Joe Conason's Journal

Turning healthcare over to the private sector will cost taxpayers more, not less.

Published November 24, 2003 10:07PM (EST)

The "efficiency" that will bankrupt us
Enthusiastic advocates of Medicare privatization always insist that such measures will rein in costs, improve efficiency, and apply "market discipline" to federally subsidized healthcare. Senate Majority Leader Bill Frist regularly utters the same clichés, as he did again this week while seeking to end debate on the pro-privatization prescription-drug bill. "We just think that competition through the private sector, through bulk purchasing and negotiation, is a more effective means to hold down prices," he said on Sunday.

As the Washington Post reports today, however, the Medicare bill that is about to become law "would steer at least $125 billion over the next decade in extra assistance to the health care industry and U.S. businesses." The legislation's lavish provisions benefiting insurance companies, HMOs, hospital corporations, and other allegedly efficient providers tacitly acknowledge the unspoken truth about healthcare: Turning healthcare over to the private sector will probably cost taxpayers more, not less. Rather than encouraging savings, the bill actually guarantees higher costs.

Lobbyists for the "efficient" private insurers demanded and won a new rule that will give them the same rates paid by traditional, fee-for-service Medicare -- plus an additional $12 billion slush fund for the private programs, designed to "persuade" them to do business in places where they have already begun to abandon their clients. (The success of the healthcare lobby no doubt is connected to its political generosity. Nearly two dozen of the Bush Pioneers, fat cats who have bundled more than $100,000 for the president's campaign, are connected with the industry.) Health economist Marilyn Moon finds these fat payoffs "very ironic," since, as she explains, "To increase participation in private plans, we are going to overpay them for the foreseeable future."

As a scion of Health Corporation of America, the nation's largest operator of private hospitals, Frist himself stands to benefit substantially from congressional largesse to the industry, as do members of his family. (See this thorough probe of the wealthy lawmaker's "blind trust" published in Nashville Scene last summer.) When Frist blathers on about the best way to tend to the nation's health needs, he never mentions the ongoing scandals in the private health sector -- such as the enormous Medicare fraud scandal that his family firm settled with the Justice Department last winter. Nor does he seem eager to discuss the scandals that currently beset other major providers such as Health South and Tenet Healthcare Corp.

Americans spend more per capita on healthcare than most industrialized nations that manage to insure all of their citizens -- and now, thanks to this bipartisan idiocy, we will spend billions more on companies that are notorious for waste, fraud and abuse.
[2 p.m. PST, Nov. 24, 2003]

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