How do you like those ads we taxpayers are footing the bill for that tout the “free preventative care” under Obamacare? Preventative care is the buzz word of Obamacare supporters. Unfortunately, all this “free” care is going to prevent is reasonably-priced health care.
Medicare patients already utilize health care services at a rate of 50 % higher than others with similar health-care needs. Merrill Matthews, a scholar at the Institute for Policy Innovation in Dallas, and Mark Litow,a retired insurance actuary, note in the Wall Street Journal:
Several factors help cause this substantial disparity. First and foremost is the lack of effective cost sharing. When people are insulated from the cost of a desirable product or service, they use more. Thus people who have comprehensive health coverage tend to use more care, and more expensive care-with no noticeable improvement in health outcomes-than those who have basic coverage or high deductibles.
In addition, Medicare’s convoluted benefit structure encourages the purchase-either individually or through an employer-of various forms of supplemental insurance. Medicare covers roughly three-fourths of total costs, but about 85% of the Medicare population has expanded coverage with small to limited cost sharing. This additional cost insulation pushes seniors’ out-of-pocket costs toward zero, thereby increasing overall utilization.
This will get much worse if Obamacare stands. Obamacare was created by policy intellectuals who know little about markets and incentives. Spending will be driven up significantly. Several studies have shown, the article says, that Medicare’s highly-regulated delivery system simply shifts the financial burden to insurance companies. This will get worse.
The Medicare system is currently set up to entice scammers-fraud is rampant because Medicare pays all its bills and then investigates if there are red flags. As a way to attract Republicans votes, Obamacare did set up additional anti-fraud measures. The Journal notes:
This raises an interesting point: Since private health insurers are much better at controlling utilization and reducing fraud, why not turn to the private sector to resolve Medicare’s excessive utilization? That’s what House Budget Committee Chairman Paul Ryan was trying to do with his premium-support model that would eventually shift Medicare beneficiaries into private health plans.
Simply relying on unelected bureaucrats, such as ObamaCare’s Independent Payment Advisory Board, to ratchet down Medicare price controls won’t control utilization. And history has proven that it doesn’t control spending.
But the real point is:
Medicare needs to be totally revamped. The benefits package needs to be rationalized so seniors can tell what their financial exposure is and choose from private-sector, high-deductible options, including a Health Savings Account plan. Seniors need to benefit financially from good choices. Giving them more options and control is the best way to reduce that 50% additional utilization while preserving the program for the future.
If Obamacare is overturned or declared unconstitutional, we need health-care reform that is incremental and grounded both in free-market principles and an understanding of human nature, not in the ideals of intellectuals who live in a faculty lounge bubble.