Sanders v. Elmendorf

by Art Woolf

The politician says:

And, whereas:

* Medicare has administrative costs far lower than any private health insurance plan;
* The potential savings on health insurance paperwork, more than $350 billion per year, is enough to provide comprehensive coverage to every uninsured American; [my emphasis]
* Only a single-payer Medicare-for-all plan can realize these enormous savings and provide comprehensive and affordable health care to every citizen.

            ---From Senator Bernard Sanders' petition to Congress advocating a single payer health care plan.

Arguing against the free lunch theory, there's Doug Elmendorf, the head of the Congressional Budget Office, who says rather than lowering health care costs, or the growth in health care costs, the current reform bill (and presumably a single payer system as well) will do just the opposite: 

Asked by Senate Budget Committee Chairman Kent Conrad, D-N.D., if the evolving legislation would bend the cost curve, the budget director responded that — as things stand now — "the curve is being raised."

Explained [CBO Director Doug] Elmendorf: "In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs."

Fundamental health care changes are going to be costly.  By pretending that they're not, those members of Congress who tell us otherwise do the American people a great disservice.

Comments

[greenmtnpunter]

Folks on Fox News seem to say that this thing is DOA- or is about to be stillborn. If ever there was a need for a partial birth abortion, this health care bill is the one exception I will allow. And, of course, it will be the one partial birth abortion Democrats will say is a crime!

[Sheldon Katz]

I wonder where Sanders gets his $350 billion figure, which based on a rough a back of he envelope calculation is about 15 to percent of all annual health care spending. Since state and federal spending accounts for roughly 50 percent of all health care spending, Sanders is saying that the savings are between 30 and 40 percent of private health care spending. Is it credible that administrative costs compose that much of private health care savings? And even if it did, Sanders' statement would be true only if a single payer government program had zero administrative costs.

Now, Sanders says Medicare administrative costs are far lower than private sector plans. How does Medicare do it. Easy. Accounting. A large portion of the cost of administering Medicare are accounted for off Medicare's books. Unlike the tree in the forest, a cost is still a cost even if accounted for off the books.

Finally, the question is not administrative costs, but total costs, and by this measure, Medicare does not do so well. Administrative costs are incurred for a reason -- to guard against fraud, unintentional billing errors, and payment for medically unnecessary services. Low administrative costs do not ensure lower total costs.

By all accounts, Medicare does a horrible job of keeping these costs down. The vast majority of claims are paid without being reviewed by a real person. Just by way of example, one woman, a high school dropout named Rita Campos Ramirez, electronically submitted more than 140,000 fraudulent Medicare claims over a four-year period. She went out and bought a couple condos and a Mercedes. This is what we can look forward to under the single-payer plan being cooked up (without full disclosure) by Sanders, Obama & Co.

Rita Campos Ramirez wannabe's can't wait.

[Mark Shepard]

If the there was any interest toward getting the best service for the best price, the discussion would have never gone toward government-run health care.

However, the present discussion, not unlike the discussion in Vermont that resulted in Catamount Health Care, demonstrates the real interest of those elected is to increase centralized government control over the masses, never mind the dismal results that such governments put upon their populations.

[Timothy Diette]

I agree with most of what has been said, but with too many * to fit in here.

There is some free lunch available in terms of purely wasteful administrative costs from a society level: the portion of administrative costs that are spent to try to only insure healthy customers and money spent to deny claims based on pre-existing conditions. These costs are well documented.

As Mr. Katz points out, some of these administrative costs are efficient from a society level.

The solutions to these do not require any sort of public plan.

To suggest there is no free lunch suggests that the current health care market is efficient. This is not the case.

Again, I am NOT writing in support of what will come out of Congress (an attempt to head off comments).

[Deb Richter]

As a matter of fact the CBO did not score single payer- at least not since 1993 when they concluded that we could cover all Americans with comprehensive benefits without increasing total costs. No, Elmendorf was referring to the House and Senate bills which would add costs to the system.
The $350 billion administrative savings figure is from a study published in the New England Journal of Medicine and inflated to 2008 -(Woolhandler, et al “Costs of Health Administration in the U.S. and Canada,” NEJM 349(8) Sept. 21, 2003)It not only takes into consideration payer administrative costs( which constitute 14% of the potential savings)but also provider administrative costs.The total system administrative costs represent 31% of total spending. Single payer would in fact be the most fiscally conservative approach we could take AND we could cover everyone.

[Ed G. Mann]

Enough of this Jurassic thinking. For all of the socialist health care purveyors, please give me the Article and/or the Amendment to the US Constitution than allows the Government to compete against or take over private enterprise.
I do expect an answer to this question!

The sole exception is the USPS which, even heavily subsidized by the government in getting a toe tag. So much for successful government interface with the private sector.

Private business simply does it better and cheaper or ceases to exist. Creative destruction rids us of the buggy whip companies. Obama is busy rescuing these dinosaurs.

If government could run businesses successfully, explain where the Soviet Union is, as a model and a reality. Other than being a toxic waste dump!

[Richard]

Deb:

"I know not what course others may take; but as for me, give me liberty or give me death!"

- Patrick Henry, March 23, 1775

Single payer is a choice between [false] security and liberty; the latter of which our forefathers died for.

No. Thank you.

[G. Cross]

Ed,
I assume you are talking about private businesses like GM, Chrysler, AIG, BankAmerica etc, etc. They sure did a good job of taking your money and mine in many different ways. Not sure about you, but I certainly didn't get my money's worth. I suppose from your point of view Obama, Sanders, Dean or some other fellow traveler caused the downfall of these private businesses and many more of similar ilk.

[Richard]

G. Cross,

Businesses like GM and Chrysler were brought down with much help from unions and their symbiotic relationship with the likes of Obama, Sanders and Dean. Long term and unrealistic wages, benefits and work rules doomed these companies.

AIG, BankAmerica, etc. would not have occurred without Fannie Mae and Freddie Mac purchasing those packaged securitizations; of which came about through their symbiotic relationship with the likes of Obama, Sanders, Dean, Barney Frank and the failed policy of such laws as the Community Reinvestment Act. The Federal Reserve Bank - another quasi-government entity - aided in all this with unusually too low of interest rates for too long, spawning asset bubbles and speculation in such markets as housing.

Government, its policies and interference in the private sector provided the petri dish for all of this to grow and flourish. And, it wasn't for lack of regulations; it was for lack of competent regulators and their flawed Utopian delusions.

[trice]

G. Cross, that's totally disengenuous. The financial sector woes have been well documented -- just not well publicized by our corrupt media and politicians in bed with Wall Street and ACORN, et al.
GM & Chrysler's woes were a combination of union, government & environmental arm twisting, and corporate complacency.
It isn't just the current crop of politicians that contributed to the economic convulsions in various sectors, but in every case government most certainly is the hammer that their buddies and moneyed special interests use to pound the taxpayers and keep us "in our place", since they know so well what's good for us.
No one has yet to hold up another country's single payer healthcare as the model to emulate. To think our government will do any better is pure fantasy or willful propaganda.

[Daniel Foty]

I see that others have gamely dealt with the nonsense that appeared above. Sadly, arguing with Vermont leftists is intellectually stultifying since it's like shooting fish in a barrel.

I'll just add in a couple of items about how governmentally-enabled do-gooder meddling had a great deal to do with crystallizing the messes in the motor vehicle and financial sectors.

In the auto sector, the damage wrought by the continual CAFE impositions cannot be understated. By trying to force the Big Three to make cars that Washington bureaucrats wanted them to make (at vanishing margins) rather than the vehicles that their customers wanted to buy (and which carried high margins), the profitability of the enterprises was fatally compromised. Among the ultimate absurdities reached were numerous instances where various Big Three automakers had to order their dealerships to suspend sales of their most popular (and profitable) vehicles (mainly pick-ups and SUVs) for several weeks at the end of the year - lest the total sales mix end up violating the CAFE averages and lead to large fines against the firm.

In the financial sector, the meddling do-gooders examined the geographic distribution of mortgage acceptances and refusals and found that - surprise!! - rejection rates were disproportionately higher in economically-disadvantaged areas.... which coincidentally tended to have higher population-percentages of "minorities." Well, for a do-gooder it's an easy exercise to start screaming and waving around bloody shirts - of violations of the Civil Rights Act and (more ominously) imputed actions that could fall under the RICO statutes. Faced with a possibly ruinous prosecutorial assault, most of the financial institutions thus threatened caved - and willfully underwrote loans that no sensible business-person (acting in a fiduciary capacity) ever would have underwritten; Bank of America was particularly affected by this contrived situation. The outcome was predictable.

What is most infuriating about these noxious "professional" do-gooders is that they have managed to inflict themselves onto these economic sectors while themselves bearing no fiduciary responsibilities (or fiduciary accountability). So when things went badly awry for the Big Three automakers, the financial sector, etc., they just walked away whistling and pretended that they had nothing to do with the mess.

If the noxious "professional" do-gooders now inflict themselves onto "health care" the results will soon follow the same path. I'd like to see some of these do-gooders and their "plans" subjected to the same sort of serial scrutiny that many of us are long familiar with - the kind of withering assessments that business plans are (justifably) subjected to by those responsible for such analysis. Both they and their "plans" would wilt to brown at first contact.

[Ed G. Mann]

If we are going to be forced to have Government Health Care, I'll have what Congress voted for themselves. Otherwise, no thanks.

[Mark Shepard]

George,

A good article on the American Automakers plight can be found at http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2009&month=02 if you are interested.

Even so, neither you nor I were ever forced to buy their products. That is a huge difference. Now we are all buying Chevy's whether we like it or not and whether we drive one or not.

[greenmtnpunter]

Sanders voted against his family's participation in the glorious health care plan he says we all so desperately need. All Vermonters should be OUTRAGED that Sanders holds any elected office let alone a U S Senate seat.

[Sheldon Katz]

Dr. Richter touts a study by Dr. Steffi Woolhandler, who, like herself, is a prominent member of the Physicians’ Working Group for Single-Payer National Health Insurance. Woolhandler is hardly an objective observer.

Not surprisingly, then, among other serious methodological flaws that are too esoteric for this forum, Woolhandler relies on government agency data (both U.S. and Canada) that, as noted above, is only as good as the cost accounting used by these agencies. Since agencies often obscure their true costs, the data -- and therefore Woolhandler's study -- are of little value.

Further, Woolhandler does not address the cost of fraud and the like that administrative are incurred to avoid. In our current system, it would be easy to reduce administrative costs to zero, but fraud and the like would skyrocket, leaving total cost far higher. Woolhandler's study is less than worthless -- it is misleading.

At any rate, administrative costs could easily be reduced while at the same time eliminating fraud and other billing errors by replacing third-party payer with pay-for-service. It’s not complex: (i) eliminate the nontaxable status of medical insurance benefits and (ii) allow individuals to buy (catastrophic) medical insurance across state lines. Under the current tax system, individuals through their employers, buy "insurance" -- really prepaid medical care – that covers everything, including routine health maintenance. Every visit to the doctor generates the administrative costs that are under discussion. Tax medical insurance benefits, and allow people to buy insurance across state lines, and they will no longer choose to buy prepaid medical care, with its vast administrative costs. Instead, going to the doctor will be like going to the auto mechanic: you pay at the time of service. With no third party in the middle, there is no unnecessary paperwork and no administrative cost. Stripped of unnecessary administrative costs, catastrophic insurance (true insurance) for significant illnesses and injuries would be easily affordable by everyone.

Eliminating the nontaxable status of employer-provided medical insurance benefits is the only sensible thing in Obama/Sanders care. If we did that, along with breaking down the barrier to buying policies across state lines (so states could not regulate true insurance out of existence) the problem would be solved. We would stop wasting our time talking about a medical care crisis and the need for reform and be able to concentrate on real problems such as the development of nuclear weapons by rogue states like N. Korea and Iran and the spread of tyranny in Latin America by the likes of the Castro Brothers and Hugo Chavez.

[Mark Shepard]

Sheldon,

Can you imagine what an oil change would cost if auto insurance was like our present health insurance? With the government getting deeper into the auto industry, we may soon fine out!

[Ed G. Mann]

Yeah, everyone needs to pay a premium for aromatherapy.