Reply #49: Sorry, my mistake as I meant to say Medicare Advantage came about 30 [View All]

[slipslidingaway]

years after Medicare went into effect.

Returning to the differences outlined in the article posted, the public plan is different because there is no "ready made" base of customers. In that sense it is very different from Medicare.

http://pnhp.org/blog/2009/09/05/the-chicken-and-egg-problem-can-the-public-option-succeed-where-prudential-failed/

"...I characterized the main barrier facing the Democrats’ shrunken “options” as a “chicken and egg” problem: A person or group trying to create a new insurance company can’t tell prospective customers what the premium will be until they have determined how much they will pay providers; but the person or group can’t know how much it will pay providers until it knows how many people it will insure..."


http://en.wikipedia.org/wiki/Medicare_(United_States)#Part_C:_Medicare_Advantage_plans

"Part C: Medicare Advantage plans

With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs were known as "Medicare+Choice" or "Part C" plans.

...Enrollment in Medicare Advantage plans grew from 5.4 million in 2005 to 8.2 million in 2007. Enrollment grew by an additional 800,000 during the first four months of 2008. This represents 19% of Medicare beneficiaries.

...The Government Accountability Office reported that in 2006, the plans earned profits of 6.6 percent, had overhead (sales, etc.) of 10.1 percent, and provided 83.3 percent of the revenue dollar in medical benefits. These administrative costs are far higher than traditional fee-for-service Medicare.<20>"