Republicans like to tout the miracle of competition in lowering health care costs and have even proposed a budget in the House that would completely dismantle the traditional government-sponsored Medicare program and force seniors to buy insurance from an exchange of private insurers. But seniors already have the option of purchasing private coverage through Medicare Advantage and that system — which receives a 9 percent or $8.9 billion subsidy from the federal government — has produced little savings.
The Incidental Economist’s Austin Frakt links to this chart and argues that if he were a proponent of so-called “market driven” health care, “I’d be infuriated or embarrassed by this abysmal performance of MA plans. As a taxpayer, I’m none too happy“:
Clearly this figure shows us very little about what happened between 1997 and 2004. Feel free to presume that the program saved Medicare so much money in those years that it offset the documented massive costs in other years, but I doubt you’d find many serious scholars agreeing with you. No, on the whole, the program has cost us and cost us dearly.
Over the years, a number of government reports and independent estimates have found that some plans use the taxpayer subsidies to pad their bottom lines and expose beneficiaries to serious financial risks. A recent report from the Government Accountability Office (GAO) concluded that some MA plans used lower premiums to attract healthier enrollees, but then hit them “with high and unexpected out-of-pocket costs.” It’s an embarrassing record indeed and one that Republicans seek to build on.