Greg Scandlin has a wonderful new article that covers two critical aspects of federal health care costs. The first explains why Medicare Part B has had its growth rate cut in half in 2010.  The second explains how the Left uses an apples to oranges comparison when claiming that Medicare costs are growing more slowly than private insurance costs.

The article thoroughly rebuts a Washington Post article that included a meme of the left used to justify government price controls of healthcare generally and ObamaCare specifically. Namely, that federal health programs are more efficient than the private sector (therefore justifying ObamaCare) and that they are so efficient that programs like Medicare and Medicaid need no reform.

As to Part B, Scandlin discusses the fact that the growth rate for Medicare Part B (which covers hospitalization) had been reduced in half (from 4% to 2%) in 2010. The reason for this is the implementation of Medicare's prescription drug program (Part D, which was enacted in 2003). Private-sector pharmaceutical innovation has produced drugs that have proven to help prevent and treat disease as an alternative to costly medical care. But lest anyone think Part D pays for itself, Scandlin cautions, "These savings on core services may not equal the costs of covering the drugs, but they help offset those new costs and result in better health for the covered population. So it is considered a net gain even if the total cost may be higher." While the Medicare bean-counters may look at Part B and Part D as separate programs, an honest assessment of spending for these programs requires looking at all of Medicare (in total) to asses the program's true costs (otherwise one would see "savings" in Part B (as the WaPo did) while ignoring the costs to produce those savings which are found in Part D and elsewhere).

As to the false statement that Medicare costs less than private sector insurance, he writes: "Medicare places the entire cost of covering drugs in a separate program while keeping the savings in the core program. Employer coverage retains those costs in their core program. So employer costs go up while Medicare costs stay the same." The same is true for Medicare's administrative costs compared to private sector insurance costs where federal budgeting divides funding for the Medicare bureaucracy into one pot of money (discretionary) and the programatic funding into another (mandatory). When discussing Medicare's costs, the left routinely ignores the cost of bureaucracy for Medicare but not for private insurance. This is where the left uses an apples to oranges comparison. So if personnel costs rise for both Medicare and private insurance, that increase is only attributed to private insurance while ignored in Medicare. 

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