Government Health Care Efficiency: Paying More for Oxygen, Penis Pumps, and Canes

Some proponents of a single payer health insurance system, such as Physicians for a National Health Program (PNHP), point to Medicare as an example of what they want. To wit:

…the U.S. already has a successful program that covers more than forty million people, gives free choice of doctors and hospitals, and has only three percent administrative expense. It is Medicare, and an expanded and improved Medicare for All (Medicare 2.0) program would cover everyone comprehensively within our current expenditures and eliminate the need for private insurance. This is the direction we must go.

Why? Because…

Such a single payer plan would make possible a set of mechanisms, including public budgeting and investment planning, that would allow us to address the real sources of cost increases and allow us to rationalize our health care investments. The drivers of high cost such as administrative waste, deterioration of our primary care infrastructure, excessive prices, and use of non-beneficial or detrimental high-tech services and products could all be addressed within such a rationalized system.

A New York Times article today reports that perhaps government health care bureaucracies aren't quite as efficient as the folks at PNHP fondly believe. As the Times reports:

Medicare spends billions of dollars each year on products and services that are available at far lower prices from retail pharmacies and online stores, according to an analysis of federal data by The New York Times. The government agency has paid above-market costs for dozens of items, a comparison of Medicare figures with retail catalogs finds.

The Times cites examples such as oxygen equipment, penis pumps (who knew?), and even walking canes. And let's not forget that Medicare has only now managed to get its fee for service improper payment rate down from over 10 percent in 2004 to 4.3 percent in 2007.

Rationalized system indeed!