nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
See here for more discussion.

Thursday, April 8, 2010

Get Ready For Healthcare Price Controls, Govt and Insurance Stand-Offs

Price controls have a uniformly poor record in economic policy, but that's where we are headed.

Critics and supporters of national health care reform continue to look to Massachusetts for indications of what the future will look like.  The  Massachusetts experiment is similar in many ways to the new health care law, so observers are hoping to anticipate successes and failures from the state's experience.  Now in its third year of universal coverage reform, the indicators are that things are getting worse rather than better.

Costs have skyrocketed (now the highest in the nation), and waiting times have increased.  Emergency Room visits, expected to fall when the uninsured received coverage, have risen by 17%.  The state has had to remove legal (note:  legal, not illegal) immigrants from the roles "temporarily."  The most recent blow is the state's denial of insurers rate increases, and the insurers' decision in response to stop offering policies.  For the health insurance companies the costs are continuing to rise, so they must raise premiums in order to stay solvent.  The state on the other hand, has no money  to support rate increases, even with the federal subsidies it's receiving in order to prop the system up.  Yes, the federal government does not want the MA experiement to fail, so they have been funneling tons of money to keep them afloat.  The state has received three waivers (that I'm aware of) to their Medicaid responsibilities.  Employers are already looking for ways to dump their employee health care plans onto the taxpayer; paying a fine is cheaper than covering the employee.

Does all this sound like a good thing, as we await the implementation at the national level?

My guess is that the stand-off in MA between the state and the insurers will be resolved in the only way government can afford to respond;  with cost controls.  They must cap what gets paid for medical care (Price controls on gasoline in the seventies only gave us even higher cost at the pump).

Once that happens, insurance companies, hospitals, doctors, and pharmacies will be faced with increasing costs, but capped reimbursement.  At some point the system will either adapt or collapse.  At first you will see denial of care:  providers will stop taking patients in government programs (Medicaid, Commonwealth Care, Medicare, Tricare).  At some point either public outcry or declining patient loads will force some kind of change.

I suspect supporters of health care reform are not concerned for the chaos and pain this will cause for everyone.  They are still seeking the single-payer government system, and this will be the point they have tried to manufacture:  where only the government can bail the system out.

There will be fallout:  some doctors will quit, health insurers will go out of business, innovation will be undermined, and quality and cost will become a federal government oversight responsibility.

As de Tocqueville wrote, the government will step in and assure everyone that it can do the whole job, as long as people don't question the way the government goes about it, or the decisions they make.

Only then will reform be complete.

But is it what you want?



Anonymous said...

I am going to fall back on Jess's quote.
Everything will be ok in the end, if its not ok its not the end.

Doc D said...

Yeah, but it's easy to say that by just changing the definition of "OK."

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