Monday, August 13, 2012

Medicaid as blueprint for universal healthcare

It has been proposed by some that had Obamacare been ruled as unconstitutional, that Obama could use that ruling to justify universal healthcare based off the Medicaid model. It is obvious that Obamacare is unconstitutional since the federal government does not have the authority to mandate commerce in order to regulate it and the fine for not purchasing insurance does not fall into any of the categories of taxation authorized by the constitution.

It is clear that Obamacare will severely damage the health insurance market by increasing free-ridership in the same way Romneycare did in Massachusetts and by increasing demand and decreasing supply so as to increase healthcare costs among other problems. However, since much of the problems in healthcare are caused by government programs, I would like to examine why universal healthcare based on Medicaid would be a certain disaster.

Medicaid has a terrible record of patient outcomes. A study published in the Annals of Internal Medicine found that the most significant factor in determining the survivability of heart attack was whether or not a patient was on Medicaid. Another paper published in the journal Psychiatric Services found that Medicaid was associated with worse outcomes among mentally ill patients. If you believe that universal healthcare means more people living and better health outcomes, you are dead wrong.

The system is so poorly designed that only about two-thirds of doctors will even see new patients on Medicaid while those with private insurance and even the uninsured can see almost any doctor.One of the big reasons that doctors are dropping covering Medicaid patients is because it often fails to cover costs and to get paid doctors have to spend countless hours filling out forms. In order to make up for fewer doctors, people on Medicaid are 1.5 times as likely to go to the emergency room as someone on private insurance. This is an unmitigated disaster for the hospital since they cannot deny Medicaid patients and according to the American Hospital Association, 56% of hospitals receive payment from Medicaid that do not cover the costs of service.

If Medicaid won't cover the full cost, guess who makes up the difference. By cheating doctors and hospitals, Medicaid forces up healthcare costs on private insurance companies and uninsured patients. These increased cost force insurance companies to increase their premiums. But who will cover the loss if their were no private insurers? Hospitals and doctors would be forced out of the market. To make up for this, the only possible solution short of going back to a freer market would be to completely nationalize the healthcare industry.

Nationalized healthcare does not avoid the costs of providing service, however. The costs will still be there now they will be ignored in determining how to allocate resources. Taxes will have to be raised to make up for the losses. Productivity will suffer and we will move to a European style slow-growth economy with a lower standard of living. But we will have "free" healthcare.

No comments: