Organization: Penn State University
Date: Mon, 5 Oct 1992 15:04:13 EDT
From: <DGS4@psuvm.psu.edu>
Newsgroups: sci.econ
Subject: Re: Deficit - can it be corrected?
 <1992Oct5.085151.11751@lmpsbbs.comm.mot.com> <92279.092606DGS4@psuvm.psu.edu>
 <1992Oct5.175155.17506@magnus.acs.ohio-state.edu>

In article <1992Oct5.175155.17506@magnus.acs.ohio-state.edu>,
cthorne@magnus.acs.ohio-state.edu (Charles E Thorne) says:
>
>In article <92279.092606DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>>In article <1992Oct5.085151.11751@lmpsbbs.comm.mot.com>, markr@mot.com (Mark)
>>says:
>
>>>In article <1992Oct02.141437.160192@watson.ibm.com> platt@watson.ibm.com
>l
>>>(Danie
>>>E. Platt) writes:
>
>>>>If you go to a hospital, it becomes obvious why costs are so high.  There
>>>>is no incentive to keep costs down.  People can go get health care at any
>>>>institution regardless of the rates charged.  Most people never really
>>>>have to look at their bills; that's all handled for them by the hospital,
>>>>who bills the insurance companies directly.  Medical costs are hard to
>>>>control because there is effectively no market.
>
>>>This one could be tackled this way : Allow only 90% of medical costs to be
>>>insured, while 10% MUST be paid by the patient.  Of course, with a cap
>>>of, say 20%, of ones income, so as not to bankrupt the patient, but to make
>>>it painful enough that the patient will be inclined to seek out less        e
>expensiv
>>>medical care.
>
>>This describes quite well the system we already have, except for the income
>>cap.  The typical American worker with a family paid $720 towards his/her
>>health insurance premiums in 1988.  Twenty-three percent had a deductible
>>of $200 or more; 76% had a deductible of $100 or more.  Only 5% had no
>>deductible.  86% had coinsurance of 20%, 5% had 15 percent, 6% had
>>coinsurance of 10%.  The only difference is that out-of-pcoket limits were
>>not adjusted for income.  49% had a maximum OOP expenses of $4,000 ore more;
>>81% had a maximum OOP expenses of 2,000 ore more.
>
>Unfortunately, one of the problems with Health Care costs is that the
>government share of the approx. $600 billion total is the more important
>part of the puzzle.  If you divide the amount paid by federal funds by
>the number of people this covers, the factors are in the $4,000 per person
>range (the average for $600 billion/200 million covered persons is $3,000
>per person).  Unfortunately also, the people who are covered by federal
>funds care even less about what the charges are.  This group also covers
>people who are older or generally less healthy, but the fact that they aren't
>paying the bill, even indiretly, is a seriouos cause of this part of the
>federal deficit.

First, National Health Expenditures will be about 800 billion this year,
not 600 billion.  Second, the average payment per Medicare enrollee
was $2,808.  For persons over age 65 it was $2,391 (in 1989 and
1987 repectively).  The average Medicaid payment per enrollee in 1987 was
$645. In any case, the payments on behalf of persons by private insurance
are about the same size.  What's your point?  That elderly persons don't pay
for a significant fraction of their own health care?  You're wrong.

People on Medicare, unless they purchase additional private insurance, pay
a deductible of more than $600 per hospital episode (i.e. they can pay this
multiple times per year).  In addition, after the 60th day of hospital care
they pay 25% of costs and after the 90th they pay 50% of costs,  Thye have
a lifetime reserve of days, which, when used up, requires them to pay
100% of their care.  They pay $360 per year towards their physician
insurance.  They have a deductible for physician care of $100.  They have
to pay 20% of the Medicare approved fee for physician services, as well
as any balance bill above the Medicare fee (the federal government now
limits the size of this balance bill).  The average elderly person spends
more out-of-pocket on health care now than the average elderly person
did in 1965.

Medicare pays for almost no prescription drugs and only short-term
nursing home care,  It pays for only a small amount of home health care.

While there should certainly be more cost-sharing among higher income
elderly persons, the notion that the elderly don't pay much of their
own health care is ludicrous.  Higher levels of cost-sharing would do
little to reduce expenditures, and have little impact on the deficit.


Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.
Xref: sparky sci.econ:7971 talk.politics.theory:4452