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Tilting at Windmills

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May 7, 2007
By: Kevin Drum

A WEE TEST OF THE FREE MARKET IN HEALTHCARE....As part of the 2003 Medicare prescription drug bill, Republicans expanded the Medicare+Choice program into something called Medicare Advantage. This was all part of an effort to get the free market involved in Medicare, but since it turned out the free market wasn't very interested, Republicans did what they usually do in such circumstances: they turned on the corporate welfare spigot. In this case, it took the form of bribing insurance companies to participate by paying them more for the same services than Medicare pays directly to doctors under traditional Medicare. The New York Times reports:

Federal officials said that the fastest-growing type of Medicare Advantage plan generally does not coordinate care, does not save money for Medicare and has been at the center of marketing abuses.

These "private fee-for-service plans" allow patients to go to any doctor or hospital that will provide care on terms set by the insurer. In most cases, no one manages the care. And some patients have found that they have less access to care, because their doctors refuse to take patients in private fee-for-service plans.

Moreover, those plans may be more expensive than traditional Medicare for some patients, because the co-payments for some services may be higher. The Medicare Payment Advisory Commission says that the cost to the government is also higher because it pays the private fee-for-service plans, on average, 19 percent more than the cost of traditional Medicare.

Richard S. Foster, chief actuary for the Medicare program, said "the additional payments to Medicare Advantage plans, above and beyond the costs" of traditional Medicare, were causing higher premiums for all beneficiaries and speeding the depletion of the Hospital Insurance Trust Fund for Medicare.

Private insurance carriers charge more than Medicare to provide medical services because, duh, they're a middleman and they have to make a profit. But private carriers, by movement conservative definition, must be better than any government program, so we have to find a way to get them involved. How? By paying them 19% more! So they can provide poorer service! And rip off vulnerable elderly patients (read the story for details)! And deplete the Medicare trust fund even faster than before!

Your Republican Congress at work. No wonder these guys got thrown out.

Kevin Drum 12:26 AM Permalink | Trackbacks | Comments (53)

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Comments

I didn't read any of this, but had just decided that from now on, when anyone says "free market" I'm going to say "Chinese feedstock".

So, Chinese feedstock.

Posted by: Mr. G on May 7, 2007 at 1:30 AM | PERMALINK

Your Republican Congress at work. No wonder these guys got thrown out.

But they really were at work, and did a heck of a job at that. The whole thing was a confidence game, from start to finish. Anyone who thinks otherwise is a fool or tool.

Posted by: Chukuriuk on May 7, 2007 at 1:38 AM | PERMALINK

Let's get the free market out of medical care so we can enjoy the lobbying, bribery, corruption, waste and fraud characteristic of "pure" government programs.

Posted by: harold on May 7, 2007 at 1:44 AM | PERMALINK

We're still in mid throw. Perhaps the Medicare Advantage program will sling them a little further.

Posted by: parrot on May 7, 2007 at 1:47 AM | PERMALINK

Let's get the free market out of medical care so we can enjoy the lobbying, bribery, corruption, waste and fraud characteristic of "pure" government programs.
Posted by: harold on May 7, 2007 at 1:44 AM

Okay, I'll bite, Harry: are you a tool or a fool?

Posted by: Chukuriuk on May 7, 2007 at 1:50 AM | PERMALINK

The GOP proves (again and again) that you shouldn't put people in charge of something they don't believe in.

On the other hand, this sets an interesting precedent. I wonder if I could get myself elected Pope?

Posted by: craigie on May 7, 2007 at 2:02 AM | PERMALINK

Your Republican Congress at work. No wonder these guys got thrown out.

Nitpick: Kevin, the Republicans got "thrown out" primarily because of Iraq (Democrats didn't make the case, Iraq made its own case) and that margin is razor thin in the Senate.

As for this story - no one knows about it or ever will (maybe 5% of the population at best). And by the middle of the week half of your readers here won't even remember the salient details of this article well enough to repeat them accurately to their friends.

We have the Democrats and their unfathomable and endless incompetence to thank. The Democrats continue to be completely and totally incapable of making any political hay out of anything. Latching on to the US attorney scandal is fine as a sideshow if it results in grounds for criminal charges, but it doesn't resonate with your average voter.

If Democrats want to get anywhere they need to investigate the Republicans for lying about WMDs because it's a three-fer: it brings up Iraq (which is bad for Republicans), it establishes Republicans as liars (bad for Republicans), and helps exonerate Dems for voting for the war because they were lied to.

Or remind people about Katrina: it shows this administration doesn't care about homeland defense, is incapable of responding to disasters, puts incompetents in charge of the most important areas of our government, the reconstruction is languishing and rife with corruption, and the administration couldn't even perform the most remedial task of collecting the foreign aid pledged to New Orleans (to the tune of nearly $900 million dollars).

Dare the DNC to say it: the Bush administration has proven itself to be far less competent caretakers of New Orleans than the French. Oh, but the DNC won't - they're still struggling and on the defense about stupid things like Pelosi's trip to Syria.

Here's a word the DNC should start using: treason.

Hell, Republicans have been throwing that term around with all the care of drunk frat boys tossing Mardi Gras beads (hey, look at that, I mentioned New Orleans again...) WHY THE F*** ARE DEMOCRATS SO INCOMPETENT!?!?

No, seriously. This administration -- with the full and willing participation of the GOP controlled house and senate -- has perpetrated more crimes, more scandals, more lies, more screw ups than perhaps the last 20 presidents combined. And yet the Democrats are still on the defensive and are almost completely incapable of mounting a real offense, yet alone accurately branding the GOP for the bad deeds they have done.

Thanks for the article. It's a great rundown of yet another major outrage that the Democrats will do absolutely nothing about.

Posted by: Augustus on May 7, 2007 at 2:04 AM | PERMALINK

harlold: free market

Chinese feedstock.

Posted by: Mr. G on May 7, 2007 at 2:06 AM | PERMALINK

Okay, I'll bite

If you think the military-industrial complex is something, wait until you see the medical-industrial complex.

It's amazing how, in the face of years of history, some people think that once the government runs something, it's going to be a model of efficiency and honesty. The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse.

Posted by: harold on May 7, 2007 at 2:21 AM | PERMALINK

For some reason, this article (Kevin's) is running in Google News.

Posted by: John dh on May 7, 2007 at 2:23 AM | PERMALINK

I'd still rather the government run health care, along the lines of the VA system, for the simple reason that in theory government can be made more transparent. Try getting a private health plan to open their books, reveal their internal processes, and so on. Fat chance. I'll settle for government imperfection on the simple grounds that we own it and can make it work better if it fails.

My theory is that the Republican nutjobs (a small minority, one hopes) are hell bent on finishing Reagan's efforts to bankrupt the US into being unable to provide social programs. Depleting the Medicare reserves by overpaying private insurers sounds like a wonderful and ingenious way to do so.

Think about how many trillions we are in debt after almost 30 years of Republican ascendancy. How much more debt before the government fails as intended?

Posted by: Fred on May 7, 2007 at 2:30 AM | PERMALINK

Mr. G:

You think if the government ran the pet food industry they wouldn't use cheap ingredients?

You might want to look around at the hundreds of things you buy and use from the private sector that work just fine. Then check out the countries where the government runs all the industries, and see what's on their grocery shelves. If anything.

Posted by: harold on May 7, 2007 at 2:34 AM | PERMALINK

Chukuriuk: "Okay, I'll bite, Harry: are you a tool or a fool?"

When it comes to 21st century Republicans, the two are hardly mutually exclusive.

Posted by: Donald from Hawaii on May 7, 2007 at 3:35 AM | PERMALINK

The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse.

So THAT'S why it's so much cheaper and better than private health insurance! Only 1 out of 7, rather than 2 out of 7. (Though of course what Medicare calls "fraud" is sometimes called "profit" by private insurers.)

Posted by: mattsteinglass on May 7, 2007 at 3:50 AM | PERMALINK

harold: What would fix the problem with Chinese feedstock, not just in pet fodd, but in pharmaceuticals, etc?

Free market, like they have there?

Government regulation on the part of the Chinese or the U.S. (perish the thought!)?

What?

Oh, yeah. Since I mentioned 'free market", let me just say "Chinese feedstock".

Posted by: Mr. G on May 7, 2007 at 4:15 AM | PERMALINK

I used to work measuring perfromance in a large corporation against KPI's. People who claim that the governmant cannot run things efficiently always throw up apples to oranges comparisons like "look at China".

(This makes as much sense as comparing car production in Japan to the quality of cakes in Austria.)

So here is a simple stupid question which could end this argument once and for all.

Can any of the whack-jobs like Harold, Americ Chicken squawk, AI, Eggy-fart please provide metrics that show on an apples to apples basis that:

The US Civil Service cannot:
1. Run a medical operation as efficiently as the private sector in terms of:
A) Patients seen.
B) Waiting lists.
C) Patients rejected.
D) Cost of treatment per patient or per sympton treated.

I mean if you can provide absolute metrics that shows US Public sector treatment as being inferior at the same cost per patient then you've got a slam-dunk argument.

Of course if you can't then you are just talking out of your arses.

If the Chief Actuary of Medicare is prepared to prove this shouldn't you be expected to also or are you just a waste of space?

Posted by: Bad Rabbit on May 7, 2007 at 4:27 AM | PERMALINK

The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse.

As opposed to 3 out of 7 in your private sector going to paperwork. IIRC, something like 7 or 8% of your GNP goes towards this (as opp. to 1 or 2 % in countries with government-set insurance). I'd call this waste (though I'm guessing the CEO's with their hands in this pie will loudly disagree).

Simple question. What percentage of non-Yanks want to switch to the Yank system? I think you'd be hard, hard pressed to find a country where the percentage was above the level of the crank vote.

Your vaunted 'private' system? It's broke. It don't work. So you try to boogey-man the alternative... But how do you explain away the fact that almost all of us who live day-in-day-out with your boogey-man have come to love him?

Posted by: snicker-snack on May 7, 2007 at 5:02 AM | PERMALINK

By the GOP logic, The University of Phoenix would be superior to The University of Chicago.

Posted by: jimbo on May 7, 2007 at 6:20 AM | PERMALINK

The GOP glossary:

Free market = corporate welfare
Fair and Balanced = my opinion only
Class war = preventing class war on the poor

Any more?

Posted by: joe on May 7, 2007 at 6:49 AM | PERMALINK

My mom (who lives in a small rural Pa. town) told me a couple of weeks ago that some slick type was in town trying to sell Medicare Advantage. I did about 10 minutes of googling and told her to stay away from it.

Posted by: fuzzy on May 7, 2007 at 6:56 AM | PERMALINK

If you don't like it, Kevin, learn French and move to Canada - and hope that when you get a fatal disease that you go fairly quick and painlessly. Because America has the best medical system in the world, cerainly better than any socialist plan.

Even the French are seeing the light. They just elected a conservative president.

Posted by: Al on May 7, 2007 at 7:16 AM | PERMALINK

By the GOP logic, The University of Phoenix would be superior to The University of Chicago.

Ah yes... Chicago. Take Leo Strauss. Take Allan Bloom. Take Talcott Parsons. Take Milton Friedman. Please, someone take them (apologies to Henny Youngman and to my U of C grad friends; yes, it's a very impressive school - but with this weird ability to attract authority loving intellectuals).

Posted by: snicker-snack on May 7, 2007 at 7:27 AM | PERMALINK

Al,

Boo!!

Posted by: The Stalking Spectre of Creeping Socialism on May 7, 2007 at 7:29 AM | PERMALINK

Even the French are seeing the light. They just elected a conservative president.

One tasked by Jean Average with keeping all his sweet, sweet socialist goodies out of swarthy hands.

Anybody who thinks Nicholas Sarkozy was chosen because of his amazing resemblance to Milton Freedman needs to choose their mushrooms more carefully.

Posted by: Davis X. Machina on May 7, 2007 at 8:19 AM | PERMALINK

craigie wrote: The GOP proves (again and again) that you shouldn't put people in charge of something they don't believe in.

As P.J. O'Rourke wrote -- back in the '80s, yet! -- Republicans preach that government doesn't work, then get elected and prove it.

Posted by: Gregory on May 7, 2007 at 8:31 AM | PERMALINK

"This was all part of an effort to get the free market involved in Medicare, but since it turned out the free market wasn't very interested, Republicans did what they usually do in such circumstances: they turned on the corporate welfare spigot."

I believe you've put the cart before the horse. The goal wasn't to get the free market involved, the goal was to turn on the corporate welfare spigot.

Posted by: larry birnbaum on May 7, 2007 at 8:43 AM | PERMALINK

You can't be bright--and be a Republican. You can be cunning--but that only gets you so far--it let's you get away with stealing elections and bamboozling the rubes. But genuine policy formation process requires true intellegence, actual knowledge, and thinking in terms of whole systems and total cost of ownership.

Posted by: c4logic on May 7, 2007 at 9:06 AM | PERMALINK

The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse.

How many private insurance dollars are spent on
fraud and abuse ?

Posted by: Stephen on May 7, 2007 at 9:07 AM | PERMALINK

Let's get the free market out of medical care so we can enjoy the lobbying, bribery, corruption, waste and fraud characteristic of "pure" government programs

Because there isn't any "lobbying, bribery, corruption, waste and fraud" in private insurance prograns ???

Posted by: Stephen on May 7, 2007 at 9:09 AM | PERMALINK

Stephen: Because there isn't any "lobbying, bribery, corruption, waste and fraud" in private insurance prograns ???

Don't bother pointing out the obvious to harold, Stephen.

We all know that conservative belief in the free market is just that, faith-based analysis that ignores fact and logic.

The free market is free of corruption, bribery, criminality, waste, fraud, and inefficiency, because conservatives believe it to be so.

And anyone who thinks differently is anti-American, anti-Christian, anti-God, anti-freedom, and a pinkie, communist, liberal negative naboob.

Posted by: anonymous on May 7, 2007 at 9:16 AM | PERMALINK

Medicare - is one of the best things (and best working systems) in America. I work with poor people with multiple health problems - it works, and it is free (or almost free).

Posted by: nm on May 7, 2007 at 9:41 AM | PERMALINK

New Political Animal readers, check out my blog.

Posted by: Swan on May 7, 2007 at 9:45 AM | PERMALINK

"The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse."

Funny, that line. The fraudsters are largely private enterprise. Republicans think entitlements are to be pillaged so they can point out they are prone to fraud and abuse.

Posted by: Nat on May 7, 2007 at 9:57 AM | PERMALINK

Al,

Chirac was also a Conservative. Support for Bush does not a conservative make. He's poison, and watch how quickly Sarkozy distances himself from W. I wouldn't expect an influx of French troops to Iraq anytime soon.

Posted by: Everblue Stater on May 7, 2007 at 11:14 AM | PERMALINK

We all know that conservative belief in the free market is just that, faith-based analysis that ignores fact and logic.

You can't refute a theology. That's been achieved, historically, only by persecution, or an even better fairy tale...

Posted by: Davis X. Machina on May 7, 2007 at 11:54 AM | PERMALINK

Let's get the free market out of medical care so we can enjoy the lobbying, bribery, corruption, waste and fraud characteristic of "pure" government programs.

Here's a radical thought. We provide oversight, and then harshly punish those who corrupt and defraud the Government.

Posted by: AkaDad on May 7, 2007 at 11:59 AM | PERMALINK

"fastest growing" is such a misleading stat, isn't it?

What if 80% of the people are enrolled in more established types of plans (POS/PPO) that are not run as the one described? But the one described has 10 people in it and now it has 100 people. It's still the "fastest growing" plan, right? Big woop.

They may be right or wrong, but I need a more compelling stat than that.

Posted by: DK on May 7, 2007 at 12:13 PM | PERMALINK

Got to say that with the Bush naming convention, it is most likely that the new scheme is a Medicare Disadvantage.

Posted by: Scorpio on May 7, 2007 at 12:17 PM | PERMALINK

Does opposition to stem cell research ring any bells?

Posted by: scienceguy on May 7, 2007 at 1:28 PM | PERMALINK

Augustus is disappointed with the Democrats, and asks "WHY"?

A big reason is that the Party doesn't have enough people like Augustus. Seriously. Here in New Mexico, an activist group got started shortly after the 2004 election, and met right down the street from where I live. I attended several meetings before dropping out.

Since that time, this group has pushed through legislation that got rid of New Mexico's electronic DRE voting machines and replaced them with paper ballots in time for the 2006 election, and just last month TOOK OVER THE STATE DEMOCRATIC PARTY.

As Americans, we possess the inalienable right to sit around at our keyboards and gripe. But we also have the right to assemble, to organize, and the right (some might say "duty") to participate in our democratic (and Democratic) organizations.

You don't approve of the current Democrats. A lot of people agree with you. Maybe you guys would do a better job in the party, and in office. But you'll never know unless you try.

As Al Gore says, "Political will is a renewable resource."

Posted by: Zandru on May 7, 2007 at 1:30 PM | PERMALINK

I swear, Democratic candidates need to just memorize these concise, crystal clear, vote winning posts from Drum, and repeat, repeat, repeat, repeat.

Maybe swap in something else for the "duh," just to sound more presidential.

Posted by: ferd on May 7, 2007 at 2:26 PM | PERMALINK

No wonder these guys got thrown out.

So tell us all the good things that the Democrats have done this year. You probably want to omit Pelosi's trip to Syria and "the road to peace goes through Damascus." What's the latest on the investigation into the Plame/Libby affair? How's the clean edge act progressing? How about the Democratic plan on immigration reform, which rather famously passed the Senate and had presidential backing? They have taken as many vacations as Bush, and with Memorial Day approaching, they'll probably disappear from Washington soon altoghether.

Posted by: MatthewRmarler on May 7, 2007 at 2:26 PM | PERMALINK

But, to be fair, they have held the majority for only a little longer than the "surge" has been in effect. We should give them a few more months before scoring their success or failure.

Posted by: MatthewRmarler on May 7, 2007 at 3:44 PM | PERMALINK

You probably want to omit Pelosi's trip to Syria and "the road to peace goes through Damascus."

Why omit a bipartisan trip that included Republican legislators that even the Bush administration now concedes was a perfectly fine thing for her to do? I think we need to continue talking about how Republicans looked like fools for freaking out about Pelosi's innocuous trip.

What's the latest on the investigation into the Plame/Libby affair?

Lewis "Scooter" Libby was convicted of perjury for lying to investigators and is currently appealing his 5-7 year sentence. Did you miss that on the news? It was pretty big a few months ago.

Really, if you can't keep up on current events, you can't expect people to explain every little thing to you to get you up to date. Maybe hit Yahoo! News every couple of days just to see what's new so you have talking points that weren't discredited four months ago.

Posted by: Mnemosyne on May 7, 2007 at 4:58 PM | PERMALINK

Did no one read the NY Times article? In nearly 40 paragraphs the reporter never mentioned the 2003 Republican Medicare bill which provides a subsidy to the private insurance companies selling the policies. The only law mentioned was the 1997 act which authorized the Advantage type plans.
In the past couple of years, many retirees have been placed in these plans without their consent by their former employers such as the Big 3 auto manufacturers. Their only recourse is to forgo their negotiated benefits and purchase supplemental insurance on their own.

Posted by: Basswood on May 7, 2007 at 5:19 PM | PERMALINK

mnemosyne: Lewis "Scooter" Libby was convicted of perjury for lying to investigators and is currently appealing his 5-7 year sentence.

Congress opened an investigation, made a couple headlines, and then dropped the investigation. Hence my question. You must have missed this, despite its being in the news.

Why omit a bipartisan trip that included Republican legislators that even the Bush administration now concedes was a perfectly fine thing for her to do?

There was nothing wrong with her trip. The problem was her public commnetary, such as the line that I quoted.

Posted by: MatthewRmarler on May 7, 2007 at 7:08 PM | PERMALINK

"It's amazing how, in the face of years of history, some people think that once the government runs something, it's going to be a model of efficiency and honesty."

Actually, I'm not aware of anyone who thinks this. This is just the usual strawman argument from someone who doesn't have a case to make.

"The GAO estimates that 1 out of every 7 Medicare dollars is lost to fraud or abuse."

The estimate I've seen is 1 dollar out of 10. The estimate for fraud, abuse, and waste in the private insurance/health care industry? Wait for it ... 1 dollar out of 10.

"It's amazing how, in the face of years of history, some people think that once the 'free market' runs something, it's going to be a model of efficiency and honesty."

Posted by: PaulB on May 7, 2007 at 7:15 PM | PERMALINK

By the way, that figure for the private health care/insurance industry does not include things like profits, executive compensation, advertising costs, and the like.

Posted by: PaulB on May 7, 2007 at 7:18 PM | PERMALINK

"By the GOP logic, The University of Phoenix would be superior to The University of Chicago."

And we'd all be contracting with private police and fire agencies.

Posted by: PaulB on May 7, 2007 at 7:19 PM | PERMALINK

"So tell us all the good things that the Democrats have done this year."

Aside from the legislation passed during the "first 100 days?" And doing their damnedest to end this ill-advised war? And shining the light on Bush administration malfeasance? I'd say that's sufficient for any Congress. Hell, it already beats the two-year record of the previous Congress.

"You probably want to omit Pelosi's trip to Syria and 'the road to peace goes through Damascus.'"

Why? Not a damn thing wrong with that trip or how it was executed.

"They have taken as many vacations as Bush"

LOL.... You don't get out much, do you? They aren't even close.

"and with Memorial Day approaching, they'll probably disappear from Washington soon altoghether."

As will Bush and the rest of Congress. Did you have a point to make?

Posted by: PaulB on May 7, 2007 at 7:23 PM | PERMALINK

"Congress opened an investigation, made a couple headlines, and then dropped the investigation."

To the best of my knowledge, the investigation is ongoing. Waxman's committee is simply overburdened with the mindboggling number of matters to investigate. If I recall correctly, the investigation was less about Libby than it was about appropriate handling of top secret information.

Posted by: PaulB on May 7, 2007 at 7:26 PM | PERMALINK

"The problem was her public commnetary, such as the line that I quoted."

LOL... That's the best you can do? My goodness, but you're really reaching now.

Posted by: PaulB on May 7, 2007 at 7:28 PM | PERMALINK

Of course if you can't then you are just talking out of your arses.

"Arses" is an ugly word referring parts of the human anatomy and comes from the language of foreign appeasers.

Here in America we call them "Freedom Holes."

Posted by: trex on May 7, 2007 at 11:06 PM | PERMALINK




 

 

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