Health Care Industry Pressured To Cut Costs

Health Care Industry Pressured To Cut Costs


Something has to give, and it isn’t going to be the CBO’s numbers.

From Politico:

“They are shaking people down, and it’s fair to say that includes a broad range of health care stakeholders,” said a health care industry insider, who asked for anonymity to speak candidly without fear of retribution. “They’re playing hardball, and they’re serious about it.”

Industry representatives have offered cost-cutting measures, such as putting health records online and improving the management of chronic disease.

But they’ve been frustrated to discover that the Congressional Budget Office, whose estimates hold big sway, doesn’t count them as hard-dollar savings.

My guess is that it’ll all come back to Medicare reimbursement rates. And that’ll affect insurance companies too…

A likely target for them is the Medicare Advantage program, which gets an average of 12 percent more funding than traditional Medicare. Some Democrats have wanted to cut the program for years, and Obama has proposed slashing it to help pay for reform.

Policymakers are also considering costly administrative changes, such as forcing insurers to standardize enrollment forms and create a single portal for doctors to use when dealing with the industry’s many companies.

This much is clear…there will be blood.

  • Nick Benjamin

    MediCare Advantage was always an odd idea. Everyone agrees at least 92% or more of MediCare’s costs are actual medical care. Depending on whose numbers you believe it can be closer to 97%. This is not unusual. MediCare’s namesake, Canadian MediCare and Taiwan’s equivalent also have administrative costs in the low single digits.

    OTOH private health plans say they average 15% administrative costs plus profit. Some studies have put the real number at more like 30%, or $1,000 per capita.

    MediCare advantage was supposed to increase competition in MediCare by allowing private companies to compete. But if they’re paid MediCare rates they only have 3% of revenue to spend on advertising, administration, and profits. So to get anybody with business sense into the system they have to pay the private companies a lot more than they pay MediCare.

    Given that competition is supposed to reduce costs MediCare Advantage seems like it’s a very dumb idea.

    BTW, I love that insurance company executives hate the CBO numbers. Welcome to my world boys. The CBO’s is very bad at figuring out how much money an innovative idea will save, therefore they don’t try. And us poor liberals with new ideas to cut costs get slapped with a $Trillion price tag.

    I’d mention that German word if I had any idea how to spell it.

  • Fletch


    Everyone agrees at least 92% or more of MediCare’s costs are actual medical care.

    Sure… after completely disregarding the 15-20% spent on fraud.

  • Medicare Advantage

    With these news, I guess the best advice is to try to do everything you can to stay healthy…

    BTW Nick: I’m wondering: what German word are you talking about? I didn’t get this part of your comment?