Sunday, June 19, 2005

The Advantages of Medicare Over Private Health Insurance

In arguing with Paul Krugman's recent call for universal health care, libertarian economist Arnold Kling writes:
There is no actual evidence that the elderly receive better care, or more cost-effective care, or more egalitarian care than people under 65. Particularly interesting is the data that the U.S. spends about 40 percent more per capita on health care for the elderly, just as we spend about 40 percent more per capita on health care for those under 65. Where in the data is the much-vaunted efficiency of Medicare?
Maybe this isn't proof of better care, but one point which contradicts the standard right wing talking points against government plans is the fact that Medicare recipients are more satisfied with their health coverage than those with employer-based health plans.

Arguing over whether there is better care misses the point. The point is that everyone over 65 has coverage--something which certainly cannot be said for those under 65. I wouldn't expect quality of care to differ significantly when comparing Medicare recipients to those under age 65 who have insurance as Medicare recipients generally see the same doctors and go to the same hospitals as those who are covered under 65.

Coverage for people under 65 may be better or worse than for those under 65. This is based upon traditional Medicare (not Medicare HMO's). If you have private insurance, compare this with your policy:
  • No exclusions for preexisting conditions under Medicare.
  • The deductible for many years was only $100, with an increase to $110 this year (thanks to George Bush).
  • Co-pay is 20% of what Medicare allows. (On the average Medicare allows around 60% of typical charges).
  • Some services are covered 100% without any deductible or co-pay, including all lab tests, flu shots, and Pneumovax.
  • No prior authorization is needed for referrals.
  • Some preventative services are covered such as routine mammograms.
  • Medicare recipients can go to virtually any doctor, not a limited list of those who accept a private HMO or PPO.
  • Payment is fee for service, not capitation as in many private plans which result in incentives to deny medical care. (Ironically it is these private plans which are have the deleterious features often attributed to government plans in other countries by conservatives).
I bet that most people with private insurance are paying much more out of pocket than those in Medicare. Also note that supplemental insurance is provided to many people by their previous employer, or is available for purchase, which often covers the above co-pays and deductibles.

There are of course some restrictions on coverage, but in my experience I find Medicare rules to be less of a problem than those of many private plans. Another benefit of Medicare is that there is a meaningful appeals process. While a private plan can arbitrarily deny payment for a variety of reasons, Medicare has fixed rules. When they have denied payment in violation of these rules, I have successfully argued the case before an administrative law judge and received payment on behalf of my patients. On the other hand, I've often had private plans arbitrarily deny payment and had little recourse.

As for efficiency, the overhead of Medicare is typically one-fourth that of private plans. Considering how much more medical care the typical person over sixty-five requires compared to those younger, Medicare sounds more efficient if Kling's figures show comparable spending on those under and over age 65.

Some Democrats have suggested allowing people under 65 to buy into Medicare, considering this more achievable than universal health care. I hope they manage to accomplish this for selfish reasons. Most likely I'd dump my over-priced high-deductible private plan for Medicare.


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