Medicare's share of total spending on health care services for non-institutionalized Medicare enrollees fell from 72.2 percent in 1997 to 50.8 percent in 2005. The remaining 49.2 percent was covered by a combination of private insurance, including employer-sponsored insurance (for employees and retirees) and individually purchased Medigap plans (21.4 percent); beneficiaries' out-of-pocket spending (15.7 percent); and other public plans, including TRICARE, Veterans Health Administration, and Medicaid (12.0 percent). Total spending per capita in 2005 was $12,157, including $6,180 paid by Medicare and $2,603 paid by private insurance.Book also claims that Medicare does not have lower administrative costs than private plans, that it does not use superior bargaining power to reduce costs, and that it is not more innovative than the private sector. Book takes on Jacob Hacker and Paul Krugman, amongst others. I'd be interested to see a detailed rebuttal.
Over time, Medicare's share of health care spending for Medicare beneficiaries has fallen, while private insurance's share has risen. In 1997, Medicare's share was 72.2 percent, and the private-insurance share was 12.2 percent. Total spending per capita in 1997 was $5,438, including $3,925 from Medicare and $662 from private insurance.
While total per-capita health care spending for Medicare enrollees increased by 124 percent from 1997 to 2005 (an average of 10.6 percent per year), spending by the Medicare program increased by only 57.5 percent (5.8 percent per year). Meanwhile, private insurance spending on Medicare beneficiaries increased by 294 percent (18.7 percent per year), and out-of-pocket spending by Medicare beneficiaries increased by 205 percent (15.0 percent per year).
Wednesday, July 29, 2009
According to the Heritage Foundation's Robert A. Book, it's a myth that Medicare controls costs better than private insurers. The slower growth in Medicare spending is due mainly Medicare shifting more costs onto patients and their other insurance sources: