Archive for August 22nd, 2011

Why people – especially Medicare insureds – see the doctor way too much …

August 22, 2011

According to the WSJ:

Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions.

In other words, given two patients with similar health-care needs—one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance—the senior will use nearly 50% more care.

Why?

People who have comprehensive health coverage like Medicare tend to use more care, and more expensive care — with no noticeable improvement in health outcomes — than those who have basic coverage or high deductibles.

Prof Mark Perry extends the observation, to partially explain why healthcare costs are so high … in general, folks have a decreasing amount of skin in the game (think deductibles and co-pays) … and when consumers are insulated from costs, they consume more … and more … and more.

The graph below tells the story.

image

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Posted in Health Care / Medical Insurance | 1 Comment »

Hiring incentives are a bad idea … here’s why

August 22, 2011

An idea being floated as part of Obama’s September plan is to offer employers incentives – say, a year’s waiver on unemployment insurance premiums – for any new hires.

At first blush, it sounds like a good idea.

But it’s not.

First, no sensible employer is going to make incremental hires for a single year of benefits.  If they do, there are equal odds that they’ll jettison the employees when the waiver expires.

More important, the program is likely to punish responsible companies and reward irresponsible ones.

Let me explain.

Say, company A laid off 20% of its workforce during the recession – largely due to the business slowdown, but also the result of opportunistic house-cleaning – getting rid of slackers and dolts.

Comparable company B  laid off a couple employees due to the downturn, but – took its lumps – and kept most of its employees on the payroll, even though many weren’t really needed.

Along comes the hiring incentive.

Which company gets it?

Yep, company A – the company that shed employees.

What does company B get for standing by its employees.

Nothing.

Sound fair to you?

Sounds like punishing responsible behavior … again!

P.S. And, now that the idea has leaked … why in the world would any company hire employees now.?

Smart ones will sit back and wait for the incentives to kick in.

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Posted in Employment - Jobs | 1 Comment »