEddieO007, with all due respect you are thinking in the wrong direction.

If everyone had an equal amount to spend on health care, and equal need for services, and equal access to abundant choices, then perhaps a competition-driven market would have some limited effect on limiting the rise in costs.

But the reality is that people have differing means to pay, different needs for care, and different access to options. The rich will be less interested in getting the best deal as opposed to getting the best care. The poor will have their ability to pay completely priced out, as many uninsured low income people already do today. People in cities will have more places to "shop" than people in rural America, where a particular hospital or clinic may be the only option for miles around. Lastly, it is not as though there is an oversupply of providers willing to cut costs for a shrinking number of patients. Lots of physicians book appointments weeks and months in advance. And when people find a doctor they like and trust, they tend to want to stay put, even when rates are a little higher. Price is always a factor (whether you have a deductible or pay out-of-pocket), but health care is not like picking a grocery store based on the fact that the Campbell's Soup there is a nickel cheaper. Every doctor is (in a sense) a unique commodity and creates differnt value to different patients.

Very little real comparison shopping can ever take place if you leave consumers uninsured and fending for themselves, and there are numerous other factors that push up the cost of care in this country besides the competition among providers (or lack of same).

Posted by: Patrick_M | August 21, 2010 3:19 PM | Report abuse

For example, in our current private health care system, most doctors want to be "in network" for at least one of the major insurers, because of the large books of business that insurers bring. In theory a doctor is free to fix their own rates, in reality they will adjust their billing to fall within the defined "in network" services of that insurer.

Posted by: Patrick_M | August 20, 2010 4:54 PM | Report abuse


Patrick,

this isn't necessarily the case. Years ago, doctors when they first started in practice (in general) tolerated insurers because as you assume insurers brought them patients. As doctors grew into their practices they would attempt to leave insurers so they didn't have to accept the 40-50% discounts. If they were good enough doctors and they felt people would come to them anyway they'd do this.

Nowadays some doctors participate in insurance networks for different reasons. One main one is if they're a specialist that performs surgical procedures many of them own surgery centers that purposefully don't participate while the doctor himself or herself do. They get people to come to them "in network" through the insurance network and accept the discount from the provider portion of the bill because their "facility" that they own a stake in does not participate in any insurance network so they more than make up what they lost on the 40-50% discount. Its a nice, legal scam of the insurance industry and in turn the consumers that pay the premiums.

This is another reason hospitals are in trouble because many of the outpatient procedures that were done there years ago are now done in doctor owned surgery centers. Not only do the doctors make money hand over fist due to being paid based upon UCR as opposed to network discounts, they don't have to pay admitting priviliges at their own facilities they own.

It'll be nice when people clue into that doctors over the last 20 years have become businessmen just as much as doctors but I'm not holding my breath.

Posted by: visionbrkr | August 21, 2010 7:51 PM | Report abuse

also the doctor is not free to fix his own rates. He's required to accept what the insurer pays (unless he's part of a very large practice that is vital to an area). Its hospital negotiation that is very tenuous nowadays. You'll hear many times how hospital "X" is leaving insurance company "X"'s network. Eventually one of them blinks but prices to these facilities are not going down they're going up. Add in increased utilization and you get why we're seeing the increases we're seeing in healthcare costs for individuals and companies.

Posted by: visionbrkr | August 21, 2010 7:55 PM | Report abuse

visionbrkr,

I agree with all you say, and you know I have always appreciated the depth of understanding you bring to the discussion of costs. I know my own discussion about how the desirability of being "in network" with major providers was a generalization, and it is an imperfect and incomplete method of containing rising costs.

The point I was trying to make to Eddie was that if insurance vanished tomorrow, the notion that 300 million + individual consumers suddenly having to pay everything out-of-pocket is the magic bullet that will contain costs is an even more simplistic analysis. We have to take into account the reasons why costs are driven by factors in a addition to a simple market model of products that compete for buyers.

Pricing in the medical field is far more complicated than, say, two big electronics retailers competing to offer the lowest price to consumers for the same model flat screen TV. Your comments simply enlarge upon that point.

Posted by: Patrick_M | August 22, 2010 3:14 PM | Report abuse

The voucher description hardly holds water. As a member of a medicare advantage plan I don't see where vouchers enter. I am enrolled in a plan and I cannot decide next month to take my ( fictitous) voucher to another plan. Also your whole discussion somehow does not mention that members pay a monthly fee . In my situation a modest $ 160 fee covers a good drug plan.
Bottom line: progressives hate the advantage plan and try to trash it but they don't quite succeed.
Bernard Chasan

Posted by: gosha246 | August 22, 2010 5:59 PM | Report abuse

Patrick,

Thanks. I think we all need to understand that doctors are businessmen and women now too and not necessarily the good dr we remembered from old movies. Sure most still have our best interest at heart but many see their own financial interest as just as vital which to me is the main driver of cost.

Posted by: visionbrkr | August 23, 2010 9:13 AM | Report abuse

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