Take 2: Does the Free Market Hold Down Healthcare Costs?

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A couple of days ago I wrote a post about the cost growth of Medicare compared to the cost growth of private healthcare, along with a bit of speculation for the reason that private healthcare costs have grown faster. The post was a bit rushed, and I’ll probably try to expand on it in the future. For now, though, I just want to present a couple of pieces of raw data comparing Medicare costs to private healthcare costs. First, here are the basic BLS figures on overall growth trends, with 1992 indexed to 100:

This tells us that overall costs of private healthcare have grown faster than Medicare, but it doesn’t tell us why. It might be demographic, it might be because private insurers cover more procedures, or it might be due to cost growth of specific procedures. The latter is the one I’m most interested in at the moment, so here’s a bit of data from a paper by James Robinson earlier this year:

We now know two things:

  • The overall cost of private healthcare has risen faster than Medicare over the past couple of decades.
  • The current price of specific procedures is higher for private insurers than for Medicare.

But here’s what we don’t know:

  • Has the price of specific procedures gone up faster for private insurers than for Medicare?

Unfortunately, it appears that time series data on specific procedures isn’t available, so we don’t really know whether private insurers have put as much pressure on providers to keep prices down as Medicare has. It’s a good guess that they haven’t, but you can’t tell for sure from this data. What’s worse, even if we assume they haven’t done a good job of controlling costs, it’s still pretty difficult to say why. These numbers are averages, and they vary by region, by level of competitiveness, by the possibilities for cost shifting, and so forth. More on this later.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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