CBO: Private Insurers Better at Expenditure Growth Control than Medicare, Medicaid

Advocates for government run health care assert that it does a better job of cost control than private insurers. Here are some data from a 2007 Congressional Budget office report on the Long-term Outlook for Health Care Spending.

On a real per capita basis, private insurers had slower spending growth than Medicaid or Medicare. The CBO says that estimates were adjusted for changes in population composition.

The growth in per capita Medicaid spending is symptomatic of a program in which both the states and the federal government have an incentive to spend more to get more, and cost control remains someone else’s problem.

  Source: Congressional Budget Office

Comments (9)

Trackback URL | Comments RSS Feed

  1. Ken says:

    Thanks, Linda. This is good information.

  2. Greg says:

    More good information on this subject. Thanks.

  3. Vicki says:

    I’m not sure I understand the difference in the two tables, but it looks like the private sector is doing a better job — either way.

  4. Devon Herrick says:

    Comparing Medicare and the (mostly socialized employer health plan) private sector ignores that both suffer from the same problem — perverse incentives. To really understand how to control costs, look at the cosmetic surgery industry. It’s done a far better job than either Medicare, Medicaid and employer plans.

  5. John R. Graham says:

    I think it is even worse. Public-sector employees are “privately insured” in analyses by the CBO, Centers for Medicare & Medicaid and Medicare services, et cetera. However, their health benefits have spiralled out of control, as recently demonstrated by Josh Barrow, “Cadillac Coverage: The High Cost of Public Employee Health Benefits,” Civic Report 65 (New York, NY: Manhattan Institute, July 2011).

    I have yet to see someone decompose private health spending into that accounted for by public-sector employees versus private-sector employees. I am pretty confident that such a decomposition would show that private-sector employees’ health spending has grown slower than the aggregate estimate of private spending.

  6. steve says:

    There you go again. Could you please define “all other”. I would like to see direct comparisons with private insurance. Separately, for what it is worth, I have gone back through our billing records for about the last 20 years. Fees for private insurance have gone up faster than Medicare fees (we are heavy on Medicare so it kind of sucks). Just one specialty in one area of the country, so just anecdotal. Will ask the national society what kind of numbers they have.


  7. Dr. Karl Stein says:

    If you want to save costs on Medicare, which is all federally funded, then control the lawyers. It is estimated that 30% of medical costs are due to defensive medicine. The public wants cheap medical care, but to keep the lawyers in money. It does not work. The state courts are unreliable in so-called “Malpractice” actions. Put all Medicare cases in federal court, perhaps even have a special branch of federal court. Federal court with federal judges are usually more stringent and strict about evidence and less emotional. Doctors can then apply the method of cheaper care that the government demands. This of course will be harmful to the 5% to 10% of the population that have unusual problems, but it will be less costly for everyone else. There is a limit of funds as Americans are finally realizing, and as countries with socialized medicine have known for decades. But these people accept these limitations.

  8. Eric says:

    I was astonished to find this, since all previous data points to Medicare controlling better costs than private insurance. So I decided to go read the actual CBO report, and saw this in it, right underneath the chart: “the differences in excess cost growth between Medicare, Medicaid, and other health care spending should not be interpreted as meaning that Medicare or Medicaid is less able to control spending than private insurers.” So you’re comparing apples and oranges but now of course this story is all over the internets and everyone will believe it.

  9. Kadir says:

    All time record piroft for Pharma and Insurance.Health reform Be careful what you ask for.This medicare lobbyist/public advocate is really digging in her heals LoL.