Democrats Should Encourage Public-Private Competition For Medicare, Columnist Writes; Letter Responds To Universal Health Care Column

Wednesday, January 10, 2007, 8:21
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Universal health care “won’t happen until there’s a change of management in the White House,” but the new Democrat-controlled Congress “can take an important step toward making our health care system less wasteful” by changing the 2003 Medicare Modernization Act, columnist Paul Krugman writes in a New York Times opinion piece. The 2003 law “increased payments to Medicare-supported HMOs, which were renamed Medicare Advantage plans,” even though Medicare’s experience with HMOs beginning in the 1990s indicated that they “had higher costs than traditional Medicare and couldn’t compete on a financially fair basis,” Krugman writes. “The inability of private middlemen to win a fair competition against traditional Medicare was embarrassing to those who sing the praises of privatization,” according to Krugman, who adds, “Maybe that’s why the Bush administration made sure that there is no [public-private] competition at all in Part D, the drug program.” Because of this, Part D is “needlessly expensive” and “highly confusing,” Krugman writes. The Democratic majority in Congress likely will require “Medicare to negotiate drug prices on behalf of the private drug plans,” but it also should “go further and force Medicare to offer direct drug coverage that competes on a financially fair basis with the private plans,” Krugman writes (Krugman, New York Times, 1/5). Letter to the Editor
A Krugman column published last month regarding health care reform is “half right,” Harvard Medical School professor emeritus Arnold Relman writes in a Times letter to the editor (Relman, New York Times, 1/4). Krugman wrote that proposals to switch the U.S. to universal health care have been flawed because they rely too much on private insurance companies rather than a Medicare-style approach. Krugman added that the resistance persists because “would-be reformers are trying to avoid too strong a backlash from the insurance industry and other players who profit from our current system’s irrationality” (Kaiser Daily Health Policy Report, 1/2). Relman writes that he supports Krugman’s call for “a public, tax-supported insurance system, like Medicare, to replace the hundreds of private, high-overhead insurance companies.” However, “that would not control rising costs,” Relman says, adding that “Medicare’s costs have risen nearly as rapidly as the private sector’s” because “economic incentives encourage overuse of expensive medical technology even when it is of unproven or marginal benefit.” Relman concludes, “Fee-for-service payments of physicians, investor-owned facilities and a market ideology will have to be replaced by salaried physicians working in prepaid medical groups and by nonprofit ownership. A difficult agenda, but nothing less will do” (New York Times, 1/4).

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