Drew Altman on public versus private control of spending

Public vs. Private Health Insurance on Controlling Spending

By Drew Altman
The Wall Street Journal, April 16, 2015

The Federal Office of the Actuary in the Centers for Medicare and Medicaid Services has charted the annual rate of increase in spending for Medicare, Medicaid, and private health insurance. As the chart (at the link below) shows, by cumulative growth in per capita spending, Medicare and Medicaid have generally grown more slowly than private insurance and are projected to continue doing so through 2023. Per capita spending is an especially useful measure for comparing public and private health insurance spending because it shows how much Medicare, Medicaid, and private insurers spend on each person irrespective of the number of people covered.

Overall… it appears that public programs control per capita spending somewhat more effectively than private coverage does. That may be just the opposite of what many would presume in a country where the private market is generally expected to outperform the public sector.

Here’s another way to think about it: While Medicare and Medicaid are far from perfect, the purchasing power and policy levers available to large public programs appear to give them an edge over our fragmented private insurance system when it comes to controlling spending.

Drew Altman is president and chief executive officer of the Kaiser Family Foundation.



By Don McCanne, MD

One of the primary purposes of the Affordable Care Act was to control health care spending. After five years, the impact on spending appears to be negligible except for a slight decline in use of beneficial services as a result of higher deductibles and less accessible provider networks - exactly the wrong way to control health care spending.

The data is right out front for all the world to see: large public programs are clearly more effective than our fragmented private insurance system when it comes to controlling spending.

The Affordable Care Act experiment has already failed. It’s time for single payer.