In good times and bad, people still get sick, right?
This conventional wisdom makes sense: Healthcare should largely be immune from the ups and downs in the larger economy.
According to a recent study, it’s not.
The National Bureau of Economic Research recently published a study finding that 26.5% of Americans report cutting back on routine medical care since 2007.
Cutting back was more prevalent among younger people, those with lower incomes, and those whose financial portfolio has been hard hit by the recession.
The study also compared cutbacks in routine healthcare spending in the U.S. with those in other countries—specifically, those that have universal healthcare.
Of course, the higher the out-of-pocket cost, the greater the ensuing cutbacks.
For example, nations like Britain and Canada have lower co-payments and thus experienced smaller cutbacks than France and Germany saw with their higher co-payments and cutbacks. The U.S. saw the highest cutbacks of all.
And this should not surprise you: This information is being used to support the new healthcare “reform” law.
With over 30 million more people expected to swell the ranks of the insured—especially people with low or no incomes—this will supposedly increase spending on preventative care. Problem is, insurers won’t be able to charge co-payments for that care . . . or even count it toward part of the insured’s annual deductible.
That may well increase the numbers and frequency of routine healthcare provided in the U.S., but the unintended consequence is that physicians are likely to get squeezed yet again.
If the insurers can’t charge for it, what are they likely to do? Negotiate lower rates with physicians. Or, in the case of HMOs, it will be more patients to see at most likely the same or lower reimbursement rates.
Now think about this: In August 2010, the Journal of the American Medical Association published a study showing that the overall number of emergency room visits increased by 23% in the 10 years spanning 1997 to 2007. That’s double the rate that can be explained by the growth of the population alone.
The reason? Visits by adults with Medicaid coverage.
ER visits by adults with Medicaid increased 39% during the time period studied. Among adults with Medicare, private, or even no insurance, the level of ER visits was virtually unchanged.
And it’s easy to see why. The government-funded insurance program has reimbursement rates so low that many physicians won’t accept it. And who can blame them? Often the doctors treat Medicaid patients at a loss.
Here’s the thing: Guess what the health reform law is relying on to cover many of those 30 million Americans? That’s right—Medicaid. Medicaid is projected to cover 16 million of the as-of-now uninsured Americans by 2019.
So the federal government has record high levels of debt, and our entitlement programs like Social Security, Medicare, and Medicaid are in a precarious state. Incomes and employment are falling and, thus, so will tax revenue, yet somehow, we can afford to enroll millions more into an already broken system.
And just because someone has insurance doesn’t mean they can easily get care. Since many doctors refuse to see Medicaid patients, it stands to reason that a good portion of those 16 million folks will make the E.R. their first—and only—stop for medical care.
Obviously, the main beneficiary of any increase in care resulting from health reform legislation will be the hospitals. Although at current reimbursement rates, they are not likely to see it that way.
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