Two smaller points, though, deserve mention: first, data shows that spending on hospitals, doctors, and nursing homes grew at a slower rate in 2006 than it did in 2005, but that spending on administrative costs increased at a greater rate – almost twice as fast. "One reason [for this] is that private insurance companies have a larger role in Medicare, and they typically have higher administrative costs than the traditional fee-for-service Medicare program, federal health economists said."
Second, Medicare’s share of drug spending soared from 2 percent in 2005 to 18 percent in 2006, while Medicaid's share fell from 19 percent to 9 percent in the same period; this is because drug costs for six million people shifted from Medicaid to Medicare. As noted by the article, "[p]rivate insurers, which manage the drug benefit for Medicare, negotiate discounts with pharmaceutical companies. The discounts were generally smaller than those provided under Medicaid, the report said."
I call attention to these two smaller points because they implicate what tends to be a broader argument against health care reform that includes greater government participation: that the private market will be better at keeping health care costs and spending down. On at least a superficial level, these points appear to provide some evidence against that argument.
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