Monday, October 29, 2012


Paul Krugman discusses the success story of MedicAid:

So Medicaid does a vast amount of good. But at what cost? There’s a widespread perception, gleefully fed by right-wing politicians and propagandists, that Medicaid has “runaway” costs. But the truth is just the opposite. While costs grew rapidly in 2009-10, as a depressed economy made more Americans eligible for the program, the longer-term reality is that Medicaid is significantly better at controlling costs than the rest of our health care system.

How much better? According to the best available estimates, the average cost of health care for adult Medicaid recipients is about 20 percent less than it would be if they had private insurance. The gap for children is even larger.

And the gap has been widening over time: Medicaid costs have consistently risen a bit less rapidly than Medicare costs, and much less rapidly than premiums on private insurance.

How does Medicaid achieve these lower costs? Partly by having much lower administrative costs than private insurers. It’s always worth remembering that when it comes to health care, it’s the private sector, not government programs, that suffers from stifling, costly bureaucracy.

Also, Medicaid is much more effective at bargaining with the medical-industrial complex.
I often wonder if the hatred towards programs like MedicAid and Social Security is that they exist as counter-examples to current ideology that the free market is always the best solution.  If so, I think that would be a massive mistake.  The traditional of American Pragmatism has been to do what works regardless of the source and that has been a huge relative advantage.

If anything, we should be expanding MedicAid, not shrinking it. 

1 comment:

  1. There are quite a few good reasons for a single payer health insurance system. Economies of scale is one.

    Another, which is overlooked, is that it wouldn't tie insurance to a particular employer. I would think a lot of employers who would like to get out of proposition of providing insurance because of the resources that it demands: money and time. Also, if we are so interested in the small business person, one of the big downsides to starting a new business, not having health insurance, would be removed.