How Government-Run Health Care Worsened the Coronavirus Crisis

Leftist politicians have spent a great amount of time over the past two months attacking President Trump for his handling of the coronavirus crisis. But instead of reflexively criticizing the administration, those liberals might want to examine how the left’s dream of government-run health care has exacerbated the crisis within the United States.

One of the major causes of the dearth of testing over the past several months: Low payments from Medicare, which led to low payment rates from private insurance plans. It may come as a shock to people like Rep. Alexandria Ocasio-Cortez (D-NY), but guess what labs did when low payments meant they suffered a financial loss for every coronavirus patient tested? They performed fewer tests.

Low Reimbursements Equals Fewer Tests

A recent expose in USA Today highlighted how Medicare “lowballed payments” to labs for coronavirus tests, leading those labs to restrict the number of tests they performed. An executive at one lab, Aaron Domenico, told the paper that “I’m an American first, and if I could do it for cost, I’d be happy to do it for the people at cost.” But Medicare initially reimbursed laboratories only $51 for a coronavirus test, much less than Domenico’s costs of $67 per test.

Paying $51 for a diagnostic test sounds like a lot, but Medicare gives laboratories nearly twice that amount, or approximately $96, to test for the flu. And government bureaucrats setting unrealistically low prices meant that private insurers followed Medicare’s lead. Little wonder that the head of the National Independent Laboratory Association said “a number of labs are holding back” on performing additional tests “because they didn’t want to lose money.”

Thankfully, on April 14 Medicare raised its reimbursement for a coronavirus test from $51 to $100. Unsurprisingly, the number of tests performed daily has roughly doubled since that point. Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said she “recognized that there may have been some issues with reimbursement” discouraging labs from performing coronavirus tests.

Bureaucrats Can’t Micromanage Health Care

Therein lies one of the major problems with government-run health care: The notion that federal bureaucrats can determine the correct price for every prescription drug, laboratory test, physician service, or hospital procedure across the country. Donald Berwick, a former CMS administrator who helped develop Sen. Elizabeth Warren’s single-payer proposal, once said, “I want to see that in the city of San Diego or Seattle there are exactly as many MRI units as needed when operating at full capacity. Not less and not more.”

Berwick’s comments suggest that the federal government can determine the “right” amount of MRI units in each city, and use policy levers to achieve that “correct” outcome. But the coronavirus testing fiasco demonstrates how federal bureaucrats often do a poor job of trying to micromanage health care from Washington. Paying doctors and laboratories too much will encourage over-consumption of care, while paying too little discourages providers from even offering the service.

Low Payments Lead to Job Losses, Too

The problems with coronavirus testing also preview the left’s efforts to expand government-run health care. For instance, Joe Biden’s campaign platform calls for a government-run health plan that “will reduce costs for patients by negotiating lower prices from hospitals and other health care providers.”

But all these proposals—whether they would abolish private insurance outright, as Warren and Sen. Bernie Sanders support, or offer a government-run “option,” as in Biden’s platform—would have the government “negotiate” prices by forcing doctors, nurses, and hospitals to accept less money. By lowering payment levels, those plans would lead to massive job losses—as many as 1.5 million jobs in hospitals alone under a transition to single-payer, according to one estimate in the prestigious Journal of the American Medical Association.

The pay cuts and furloughs affecting many front-line health workers—the health-care sector lost 1.4 million jobs during the month of April—provide a preview of the future. Instead of suffering temporary revenue declines due to the coronavirus pandemic, hospitals and medical practices would face permanent reductions in revenue from lower-paying government programs.

Worse yet, care will suffer when people cannot access the care they need at the paltry prices government programs will pay. While the left lays the coronavirus testing flaws at the feet of President Trump, they should look instead at the government-run programs they support as a major source of the problem. Voters being asked to endorse the movement towards socialism in November should take note as well.

This post was originally published at The Federalist.

Hospitals’ Corona Cash Crunch Shows Problems of Government-Run Care

The coronavirus pandemic has inflicted such vast damage on the American economy that one damaged sector has gone relatively unnoticed. Despite incurring a massive influx of new patients, the hospital industry faces what one executive called a “seismic financial shock” from the virus.

The types of shocks hospitals currently face also illustrate the problems inherent in Democrats’ proposed expansions of government-run health care. Likewise, the pay and benefit cuts and furloughs that some hospitals have enacted in response to these financial shocks provide a potential preview of Democrats’ next government takeover of health care.

Massive Disruptions

The health-care sector faces two unique, virus-related problems. The lockdowns in many states have forced physician offices to close, or scale back services to emergencies only. The cancellation of routine procedures (e.g., dental cleanings, check-ups, etc.) has caused physician income to plummet, just like restaurants and other shuttered businesses.

While many physician practices have seen a dramatic drop-off in patients, hospitals face an influx of cases—but the wrong kind of cases. According data from the Health Care Cost Institute, in 2018 a hospital surgical stay generated an average $43,810 in revenue, while the average non-surgical stay generated only $19,672.

The pandemic has raised hospitals’ costs, as they work to increase bed capacity and obtain additional personal protective equipment for their employees. But as one Dallas-based hospital system noted, coronavirus’ true “seismic financial shock” has come from the cancellations of elective surgeries that “are the cornerstone of our hospital system’s operating model.”

This rapid change in hospitals’ case mix—the type of patient facilities treat—has inflicted great damage. Replacing millions of higher-paying patients with lower-paying ones will rapidly unbalance a hospital’s books. Changing patient demographics, in the form of additional uninsured patients and patients from lower-paying government programs, only compounds hospitals’ financial difficulties.

A Preview of Democrats’ Health Care Future

The shock hospitals face from the rapid change in their case mix previews an expansion of government-run health care. The Medicare Payment Advisory Commission noted in a report released last month that in 2018, hospitals incurred a 9.3 percent loss on their Medicare inpatient admissions. To attempt to offset these losses as hospitals treat coronavirus patients, Section 3710 of the $2 trillion stimulus bill increased Medicare payments for COVID-related treatment by 20 percent.

With respect to the single-payer bill promoted by Sen. Bernie Sanders (I-VT), neither the conservative Mercatus Center nor the liberal Urban Institute assumed the higher reimbursement rates included in the stimulus bill. Mercatus’ $32.6 trillion cost estimate assumed no increase in current Medicare hospital or physician payments, while Urban’s $32 trillion cost estimate assumed a 15 percent increase in hospital payments and no increase in physician payments. Raising Medicare reimbursements to match the 20 percent increase included in the stimulus bill would substantially hike the cost of Sanders’ plan.

Conversely, presumptive Democratic nominee Joe Biden believes his “public option” proposal, by making enrollment in a government plan voluntary, represents much less radical change. But his plan increases the generosity of Obamacare subsidies and repeals current restrictions prohibiting workers with an offer of employer coverage from receiving those subsidies—both of which would siphon patients toward the government plan.

In 2009, the Lewin Group concluded that a government plan open to all workers would result in 119 million Americans dropping their private coverage. Such a massive influx of patients into a lower-paying government system would destabilize hospitals’ finances much the same way as coronavirus.

Economic Cutbacks and Job Losses

Sadly, the coronavirus pandemic has allowed us to see what a rapid influx of lower-paying patients will do to the hospital sector. A few weeks into the crisis, many systems have already resorted to major cost-cutting measures. Tenet Healthcare, which runs 65 hospitals, has postponed 401(k) matches for employees. In Boston, Beth Israel Deaconess has withheld some of emergency room physicians’ accrued pay, a measure sure to harm morale as first responders face long hours and difficult working conditions.

This economic damage from a rapid change in hospitals’ payer mix echoes a study in the Journal of the American Medical Association last spring. That study concluded that a single-payer health care system paying at Medicare rates would reduce hospital revenues by $151 billion annually, resulting in up to 1.5 million job losses for hospitals alone. Robust enrollment in the government-run health plan Biden supports would have only marginally lower effects.

Hospitals, like the rest of our economy, will in time recover from the financial impacts of the coronavirus pandemic. But they may not bounce back quickly, or at all, from another expansion of government-run health care—a fact that hospital workers facing cutbacks, and patients needing care, should take to heart in November.

This post was originally published at The Federalist.

Analyzing the Gimmicks in Warren’s Health Care Plan

Six weeks ago, this publication published “Elizabeth Warren Has a Plan…For Avoiding Your Health Care Questions.” That plan came to fruition last Friday, when Warren released a paper (and two accompanying analyses) claiming that she can fund her single-payer health care program without raising taxes on the middle class.

Both her opponents in the Democratic presidential primary and conservative commentators immediately criticized Warren’s plan for the gimmicks and assumptions used to arrive at her estimate. Her paper claims she can reduce the 10-year cost of single payer—the amount of new federal revenues needed to fund the program, over and above the dollars already spent on health care (e.g., existing federal spending on Medicare, Medicaid, etc.)—from $34 trillion in an October Urban Institute estimate to only $20.5 trillion. On top of this 40 percent reduction in the cost of single payer, Warren claims she can raise the $20.5 trillion without a middle-class tax increase.

Three Reasons You Won’t Keep Your Doctor Under Single Payer

Over Fourth of July week, liberal activists took solace in the results of a poll that they said demonstrates the popularity of a single-payer health system. The survey showed diminished support for a “‘Medicare for All’ [system] if it diminished the role of private insurers.” However, support rose by nearly ten points if pollsters described single payer as a system that “diminished the role of private insurers but allowed you to keep your preferred doctor and hospital.”

Staff for Sen. Bernie Sanders (I-VT) claimed the survey showed single payer “is wildly popular when you tell people what it would actually do.” That claim misses the mark on several levels. First, most individuals wouldn’t consider a 55 percent approval rating—the level of support for a single-payer plan that allows patients to keep their doctors—as evidence of a “wildly popular,” as opposed to mildly popular, policy.

More fundamentally, though, single payer has precious little to do with keeping one’s doctor. For at least three reasons, many patients will lose access to their preferred physicians and hospitals under a single-payer system.

‘Free Care’ Means People Will Demand More

Second, the Sanders legislation would virtually eliminate medical cost-sharing—deductibles, co-payments, and the like. As a result, individuals who currently have health insurance would use more care once it becomes “free.”

In their analysis of single-payer legislation, both the Rand Corporation and the liberal Urban Institute have estimated that induced demand would result in capacity constraints for health care supply. In other words, so many more people would clamor for “free” care that the system would not have enough doctors or facilities to treat them.

More Work, Less Pay

As I noted last year, single-payer supporters operate under the fanciful premise that doctors and hospitals will perform more procedures for less money. Nearly three-quarters of hospitals already lose money on their Medicare patients—and single payer would extend those Medicare reimbursement rates to all patients nationwide. A study earlier this year in the Journal of the American Medical Association (JAMA) concluded that a single-payer system linked to Medicare payment levels would reduce hospitals’ revenue by $151 billion annually.

More Soul-Crushing Regulations

The federal government has already caused physicians countless hours of paperwork and grief. Thanks to requirements regarding electronic health records introduced in President Obama’s “stimulus,” an emergency room physician makes an average of 4,000 clicks in one shift. Rather than practicing their craft and healing patients, physicians have become button-clicking automatons, forced to respond to Washington’s every whim and demand.

The combination of more work, less pay, and added government intrusion under single payer could cause many physicians to leave the profession. For instance, the electronic records requirements caused my mother’s longtime physician to retire—he didn’t want to spend all his time staring at a computer screen (and who can blame him).

Some physicians could instead eschew the single-payer route, offering their services on a cash basis to wealthy patients who can afford to opt-out of the government system (provided the government will permit them to do so). Still other individuals may make alternative career plans, abandoning medicine even before they begin their formal training.

Here’s hoping that the American people never get an opportunity to discover the fanciful nature of Sanders’s promise that you can keep your doctor and hospital under single payer.

This post was originally published at The Federalist.

Democrats Debate How Many Americans to Take Coverage Away From

The first segment of Wednesday evening’s Democratic presidential debate featured the ten candidates largely competing amongst themselves to see who could offer the most far-reaching proposals. In response to a question from the moderators, the candidates debated whether to allow individuals to keep the private insurance plans that most Americans have (and like) currently.

Of the candidates on stage, only New York Mayor Bill de Blasio and Massachusetts Sen. Elizabeth Warren said they wanted to do away with private insurance entirely. But as I explained on Wednesday, the other candidates’ plans for a so-called “public option” could result in two-thirds of those with employer-sponsored coverage losing their insurance. In reality, then, the debate centered not around whether to take away Americans’ current health coverage, but how many would lose their insurance—and how honest Democrats would be with the American people in doing so.

For better or for worse, by saying “I’m with [Sen.] Bernie [Sanders]” on eliminating private coverage, Warren admitted that she’s “got a plan” for taking away Americans’ current insurance. Having seen her fellow senator and presidential candidate Kamala Harris flip-flop on her earlier comments about banning private coverage, Warren went all-in on embracing single-payer insurance, perhaps to siphon away Sanders’ socialist base.

Warren used flimsy reasoning to justify her support for single payer, talking repeatedly about insurers’ profits. As she noted, those profits totaled just over $20 billion last year. But during the last fiscal year, Medicare and Medicaid incurred a combined $84.7 billion in improper payments—payments made in the wrong amount, or outright fraud. With improper payments in government programs totaling nearly four times the amount of insurers’ earnings, a move to single payer would likely end up substituting private-sector profits for increased waste, fraud, and abuse in the government plan.

In rebuttal, Maryland Rep. John Delaney pointed out that Sanders’ bill would pay doctors and hospitals at Medicare reimbursement rates. Because government programs pay medical providers less than the cost of care in many cases—72 percent of hospitals lost money on their Medicare patients in 2017—Delaney persuasively argued that extending those payment rates to all patients could cause many hospitals to close.

Indeed, a study in the Journal of the American Medical Association earlier this year concluded that single payer would reduce hospital payments by more than $150 billion annually. To cope with losses that massive, hospitals could lay off up to 1.5 million workers alone. If extended to doctors’ offices and other medical providers, single payer could put millions of Americans out of work—job losses that would obviously affect access to care.

Ironically, the health care debate soon pivoted to talk about “reproductive health.” Commentators noted that the candidates seemed much more eager to talk about abortion issues—on which they almost all agree—than on single payer. But of course, the two remain linked, as Democrats not only want to have taxpayers fund abortions, but to force doctors and hospitals to perform them.

It says something about the current state of the Democratic Party that forcing doctors to perform abortions, and taking away the coverage of “only” 100 million or so Americans, now represent moderate positions within the party. If Democrats want to win over persuadable swing voters next November, they sure have a funny way of showing it.

This post was originally published at The Federalist.

Did Obamacare Increase the National Death Rate?

Researchers have raised legitimate questions about whether a policy change included in Obamacare actually increased death levels nationwide.

Some may recall that two years ago, liberals engaged in no small amount of hyperbolic rhetoric insisting that repealing Obamacare would kill Americans. They viewed that fact as a virtual certainty, and spent more time arguing over precisely how many individuals would die under the law’s repeal.

About the Readmissions Program

The Obamacare change sparking the policy debate involves the law’s hospital readmissions program. Section 3025(a) of the law required the Department of Health and Human Services to reduce Medicare payments to hospitals with higher-than-average readmission rates. The program began in October 2012, and since October 2014 has reduced payments by 3 percent to hospitals with high readmission rates for three conditions: heart failure, heart attacks, and pneumonia.

The program intended to make hospitals more efficient, and encourage them to treat patients correctly the first time, rather than profiting on poor care by receiving additional payments for “repeat” visitors. However, several data points have called into question the effectiveness of the policy.

First, a recent article in the journal Health Affairs concluded that data proving the readmissions program’s effectiveness “appear to be illusory or overstated.” The study noted that, right before the readmissions program took effect, hospitals could increase the number of diagnoses in claims submitted to Medicare. After controlling for this difference, the Harvard researchers concluded that at least half of the “reduction” in readmissions came due to this change.

By contrast, a December study in the Journal of the American Medical Association found an even darker outcome. The JAMA study, which examined a total of 8.3 million hospitalizations both before and after the readmissions penalties took effect, found that the program “was significantly associated with an increase in 30-day postdischarge mortality after hospitalization for [heart failure] and pneumonia, but not for” heart attacks. This study suggests that, rather than incurring penalties for “excess” readmissions, hospitals instead chose to stop readmitting patients at all—and more patients died as a result.

Is This ‘Alarmist’ Rhetoric?

In a blog post analyzing the debate at the New England Journal of Medicine, former Obama administration budget director Peter Orszag pointed out the two studies arrive at conclusions that are likely mutually contradictory. After all, if the readmissions policy didn’t affect patient outcomes, as the Health Affairs analysis suggests, then it’s hard simultaneously to argue that it also increased patient mortality, as the JAMA paper concludes.

But Orszag also criticizes The New York Times for an “unduly alarmist” op-ed summarizing the JAMA researchers’ results. That article, titled “Did This Health Care Policy Do Harm?” included a subheading noting that “a well-intentioned program created by the Affordable Care Act may have led to patient deaths.”

  • Washington Post: “Repealing the Affordable Care Act Will Kill More than 43,000 People Annually”
  • Chicago Tribune: “Repealing Obamacare Will Kill More than 43,000 People a Year”
  • Vox: “Repealing Obamacare Could Kill More People Each Year than Gun Homicides”

These headlines don’t even take into consideration the comments from people like former Sen. Harry Reid (D-NV), who said, “If you get rid of Obamacare, people are going to die.” Then there were the “analyses” by organizations like the Center for American Progress, helpfully parroted by Sen. Bernie Sanders (I-VT), that said “getting rid of Obamacare is a death sentence.”

Alongside this rhetoric, the supposedly “alarmist” Times article seems tame by comparison. It didn’t use the word “Obamacare” at all, and it couched its conclusions as part of a “complex” and ongoing “debate.” But of course, the contrast between the mild rhetoric regarding hospital readmissions and the sky-is-falling tone surrounding Obamacare repeal has absolutely nothing to do with liberal media bias or anything. Right?

Democrats, the Science Deniers

The Times article concludes by “highlight[ing] a bigger issue: Why are policies that profoundly influence patient care not rigorously studied before widespread rollout?” It’s a good question that Democrats have few answers for.

Liberals like to caricature conservatives as “science deniers,” uninformed troglodytes who can barely stand upright, let alone form coherent policies. But the recent studies regarding Obamacare’s hospital readmissions policy shows that the Obama administration officials who created these policies didn’t have any clue what they were doing—or certainly didn’t know enough to implement a nationwide plan that they knew would work.

Given this implementation failure, and the staggering level of willful ignorance by the technocrats who would micro-manage our health care system, why on earth should we give them even more power, whether through a single-payer system or something very close to it? The very question answers itself.

This post was originally published at The Federalist.

Medicaid as a “Persistently Inferior” Form of Health Coverage

How many individuals would knowingly want to enroll in a form of health coverage with “persistently inferior” outcomes? It’s a good question, as a new study released last week suggests that Medicaid provides those persistently inferior outcomes in the nation’s largest state, raising more questions about the program that represents the bulk of the coverage expansion under Obamacare.

What This Study Looked Into

The study, published in the Journal of the American Medical Association Oncology, used a California data registry to compare cancer survival outcomes across multiple forms of insurance and nearly two decades (1997-2014). The study classified patients based on four forms of insurance: Private coverage; Medicare; other public coverage, about three-quarters (74 percent) of whom were Medicaid patients; and the uninsured.

The study examined five-year cancer survival rates for the five most common cancers in California: breast, prostate, lung, colorectal, and melanoma. As the chart demonstrates, the study looked at survival rates over three separate periods (1997-2002, 2003-2008, and 2009-2014) to determine trends over time.

And The Results Were

Overall, the study found “substantial and persistent disparities in survival for patients with either no or other public insurance compared with private insurance for all 5 of the cancer sites examined.” In general, these disparities increased rather than decreased over time: “with few exceptions, survival disparities were largest among those diagnosed during 2009-2014 relative to the two earlier time periods.”

As to whether patients with Medicaid coverage suffered worse health outcomes than the uninsured, the study provided a decidedly mixed verdict:

Our findings suggest that, while survival falls short of that achieved by patients with private insurance, public insurance such as Medicaid does confer a survival benefit over no insurance for breast, prostate, and lung cancer. However, there was little or no benefit of public insurance over no insurance for colorectal cancer or melanoma, and the lack of improvement in survival is a concern. These findings suggest that the health care provided to publically [sic] insured patients with cancer in California is not adequately meeting their needs.

Overall, the authors concluded that Medicaid provided “persistently inferior survival” outcomes for cancer patients—far from a ringing endorsement.

Why This Medicaid Study Matters

To be fair, the study’s harsh conclusions could stem in part from circumstances determined by the state the researchers studied. While Medicaid programs generally offer physicians low reimbursement rates, California has a reputation for notoriously stingy payments.

That said, the results certainly do not provide much encouragement to the many people newly enrolled in Medicaid as a result of Obamacare. While enrollment in Medicaid has exploded under the law, the program’s health outcomes leave much to be desired. Beneficiaries may sign up for Medicaid because the program offers few out-of-pocket costs to them, but to borrow the old phrase, they may be getting exactly what they paid for.

This post was originally published at The Federalist.

The Problem with Health Care Costs: Third Party Payment

Several recent studies have illustrated the root of health care’s cost problem: In most cases, no one person—let alone one organization—bears sole responsibility for paying the bill. Slowing the growth of health costs may well involve changing those financial incentives—but also requires changing the culture that supports the status quo.

Two examples: A paper by University of Pennsylvania researchers found that 2,300 physicians “submitted claims for service codes that would translate into more than 100 hours per week on services” for Medicare beneficiaries alone; 600 doctors submitted claims totaling more than 168 hours per week—alleging to Medicare that they were working more than 24 hours per day, seven days per week. When it comes to drug costs, another researcher noted an interesting discrepancy: While pharmaceutical prices have increased by double-digit margins the past three years, drug prices net of rebates—that is, drug spending after discounts provided from manufacturers to pharmaceutical benefit managers (PBMs), have grown at much slower rates.

In both cases, the opacity of health care finance—individuals and businesses not knowing what things cost, and benefits not getting passed to consumers—results in hidden gains for intermediaries. In the drug scenario, PBMs negotiate rebates with manufacturers—rebates which they may or may not pass on to insurers, and which insurers may or may not ultimately pass on to consumers. Likewise, the Medicare insurance system—in which most seniors pay little-to-nothing out-of-pocket—can encourage some physicians to “up-code” their claims, knowing their patients will not incur any direct financial penalty.

Additional price transparency would help reveal the pricing disparities created by this “middle-man” issue. For instance, a recent Health Affairs article showed wide variations within states for common medical procedures such as ultrasounds. But transparency alone might not change behavior—or could even push it in the wrong direction.

A JAMA study released last week found that, among patients exposed to a price transparency tool, spending actually increased. As an accompanying editorial noted, “If patients are comparing services based on price for which their share of the cost is $0, the use of a price transparency tool may lead directly to patients selecting the higher-cost options given their likely perception that higher price is a proxy for higher quality and the lack of an incentive to price shop.”

Much of the problem with rising health costs stems from system actors—doctors, insurers, employers, and even patients—all believing that they’re spending other people’s money. Fixing that requires changing incentives so that patients can receive financial benefits from acting as smart purchasers of health care. But it also requires changing the culture, such that patients do not automatically equate the most expensive option as “best.”

This post was originally published at the Wall Street Journal Think Tank blog.

The Siren Song of the Left’s “Competition”

As previously noted, yesterday the Center for American Progress released its platform for altering entitlements.  In fairness, the paper does include some conservative ideas, most notably additional means-testing for Medicare beneficiaries.  But mainly the report demonstrates the fundamental difference between conservatives and liberals: Not only do liberals not believe in markets, they don’t understand (and/or don’t want to understand) how markets actually work.

Take for instance the CAP proposals that will supposedly “enhance competition based on price and quality,” such as the idea to “require health insurance exchanges to offer tiered insurance plans.”  On the face of it, the idea sounds reasonable enough – encourage plans to lower premiums by offering a variety of choices.  But the catch here – as in the rest of the CAP proposals – is that “competition” is government-defined, government-mandated, and government-prescribed.  For instance, if insurers want to offer, and patients want to purchase, less expensive insurance coverage that doesn’t cover all of Obamacare’s mandated benefits – and/or insurance purchased across state lines – both CAP and Obamacare would tax those who gain coverage through such means, because this “competition” is prohibited in liberals’ new health care utopia.

Then there’s the fact that the CAP report also includes numerous other proposals that involve expanding prescription drug price controls in various forms.  One may find it ironic – and ever-so-slightly contradictory – that a report supposedly focused on “enhanc[ing] competition” simultaneously expands government-dictated price controls.

Finally, CAP’s proposals for “competitive bidding” seem little short of comical for their ideologically-based hypocrisy.  The paper states that Congress should “use competitive bidding for Medicare Advantage” – but then just as quickly states that government-run Medicare itself should not compete.   And why doesn’t CAP want government-run Medicare to compete against private plans?  Because a paper co-authored by one of CAP’s own scholars released in September found that in many parts of the country, traditional Medicare can’t compete – it’s far too costly.  The study, outlined in an article in the Journal of the American Medical Association, found that private plans would be 9% cheaper than traditional Medicare under a competitive bidding proposal.

Mind you, the Left has no problems forcing seniors to pay more for private Medicare Advantage coverage, or forcing them out of their plans entirely – Obamacare’s cuts to the program will ensure both outcomes.  But when it comes to competitive bidding for government-run Medicare itself, CAP and others on the Left want nothing to do with such an idea, clinging instead to the shibboleth of government-run Medicare as a first step towards socialized medicine for all.  And that hypocrisy – competition for thee, but not for me – explains in a nutshell why liberal ideas such as those in the CAP paper are both unrealistic and ideologically dangerous.

The Left Defends an Inefficient Medicare System

One well-hidden fact in yesterday’s Kaiser Family Foundation report regarding premium support is this – even the Kaiser Foundation admits that in half the country, private Medicare Advantage plans are more efficient than government-run Medicare.  Take a look at the summary on page 4:

Among beneficiaries in the traditional Medicare program [under a premium support proposal], about half (53%) – 18.5 million beneficiaries – would be expected to pay higher Medicare premiums for coverage under the traditional Medicare program, because about half of beneficiaries in the traditional Medicare program live in counties where traditional Medicare costs were higher than the benchmark.

What that sentence means is that, in about half of the country, seniors private Medicare Advantage plans are cheaper than government-run Medicare.  Under premium support, these seniors would not have to pay more to afford coverage – they could switch to a cheaper private plan, or pay more to maintain their more expensive coverage.

The Kaiser report is far from the only study finding that private plans are more efficient than Medicare in many, if not most, areas of the country.  Whereas the Kaiser report said that Medicare Advantage plans are less costly in about half the country, former Congressional Budget Office Director Alice Rivlin found an even higher number.  Rivlin testified before the Ways and Means Committee in April that “88 percent of Medicare beneficiaries live in areas in which a bidding process [for premium support] would produce a second-lowest bid below the current cost of FFS [traditional] Medicare.”  And a recent article in the Journal of the American Medical Association found that private plans would be 9% cheaper than traditional Medicare under a premium support proposal.  So there is much evidence to suggest that Medicare Advantage plans can provide health care for seniors at lower costs – which would help make Medicare more sustainable over the long term.

Of course, the Left wants nothing to do with such facts, preferring instead to cling to the shibboleth of government-run Medicare as a first step towards socialized medicine for all.  As we noted yesterday, the Kaiser report obscures the reasons for its findings – it trumpets the talking point of higher costs for seniors under premium support, but fails to highlight the fact that in many cases, those higher costs are because government-run Medicare is less efficient than private plans.  Likewise, the Commonwealth Fund, in releasing a study on Medicare Advantage today, claimed that “the Medicare Advantage program must work just as well as traditional Medicare” and that Obamacare “will make that possible.”

The facts suggest that the Medicare Advantage program can actually work better than traditional Medicare – and at lower costs.  The only problem is that the Commonwealth Fund, the Obama Administration, and the “professional left” don’t want to make that possible.  And so the same crowd that complained so loudly about “wasteful overpayments” to private Medicare Advantage plans now wants to keep making wasteful overpayments to government-run Medicare – merely to satisfy their government-centric ideology.