Expanding public health insurance programs would be a less costly way to decrease the number of insured than expanding private insurance, according to an analysis released on June 24, 2008 as a Health Affairs web exclusive. The researchers, Leighton Ku of George Washington University and Matthew Broaddus of the Center on Budget and Policy Priorities, said that average medical expenditures per person are lower under public programs like Medicaid or the State Children's Health Insurance Program (SCHIP) than under private insurance.
The average cost that insurers (public or private) pay per beneficiary is lower under public programs than under private insurance, probably because these programs reimburse health care providers at lower rates and have lower administrative costs, according to the analysis. In addition, the average out-of-pocket costs that individuals incur are substantially lower under public programs than private insurance because Medicaid and SCHIP limit cost-sharing for low-income beneficiaries, it said.
The researchers found that based on the relative average costs of Medicaid and private insurance, total medical expenditures for an adult Medicaid enrollee would be 26 percent, or $1,456, higher, on average, if the individual were enrolled in private coverage rather than Medicaid. In addition, medical expenditures for a low-income child enrolled in Medicaid would be 37 percent, or $339, higher if the child were enrolled instead in private coverage. The researchers also determined that the average medical costs paid by an insurer on behalf of an adult Medicaid beneficiary would be 7 percent, or $360, greater on average, if the beneficiary were covered instead by private insurance. Finally, they found that a low-income adult enrolled in Medicaid would spend over six times, or $1,096, more on an out-of-pocket basis, on average, if he or she were instead enrolled in private insurance coverage.
The story "Public and Private Insurance: Stacking Up the Costs" dated June 24, was a web exclusive for Health Affairs and can be found at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.4.w318
Source: CCH Washington Bureau, June 26, 2008.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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