Profitability and insuring the elderly
Those who liken the health plan for government employees to the Republican plan for moving Medicare to private insurers miss a significant difference: the patients.
The Federal Employee Health Benefits program works because its beneficiaries tend to be young and healthy. The many employees not needing expensive care subsidize the few who do. When government workers retire at 65 Ÿ at which point they may start needing more health care Ÿ Medicare takes over.
Private insurers participating in any future voucher-based Medicare system would compete for the tennis players and avoid those with expensive multiple conditions. I can think of no sane business model in which a for-profit insurer would compete for an 85-year-old needing a new hip, a heart valve and twice-a-week kidney dialysis Ÿ unless he had many thousands to cover the part of a high premium that “premium support” (the voucher) wouldn’t. Medicare was created as a government-run plan precisely because insuring old people needing extensive medical services is a generally unprofitable enterprise.
But let’s pretend otherwise. Here’s a modest proposal in the spirit of making the numbers work for vouchercare:
Ÿ Raise Medicare eligibility to 95. This makes a great deal of sense. Without health coverage, 80-year-olds are likely to die sooner and put less stress on the program’s finances. Sure, those 95 and up use a lot of medicine, but there are few of them. The money saved on octogenarians would more than cover those bills and free up extra for more tax cuts.
Ÿ Eliminate the funding of annual health checkups. First off, they’re not so expensive that people can’t pay for them on their own. Sure, many won’t spend their own money on this basic health service, but that’s part of the actuarial plan. Many such cheapskates will miss diagnoses of chronic conditions and serious diseases, sparing Medicare the cost of their treatment. If the conditions progress, shortening lives and time on Medicare, still more savings.
Ÿ Provide full funding for homeopathic miracle cures. Remedies such as raspberry ketone and wolfsbane tend to cost a lot less than traditional medicine and cover every ailment. By offering to subsidize them, Congress would be giving them a seal of approval. If they don’t work, and the patient dies early as a result, that saves money, too.
Ÿ Fund unregulated clinics. Why let unelected government bureaucrats pick winners and losers among health care providers? We don’t need regulations at all. Some clinics may offer fine medical services and some substandard care or engage in outright fraud. Let the marketplace weed out the con artists. Meanwhile, the quack clinics that do survive will hasten the demise of their more sickly patients, again reducing the taxpayer’s burden. We should trust the American people to choose their own health providers.
Ÿ Encourage cherry-picking of healthy customers by private insurers. If a Medicare insurer wants to put its sign-up sheet at the top of a five-floor walkup, why not let it? There are all kinds of ways private insurers can focus on retired marathoners without admitting to doing it. Preventive care, yes. Expensive new chemo treatments, no. Consider the pluses: Hardy 68-year-olds are offered benefit choices (health club memberships?) they wouldn’t get in stodgy traditional Medicare. Meanwhile, they wouldn’t have to subsidize the irresponsible people who let themselves get old.
On a serious note, an American Enterprise Institute paper points to this virtue in applying the federal-employee-plan model to Medicare: “... federal employees wanting a more expensive plan must pay the higher premium on their own,” and that “makes individuals more cost conscious.” Yeah, and what are the risks of miscalculating at a healthy age 35?
Perhaps some of the modest proposals aren’t modest after all.
© 2012 Creators Syndicate