Healthcare Admin Cost: Government vs Private

Last week I was at a dinner of healthcare provider and naturally the discussion turned to Obamacare. One physician stated that Medicare administrative cost was only 3% compared to substantially higher numbers for private insurance plans. This figure shocked me because it seems unbelievably low. And as it turns out, it should not be believed. As it turns out, this percentage is based on administrative cost as a percentage of medical payment.

However, there are other ways to crunch these numbers, and one such way is how much medicare spends to administer the cost of managing each person's healthcare payment. Robert Book at the Heritage Foundation have done just that.


Obamacare: the "Public Option"

What is the "public option" under Obamacare? What is being proposed is that all citizens are required to be a part of a healthcare plan. To cover those that cannot afford private plans, the government would provide for a government rant "public option."

What is the problem then with the "public option?" It will drive the private plans out of business. Private plans collects money only for the members it serves. The "public option" collects money from all tax payers and covers only those without a private plan. There is no way that any private plan can come even close to the intake:outlay ratio of the "public option" plan. Thus initially the "public option" plan will be substantially cheaper as well. Those who pays for healthcare plan, whether it be individual or business, will gradually gravitate to the "public option" plan to reduce cost. (And cost has been and will continue to be the main problem of healthcare in the US).

What is wrong with the US government's "public option" plan being the primary provider of healthcare in the US? Because the government is inept and incompetent and inefficient when it comes to providing any service. Talk to any patients who has experience both the Veterans Administration care (Government care for veterans) and the private sector and they will tell you which is better. Talk to any healthcare provider regarding ease of providing care to their patients between Veterans Administration care and the private sector. They will all tell you that the private sector does it better. The private sector does it better because they are competing among themselves and competition always stimulate quality. I do not mean to suggests that Veterans Administration care is inadequate, I only suggests the private sector does it better.

Thus the end result is that the "public option" will result in the government being the primary and dominant healthcare provider, near universal healthcare. The result will also be healthcare that is delivered inefficiently and poorly. As such, either the quality of care will fall, and or the cost of care will increase. When the cost of care increase, the likely response will be to reduce the care provided, i.e. rationing. Then healthcare will certainly be worse than what we have today. At least today, if you are unhappy with the care, you have alternatives and options.


Iranian Protest 09

Peaceful revolutions are the exceptions, more commonly peaceful attempts at revolutions are crushed brutally. Against a totalitarian regime willing the hold on to power despite its people, willing to act with violence against its own people, these protests will come to no good, leaving only blood, deaths, and persectutions. Just like with Tiananmen square in 89. My heart goes out to freeom loving Iranians.