Another angle on middlemen

As noted here before (and before), middlemen have the potential to increase the efficiency of the health care system, but they can also be a drag on the system. Paul Krugman last week* noted that the privatization of Medicare, including (but not limited to) the use of pharmacy benefits managers in the Part D pharmaceutical benefit, has not worked out so well. As an example, he notes that the managed-care portion of Medicare, now called Medicare Advantage, costs on average 11% more than traditional Medicare. So much for privatization, at whose alter this administration worships: It is an empty faith that drains dollars from public programs without increasing the welfare of their intended beneficiaries.

* Krugman's column is here, which is a TimesSelect address that requires a paid subscription. There's a good summary over at Mark Thoma's blog.