Dean Baker: If Private Insurers Compete with Government, They'll Lose

[marmar]

Published on Tuesday, March 10, 2009 by CommonDreams.org

If Private Insurers Compete with Government, They'll Lose
Competing Views of Government: Universal Medicare or Government-Protected Insurance Companies

by Dean Baker


We all know that people have different ideologies about the proper role of government. Some people, who tend to be left of center, think that the government's role is to try to promote the general good, by providing basic services, protecting the poor and the sick, and ensuring a well-working economy. On the other hand, there are others, who usually place themselves right of center, who believe that the proper role of government is to redistribute as much income as possible to the wealthy.

These competing views of government are coming to a head in the debate over national health care reform. Those who think that the role of government is to serve the public good are likely to favor some form of universal Medicare. Such a system would almost certainly save a huge amount in administrative costs at the level of insurers, providers and government oversight.

Private insurers spend more than 15 percent of the money they collect in premiums on administrative costs. By contrast, Medicare spends about 2 percent. Part of the insurers' administrative expenses go toward marketing - an expense that would be unnecessary in a universal Medicare system.

The other major factor driving administrative costs with private insurers is associated with their efforts to game the system. Gaming is the best way to make profits in the current system. If insurers can find effective mechanisms for either keeping sick people from being insured, or finding ways to deny coverage for expensive care, then they stand to make large profits. Naturally, profit-maximizing insurers will therefore devote substantial resources to trying to avoid ways to provide health care to people who need it.

At the level of providers, the wide range of divergent forms and policies employs hundreds of thousands of people in administrative positions in hospitals, doctors' offices, nursing homes and other providers. These people are often quite adept at dealing with various insurers, which is an important skill in our current system, but a task that would disappear if we had a universal Medicare system. ..........(more)

The complete piece is at: http://www.commondreams.org/view/2009/03/10

[Triana]

1. Health care should NOT be a for-profit Industry - PERIOD. Until that is dealt with...

...we won't have Health Care in this country - we'll have private insurance companies profiting off the backs of the sick, injured, and dying.

And that is as IMMORAL as it gets.