No government shutdown predicted, and more

  • The Wall Street Journal reports on the Democratic leadership’s “risky” appropriations strategy. According to the report, “No one predicts a government shutdown, but the Democratic majority faces a lame-duck president who has interpreted the 2006 elections as a call to vigorously exercise his veto power against spending.”
  • According to a New York State Attorney General press release, CIGNA has entered into an agreement with Attorney General Cuomo, witnessed by the American Medical Association and Consumer’s Union, to provide more transparency over its doctor ranking process. The AP reports that CIGNA “said its list of preferred doctors, always based on quality and cost, won’t change because of Cuomo’s agreement. Cigna will still consider both but will begin sharing more information with customers.”
  • A Wall Street Journal editorial directed me to an interesting study titled “Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?” The study was written by Benjamin Zycher of the Manhattan Institute. The author explains in pertinent part that
  • Administrative costs for private health insurance, defined broadly, are in the range of 11-14 percent of total premiums.
  • Administrative costs reported directly in the Medicare budget, combined with a proportional allocation of the costs of other federal government administrative functions, yield a finding of 6 percent of Medicare outlays as the total reported administrative costs for Medicare. This more complete estimate is twice as high as a proportion of Medicare outlays as commonly asserted.
  • The lower reported administrative costs for Medicare are unsurprising, in that Medicare spends substantially less on such functions as marketing, risk evaluation, claims scrutiny, and compliance with the regulatory requirements of the individual states. This does not mean that the higher reported administrative costs of private health insurance are “wasteful.” Instead, they serve the interests of consumers by reducing the extent to which insurance creates cross-subsidies among consumer classes; such cross-subsidies reduce the economic benefits of risk-pooling. Private administrative functions also impose discipline on the consumption of health-care resources, thus reducing upward pressure on insurance premiums.
  • The study is worth reading.