Government Efficiency and the Price of Bread
Last week, I had the opportunity to testify before the House Energy and Commerce health subcommittee on the subject of IPAB (the Independent Payment Advisory Board) and the impact it may have on Medicare beneficiaries. In the course of that day’s hearing, discussion turned to the relative efficiency of the Medicare program versus private health coverage.
It always amuses me when spokespersons adhere religiously to their talking points that Medicare is far more efficient than private plans, as if it’s a genuine apples-to-apples comparison. Of course it’s not. Private health plans pay taxes, while Medicare doesn’t. Private insurers have to spend considerable money to comply with the regulations Medicare issues. Medicare predominantly treats seniors, who have a higher frequency of illness, so therefore the proportion of the Medicare budget devoted to patient care would naturally be higher.
And the list of dissimilarities goes on.
I mention this, though, because you hear the argument quite a bit these days, particularly from those who continue to insist that the Medicare Part D program would be even more efficient if the federal government, instead of private plans, had the power to ‘negotiate’ prescription drug prices.
Before we ever go down that road, it might be instructive to pay attention to the price of bread in Great Britain.
According to The Telegraph, Great Britain’s National Health Service, ostensibly a model of government purchasing power, is paying 10 times more for a gluten-free loaf of bread than the price consumers pay in the supermarket. The NHS is paying about six times more for a package of gluten free pasta than average grocery store prices.
A government representative said the price differential is due to bureaucratic supply chains in the NHS.
The Welsh health minister, though, had a ready solution to the problem. Work is already underway not to improve government purchasing, but rather to reduce costs by prescribing fewer gluten-free products for patients.
