Hack attack, part two: Abramoff's bagmen keep schoolin' me on healthcare ...

Posted by Joshua Holland at 11:05 AM on July 28, 2006.

Note: you should read yesterday's post about the pseudo-scholars at Jack Abramoff's favorite "think-tank" (for laundering crooked lobbying cash) taking a shot at me on healthcare before reading this post. And here's my post that started the exchange.

The much-anticipated second installment of David Hogberg's explanation of why our healthcare system is great even though we spend more than any other highly-developed country but have poorer outcomes is arrivé.

Behold the mighty intellect of the right-wing echo-chamber:

Continuing my deconstruction of Joshua Holland's AlterNet polemic in favor of single-payer health care, let's now look at administrative costs.

Holland claims:

… Two percent of Medicare's costs are administration and management while 20 percent of private "Medigap" plans are sucked up by administrative costs. Medicare, which doesn't need to turn a profit, does that with a much sicker (and more treatment-intensive) population than private insurers deal with.

… Holland [also] seems to suggest (it's not fully clear) that recipients of Medicare are much happier, on average, than those with private insurance.

Holland should check out the 2005 Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey. On a variety of ratings, the CAHPS survey shows that only slightly more people are dissatisfied with their private plans than are dissatisfied with Medicare -- Medicare is hardly winning a popularity contest by a wide margin.

OK, so Medicare's ahead in satisfaction by a smaller margin than I suggested (at a fraction of the cost). Quite the argument there, David -- I'm humbled.

(And, for those thinking that government health care programs result in higher patient satisfaction, be advised: The worst patient satisfaction ratings are for Medicaid.)

But, wait, aren't we talking about Medicare? And didn't you just say that the overall satisfaction … oh, never mind.

Holland's claims about administrative costs are even more misleading. As a policy study from the Council for Affordable Health Insurance states, comparisons of administrative costs are inaccurate because …

The "Council for Affordable Health Insurance" (CAHI) is an insurance industry group and lobbying organization devoted to pushing "consumer-driven" healthcare. It has a revolving door to the Bush White House -- some of CAHI's fellows helped craft Bush's proposals for private "Health Savings Accounts."

But I'm "misleading" for using the same GAO data as everyone else. Yeah.

… The primary problem is that private sector insurers must track and divulge their administrative costs, while most of Medicare's administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government.

He goes on about the "hidden costs" of administering Medicare, and some are quite the stretch (Congressional salaries aren't included, even though they have to vote to appropriate the funds!).

Then he concludes:

When such factors are included, Medicare's administrative costs are over 5%, not 2%.

That may well be, but here's the punchline: I clicked through and read the study he's citing. Even his insurance group's own paper shows that the "average private sector administrative costs" are "16.7 percent when commission, premium tax, and profit are included" -- more than three times as high!

So, as Hogberg's own "deconstruction" of my "polemic" indicates, Medicare's still cheaper per patient, it has a third of the overhead costs and gets slightly higher satisfaction rates than private insurers get. And that's using a study from the insurance lobby.

I have to thank Hogberg for a great argument -- I'll be sure to use it in the future.

(These people should never wade into the blogosphere -- where critical thinkers actually look at the basis of their arguments -- it's like shooting fish in a barrel. They need the kind of glassy-eyed audience that'll swallow whatever they're selling without hurting their heads by thinking too hard.)

The reason why this "senior policy analyst" took the time to write two rebuttals to my humble little blog-post (despite the fact that he really has no leg to stand on) is that I didn't write that we should go ahead and enroll everyone in Medicare. I suggested opening it up and letting competition take its course. It's a free-market approach; whichever system can provide the best benefits for the lower cost should prevail. Hogberg and I both know which one would win, and that's a huge danger for the corporate right. If he really believed the private insurance system would do a better job he wouldn't have a problem putting his belief to the test. The problem for him is the estimated $300 billion dollars per year that would be saved with a single-payer system on reduced paperwork and efficiencies of scale alone.

It's a point that Both David Sirota and Dean Baker made in their recent books: the right falls all over itself lauding the marvels of Big Business and proclaiming its unquestioned superiority over the public sector, and then spends an enormous amount of energy keeping the two from ever competing head-to-head.

That's something to keep in mind.

Joshua Holland is a staff writer at Alternet and a regular contributor to The Gadflyer.