Friday, March 4, 2011

Medicare Loses Nearly Four Times as Much Money as Health Insurers Make

yet another example of government lacking efficiency.  as i've been saying for many years now, bureaucracy costs money... OUR money, and a LOT of it!

included below the article is a comment by my friend, Ewin, who sent me the link.  i believe he nails the issue on the head.

my question is, what's it going to take for the masses to realize that we are only hurting ourselves and all future generations — our children — by continuing down this path of economic disaster in allowing government to infiltrate various economic aspects of the private sector, while it simultaneously violates the sanctity of the individual's private life itself?


In a newly released report, the Government Accountability Office (GAO) estimates that, in fiscal year 2010, $48 billion in taxpayer money was squandered on fraudulent or improper Medicare claims. Meanwhile, the nation’s ten largest health insurance companies made combined profits of $12.7 billion in 2010 (according to Fortune 500). In other words, for every $1 made by the nation’s ten largest insurers, Medicare lost nearly $4.

This is sobering news for the minority of Americans who (for some reason) continue to think that government-run health care is a model of efficiency and cost-effectiveness. Last year, total outlays for Medicare were $509 billion; therefore, Medicare spent nearly 10 percent of its outlays on fraudulent or improper claims. Actually, it may have been even worse than that: The GAO writes that this $48 billion in taxpayer money that went down the drain doesn’t even represent Medicare’s full tally of lost revenue, since it “did not include improper payments in its Part D prescription drug benefit, for which the agency has not yet estimated a total amount.”

The combined profits of the nation’s ten largest health insurers are down 2 percent from 2008. In fact, the nation's ten largest health insurers’ combined profits last year were less than the profits that Walmart — a supporter of Obamacare — made all by itself.  Walmart made $14.3 billion last year, up 12 percent from 2008. (On the Fortune 500 list, Walmart’s profits also dwarf the profits of all but one oil company.)
True, private insurers may never manage to make nearly as much money as government-run heath care programs manage to lose. Still, there is good news on the horizon for insurers: If Obamacare isn’t repealed, then, as of 2014, every American will be required to buy their product (or a federally mandated version of it) under penalty of law. Moreover, the Congressional Budget Office estimates that $1 trillion would be funneled from taxpayers, through Washington, to those same insurers, from 2014 to 2025. Ever wonder why insurers didn’t oppose Obamacare?
Ewin's comment:

The plain truth is that government is a political animal and not an economic one.  When we allow government to be involved in any economic activity, the economic aspects of it are only important as they impact the political aspects.  And when government does some economic activity, it always does it less efficiently than when private business does it.  Case in point: when it gives a class of citizen all the health care it demands, of course it costs way more than anyone expects.

We were assured by supporters of ObamaCare that it would be a way to reduce the federal deficit.  One reason the left supported ObamaCare was because of their visceral hated at the idea of a health insurance company would make a profit.  What they were ignorant of was that profit was actually the sign of efficiency.  High profits would attract competitors and thus over time the industry leaders provoked each other to improve and become more efficient. There is no such provocation or competitive pressure for a single payer government bureaucracy.


bernard baruch carman
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