Thanks for all of the intelligent comments. Here are my thoughts:

JEM (External Link ) rightly points out that “cost per covered life and insurance premium don’t mean the same thing.” He notes that I didn’t take administrative costs and actuarial value into account in my comparison of private insurance and Medicaid.

Incorporating administrative costs makes the comparison worse for Medicaid. If we assume a medical loss ratio of 15%, then the actual amount spent on health care for private insurance is $4,189 instead of $4,928. Remember, though, that Medicaid also has administrative costs—costs that aren’t reported in a transparent fashion.

As to the fact that people on private insurance have more stringent co-pays, deductibles, coinsurance, etc. compared to Medicaid, this is also true, and is also an indictment of Medicaid insofar as Medicaid as far less cost-sharing, and yet far worse medical outcomes. Moving Medicaid into a consumer-driven model, as JEM suggests, is certainly one way to rectify this.

Cab (External Link ) compellingly expresses the difficulty of obtaining insurance if one is self-employed or unemployed, especially with pre-existing conditions. “I want to have insurance, but if it comes to rent vs. insurance, rent will win, and I never thought I would be faced with that.”

One of the depressing aspects of the Obamacare debate is that there is an obvious solution to this problem that was explicitly rejected by the President: ending the tax subsidy for employer-sponsored health insurance. If we all bought insurance on the individual market, we would be able to keep that insurance throughout our lives, regardless of where we worked, and the pre-existing condition problem would go away. Instead, we will get hundreds of thousands of pages of new regulations to deal with what is actually a very simple problem.

Anonymous (External Link ) argues that my analysis doesn’t take into account that a “large portion of Medicaid spending…is on Nursing home care which is very expensive” along with “those with schizophrenia, HIV/AIDS etc., who are disproportionately in Medicaid.” This is true, which is why I suggested that it might be fair to spend 50% more on Medicaid patients than average Americans do on private insurance.

Anonymous points out that “Medicaid beneficiaries are of poorer health” and “have access issues.” This is also true, but this is largely caused by Medicaid itself: by underpaying physicians, physicians are less willing to see Medicaid patients, leading to poorer health and poorer access. This is precisely why Medicaid reform is needed. I would also disagree with Anonymous on the cost savings of preventing chronic disease. While preventing chronic disease may be good for public health, numerous studies convincingly show that prevention does nothing for health costs. After all, we all have to die of something.

Hi Philidor,

Both are true: preventive medicine is inherently non-cost effective for the reasons you cite when it comes to things like mammogram screenings. You have to, say, screen 100 people to save 7.

But when it comes to things like obesity, no screening is necessary -- we know who is obese. There the question becomes, can we save health costs by reducing the number of obese people? The answer is, not as much as you might think, because even healthy people eventually die: of cancer, heart disease, etc.

This article is very poorly considered and completely fails to recognize a basic fact: Medicaid patients, on average, are much, much sicker than patients who are covered through private insurance.

The average person covered through private health insurance is employed full time and gets coverage through his/her employer. In other words, the average person covered through private health insurance is healty enough to work full time.

If this person becomes unable to work due to serious illness or injury, then two things will happen: the person's medical bills will skyrocket AND the person will lose health insurance coverage and end up on Medicaid. The people who are paralyzed in car accidents, or develop multiple sclerosis, or suffer some similar catastrophe will usually end up on Medicaid.

To attempt to compare Medicaid patients to patients covered by private insurance, without taking account of the specific illnesses being covered, is an apples to oranges comparison.

I regret to see that National Review would publish an article by someone who knows so little about how the various health care delivery systems work.

There is huge gap in the data used for your analysis. The reason that the cost of Medicaid skews higher is the cost of end-of-life care, particularly longterm care facilities. The typical state Medicaid plan is paying upwards of $60,000 per person per year for a nursing home placement. The cost-effective alternative to that expense is in-home care, which is averaging in the neighborhood of $26,000 per year. Unfortunately, CMS bigwigs are committed to destroying the market for home medical equipment (home care typically begins with some form medical equipment such as a walker or oxygen equipment) by eliminating 90% of competitors and erecting absolute barriers into the market. This is what happens when you put bureaucrats in charge of defining "competition." Holding down the costs associated with Medicaid can't be accomplished without first addressing the longterm care dilemma. Neither a voucher nor a cash payment will suffice this very coltly obligation.