The Health & Healthcare Blog  

Tuesday, October 9, 2012

Can The Government Really Provide More Affordable Health Care?

President Obama's Affordable Care Act basically recommends forming a system where the federal government runs health care. It is based on the premise that the government can run a leaner program than private health care is able to do.

In the first of the Presidential debates between Obama and Romney, Obama states (taken directly from the debate transcript): "...every study has shown that Medicare has lower administrative costs than private insurance does...private insurers have to make a profit...so you've got higher administrative costs, plus profit on top of that." Romney replies: "The president said that the government can provide the service at lower cost and without a profit. But my experience -- my experience the private sector typically is able to provide a better product at a lower cost." So, who is right?

The United States Government Accountability Office released a report in March, 2011, which stated in part that the Medicare program, run by the government, loses $48 billion per year due to fraud. Compare this to what CNN, Fortune and Money report on the profits gained by the top ten private medical insurance companies, which is $13.7 billion. The question then becomes, what is better? Losing $48 billion or gaining $13.7 billion? The difference is obvious.

One reason proposed for the higher cost of government-run programs is there is no competition, unlike private health insurance programs. Not so, says the Congressional Budget Office. They have stated that increasing competition and choice would raise costs. How? Well, that answer is not clear. But the facts are clear. A study by Pacific Institute Research showed that Medicare and Medicaid costs increased by one third from 1970 to 2008, compared to increases from private health care.

So, what is the answer to cutting costs and providing more affordable health care? Who is able to do it better? It depends on who you talk to. But it is definitely a complicated subject that requires much investigating and reviewing the facts before deciding which option of offering health care is truly more affordable for Americans.





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