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Home Publications Blogs Beat the Press Ezekiel Emanuel Seriously Misrepresents Arguments on Health Care Savings

Ezekiel Emanuel Seriously Misrepresents Arguments on Health Care Savings

Friday, 04 November 2011 06:02

It is dishonest to deliberately misrepresent someone's argument in order to refute it. This is what Ezekiel Emanuel does repeatedly in an NYT blognote on reducing health care costs.

He belittles the idea that there could be substantial health care savings at the expense of the insurance industry by telling readers that industry profits are just $11 billion a year, less than 0.5 percent of national health care expenditures. Presumably Emanuel knows that advocates of a universal Medicare type system see the whole insurance industry as a source of waste, not just the profits.

According to the Centers for Medicare and Medicaid Services, the country spends $150 billion a year administering private insurance. In addition, the fact that providers must deal with an array of complex rules from multiple insurers means that they must have additional office staff who would not be needed if they were just providing health care. This has been estimated as increasing health care costs by as much as 15 percent of total expenditures ($390 billion a year).

Similarly he suggests that the potential savings from lower cost prescription drugs are very small, on the order of $6 billion a year. In fact, we spend almost $280 billion a year on prescription drugs. If these drugs were sold in a free market without patent monopolies, they would cost around $30 billion, leaving a potential saving of $250 billion a year. It would be necessary to find other mechanisms to support research, but the potential savings are an order of magnitude greater than suggested by Emanuel.

Comments (4)Add Comment
peanuts go to the elephants
written by frankenduf, November 04, 2011 9:25
blankfein used the same argument to belittle prosecution of the finance corporations- he pointed out that executive bonuses were just $11 billion, less than .5 percent of the housing collapse- in fact, it rounds off to zero, so to critique its market efficiency is in bad faith
written by jamzo, November 04, 2011 11:06
ez emanuel'sintellectual capital is tied up in his "health care service voucher" idea
written by trish, November 04, 2011 2:11
emanuel's answer to lack of adequate health care for millions of struggling americans is "universal" health coverage through continued skimming by the insurance industry (which he seems to represent), using vouchers paid for by a likely regressive vat tax. Nothing he writes should be taken too seriously.
written by Lee Hartmann, November 04, 2011 6:07
Obviously there is hardly any money to be saved on prescription drugs, as indicated by the huge number of seniors getting their drugs from Canada.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.