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Government is Good at Healthcare

By Dr. Sachin D. Shah
. 1 Comment(s)

Our national political discourse these days is dominated by talk of cost control.  Among other targets, Medicare is at real risk of being subjected to indiscriminate cuts in the name of cutting of health care costs. 

I agree that government is often responsible for creating appallingly wasteful, bureaucratic monstrosities that make a mess out of some of their most basic responsibilities.    But by most any measure, our government does pretty well with health care when it comes to cost, efficiency, and quality.  And it does way better than the private sector.

The fact is, Medicare saves a tremendous amount of money when compared to private insurance companies.  By cutting Medicare, we would not only deprive many Americans of essential care, we’d also undoubtedly drive up total health care costs.

Yes, inflation adjusted Medicare spending per beneficiary rose over 400% between 1969 and 2009.  But guess what?  Inflation adjusted premiums on private health insurance rose over 700% in the same time period.  Health care spending is clearly out of control and I’m not trying justify as acceptable the lesser of two evils here.  But I’m also not about to be complicit in the fallacy of allowing the far greater of two evils to be touted as the solution to reining in health care spending. 

I think it’s time we acknowledged something about health care in our country: the private sector does a terrible job at controlling health care costs.  Cutting Medicare enrollment, or raising the eligibility age, and thereby forcing more people to enroll in private insurance, is an awful, misguided idea.  Why would we push people out of an admittedly expensive Medicare system into an undeniably more expensive private insurance system?

The assumption that’s also made in plans to cut or delay enrollment is that all seniors who would be pushed out of Medicare would be able to afford private insurance, which is far from a sure thing.  A substantial number would be left uninsured, and there’s clear evidence that Americans, in the years before becoming Medicare-eligible, already routinely postpone needed care.  As a consequence, these individuals become more expensive Medicare recipients once they do become eligible.  Cutting Medicare funding would be a great way to increase overall health care spending in the long run.

What’s more, Medicare is run with the goal of protecting the public interest and improving the overall health of its enrollees.  Private insurance companies are run to profit and earn money for their shareholders, something they’re exceedingly skilled at. 

UnitedHealth, WellPoint, and Aetna profited a record $2.51 billion in the second quarter of 2011.  Based on their strong showing during the first half of the year, all three have raised their profit forecast for 2011.  Aetna’s CFO, Joseph Zubretsky, assured investors that the company would not risk adding people to its rolls who might have substantial medical needs.  “We would like to have both profit and growth, but if you have to choose between one or the other, you take margin and profit and you sacrifice the growth line.”  In 2008, WellPoint’s Angela Braly promised analysts that the firm would “not sacrifice profitability for membership.”  Our current system of private health insurance is predicated on avoiding the sick.  The priority is on profits over people.

The nation’s five largest for-profit health insurers made $11.7 billion in profits in 2010, up 51% from 2008, as medical costs grew slower than forecast.  Fewer insured patients sought medical care in an effort to avoid expensive co-pays and increasingly higher deductibles during a recession.  UnitedHealthcare led with $4.6 billion in profits, followed by WellPoint ($2.9 billion) and Aetna ($1.8 billion).  These are the same insurance companies proposing double-digit premium increases, arguing that demand for medical services may increase at the end of the year.

The CEOs at the nation’s five largest for-profit health insurance companies earned (loose definition) $54.4 million in compensation in 2010.  Cigna’s David Cordani made the most, at $15.2 million, followed by WellPoint’s Angela Braly ($13.5 million), UnitedHealthcare’s Stephen Hemsley ($10.8 million), Aetna’s Mark Bertolini ($8.8 million), and Humana’s Michael McCallister ($6.1 million).

Now consider these facts and tell me with a straight face that shifting more of our health care to the private sector is the answer for our uncontrollable health care costs.  The logical solutions have to do with thoughtful approaches to improving cost and quality of care, and tipping the balance of resources and spending towards primary care and public health.  We don’t get there unless the health and welfare of our citizens is the priority.  Our experiment with prioritizing profits in health care has gone on long enough with disastrous consequences.

Government, for all its flaws, does health care consistently better than the private sector.  If we truly want to control health care costs, we should be insuring more Americans with programs like Medicare, not less.

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  1. shweta sharma

    Sachin, very well written, compelling argument! I enjoyed reading it.

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