Those in favor of government health care often argue that private insurance companies are inefficient, wasting huge sums in administrative overhead that provides no benefit to patients.
At the same time, the same people blast private insurance companies for being driven by the profit motive.
I wonder: who has the greater incentive to avoid wasting money on useless overhead? The government, or a private company that can keep the money saved as profits?
Further: private health insurance companies operate in competitive markets. Those companies that spend needlessly on overhead that doesn’t add value will go out of business. That’s the neat thing about competition and free markets, as realized in the form of profits and losses: these forces help companies learn the best way to organize and how much to spend on the various things that make their businesses run.
Companies that make unwise decisions will see their profits suffer or will incur losses. This is a signal that other companies are more efficient.
Government, on the other hand, is immune to the forces of competition. It can waste whatever it wants with little consequence. Once in a while people notice and vote someone out of office, but this doesn’t happen very often.
For those who point to Medicare’s low overhead costs, here’s a blog post that explains: Busting Medicare’s “Low Overhead Advantage” Myth.
Related posts:
- Hypocrisy over oil profits abounds
- In health care debate, can we trust the president?
- President Obama’s health care speech
- Health care video fails to make case for universal, “socialized” medicine
- Health care talk gives alternative to big-government reform
- Not all health care administrative costs are wasteful
- Eliminate all health insurance profits, and what’s left?
- How will government run our health care?
- Drug Runaround: Solved by Universal Health Care?
- Health care about to get worse
{ 1 comment… read it below or add one }
The biggest way to avoid costs and improve profitability is to deny payment on claims. Yay for us!