January 03, 2014
Uwe Reinhardt has a useful blogpost taking issue with a Wall Street Journal editorial on the Affordable Care Act (ACA). The editorial had complained that the ACA steals $156 billion from the Medicare Advantage program, the portion of Medicare run by private insurers.
Reinhardt points out that this $156 billion in reduced payments is over a ten year period, a point missing from the editorial. That’s around 2.0 percent of projected Medicare spending over this period. The other key point in Reinhardt’s piece is that this reduction in payments for Medicare Advantage simply involves leveling the playing field so that the federal government will pay the same amount for each beneficiary in the Medicare Advantage program as in the traditional fee for service program.
Towards the end of the piece Reinhardt notes that, given the WSJ’s ideology, it is understandable that it would object to this leveling of the playing field. While this is true, this is not where a market oriented ideology would take them. If the WSJ editors were confident in the superiority of private sector insurers, they would not feel that they needed a subsidy compared with the traditional government program. The WSJ position only makes sense if the view of the editors is that it is the responsibility of government to redistribute money to the private insurers and implicitly their shareholders and top executives.
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