Tuesday, April 15, 2008

Health Care System Not Prepared for Boomers

An Associated Press report discusses yet another study that shows that America's health care system is not prepared to provide care for its aging population. The article summarizes the findings of a recent report published by a committee of the Institute of Medicine:

The study said Medicare may even hinder seniors from getting the best care because of its low reimbursement rates, a focus on treating short-term health problems rather than managing chronic conditions and lack of coverage for preventive services or for health care providers' time spent collaborating with a patient's other providers.

Some people may read this and wonder how Medicare reimbursement can be described as "low" when everyone knows that health care costs, including Medicare costs, are rising dramatically. The reason for this is that the cost of health care, both within and outside government programs, is driven by service utilization, not by fee per service. For various reasons -- some legitimate, some not -- utilization of various expensive medical services and treatments is on the rise, and that expanded use of services accounts for much of the growth in spending.

Why is utilization increasing? There are various reasons. New technologies frequently cost more. Our medical malpractice system encourages the practice of defensive medicine. Low reimbursement rates also incentivize physicians -- either consciously or unconsciously -- to order more services in order to increase incomes. Additionally, utilization continues to rise because Medicare -- and private insurance, which frequently follows the policies and requirements of Medicare -- pays for the wrong things. They don't pay for things like patient care or patient education, which frequently are the most important needs. Instead, they reimburse for tests and diagnoses. Thus, if you have to go to the doctor or the hospital, you will have lots of tests run. Even patients without a medical condition meriting care will need to have their complaints "medicalized." As one doctor said to me, insurers don't pay for "I don't know."

One suspects that these problems will worsen as politicians race to embrace a public interest in expanding the scope of government run health care.


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