April 13, 2010 4 Comments
Yup, you heard it here that it may be a problem and now we see that it already is. As the ranks of insured expand we will see an approximate shortage of 150,000 doctors, mainly primary care doctors, in the next 15 years, according to medical experts.
Part of the problem is that medical money is wrapped up in testing due to how our insurance system is currently set up (more on this to come), leading many doctors to go into very specialized fields. Between 2002 and 2007 the number of medical school applicants entering family medicine fell by more than a quarter. This drop will more than likely mean longer lines to visit your primary care physician, especially when the millions of uninsured are finally insured under Obamacare.
Do not take this as a critique of doctors because they are behaving rationally. This is a critique of the system currently in place. This is the way the system is currently set up:
Employer-Provided Family Benefit
(Husband and Wife, no Children)
|Annual Expenditure||Employee Pays||Employer Pays|
This is what this means: For all medical expenditures, you, the employee, pay the first $800. This is more commonly known as the deductible. For the next $8000, the employee pays 20%, or $1600, and the employer pays 80%, or $6400. Everything above that $8800 mark, the employer pays for all. To use an illustration Dr. Newell used in class, image this product which your employer provides for is food. What would you be tempted to do? Overindulge is correct. You would as quickly as possible get to the $800 mark so that your employer picked up the slack and then everything after that would be mostly paid for by someone else. If this was me, Megan and I would be eating Outback Steakhouse, Olive Garden, and Texas de Brazil all the time. Why? “Because I am not paying for it baby!”
The same concept applies to your health insurance. Once you reach a certain level, as long as you (or more commonly, your employer) are paying for your insurance you can have as much testing, as many name brand prescription drugs, and as many doctors visits as you want and all you will have to pay in the course of a year is $2400, no matter how much you use it. The incentive is to overindulge, resulting in higher health care costs.
The problem Obamacare is (at least overtly) seeking to combat is the rising cost of health care. The reality is that his “reform” does not reform anything, it only regulates. If we really want to reform we must change the system itself. One way to do this is through Health Savings Accounts, which have been used with some success by Indiana state employees. Mitch Daniels, the current governor of Indiana, was the leader of the state when they moved to these Health Savings Accounts as an option for all employees. What Indiana does is deposit $2750/year in an account that is completely controlled by the employee. So when they need a prescription, they can ask for a generic (and save a bundle) and make cost conscious decisions about testing. The savings this is generating for the state in health care costs is truly startling considering where health care costs have been going. Even more encouraging is that a whopping 70% of Indiana state employees opted into the system! Why? Because when the year ends, they get to keep everything left in their health savings account. There are numerous tax advantages to a Health Savings Account, which you can read about here.
If we truly want lower costs then we need to change the system, in particular by giving individuals more power over it. Further regulation will not drive down costs.