To see why, imagine two beneficiaries. One has medical expenses amounting to $150 and the other, $50. The average cost is $100. Now imagine that a private plan bids $90 to cover beneficiaries, so it looks to be about 10 percent cheaper than traditional Medicare. That plan, however, while it is designed to be very attractive to the $50 beneficiary, isn’t appealing to the $150 one, so that person stays in traditional Medicare.Pretty damn simple, really.
The result is that total costs rise from $200 ($150 for the expensive beneficiary plus $50 for the inexpensive one) to $240 ($150 for the expensive beneficiary plus $90 for the inexpensive one). So even though the plan “looks” like it saves money, it doesn’t.
http://www.bloomberg.com/news/2012-08-2 ... -cost.html
Its been noted here that newbies sometimes get a rough treatment. Here is one response, written by Old Dog, that might help those thinking of making their first post understand a little bit about this place. After you read this take a moment (or two or three) and look around and get a sense of this place. If you're still interested make your intro and join the fray. —Jed