Unlimited Health Insurance Benefits Will Cause Medical Overuse, Expert Says

6 May 2011 |

Anyone who has visited this blog before knows I believe that the Patient Protection and Affordable Care Act, sometimes called Obamacare, weakens the actuarial foundations of private health care insurance and will lead to its demise. Many people think this might be a good thing, or are ambivalent about it, but I disagree. Through the concept of shared risk, private health insurance has made the highest quality healthcare affordable for hundreds of millions of people. Undermining its sustainability will make healthcare in America worse, not better.

For Obamacare to work, large numbers of young and healthy adults who have made a choice to not purchase health care insurance will be forced, through fines and other mechanisms, to buy it. Because the law has cut the rates for older, sicker adults, the young people will pay higher premiums than they would if normal, actuarial science was employed to set rates. Supporters of Obamacare believe that forcing younger adult to enroll in health insurance will offset the costs of removing caps on benefits and restrictions on preexisting conditions. I disagree. Those who are forced to purchase health insurance are not going to simply pay their premiums and carry on as before. They will want to “get what they pay for,” so they will make much greater use of the healthcare system than they did when they were uninsured. That means there will not be a windfall of premiums to offset the losses through unlimited benefits. Those premiums will pay for the care the younger people receive: screenings, check-ups, care for minor injuries and common ailments. I saw a financial problem in this influx of new healthcare users. Rosemary Gibson, an expert on patient safety, sees a different problem.

Gibson, who has spent the last 16 years working for improve patient safety, believes mandatory health insurance exposes the younger generation health insurance consumers to the unscrupulous practices of some healthcare providers. Gibson, the author of The Treatment Trap: How the Overuse of Medical Care Is Wrecking Your Health, and What You Can Do About It, told Jordan Rau of Kaiser Health News:

Health insurance used to be about giving patients access to providers. That’s still true, but it is also about giving providers access to patients. The 32 million people estimated to be getting health insurance coverage when the law takes full effect will be exposed to overuse.

The health reform law also removes annual and lifetime caps. That can be an enormously valuable benefit to those who have a serious illness and need medical care; at the same time, it’s an open invitation for health care providers, device manufacturers, pharmaceutical companies and every other health care business to increase volume and price. It’s like a credit card without a credit limit. It’s as if we have this tsunami, this surge of tests, procedures and medication. With health reform, we will be merely transferring the bankruptcy of individuals to the eventual bankruptcy of the federal government.


In the interview, Rau suggested that using the word tsunami in the wake of the recent one that struck Japan was insensitive. Gibson stuck by her comparison. “There’s an estimated 8,000 deaths from the tsunami,” said Gibson, “and that toll is certainly going to increase. It’s a terrible tragedy. The National Cancer Institute estimates there are 14,500 deaths every year from cancer because of radiation exposure associated with diagnostic imaging. That’s just one example. In Japan at least they had a warning system; in U.S. health care we have no warning system about that potential harm of too much medical care.”

Gibson points out that even the effort to curb medical costs has the unintended consequence of exposing patients to medical overuse. “If we pay for episodes of care, suddenly we have a lot more episodes, particularly if we ratchet down the payment per episode. What we know in fee-for-service is if we reduce the payment per unit that creates the incentive to increase the volume.”

In other words, if you give people a free lunch, or at least a subsidized lunch, they will consume it—and that comes with risks.

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