One of the things that a lot of people forget to mention in the discussion about McCains "Health Program" is that, by forcing a lot of us into the individual health insurance market, we will lose the advantage that we get in terms of cost of services that our insurer has negotiated with the providers. I'm lucky. I work for a small company, but have great health insurance due to their desire to attract quality employees. It's amazing how much was saved over the "retail" price when I had surgery last year due to the negotiated discounts. I shudder to think what would happen under McCain.

Do these numbers take into account helping insurers with catastrophic care or the effects or regulation, like increasing competition through monopoly control?

Let me repeat what I wrote earlier:

I like Health Affairs a lot. But take a look at the two analyses of the health care proposals. The review of Obama's is written by Joe Antos, a scholar at the American Enterprise Institute, Gail Wilensky, an adviser to the McCain campaign and former official in the Bush I administration, and some guy named Hanns Kuttner who was also, I think, an official in the Bush I White House.

Are you going to get an objective analysis of Obama's plan out of those three? Couldn't Health Affairs find some other analysts?

We need some better use of terms in this discussion.

Cost saving should be about things not done or done with less human effort.

Spending can be reduced in many ways.

On the PBS Frontline special “Sick Around the World” it looked like other countries got most of their savings by squeezing providers which is not some much cost control as putting more of the cost on the providers. Some of which might be achieved by loosening license requirements.

Health Affairs intentionally had conservatives critique Obama's plan and liberals do the honors for McCain's.

Medicare has a hard time controlling costs because they do not control enough of the market in most areas of the country. Many providers have a maximum number of Medicare patients they will see and this number is reduced when there are reductions in reimbursement (actual or with inflation over time).

Ezra,

A few points.

One part of very underdiscussed part of Obama's plan that leads to some of the $2500 in cost savings is federal catastrophic reinsurance. This is really a cost shift-- from premium expenditures to taxpayer expenditures. For those interested in incrementalist approaches to single-payer, this for some reason hasn't gotten sufficient attention. If catastrophic care is de facto being paid for by the federal government in the medium-term, the transition to single-payer seems less drastic. I don't like it, but its there.

On the cost control points.

So far, the economic incentives to cut costs have been outweighed by the political incentives to sustain a permissive medical plan.

Very true. So the questions is when will the equation change? As you have pointed out in a different context, federal government can deficit spend. So if the Democrats' answer to cost control is federal control of health care dollars, it will take longer to reach that point-- its a major reason why a public option is a bad idea with respect to cost control. There are potential benefits to this approach-- but its one that overvalues cost savings due to monopsonistic pricing, and undervalues the government's relative inability to restrict access to "low value" care.

This is not a matter of theory: Wal-Mart, and Canada, and France and Target and the VA health system and many years of capitalism have proven that size can be leveraged to control cost

Again, you're too focused on pricing, when health policy experts agree that increased utilization is the primary driver. Its a continual fundamental flaw in your thinking. Utilization is the primary issue with cost control, not prices.

"Health Affairs intentionally had conservatives critique Obama's plan and liberals do the honors for McCain's."

All the "liberals" are actual academics in the field. I don't consider AEI an academic institution. Wilensky is a real researcher, but also an adviser to McCain's campaign. Don't you see an imbalance there?

Obama's plan would likely cost double or triple the $50-65 B per year he claims (per the Health Affairs articel and analysis by the Tax Policy Institute). If the plan options were modeled on the Federal Employees Plan the difference could be even larger. In turn, this would significantly increase the budget deficit at the same time that Obama would be passing a middle-class tax cut. How are each of these plans even possible?

In Florida, Medicare pays $35.31 for a 15 minute history and physical done by a doctor.

Doctors reimbursements (including overhead) make up only 20% of total healthcare costs. Actual income is only 10%. That means you could slash the incomes of doctors by 50% and healthcare costs would only go down 5%. You need a decrease of at least 35-50% before you approach the levels of spending that other countries have, so where are you gonna get that other 30-45% decrease?

"But as the authors basically admit, Medicare certainly has the capacity to do these things: So far, the economic incentives to cut costs have been outweighed by the political incentives to sustain a permissive medical plan."

This comment so is ignornat of reality. Congress has on multiple occasions through multiple leans made serious efforts to reduce cost and all have failed.

The have reduced provider and hospital reimbursements only to have them revolt so they increased compensation.

To control imaging expenditures they drastically cut reimbursment per test only to see the number of test skyrocket.

The have eliminated coverage for some test and procedures or changed rules for authorizing them only to have providers find a way around them.

Maintain permissive health plan? It didn't even cover drugs until a couple years ago, doesn't cover dental or vision. What's permissive about it besides costing the enrollee next to nothing?

Contrary to your claim Medicare has no ABILITY to contain cost.

wiseone writes, This is really a cost shift-- from premium expenditures to taxpayer expenditures.

This is already happening without any changes by the government. Private enrollment is dropping year after year while the government picks up the slack. As the pool of those enrolled in private insurance shrinks, so does the ability to spread the risk. Price increases, fewer reenroll.

Utilization is the primary issue with cost control, not prices.

Perhaps a solution is to implement policies that increase the resources that are being utilized. There does not appear to be a good reason for health care to be a scarce resource like oil is. Perhaps protectionism for doctors and patent monopolies are a factor for these low supplies.

Also, I would argue that we are utilizing the wrong type of resources. More inexpensive preventative care would reduce the need for expensive procedures later. We could have some sort of credit for those that get regular checkups, with additional credits for those that score well on screenings for waist line, blood pressure, cholesterol, etc. Those that properly manage chronic diseases like diabetes could also get credit. This regular maintenance should decrease utilization of more costly resources like surgeons and operating rooms. It should also lead to better outcomes for every dollar we spend, as patients, consumers and taxpayers.

Nate wrote, Contrary to your claim Medicare has no ABILITY to contain cost.

If I remember correctly, the cost of administrating health insurance in the private sector is skyrocketing. For Medicare, however these costs have been contained.

Meanwhile, efforts to privatize Medicare have been met with failure. Instead of cutting costs, Medicare Advantage has resulted in the expenditure of even more tax payer dollars.

goDems,

Lost me on that claim, cost of administrating private insurance decreased last year, not sure why you would get the crazy notion that it was increasing let alone skyrocketing.

Depending on how you define administrative expense private insurance runs $240-$700 per year. Medicare runs $650 to $1300.

Medicare Advantage covers far more then Medicare, wouldn't you expect it to be more expensive?

nate wrote, Depending on how you define administrative expense

Admin Costs = Total Spending - Dollars spent on providing medical care

I suppose one could argue that expenses related to denying coverage to the insured counts as money spent towards providing medical care, but I would have to disagree with that assessment. If you think that refusing claims is a useful service for addressing over utilization, then I would suggest looking at why health care resources are so limited.

nate wrote, private insurance runs $240-$700 per year. Medicare runs $650 to $1300

I could not find these numbers, but usually overhead is expressed as a percent since program expenses for the elderly are generally higher than the general population. Since the elderly use more health care, one would expect the costs to administer their plans to be higher.

nate wrote, Medicare Advantage covers far more then Medicare, wouldn't you expect it to be more expensive?

Spending more taxpayer money was never the point of MA. It was believed that the private sector could introduce innovations which would reduce the costs over traditional Medicare and that competition could further reduce costs. This idea has so far proven to be wildly off the mark. In 2008 extra payments to the Medicare system due to MA are expected to amount to $8.5 billion (12.4% greater). Unfortunately, despite your claim, these extra costs do not fully translate to additional benefits for enrollees of MA. Also, because of MA, the costs to taxpayers for traditional Medicare beneficiaries are being forced up. I am not sure why you would support spending more taxpayer money in this way. It seems conservatives wish to dramatically increase the costs for Medicare to the point where it self destructs. In the long run that may prove to be an effective means for dissolving this program altogether, but until then the tax payer is squeezed unnecessarily.