Medicare Costs Are Higher, Not Lower

Nina Owcharenko Schaefer / June 26, 2009

In his testimony before the House Education and Labor Committee on the Tri-Committee Health Care Reform bill, Dr. Jacob Hacker (the architect of the now famous “public plan option”) continues to suggest that a public plan has the benefit of lower administrative costs compared to private coverage:

Perhaps the most pressing of these problems is skyrocketing costs. Public health insurance has much lower administrative expenses than private plans, it obtains larger volume discounts because of its broad reach, and it does not have to earn profits as many private plans do. Furthermore, experience suggests that these lower costs are accompanied by a superior ability to control spending over time.

Dr. Robert Book, in a new Web Memo entitled “Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance,” argues against the claims put forth by Dr. Hacker: (more…)