The Real Source of Rising Healthcare Costs

from Dissent magazine:




The Real Source of Rising Healthcare Costs
Daniel J. H. Greenwood - April 26, 2011


REPRESENTATIVE PAUL Ryan has proposed to replace Medicare with a voucher system. Individuals would be expected to use vouchers to purchase private medical insurance, and would be left to their own devices if they couldn’t do so at a price covered by the vouchers. The plan ensures that this would happen: the voucher amount would increase with inflation, but medical costs are increasing far faster—and Ryan’s plan, by further empowering insurance companies, would be likely to make them increase faster still.

Thus our current system of single-payer, governmental insurance for the elderly would gradually be replaced by an increasingly private system in which each individual would be responsible for financing the bulk of his or her own medical care. According to economists Dean Baker and David Rosnick’s report on the Congressional Budget Office’s analysis of the plan, by 2022, when the program would take full effect, the projected cost for sixty-five-year-olds will be over one-third of their mean income. However, medical costs rise with age, so that number radically understates the costs to older people and, of course, sicker people. Costs for eighty-five-year-olds are likely to be double the costs for sixty-five-year-olds.

According to the CBO’s projections, Ryan’s plan not only places unfair burdens on those least able to bear them, but also would increase the cost of medical care by close to half. John Rawls famously suggested that inequality can be justified under limited conditions: if it makes the worst off better off than they’d be under more equal conditions. Paul Ryan’s plan would reduce equality and make all of us worse off, and the worst off most of all.

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What we cannot afford is to pay twice as much for it as any other country does. We need to reduce the astonishing inefficiency of our market-based medical insurance system. In our system, insurance companies waste stunning sums attempting to exclude people who might require care from low-cost pools, and providers and payers create enormous duplicative bureaucracies to process (and debate) individual claims. We need to reduce the inefficacy of our market-based hospitals, driven by fee-for-service payments to ignore results and focus instead on returns to investors and executives. And we need to replace our horrendously costly system of subsidizing drug companies with legally created monopoly rights (patents) in the vain hope that, contrary to all economic theory, they will use the resulting rents to subsidize useful research rather than inflate marketing costs. .............(more)

The complete piece is at: http://dissentmagazine.org/online.php?id=474

but the damage that insurance companies do every day is manifest, and started the whole health care reform movement. By focusing on "uninsured" as opposed to medically untreated, the problem was shifted so that insurance companies looked like the Solution instead of the Problem....