Benefits of Privatization

Robert Pear, writing in The New York Times, looks at Bush's privatized Medicare insurance benefit and finds the predictable problems:

Tens of thousands of Medicare recipients have been victims of deceptive sales tactics and had claims improperly denied by private insurers that run the system’s huge new drug benefit program and offer other private insurance options encouraged by the Bush administration, a review of scores of federal audits has found

Probably the worst problem is the systematic denial of claims and obstruction of patient attempts to correct errors. One does not need to be a genius economist to understand the intrinsic problem of this type of privatization: it places the patient and the service provider in adversarial positions. The more effective the insurance company is in denying claims, the more money it makes - thus it has positive incentives to give poor service. This tactic is most effective with the sickest patients who are least able to defend themselves.

A good article. Read it if you are old, expect to be sometime, or have an elderly relative.

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