Brian,

Thanks for your thoughtful comments. I’ll try to address them.

1) Medicare and Medicaid pay for lawyers. You are correct that prosecution for Medicare and Medicaid fraud is handled by other government agencies. But private health insurance companies also make large outlays for advertising and profit, which government run plans don’t.

Medicare’s administrative expenses are supposed to be 4 percent by law. Add in some of the fraud protection stuff and they’re probably closer to 6 percent. The average margin for private health insurance companies is 12 percent or more. Administrative costs for individual policies are closer to 28 percent. The total overhead cost of private health insurance in 2007 was $155.7 billion.

2) Defensive medicine surely adds to the cost of health care in the U.S. By how much? Tort reform advocates say we could save $200 billion a year by changing liability laws. Let’s suppose that’s a good figure — I haven’t seen any peer-reviewed study that spells out where it came from so I don’t know.

It’s estimated that as much as a third of all health spending confers no real benefit on patients. We’ll spend $2.5 trillion on health care this year, which means more than $800 billion goes to care that doesn’t benefit patients. That’s four times the $200 billion figure.

You also attribute some blame for cost increases to moral hazard — people demanding care because it’s free. But health care isn’t free; Americans pay the highest out-of-pocket costs in any developed nation. Yet there’s no evidence that they demand or receive any more care than citizens in other countries. Per capita physician visits in the U.S. are actually lower than in many European countries, for example.

3) You say businesses will drop coverage if an employer mandate is passed. In Massachusetts, the opposite happened after the 2006 reforms. More employers started offering coverage.

Companies don’t drop health benefits because doing so puts them at a competitive disadvantage for attracting talent. The problem you describe could occur to some low-skill workers, but they’re losing coverage anyway because premiums keep rising so fast. The solution is to make the fee that employers pay in lieu of covering workers higher, or to tie it to the average cost of a health insurance policy locally.

4) You say wages will fall after health reform. Actually, economists would say the opposite. Wages have not risen as fast as they would have in the past because premiums were growing so fast. Higher costs for benefits mean less money is available for wages; controlling benefit costs means more money is available for wages.

Again, thanks for taking the time to respond.

This is going to take some serious time to respond to. I’ll post when I’ve finished.