Question

"Medicare increased payments to providers and still managed to keep

overall spending to 7.8 percent in 2001,” said Representative Pete Stark, Democrat of

California. “Meanwhile, private insurance premiums went up 10.5 percent. Given

these results, I cannot understand why Republicans continue to devise plans for

turning Medicare over to private health insurers.”

Can it be possible for total spending by private insurance to go up faster than

spending on public insurance and yet have the private

insurance plan be better?

Explain.

Answer 1

Data collected from the Congressional Budget office (CBO)and the Center For Medicare and Medicaid services(CMS ) point out that private insurance is less efficient than Medicare.This is highly debatable and many do not agree to this.Medicare has controlled cost more efficiently than private insurance.The CBO points out that the rising cost of private insurance will be more than Medicare in the next 30 years.The private insurance will cost 40% more than Medicare in 2022 for a 65 year old person.Medicare has less administrative cost but competition in the private health care system has led to rising cost.Medicare is publicly accountable and so it has the capability to drive system change and control rising cost of healthcare while private insurers lack accountability and their objective is to obtain profit. So Medicare is more efficient than private insurers.Under Medicare patients receive free or subsidised treatment and they only pay the gap between the fees charged by the doctors and the amount paid by Medicare which is $0 in many cases. But in private insurance the patient may get a portion of the cost or at times 100% according to the choice of insurer.The premium is increasing every year in private insurance.Even though Medicare has certain restrictions and there are many benefits of private insurance like no waiting period, can meet doctor of choice,covers mostly all kinds of treatment etc, Medicare is better according to 2002 report by Commonwealth Fund.