Medicare and facts

John Goodman and Thomas Saving have published a post at Health Affairs that aims to dismantle the notion that Medicare spending grows more slowly than private sector health spending. My comments:

  1. The authors claim that private costs are overstated because cost sharing has gone down in proportional terms. But the trend in cost sharing is, itself, an effect of the private system. Also, cost sharing has gone up in absolute terms.
  2. It seems as if Goodman and Saving missed my post about the CBO figures they use. The CBO doesn’t even agree with how they’re using them.
  3. Except during the late 1980s, the vast majority of reductions in Medicare spending (relative to trend) resulted in cost cutting, not cost shifting [summary in this post, among others].
  4. I’m not as impressed as the authors are with the extra benefits delivered by Medicare Advantage. Each taxpayer dollar spent on additional benefits delivered by Medicare Advantage is valued by beneficiaries at a mere 14 cents [summary in this post, among others].
  5. Administrative costs on the private side are not just those due to insurers, but also those incurred by providers. Some of that is Medicare “red tape”. A lot is due to the myriad of different, private insurance coding and billing systems, procedures, and requirements.
Now, in light of these facts (and links that back them up), is it a slam dunk that private spending has grown more slowly than Medicare’s? It’s not so clear to me.

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