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With No Public Option, Lowering the Medicare Age to 55 Will Make Our Problems Worse

Lowering the Medicare enrollment age just makes the insurance companiesto defer treatment, because it becomes eventhat they'll have to pay the piper.
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There is talk in the Senate of lowering the enrollment age for Medicare. This would be a great idea... if the enrollment age were lowered to zero. But to lower the enrollment age to 55 -- especially at the expense of the public option -- would likely hurt our medical care system more than it helps it.

Let's be clear that there are two distinct problems with the American medical care system that we need to solve:
  • A whole bunch of people don't have insurance, and can't therefore get the range of medical services they need; and
  • We spend way too much - twice as much as most of the rest of the industrialized world- for healthcare that's not as good as what they get.
The focus of the debate has been often on the uninsured, but the problem of costs has more profound long-term impacts on our country. And what the Senate is talking about doing will help with the first but likely make the second a whole lot worse.

The reason we pay too much for not enough is that we underinvest in routine and preventative care, and end up paying through the nose for catastrophic and chronic care because of it.

The United States spends roughly 16% of its GDP on healthcare. Most of the rest of the industrialized world pays between 8% and 11%. Nobody else pays more than 11%. And those countries nearly all get better results than we do. At 16% of GDP and growing, the costs of healthcare are destroying our businesses and families - and we're not healthier because of it!

If you don't do the things that will keep people healthy, you end up having to pay when they get really sick.

There are many ways we can cut health costs. For instance, we can nibble around the edges by making better use of technology. But to really solve our health cost dilemma, we need to change the misguided incentive system that has brought on the crisis we now face.

Why do we underinvest in routine and preventative care? Because insurance companies won't pay for it, or have a policy of under-reimbursing for it. Why? Because they calculate that by the time the real bill comes due, they will no longer be insuring the patient. Maybe the patient will have changed jobs -- an increasingly common pattern in our modern economy. Or, more likely, maybe the person will be covered by Medicare, and it will be up to the taxpayers to cover the costs.

So lowering the enrollment age of Medicare to 55, just makes the problem worse. It just makes the insurance companies more likely to defer treatment, because it becomes even less likely that the insurance company will have to pay the piper.

If doctors cannot be properly reimbursed for preventative care, they will not emphasize it. If doctors do not emphasize it, individuals will be less aware of it. If we are less aware of it, we will continue to sicken as a society.

This leads to some pretty dumb outcomes. For instance, I'm at high risk for type 2 diabetes: my dad has it, my uncles have it, my grandfather has it... you get the idea. So it would make sense for me to be monitoring for early indicators. Total cost of an annual blood test? About $15. And if we catch problems very early, we can change diet and exercise (cheap) rather than wait until there's organ damage and a need for insulin injections and kidney dialysis, which would cost tens to hundreds of thousands of dollars. But there were years when my insurance company wouldn't pay for the test. By their calculations, they're unlikely to be the ones insuring me when things finally go south and I need really, really expensive care. So why should they invest even $15 in fending off such an outcome?

We can only solve this problem by having a health delivery system that calculates the return-on-investment for specific procedures over the entire lifetime of the patient. If a dollar spent today saves $100 in ten years, the incentive needs to be to spend that dollar.

This is why we need the public option. A cradle-to-grave insurance plan will have the correct incentives to calculate the real return on a preventative procedure. Rather than externalizing costs to Medicare, it is likely that the public option will serve as a forcing function to change how care is delivered in order to keep people healthier.

So to me, while lowering the Medicare enrollment age to 55 is a lovely idea, it's not sufficient and it's not a substitute for the public option. It's likely to raise the total cost of healthcare in this country rather than lower it. It will be even less risky for insurance companies to refuse to invest in keeping people healthy, since the odds are even greater that the expensive catastrophic and chronic care costs would be borne by the government rather than private insurers.

If we're going to open enrollment in Medicare, let's do it right: open it to everyone. Or find a way to fix the problem so that insurers stop having incentives to make Americans sicker.