Taking Advantage of Medicare

One of the appalling features of the Republican prescription drug benefit plan is that the US pays private companies more than it pays the medicare administration to manage insurance. The idea is supposed to be that the private sector is more efficient. However, in fact, the private sector is less efficient (economies of scale and all that). I have no idea what mix of ideological blindness and corruption was involved, but the Republicans definitely knew that private insurers could not compete with the medicare administration without a subsidy, so they subsidized them in the name of the free market.

This apparently cost the medicare administration 5.2 Billion dollars last year

Private Medicare Advantage (MA) plans were paid an average 12.4% more per enrollee in 2005 compared with what the same enrollees would have cost in the traditional Medicare fee-for-service program, according to a new report from The Commonwealth Fund.

In the report, Brian Biles of George Washington University and colleagues estimate that extra payments to MA plans amounted to $922 over fee-for-service costs for each of about 5.6 million Medicare beneficiaries enrolled in Medicare Advantage (MA) plans, for a total of more than $5.2 billion.

Ouch

Now a lot of people complain about the absurdly high compensation of Big Business CEOs. Let's compare

$5.4 billion: The amount CEO’s from America’s 500 biggest companies earned last year, a 6 percent raise from the previous year. See who the Top 25 earners were here.

Yep that one Republiscam cost about as much as the total compensation of all 500 S&P 500 CEOs put together.

yeah $ 200 million more, but the 5.2 billion Medicare Advantage disadvantage is mostly pure waste due to inefficiency and not a transfer.

This is (barely) in the news only because former speaker Dennis Hastert grossly abused the legislative progress to send more of the money to a firm based in his state

By slipping four sentences into a big bill passed last week, Speaker J. Dennis Hastert secured a major change in Medicare policy avidly sought by a few health insurers, in particular a multinational company with headquarters in his home state, Illinois

[snip]

Mr. Hastert’s provision showed up mysteriously after House and Senate negotiators had finished writing the bill. The provision was added by the House Rules Committee, just a few hours before the bill went to the House floor last week.

Congressional aides, Medicare officials and insurance lobbyists said the main proponent of the measure was the Aon Corporation and its subsidiary, Sterling Life Insurance Company. Aon, a Fortune 500 company, is based in Chicago and does business in more than 120 countries.

This act is a total violation of the barest sham of democratic procedures in the US congress. I hope the Republican party spends Aons in opposition as the US people learn about their corruption.