It's Not a Website... It's a Health Plan

My birthday is in January; so I find myself reviewing my new health insurance options during the open enrollment period for those covered by Medicare.  (Yes, that’s right.  I will be 65.) 

Last week, I attended a seminar by a local insurer.  The presenter covered all the options – Medicare Parts A and B, Medicare Advantage, etc. – concisely and congenially.  It was well worth my time having come away from the various government and AARP websites totally confused.  Obamacare will cause premiums to rise.  Aetna CEO Mark Bertolini says it will cost his customers about $1 Billion per year.  But, I am not complaining.

Regular readers know that I believe that government should not intervene in private enterprise.  So, why am I looking forward to Medicare?

Well, my premiums will go down 80% after I sign up.  Moreover, I have grappled with the free market for private individual insurance and I’m familiar with its flaws.  An insurer has turned me down because my blood pressure is below normal.  My doctor says I am too healthy.  However, there was no medically qualified person at the insurer to whom I could make my case.  Just a faceless bureaucracy following a set of guidelines.

Still, I got a chuckle when NBC broke the news about people having their policies cancelled because Obamacare requires insurers to offer only those policies that meet new standards.  The news story featured a middle-aged guy whose premium went up 400% in order to meet those standards, which include coverage for, among other things, maternity. 

Hey, I could afford to chuckle.  I have Medicare!

The hodgepodge of regulations that technocrats will shape from this onerous 2500+ page law will undoubtedly cause us more grief, just as the Healthcare.gov website has in the first few weeks of implementation. 

By now, we shouldn’t be surprised that the government would spend $375 Million of the taxpayers money to build a website that doesn’t work.  So what if that’s more than double what Apple invested to develop the iPhone?  Remember those $600 toilet seats on Navy submarines?

What’s the big deal?

The big deal is that the law doesn’t do what its headline says it will do – make healthcare affordable.  The President has talked about “bending the cost curve”, whatever that means.  But, mandating that young folks who can’t afford health insurance buy it or be penalized doesn’t bend the cost curve.  It just adds people who don’t go to the doctor to the insurance pool with the intent of lowering the average premium. 

The real driver of healthcare cost is the fee for service (FFS) payment system.  From an economist’s perspective, if you provide a financial incentive for doctors to perform medical procedures, they will perform more procedures – especially when there is a bottomless pit of money at the other end of the claims process.

It gets worse.  The best defense against a medical malpractice suit is to follow (or perhaps “over-follow”) published protocols on each patient.  You guessed it.  More billable procedures.

However, there’s hope.  The Affordable Care Act authorizes the creation of Accountable Care Organizations (ACO’s) and healthcare providers are beginning to experiment with this model.  Payment would be based on the quality of care provided rather than the amount of procedures performed.  The financial incentives and disincentives are being studied with results that are, to date, inconclusive.

The Center for American Progress suggests other alternatives such as Bundled Payments, wherein providers would receive a single payment for each patient based upon medical history.  Patient centered medical homes would restructure primary care to focus on preventive medicine, patient education and coordination among healthcare providers.  It would encourage preventive care rather than excessive treatments.

Again, these alternatives to FFS are great ideas as yet untested.  But, they represent potential free market solution within the government’s framework.

All of this confusion and complexity could easily lead one to buy into the liberal Democrat idea of Medicare for all.  Medicare works well for seniors (and, if you don’t believe me, see what happens if you try to take it away).  Why not extend coverage to every American?

Well, you have to ask how we’ll pay for it.  By many estimates, the Medicare Trust Fund will go broke before Baby Boomers go on to their great reward.  Clearly, the current 2.7% payroll tax is insufficient to extend coverage to the population at large.

No doubt, there are many who would propose raising taxes to close the gap.  And, certainly the half of the population that receives subsidized health insurance would sign up for that.  That includes me – I’m on Medicare!  So, it would be easy to tax the other half, wouldn’t it? 

Wait a minute!  That includes me, too!

WHO WILL LEAD?