Publisher's Note: This article originally appeared in the Beaufort Observer.
Imagine you own a business that has multiple locations but with basically the same demographics of employees at each of the six locations. Imagine that your CFO came in to see you one day with some charts on how much sick leave was costing at all six plants and disclosed to you that at three of your locations the average number of days of sick leave was 50% higher than at the other three locations.
Would you just allocate more money to the three locations that had 50% higher sick leave days being used? Suppose your CFO told you that your company does not have the cash flow to fund the excess days and you will have to go to the bank and borrow the money to meet the excess expenses. What would you do?
That is essentially the situation that is being played out in the "deficit reduction" talks going on in Washington.
But last week the Wall Street Journal published an editorial that said:
"Almost all discussions about Medicare reform ignore one key factor: Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions. In other words, given two patients with similar health-care needs--one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance--the senior will use nearly 50% more care.
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."
Is it any wonder we have a problem in our health care system in this country? And remember, Medicare and Medicaid are the two leading causes of the increase in the Federal deficit, and have a tremendous impact on the growth of state spending as well. And ObamaCare would make the situation even worse simply because it adds more people to the system that insulates users from the cost of what they use.
So why would we not be better off to simply change the system, including employee paid health insurance, to a system whereby each of use buys our own insurance if we wish coverage or pocket the money if we choose not to obtain coverage. Of course we would have to not provide services that are not covered by insurance or paid for out of pocket. While it might mean that some of us would not get the medical care we might otherwise receive, if we continue on the road we are now on, that very thing is bound to happen anyway.
You get what you pay for and you pay for what you get.