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Memo To GOP: Medicare Is Better At Controlling Costs Than Private Insurers

By Igor Volsky on June 13, 2011 at 9:06 am

"Memo To GOP: Medicare Is Better At Controlling Costs Than Private Insurers"

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During yesterday’s appearance on Meet the Press, Rick Santorum regurgitated this nugget of Republican conventional wisdom: “We need a more comprehensive plan where seniors and individuals are involved in controlling costs. And you have government now controlling well over 50 percent of medical care, and they’re not doing a very good job controlling costs.”

The truth is that government health care spending has dramatically increased in the last decades — but at a far slower pace than private health costs. As Paul Krugman pointed out in his column, while inflation-adjusted Medicare spending per beneficiary rose “more than 400 percent from 1969 to 2009, premiums on private health insurance rose more than 700 percent over the same period.” “So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse,” he concludes:

Medicare’s smaller administrative spending and its ability to use its sheer size and clout to bargain for cheaper services explain this advantage. In fact, “if Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper,” Krugman writes.

In the face of all this data, Santorum still wants to privatize Medicare and ask today’s seniors to purchase private coverage with a voucher. He opposes all of the Affordable Care Act’s provisions that address his criticism and control Medicare costs and so he is very hard to take seriously.

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