Government Pays for Your Healthcare, Government Owns It (And You)

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Although the policy details will be a subject for analysis and debate for some time to come, one line in particular from Ted Nesi’s report on Rhode Island’s latest Medicaid initiative is worth capturing now:

“Hopefully the example of Rhode Island will be evidence and ammunition, frankly, for us to make the case that this current system, when administered properly, can produce good results,” Congressman David Cicilline said.

Of course, Cicilline exposes more risk than he intends when he emphasizes the need for the state government of Rhode Island to administer a program “properly,” but that’s not the key point.  Rather, readers should take from the congressman’s quotation that the Ocean State is embarking on a big experiment with Medicaid.  Those who rely on the welfare program will soon become guinea pigs for a system in which “managed-care organizations,” otherwise known as “insurance companies,” give money to “accountable entities,” which are teams of healthcare providers, based on the health of their clients, rather than the services they provide.

As a concept sketched out by a bunch of centrally planning academics and bureaucrats, it sounds like a reasonable idea.  Change the healthcare system such that the economics align with the desired outcome.  Doctors won’t have incentive just to provide as many treatments as possible, but instead, to produce healthy patients.  As always, of course, the difficulty enters the system when it is put into action among real human beings with their peculiarities and personal incentives.

In general, doctors can improve the health of their lists of patients by looking for those who are already healthy.  Alternately, they can mitigate the losses from unhealthy patients by providing fewer services.  And somebody else has to decide whether the patient is healthy or not and whether a certain service will help.  That moves healthcare in the wrong direction.

The simplicity of a market system that places a monetary value on a doctor’s time and resources, which patients can decide whether to utilize based on the cost, ultimately puts the seller and the buyer on the same team.  You want items and services of value that will improve your life, and your doctor wants to sell them to you.  In a competitive market, one very valuable service a provider can offer is just being trustworthy enough that the client does not feel as if he or she is not spending money unnecessarily.  (That is, patients will generally want doctors who maximize the value that they get from healthcare, which, let’s face it, tends to be both expensive and uncomfortable, not doctors who maximize their bills and discomfort.)

In contrast to this market system of doctor-patient cooperation, the government’s new scheme arguably creates a more adversarial relationship in the doctor’s office.  You, the patient, stand in the way of the doctor’s receiving more money from them, the government-overseen insurance companies.  The incentive is not to convince you what is in your best interest, but to convince them that the “accountable entities” are working — which is to say that they’re hitting some metric developed by insurance agents (whose incentive is to collect more money from the government than they pay out for services) in cooperation with government bureaucrats (whose incentive is to keep adding new dependents into the mix so they can bill taxpayers).

Don’t miss the strange contrast in that last parenthetical.  The Medicaid experiment is to pay doctors for good outcomes, rather than the number of services they provide.  In order to achieve that end, the government will establish a new bureaucracy that will receive funding based on the number of people it can rope into dependency on its services, not how healthy they are.  Indeed, to the extent the system is not working well for Medicaid recipients, the bureaucracy has a stronger hand for demanding more money.

Just look at the recent history of healthcare in Rhode Island.  Our government jumped right into the Affordable Care Act (i.e., ObamaCare) and Medicaid expansion with both feet.  All of its efforts and tremendous expense to entice people to buy health insurance through a health benefits exchange called HealthSource RI mainly had the effect of snaring people into Medicaid, which has expanded from 169,700 recipients of Medicaid/CHIP as of December 2010 to 287,021 as of August.  That’s an increase of almost 70% — another 117,321 people who will now be plugged into the government’s healthcare experiment.

If you aren’t paying for your healthcare, you don’t own it.  You aren’t the one with the power to make decisions about your doctor’s pay.  If the government is paying for your healthcare, guess who does own it.  Guess who is making the decisions.

Congressman Cicilline provides us with some evidence of the factors that will be most important as government makes those decisions about your health.  Rhode Islanders aren’t human beings in need of medical services.  We’re “ammunition” for a political fight, giving one faction in national politics advantage as it seeks to make more and more of us dependent on the government plantation.



  • Mike678

    Health care can be made cheaper and even ‘free’. Cheaper by encouraging competition and tort-reform. Free by implementing the Gov’t run, top-down Cuban model so many uninformed leftists laud. It’s a two tier system. One system for the elites and foreign visitors, and one for the little people. Guess who actually gets good care?

    http://www.therealcuba.com/?page_id=77

    http://www.washingtonexaminer.com/think-the-cuban-healthcare-system-is-ideal-no-cigar.-not-even-close./article/2608367

  • MattM

    Of course, under the traditional US system, if one is paying for health insurance, you don’t own your healthcare either and don’t have a say about your providers pay. The only person who has that is someone paying for each visit or service from their own wallet.

    • Justin Katz

      Of course, although the existing system has more ambiguity, inasmuch as the insurer still requires either the individual or his or her group to continue coverage. However, I’m not arguing that the pre-ObamaCare system didn’t require reform, but that this new version of reform is the wrong direction. We should be increasing the direct responsibility of patients.

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