Healthcare Reform Raises Costs

Assigned Reading: U.S. agency sees more health spending with reform
(FROM: Reuters)

The weird thing about this article is that you have to read 7 paragraphs before they tell you who issued the report:

The report, written by Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services, said the increase in healthcare spending reflected the impact of millions of newly covered people seeking medical care.

“Although several provisions would help to reduce healthcare cost growth, their impact would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions,” the report said.

Foster acknowledged his analysis of the sweeping reform had a “greater degree of uncertainty than is usually the case with more routine health care proposals.”

Democratic politicians are latching onto that uncertainty like a lifeline: “Democrats said many of the potential cost savings in the bill were hard to estimate”. When did “we don’t know what will happen” become a good reason to spend trillions of dollars overhauling our healthcare system? Call me crazy, but if the doctor says “I’m really not sure what this will do…” I’d rather he not find out by experimenting on me.

If we are going to have to deal with uncertainty, however, who do you think is better qualified to handle the uncertainty? A politicians? Or an actuary? Gee, my money is on the guy who has PhD-level understanding of statistics and spends his career estimating uncertain costs in order to set prices for insurance policies. I know, I know. Call me crazy.

There were some other important findings in the report as well. First of all, an extra 33 million Americans would get coverage by 2019 (versus what would happen with no reform). That’s significant, and we may as well concede that the reform would accomplish some of what it sets out to do. On the other hand:

The report, similar to one issued by the agency on the healthcare bill passed by the House of Representatives in November, went on to say the added demand for health services at first may be difficult to meet and could lead to price increases and a reluctance by providers to treat patients with low-reimbursement health coverage.

Medicare has significantly lower reimbursement rates than private insurers. Doctors, clinics and hospitals that rely heavily on Medicare patients for business “could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program,” the report said.

That last one is huge. The Democrats have promised that their reforms would not cut Medicare, but according to this report the indirect result could be to force doctors, clinics, and hospitals to leave the Medicare system. What good does it do to have your Medicare benefits uncut if there is no one left around who takes Medicare?



  1. Anonymous says:

    They better not mess up Medicare before I get a Scooter Chair for free. (sarcasm… I am not really overweight, Chuck)

  2. Anonymous says:

    Ross Perot was an actuary of sorts, look where it got him. I myself am a charts and graphs guy, so I miss him dearly. The truth and facts can be so fascinating.

  3. Jeremy Janvier says:

    Nice site – Here’s wishing you and yours a very happy and prosperous new year !

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