Economics, Entitlements

Kristol, Salam, and Klein on Medicare

Reihan Salam links to this Ezra Klein post arguing that government-run insurance will do a much better job of keeping costs under control than the private sector (contrary to claims made by Bill Kristol). Klein’s evidence comes from Jacob Hacker. It’s not clear from the link when this Hacker report was published, but the data in it seem to conflict with Peter Orszag’s report from 2007, which didn’t show a huge advantage of Medicare over private insurance when it comes to keeping excess per capita cost growth under control.

The data Hacker uses to make his comparison are adapted from a “pioneering” 2003 Health Affairs paper which would have been available to Orszag when he developed his 2007 report, so it’s interesting that Orszag wouldn’t have relied on that.

It should be noted that Orszag included this caveat:

Included in other health care spending are payments by private insurers, payments by people who lacked health insurance coverage, all other out-of-pocket payments by consumers, and healthcare spending by government programs other than Medicare and Medicaid. Consequently, the differences in excess cost growth between Medicare, Medicaid, and other healthcare spending should not be interpreted as meaning that Medicare or Medicaid is less able to control spending than private insurers.

Fair enough, but that’s hardly a slam-dunk argument that Medicare does a spectacular job keeping cost growth down.

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