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Contrary to myth, private insurers add to the cost of Medicare. Steering seniors into the private plans just hastens the day Medicare goes broke.
By Jane Bryant Quinn
Newsweek
Dec. 22 issue - On reading the details of the new, $400 billion Medicare drug legislation, I had an epiphany. Here, at last, lay the secret of holding down Medicare costs. Never, ever privatize If you want a health program for seniors that gets the most bang for the buck, let the government run it. (No, please don't kick me. I can explain.)
Most Americans assume that the government wastes money while private business gets the job done for half the price. Well, not always—at least, not if you look at Medicare HMOs, where health care is managed by private insurers. Contrary to myth, the private insurers add to Medicare's costs because they're so heavily subsidized by us taxpayers. Steering seniors into private plans, as the president intends, hastens the day that Medicare goes broke.
As medical providers, Medicare managed-care plans work just fine. But they cost more to operate. In traditional Medicare, which pays doctors and hospitals for services, overhead runs at a superlow 2 percent, leaving 98 cents out of every dollar for patient care. By contrast, publicly traded HMOs show an average overhead of up to 16 percent, due to such things as administrative costs, sales and advertising, taxes, profits and the dividends paid to shareholders, says Brian Biles, a professor of health policy at George Washington University. In many cases, HMOs also pay more to doctors and hospitals than traditional Medicare does. After all costs, they spend only 76 cents of every dollar on care.<snip> more.......
http://msnbc.msn.com/id/3704899/