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Making The Case For Private Health Insurance

01/15/13

  05:53:06 pm, by MedBen5   , 348 words,  
Categories: Health Plan Management

Making The Case For Private Health Insurance

Is private health insurance more costly than public health insurance? John Goodman of the National Center for Policy Analysis says the question is “silly", and offers five principles to explain why, which we excerpt below:

Principle 1: There is almost nothing the government can do that the private sector cannot do as well or better. “It is sometimes said that government can produce things at a lower cost because the government doesn’t have to earn a profit. But people who say this never learned the concept of profit in Econ 101. Every hospital, every physician’s office, every other health care business requires capital.”

Principle 2: The few things government can uniquely do can be done without public insurance. “[T]he government doesn’t need to pay provider fees in order to suppress them. It can simply impose price controls on all providers. In fact, if paying providers below-market fees is socially desirable, that is exactly what the government should do for all patients, not just the patients the government happens to insure.”

Principle 3: Most public insurance in this country is actually administered by private insurance companies. “From the beginning, Medicare and Medicaid have been mainly run by private contractors. Who else was going to do it? The government certainly had no experience doing so.”

Principle 4: Most people with public insurance are in private sector health plans. “More than one out of every four Medicare beneficiaries is in a private Medicare Advantage plan and two-thirds of all Medicaid enrollees are in private plans under contract with state governments.”

Principle 5: It is only in the private sector that one finds anyone who has an incentive to lower costs without rationing care. “[T]here are providers who do have an incentive to lower costs and they appear to be responding to those incentives. Surprisingly, they are using some of the techniques the Obama administration says it likes (medical homes, coordinated care, evidence-based medicine, etc.) and that appear not to work well when the government funds pilot programs to try them out.”

Read the rest of John’s comments on his Health Policy Blog.

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