Saturday, December 12, 2009

Another Duh! Moment: Senate Bill Would Cause Health Care Costs to Rise

From the Wall Street Journal:

The report said measures in the bill to restrain Medicare costs and trim generous insurance plans "would have a significant downward impact on future health care cost growth rates," but said those gains would be outweighed in the initial years as newly insured people sought to get more health care.

"This report is yet another clear indicator that we have to act, and act now," said Sen. Max Baucus (D., Mont.), the chairman of the Finance Committee.

The report said 33 million more U.S. citizens and legal residents would be insured under the bill, resulting in 93% of Americans with health-insurance coverage. But it said the new demand for health care caused by the bill could prove "difficult to meet initially" because doctors and hospitals would charge higher fees in response to the new demand. The report also said the bill's proposed cuts in Medicare spending "may be unrealistic."

In addition to expanding coverage, the Senate bill creates a long-term-care insurance program that would provide a daily subsidy for those with disabilities and illnesses who require home-based care. The report cited a risk of "adverse selection," saying people who were more likely to require care would be more likely to use the new insurance. That could cause insurance payouts to exceed premium revenue.

From The New Republic, we discover that the problems aren't design flaws but features.
Dramatically expanding and strengthening health insurance leads to higher overall health spending, primarily because people who have good health insurance tend to use more health care than people who don't. And--please, please remember--mostly this is a good thing. The primary reason uninsured and under-insured people get less health care is that they can't afford it.

In other words, we want these people getting more health care, at least relative to what they are getting now. And, as a society, we should expect to expend more resources on them, relative to what we expend now.

The key question, going forward, is whether we can somehow offset this increase--ideally, in a way that reduces medical spending across the board and that doesn't lead to inferior medical care.

The way they will reduce medical costs is by either restricting access for everyone or cutting payments to health care providers, who will then restrict access for everyone (by either not taking more patients, not buying into the system, or retiring). We already have more people going to law school than med school. New doctors are going to discover their earning potential to be far less than previous generations and, given their student loan obligations, they will be even less likely to choose internal medicine or something like that as a specialty. Translation: fewer primary care physicians to take care of more people.

The truth is, bringing down the cost of medicine is going to require people going to the doctor less, not more, and the best way to do that is for people to bear the costs for normal medical care (i.e., doctor's office visits, immuizations, etc.). Your car insurance doesn't pay for you to get an oil change. Why should your health insurance pay for your doctor's visit?

Democrats like to wave around terms like "Cadillac health plans" and "taxing wealthier constituents" without bothering to tell the average person what those terms mean for them. Of course, they don't want to bother letting you know that your employer-provided insurance will most likely fall under a "Cadillac plan" and face higher taxation or, if you are a professional (like a nurse or computer programmer) you qualify as one of the "wealthier constituents" they want to tax. Fortunately, it is the Republicans' job to let you know about these things.