Cactus Conservatives Hear about Health Care Reform from Goldwater Institute
By Howard Levine
GOPUSA News
September 22. 2009
Byron Schlomach, an economist with the Goldwater Institute, spoke to the Cactus Conservatives, a political club in North Scottsdale, about issues related to health care reform.
The main point that Dr. Schomack made concerning the reforms is that they do not address the root cause of the problems, and actually make the problem worse. The fundamental problem with health care is that people do not directly pay for their own health care which drives prices up. He said that out of pocket expenses for health care were 47% of the total in 1960, but they had declined to 12% in 2006. A graph was displayed showing the relationship between lower out of pocket percentage to higher health care costs. When people are not directly responsible for their own costs, they tend to get more of an item than they need are not concerned about the prices paid. This is true for health care as well as anything else.
Dr. Schlomach cited an example of the same family having two children �" one when covered by a comprehensive health plan and the other when covered only by a catastrophic health insurance policy that excluded routine baby deliveries and related prenatal services. Without insurance coverage, the family was reluctant to get unnecessary procedures such as routine ultrasounds done in order to avoid unnecessary expenses. They also inquired about the prices of procedures before deciding whether or how to have them done. With insurance, though, the situation was different. They were willing to get as many ultrasounds as they could and had no concern about how much any procedures cost because the insurance company paid everything except $20 in copays.
An illustration similar to Dr. Schlomach's can make the point. Just imagine if you were going out to a restaurant and could order anything off the menu and only pay a copay of $10 instead of actually have to directly pay for the menu items. You would probably order more if someone else were paying for it and you would not care about the prices. If everyone was in comprehensive restaurant insurance programs, we would no doubt be having a crisis in restaurant expenses with the costs of eating out getting out of control. The insurance companies would try to find ways to negotiate lower prices with restaurants and limit the types of food items served to diners in various plans. For those unable to buy their own restaurant insurance, the government would have a Restaraid program to help low income people get access to restaurants with lower reimbursement rates than private plans. If all of this seems ridiculous, it is. That is the problem with health insurance in the United States, and Obama's plan will only make the problem worse by further separating the consumer of health care from paying for it.
An example more typical of a restaurant situation will also illustrate the point. You can do an experiment yourself. If you go out with friends for dinner, try going with the same friends to the same place twice. The first time, let everyone know that you will be splitting the bill evenly among all who are there. The second time, tell everyone that there will be individual checks; they will pay only for what they personally order. Which situation do you think will result in a lower bill and more satisfied people?
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