The eloquent Craig Garthwaite

He emails me:

There is also a broader point that I have always wondered when people cite the low administrative costs of Medicare.  At least a portion of it has to come from the fact that they cover everything with little dispute.  In addition, Medicare is also approaching fiscal insolvency.  These are not two unrelated points, and therefore I wonder if perhaps Medicare might want to spend a little bit more on administrative costs?

Addendum: More from Megan McArdle.

Comments

Exactly! Private insurance is superior to Medicare because of its larger bureaucracy that more effectively rations health care! Thank you for the enlightenment.

Aren't many of the administrative costs hidden from the cost of medicare anyway? For example revenue collection is made by the IRS, does Medicare get billed for that? Much of fraud prevention is done by the DOJ, does Medicare get billed for that? It seems that at least some of the administrative savings are really just reallocated to someone else's budget.

Can anyone seriously believe that private health insurance is better than public insurance at containing overall costs?
The absurdity of this is evident from even a superficial comparison of US health costs with those of other countries: no need to speculate about the future...
And if revenue collection is already carried out by the IRS, that's an efficiency arguing in favor of a public system: we'll have the IRS no matter what.

"Can anyone seriously believe that private health insurance is better than public insurance at containing overall costs?"

Can anyone believe it is not? Public insurance rations much more than the system we have now.

American medical treatment costs the most because we deliver the best care in the world and we develop most of the new technologies.

When we go socialist who are we going to free load off of, as the world currently does of us?
Figure that out before leap into any new system.

"American medical treatment costs the most because we deliver the best care in the world and we develop most of the new technologies."

Sorry. I am one of those docs supposedly delivering the best care in the world. We are one of the best, and maybe best in some areas, but your broad assertion is not sustainable if you look at existing data.

Steve

If you worry about the long-term insolvency of Medicare -- which is perfectly legitimate -- you should equally worry about skyrocketing private insurance costs. That's an even faster way to go bankrupt. The growth of overall medical costs is a serious problem, but there's not a shred of evidence that private insurance mitigates the problem. Just the opposite.

I recently saw a presentation that identified the five largest problems in healthcare financing, mentioned in passing that national healthcare would solve all of them but that we couldn't do that because we were America, and then outlined a typically Rube Goldberg-esque solution using the private sector. I like Rube Goldberg. He is awesome. So what if all the other industrialized nation have something that does it for half as much with arguably better results? Their systems are not cool! And besides, economic theory states that their bloated government administrative costs are huge, so it should really only cost them 1/3 what our awesome system does. But so what, we are Americans!

el chief:

Don't let the door hit you on the way out.

McArdle: "No, not the automatic denials so many insurers are fond of, and I'm not defending."

The automatic denials from insurance companies are a form of price discrimination. The left should be pleased.

I have anecdotes, not data. And I'm not saying the current US system is a dream, either--my father is a US physician who got fed up with Medicare and moved to Zambia, where he's happily practicing in a missionary hospital.

How Medicare actually works:

1) Granny sees doctor for regular checkup.
2) Doctor sees Granny for five minutes, writes prescriptions for placebos for all the ills she gripes about.
3) Doctor's office bills Medicare for "emergency heart operation for Granny".
4) Doctor's office gets a check for $500 six months later.
5) System crunches on, one more day.

Can anyone believe it is not? Public insurance rations much more than the system we have now.

the only people who can say this are people haven't needed to use their insurance. i deal with denied claims all the time and i work in clinics for people who just can't get private insurance. private companies ration A LOT...ideology can't trump facts.

My first job out of college was for HCFA, the federal agency that oversees Medicare, and was very influential in my current libertarian outlook. It was then general knowledge that every dollar allocated to the Office of Inspector General (OIG), the department of the agency that handles fraud, resulted in $10 in savings. Yet, every year, their budget was cut. The funding for HCFA and OIG is from the general fund and is "administrative expense". Claims are paid from the "trust fund" and are medical expenses. Cutting the general fund helped to balance the budget. Payments from the "trust fund" were not considered manageable. I'm not sure if this changed, but at that time, there was huge incentive to let money be wasted. Part of the administrative expense of insurers is to ensure that we don't pay doctors to enter nursing homes and give every patient cataract surgery, whether they need it or not. There were many instances of fraud that were sickening. Low administrative expense is not necessarily good.

EDUCATION
Ph.D. Economics, University of Maryland at College Park, 2009
M.A. Economics, University of Maryland at College Park, 2008
M.P.P Gerald R. Ford School of Public Policy at the University of Michigan, 2001
B.A. Political Science, cum laude, University of Michigan, 2000

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