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.
The Homa Files 
August 22, 2011 at 5:00 pm |
There is a small hole in your argument that it is “not having skin in the game” that causes increased utilization and expenditures. That small hole being roughly the size of the rest of the planet earth.
If you were correct about public sector insurance schemes like medicare being a cause of increased usage and expenditure since they constitute paying for care with “other people’s money”… then why does Canada… a country where the *entire national population* is enrolled in such a program, have half the health care costs per capita that the US has while achieving equivalent outcomes?
Or France?
Or the UK?
Or Germany?
Or Sweden?
etc…
The problem is not that medicare exists, it is that it is not universal. So people who can see the day coming down the road when they’re going to get on it will obviously delay their health care utilization until they’re covered by it. In many cases this will result in more expensive treatment being required than if that person had just received earlier preventative treatment. So when you compare out of pocket expenditures to medicare expenditures in the US’s crackpot health insurance system of course the spending is skewed in favor of medicare enrollees.
If on the other hand you compare US expenditures with those of countries with rational health insurance systems the real problem quickly becomes obvious. And that problem is not the nature of public sector health insurance.