Levels vs. changes

By email, I received the following reaction to my post on public vs. private health care cost control.

Medicare is less than 50 years old. Per person spending has exceeded Medicare growth for 40 years and still has not approached the per person cost of Medicare OR Medicaid. Do you not find that odd to the point of being an obvious LIE??? Medicare spending per person is more than 25% higher than private health care plans per person spending NOW.  And Medicare has strict and LOW price controls. If 40 years wasn’t enough to equal Medicare OR Medicaid spending per person, why would a decade or a little more be enough.

Oh my goodness!

Whoever wrote the above has a point, one I agree with. Of course per person Medicare spending exceeds that of the private sector. The program serves the elderly and disabled. Commercial market plans serve the non-elderly and, mostly, healthy. No argument there. The spending level of Medicare, per person, is above that of the commercial market. Point granted.

But this has nothing to do with what I wrote. My point was about spending growth, not spending levels. “The rate of growth in per person spending by private health care plans has exceeded that of Medicare for 40 years.” Follow the link.

See the words “rate of growth”? I put them in bold so they stand out. They mean I’m considering how spending changes, not its level. By looking at changes, not levels, one is partially controlling for the differences in the populations the two types of insurance serve. Also, by looking at per person spending growth, one is controlling for the size of the populations. What is not controlled for are differential changes in the Medicare and commercial market populations over time. Maybe the average Medicare beneficiary became more healthy over time than the average person with commercial market coverage. If one wanted to quibble, that’s where to go.

And yet, this is just one piece of evidence in a mountain of others that all point the same direction. For example, “Government payments to private, comprehensive Medicare plans (Medicare Advantage) have been well above the cost of the program’s public option (traditional Medicare) for years.” Perhaps some Medicare Advantage plans in some markets can provide the basic Medicare benefit at a lower cost than Medicare itself, but they provide extra benefits, and we pay more for them.

As I wrote in the piece, people who just believe private plans do it better will make all manner of absurd comments about the evidence. Yet, so far, I’ve not seen them put forth any evidence of their own that shows that private plans control costs better. If I saw any such evidence, I’d post it. I’ve asked for it many times. I’m still waiting.

I advise anyone still uncertain about which sector exerts greater control over costs to read the post carefully. Note that the health care industry itself is not confused about this. Shouldn’t they know? Note also that at the end of the post I have added a link to more evidence. There is also a podcast on this topic. See the podcast archives.

Links to all of this are also found in the FAQ entry.

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