The inefficiency of government subsidized medical care

Phil Greenspun posted an article discussing a study of the efficiency of Medicaid in Oregon.

The conclusion was that Medicaid increased hospital use by about 30 percent, outpatient medical care by about 35 percent, and total spending by 25 percent. Finkelstein noted that advocates for expanding health insurance often predict that use of hospital emergency rooms will decrease when everyone is insured. That turned out not to be true in Oregon. The insured and uninsured used emergency departments at hospitals at roughly the same rate.

My observations here in Spain, a country with a state-subsidized medical system, has been that waits at emergency rooms are excessively long, due to large numbers of people visiting for common colds and other minor problems. It has gotten so bad that the government has begun to impose a minimum (nominal) payment to access the emergency room.

Update: A friend suggested that a desire to see a more efficient system implies less access. That’s untrue. Efficiency is about maximizing productivity, with minimum wasted effort or expense. Greenspun offered some interesting ideas for health care reform a while back.

One thought on “The inefficiency of government subsidized medical care”

  1. American health insurance is something I’m all too expert on — particularly from having worked in the industry 11 of the past 18 years.

    I’m not as well-versed in Medicaid as I am in Medicare. But at least for Medicare, it stands alone as being more efficient than any private health insurer in the USA. That is, less of the premium money is consumed in administration, fraud and waste by Medicare than any insurance company, and more of it is actually paid to doctors and other medical providers for actual services.

    As a receiver of health care, and as a “customer” of health care insurance, I am far more interested in reliability of coverage (i.e. that I will be covered at all times), comprehensiveness of catastrophic coverage (will I be covered for things when I really need it), and universality of coverage (can every be insured), than I am in efficiency. While the single goal for private companies and corporations is profit, the goal for government is equal access to services for its citizens. Those are widely divergent goals.

    The American health care system has a ton of problems, across the spectrum. We spend 3 to 5 times more than the next most expensive country in the world, and yet have outcomes worse than a couple dozen of the OECD countries. Health care is the monster eating the American GDP, and is one of the prime drivers at all levels of spending. We absolutely need a radical change to fix it, and we absolutely need to fix it if we want American to remain a first world nation.

    Emergency room utilization is a very funny thing. Two weeks ago, I woke up with an unusual, intense pain in my lower abdomen. Thinking that we didn’t want to use any more health care services (and cost our health care system) any more than necessary, we first called a “nurse line”. The nurse said “go to the ER.” I think that I should have perhaps clarified exactly with her that I should go to the ER, versus try to see a doctor at my regular clinic, or maybe visit an urgent care instead, before I hung up, but I plead to not thinking clearly due to the pain.

    So my wife drove me to the closest urgent care, which happened to be in the same building as the closest ER. We were told the urgent care there was not open until evening, but we could walk right into the ER if we wanted to, as they were not very busy at that moment. We decided instead to find another urgent care further away.

    At that urgent care, we learned that (1) they did not have any diagnostic equipment, (2), they had no doctor present, only a nurse practitioner, and (3) that they really only treated cuts, scrapes, runny noses, sore throats, and preventive antibiotic shots, pretty much. In other words, it really wasn’t very URGENT urgent care. For any of the things they actually could do there, I would simply go see my doctor by appointment! We chatted with the nurse there long for her to say “go directly to the ER!”.

    So we did. And good thing, too, because I had appendicitis, which they figured out after about 5 hours and after a CAT scan. 2 hours later I was in surgery, and about 15 hours after that, I was discharged from the hospital and sent home.

    The point is, ER over-utilization is being driven by a lot more than Medicaid or uninsured (a big one here, stateside — by law in most states you cannot be turned away from an ER, even if you can’t pay).

    I could write a small (large?) book about the health care situation in the USA, but I’ll stop here. Suffice to say, it’s a lot more complex than it looks to 99% of the people who comment on it.

Agree? Disagree? What do you think?

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