Legal Commentary

Putting Lipstick on the Health-Reform Pig:

By Todd Zywicki

An interesting article in the Chronicle of Higher Education (I?m not sure if it is subscriber-only) raises some excellent points about the health-reform legislation that hadn?t really occurred to me previously.  One point that I should have thought of myself but didn?t occur to me is the peculiar incentives created by the mandate to cover preexisting conditions:

I guess one could say that the best thing about the current bill is that it allows individuals and families to opt out of insurance coverage until they need it. Since insurance companies would not be allowed to deny coverage based on preexisting conditions, but individuals and families will be penalized only at the rate of only 2.5 percent of their annual income if they do not have insurance, it makes sense for families earning under around $500,000 per year to forego insurance coverage until they get sick. Clearly insurance coverage costs most middle-class families far more that 2.5 percent of their annual income, so the current bill serves as a disincentive to purchase insurance. Bravo, Mr. President!

I should note that her opening and closing sentences in this passage although seemingly facetious are not entirely so, in that elsewhere in the article she discusses how the current version of health insurance encourages overuse of the medical system, overuse of the most expensive aspects of the medical system particularly, and that this high usage level provides no demonstrable increase in health.

A review of data for people over 65, all of whom have health insurance, shows that when they have access to more care, they endure more medical visits and procedures, which costs more money, but does not necessarily lead to improved outcomes.  The folks at Dartmouth have been studying this for years, and their data shows that having access to more specialists and medical facilities increases Medicare costs, but does not improve outcomes. I?d encourage you to read Shannon Brownlee?s insightful book, Overtreated: Why Too Much Medical Treatment is Making us Sicker and Poorer, to understand how overtreatment is costing us more money, but not improving health-care outcomes.

She also calls for tort reform for the medical malpractice system and reforms to align patient and doctor incentives more closely to making more cost-effective choice treatments.

Full post as published by The Volokh Conspiracy on March 10, 2010 (boomark / email).