Obamacare’s “public plan” is built on a Medicare myth

posted at 6:11 pm on July 8, 2009 by Karl

When Pres. Obama did his hour-long pitch for a government takeover of the US healthcare system on ABCNews, he offered a standard defense of a government-run insurance plan:

The concern, [Charlie] Gibson articulated, is that such a plan wouldn’t be offered on a level playing field.

The president rebuffed that, arguing that “we can set up a public option where they’re collecting premiums just like any private insurer and doctors can collect rates,” but because the public plan will have lower administrative costs “we can keep them [private insurance companies] honest.”

However, the same day Pres. Obama said that, the Heritage Foundation issued a report by Robert A. Book, Ph.D., showing that:

[O]n a per-person basis Medicare’s administrative costs are actually higher than those of private insurance–this despite the fact that private insurance companies do incur several categories of costs that do not apply to Medicare.

Pointing this out is sufficiently dangerous to the Left that New York Times columnist Paul Krugman attacked Book’s study — or, more accurately, attacked the Heritage Foundation, as ad hominem is twice as good coming from someone who used to advise Enron. Unfortunately for Krugman, the NYT allows comments, thus allowing Book to embarrass Krugman on his own site.

Moreover, Krugman’s attempted attack did not even address the point Book made in passing, but which Merrill Matthews notes with a bit more detail:

Public figures for Medicare’s administrative costs count only what it takes to print reimbursement checks. Normal operating costs — rent, management, health insurance, taxes, capital to start a business and new equipment — which private insurers must include in their administrative costs, are counted elsewhere in the federal budget.

Official Medicare administrative costs simply exclude what most companies must include. No administrative cost savings exist in the public plan, and the true costs will never be counted because they’ll be hidden in the federal budget.

For that matter, as Shikha Dalmia recently pointed out:

[L]ower administrative costs do not necessarily mean greater efficiency. Indeed, the Congressional Budget Office analysis last year chastised Medicare’s lax attitude on this front. “The traditional fee-for-service Medicare program does relatively little to manage benefits, which tends to reduce its administrative costs but may raise its overall spending relative to a more tightly managed approach,” it noted on page 93.

In short, Medicare — our already-existing government-run health insurer — does not have lower adminsitrative costs. That myth is based on fuzzy math, the program’s own laxity, and the fact that it gets to hide its costs elsewhere in the federal budget. Indeed, that last factor is the sort of unfair competition that is essential to the government-run plan envisioned by the Left. Pres. Obama claims he wants to keep private insurers honest, but he’s not being honest himself.

(Thanks to Craig Newmark via Mary Katharine Ham.)

This post was promoted from GreenRoom to HotAir.com.
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Obama claims he wants to keep private insurers honest, but he’s not being honest himself.

Obamacare = MediScam

Loxodonta on July 8, 2009 at 6:14 PM

gotta love that fuzzy math….all warm and snuggly…

cmsinaz on July 8, 2009 at 6:16 PM

Hey I got a little thing called obamacare…..pretty cheap too. Want to buy?
/sarc

FontanaConservative on July 8, 2009 at 6:16 PM

Ogabe has been consistent in lying his azz off.

Bishop on July 8, 2009 at 6:16 PM

The real question is, will ObamaCare cover the treatment for curing ObamaLie?

Upstater85 on July 8, 2009 at 6:20 PM

Judge Napolitano (pardon the spelling) is guest hosting for the Glenn Beck show this week on Fox. The first 20 minutes or so was devoted to all of the fallacies of this health care debacle. He had some very effective guests on the show that are talking about the bad assumptions being made to justify killing our current system, and how the solution is going to kill patients.

It will re-air at 2 AM, set your DVRs.

karenhasfreedom on July 8, 2009 at 6:20 PM

The real question is, will ObamaCare cover the treatment for curing ObamaLie?

Upstater85 on July 8, 2009 at 6:20 PM

LOL

excellent

cmsinaz on July 8, 2009 at 6:23 PM

Fly Swatter in Chief

moonbatkiller on July 8, 2009 at 6:23 PM

“Pres. Obama claims he wants to keep private insurers honest, but he’s not being honest himself.”

What part of the “Chicago Way” didn’t everyone understand before the election………?

Seven Percent Solution on July 8, 2009 at 6:23 PM

In short, Medicare — our already-existing government-run health insurer — does not have lower adminsitrative costs. That myth is based on fuzzy math

Obamacare = Fuzzy Health

Loxodonta on July 8, 2009 at 6:25 PM

Electing God

Obama will decide who is contributing and who is not. Making a contribution could decide health care coverage. They say that is based on organ donation, but most organ donors are already dead. Who gets the credit for the contribution? Or are other “contributions” considered also?

What could go wrong. Rahm Emanuel’s brother is involved (the doctor, not the foul mouthed agent).

Mr. Joe on July 8, 2009 at 6:32 PM

The GAO and even the Congress knows of the runaway fraud and abuse that exists in the current Gov’t health programs (Medicare, VA, etc.). Polish those turds first, Barry.

Patrick S on July 8, 2009 at 6:32 PM

Lawyers are the problem, especially those Lawyers that are elected and sent to Washington.

kirkill on July 8, 2009 at 6:36 PM

Not Barry’s fault. He skipped math classes in order to take Alinsky’s “Class Warefare 101″. Rumor has it that Barney Frank and Chris Dodd were visiting lecturers.

GarandFan on July 8, 2009 at 6:36 PM

[O]n a per-person basis Medicare’s administrative costs are actually higher than those of private insurance–this despite the fact that private insurance companies do incur several categories of costs that do not apply to Medicare.

In other words Medicare’s administrative costs are much higher and I’d be willing to bet the farm (if I owned one) that Medicare’s level of quality when it comes to competently administering such a huge program is much lower than those of a private insurer as was pointed out above:

[L]ower administrative costs do not necessarily mean greater efficiency. Indeed, the Congressional Budget Office analysis last year chastised Medicare’s lax attitude on this front.

Anyone that has ever had to deal with a government entity (as I do in my job quite often) can attest to the above, most government entities are poorly administered and this leads to higher cost. In fact the only government entities I have ever dealt with in my job that are competent are the ones the government decided to have the private sector administe, what does that tell you!

Then you add in the fact entities like Medicare are able to hide certain costs in their budget that private insurers can’t then it’s plain to see Obambi’s claim is not only a myth it’s an outright lie!

Anyone that believes the government can run things better than private industry are:

A – Morons
B – Idiots
C – Brain Dead
D – Fools
E – F-ing Liars
or F – all of the above!

I vote for F, all of the above!

Liberty or Death on July 8, 2009 at 6:37 PM

Bend over, here comes Mediocre care.

kirkill on July 8, 2009 at 6:37 PM

It all comes down to implementing “Quality Of Life” issues by the government to keep the old from health care to prolong their lives.Dead people are no longer a drain on SS.

Jeff from WI on July 8, 2009 at 6:41 PM

Paul “Give me $50,000 and I’ll say anything” Krugman.

Caper29 on July 8, 2009 at 6:47 PM

It all comes down to implementing “Quality Of Life” issues by the government to keep the old from health care to prolong their lives. Dead people are no longer a drain on SS.
Jeff from WI on July 8, 2009 at 6:41 PM

Exactly, I made a similar deduction when answering this comment:

My favorite is his notion that old people need to accept dying. I’m wondering…what’s old? 45, 55, 65, 75? What is the age that the government will consider you old?
RR

ramrants on July 8, 2009 at 4:16 PM

Here was my response to ramrants above comment:

The Obambi gubment has to pay for free healthcare somehow so what better way then to kill off those that are approaching retirement age!

It’s a win-win for the Obambi gubment, just get rid of people before they reach retirement and you can save billions on Medicare, Medicaid, and social security and re-distribute it to the more worthy illegals and the professional gubment assisted welfare class, you know the ones that just take from and don’t put into the system, not to be confused with those pesky and smelly productive citizens that actually pay taxes!

Liberty or Death on July 8, 2009 at 4:25 PM

Scary indeed, has some eerie echos of that movie Logan’s Run…

Liberty or Death on July 8, 2009 at 6:50 PM

Dead people are no longer a drain on SS.

Jeff from WI on July 8, 2009 at 6:41 PM

Plus, they can be taxed!

ROCnPhilly on July 8, 2009 at 6:51 PM

Dead people are no longer a drain on SS.

Jeff from WI on July 8, 2009 at 6:41 PM

Plus, they can be taxed!

ROCnPhilly on July 8, 2009 at 6:51 PM

And vote… getalife is digging up husband Harry Dick as we speak.

Upstater85 on July 8, 2009 at 6:55 PM

medical claims examiner here, 20 yrs in the field, have done medicare, medicaid, self funded unions, indemnity plans, multiple employer trusts (TX version of what the Dems are offering as an option to public plan)

Heritage is right, OMB is wrong..

Medicare costs more to administer

private plans cost a high amount in states like CA and NY that have so many state mandates it requires manual adjudication of every claim….

the numbers of OMB are fudged and do not accurately reflect Claims Administrator and Fiscal Intemediary for Medicare at the states level, administrative costs…

ginaswo on July 8, 2009 at 6:55 PM

What part of the “Chicago Way” didn’t everyone understand before the election………?

Seven Percent Solution on July 8, 2009 at 6:23 PM

The 52%ers just thought it was a tasty way to cook pizza.

AZCoyote on July 8, 2009 at 6:57 PM

jerr, ramrants, liberty or death-
essential reading from a comment at Ace HQ that I put up as post yesterday, Essential, Andrew Malcolm of LATimes is reading the writing on the wall as it were, Rahmbos bother tasked by TOTUS to help develop a new way of doing things in the medical field, has a cunning plan to keep Obot voters alive longer and let Baby Boomers do the Soylent Green thing

here it is

Hilights, or lowlifes as I call them:

Because none of the currently used systems satisfy all ethical requirements for just allocation, we propose an alternative: the complete lives system. This system incorporates five principles: youngest-first, prognosis, save the most lives, lottery, and instrumental value. … When implemented, the complete lives system produces a priority curve on which individuals aged between roughly 15 and 40 years get the most substantial chance, whereas the youngest and oldest people get chances that are attenuated … the complete lives system is least vulnerable to corruption. Age can be established quickly and accurately from identity documents. Prognosis allocation encourages physicians to improve patients’ health, unlike the perverse incentives to sicken patients or misrepresent health that the sickest-first allocation creates.

Under this system, patients would receive scarce care according to the graph shown below.

[Look at that the graph -- it's terrifying]

ginaswo on July 8, 2009 at 6:58 PM

And vote… getalife is digging up husband Harry Dick as we speak.

Upstater85 on July 8, 2009 at 6:55 PM

LMAO! Ah get-a-clue, I really miss clubbing that troll over the head with her idiotic and deluded ideology…good times…good times!

Liberty or Death on July 8, 2009 at 6:59 PM

more joy from the piece:

Emanuel’s CV here pdf , courtesy of Tollhouse, another savvy commenter on BelmontClub. Notice it is LONG on academics and ethics boards and short, in fact almost totally devoid of any actual practice in caregiving. Many scholarly articles, on managed care in cost containment, and a majority of articles on ..surprize EUTHANASIA!! The end of the circle of socialized medicine rationing and early death. Good Gawd, call your critters. Notice on the chart of care under their ’soopergenius’ rationing system below, theBAMABOT voters age group is ensured the most treatment, coinkydink or planning? You make the call, to your CongressCritters!

ginaswo on July 8, 2009 at 7:00 PM

House Majority Leader Steny Hoyer (D-Md.) said Tuesday that the health-care reform bill now pending in Congress would garner very few votes if lawmakers actually had to read the entire bill before voting on it.

“If every member pledged to not vote for it if they hadn’t read it in its entirety, I think we would have very few votes,” Hoyer told CNSNews.com at his regular weekly news conference.

Tazz 55 on July 8, 2009 at 7:01 PM

That myth is based on fuzzy math, the program’s own laxity, and the fact that it gets to hide its costs elsewhere in the federal budget.

doesn’t this explain oboobi’s whole administration and everything it attempts to do?

SHARPTOOTH on July 8, 2009 at 7:02 PM

ginaswo on July 8, 2009 at 6:58 PM

Yep, scary indeed! According to that graph I have about 9 more years and then I’m no longer very useful and not worth saving…I can picture myself at 60 laying on a stretcher with one arm reaching up to the sky screaming…”soylent green is made from people…!!!”

Liberty or Death on July 8, 2009 at 7:07 PM

I am no fan of insurance companies (until it is time to make a claim), but when did it become ok for the President to denigrate an entire industry by saying the public plan is necessary “to keep them honest?” I mean if they were actually dishonest wouldn’t that be a job for the legal system? Doesn’t he have an attorney general with a Justice department? Are they so hated as an industry that it ok to slander them and noone cares?

txmomof6 on July 8, 2009 at 7:20 PM

Oh dear another blue dog state wavering in the face of Teh One armtwisting..we need to call our NE friends and have them call BLanche:

from the Hill

Greg Sargent flags an interesting op-ed that Sen. Blanche Lincoln (D-Ark.) wrote in today’s Arkansas Democrat-Gazette.

Lincoln, who has previously expressed doubts about a public option (opponents call it government-run healthcare) as part of healthcare reform, seems very open to the idea now:

Health care reform must build upon what works and improve inefficiencies. Individuals should be able to choose from a range of quality health insurance plans. Options should include private plans as well as a quality, affordable public plan or non-profit plan that can accomplish the same goals as those of a public plan. [emphasis added]

ginaswo on July 8, 2009 at 7:47 PM

Official Medicare administrative costs simply exclude what most companies must include. No administrative cost savings exist in the public plan, and the true costs will never be counted because they’ll be hidden in the federal budget.

My county, Fairfax VA, has higher taxes than I like. One of the ways it spends the money is on subsidized county gyms. I would rather have the money back, but I use the gyms. A couple of years ago I told people at the gym that it was highly subsidized. Most people refuse to listen to arguments similar to those above. They simply refuse to think. The nominal admission cost of the gyms pays for a few marginal costs like utilities and wages but not some bigger costs.

burt on July 8, 2009 at 8:27 PM

Glad to see someone finally gets it!! Good for you, Karl!!!

Personal experience: My Medicare Advantage Plan, administered by Coventry, gets a fraction (in the range of 80% or so) of what Medicare would spend on me out of my (real) Medicare Premiums plus the (fantasy) Medicare Trust Fund.

For this, Conventry provides Medicare A and Medicare B…PLUS Medicare D (drug) coverage…at NO ADDITIONAL COST!!! And somehow Coventry makes a profit doing this.

This starkly illustrates that it is the PRIVATE INSURANCE INDUSTRY who should be investigating and rooting out the fraud and waste in the GOVERNMENT INSURANCE program….not the other way ’round!!!!

This is why Liberals hate “Medicare Advantage” plans: they starkly and unambiguously expose the big lie about private health insurance costs vs the government’s ability to make anything more efficient!!!

landlines on July 8, 2009 at 8:29 PM

As far as ad hominems go, just hearing that Krugman is in favor of something is now enough to make me suspicious of it.

Count to 10 on July 8, 2009 at 8:47 PM

Great post, Karl.

It’s worth noting that Jacob Hacker, the guy whose plan Obama adopted and who is still the leading figure at HCAN, has been using this line for a couple years at least. There are several videos of him saying it available on You Tube, so I have no doubt that is where Obama got it. But as you say, like everything else about the plan, it’s essentially dishonest.

John on July 8, 2009 at 9:33 PM

ginaswo on July 8, 2009 at 6:58 PM

Remember the junior high teaching of relative values when they made students decide who would be allowed in the life boat of a sinking ship? Well, it has run full circle. Ezekiel Emanuel,MD (Rahm’s brother) must have remembered it too, so now he wants to put it into practice! Remember, paraphrasing Lincoln, the brainwashing of the school room in one generation will be the brainwashing of the government in the next. Both an argument against Obamacare and an argument for home-schooling.

Christian Conservative on July 9, 2009 at 12:00 AM

That myth is based on fuzzy math, the program’s own laxity, and the fact that it gets to hide its costs elsewhere in the federal budget.

Not to mention they get to arbitrarily set the price they will pay, no matter the actual cost to the provider.

xblade on July 9, 2009 at 2:35 AM

Obama claims he wants to keep private insurers honest, but he’s not being honest himself.

We have finally found one area in which Obama is consistent.

That being, his lack of honesty.

MarkTheGreat on July 9, 2009 at 8:52 AM

Slightly off topic: Here is an opinion piece written by a doctor who sees the writing on the wall if ObamaCare is enacted.

http://www.star-telegram.com/242/story/1467465.html

txmomof6 on July 9, 2009 at 11:56 AM

If I have %100 VA disability and complete medical/hospital access at the VA, is there any reason to keep Medicare Part B?

rlwo2008 on July 9, 2009 at 12:56 PM