Paul Krugman, The New York Times, April 6, 2006
Consider the choice between two government programs.
Program A would provide essential health care to the eight million uninsured children in this country.
Program B would subsidize insurance companies, who would in turn spend much of the money on marketing and paperwork, and also siphon off a substantial fraction of the money as profits. With what’s left, the insurers would provide additional benefits, over and above basic Medicare coverage, to some older Americans.
Which program would you choose? If money is no object, you might go for both. But if you can only have one, it’s hard to see how anyone could, in good conscience, fail to choose Program A. I mean, even conservatives claim to believe in equal opportunity — and it’s hard to say that our society offers equal opportunity to children whose education may be disrupted, who may even find their lives cut short, because their families can’t afford proper medical care.
And here’s the thing: The question isn’t hypothetical. Universal health care may happen one of these years, but the choice between A and B is playing out right now.
Program A is the proposal by Senator Hillary Clinton and Representative John Dingell to cover all children by expanding the highly successful State Children’s Health Insurance Program. To pay for that expansion, Democrats are talking about saving money by shutting down Program B, the huge subsidy to private insurance plans for Medicare recipients — so-called Medicare Advantage plans — created by the 2003 Medicare Modernization Act.
The numbers for that trade-off add up, with a little room to spare. Covering all children would cost about $50 billion over the next five years, while the Congressional Budget Office estimates that eliminating the Medicare Advantage subsidy would save $65 billion over the same period (and $160 billion over the next decade.)
Now, nobody is proposing that Medicare ban private plans — all that’s on the table is requiring that they compete with traditional Medicare, run directly by the government, on a fair basis. And that’s not what’s happening now. According to Medpac, the official nonpartisan commission that assesses Medicare payments, Medicare Advantage plans now cost taxpayers an average of 12 percent more per enrollee than traditional Medicare. Private fee-for-service plans, the fastest-growing type, cost 19 percent extra.