The Post tells us that the White House says cutting payments to private insurers within Medicare will reduce services, while the Democrats say that the insurers "receive too much money." What is a reader to think? Well the Post might have told readers that it is not just the Democrats who say that insurers receive too much money, but also the non-partisan Medicare Payments Advisory Commission. The commission found that Medicare pays on average 10 percent more for patients that sign up for private insurers than it would pay for these same people in the traditional government-run program. The White House claim also has some truth for the obvious reason that they are getting extra money from the government. Suppose that the government pays $1,000 to private insurers for every person that they sign up (roughly the amount involved). The insurers would then have an incentive to offer some additional incentives to draw more customers, to some extent sharing the government's largess with their customers. In short, there is no he said/she said here. The government is paying more to have beneficiaries sign up with private insurers, although the people who go this route are likely to see something in the form of additional benefits.
--Dean Baker