With air ambulance bills sometimes hitting $100,000 per flight, state officials are planning to submit a proposal this month to the federal government to incorporate the service into Medicaid in …
With air ambulance bills sometimes hitting $100,000 per flight, state officials are planning to submit a proposal this month to the federal government to incorporate the service into Medicaid in hopes of making the service affordable.
In a state with a small population spread out over a large space, air ambulances are used regularly to transport patients to hospitals. While Medicaid and Medicare pay a small amount of the costs, most of it is borne by the patients or their insurance. A single life-saving flight sometimes financially ruins the patient.
Speaking on the state’s Medicaid proposal, Franz Fuchs, policy analyst with the Wyoming Department of Health, told NPR, “The free market has sort of broken down. It’s not really working effectively to balance cost against access.”
It was a puzzling thing to say about one of the most highly regulated industries in the nation that takes up nearly 40 percent of federal mandatory spending. Where is this free market?
Following World War II, in an effort to encourage employers to provide fringe benefits, the federal government exempted health insurance from taxes. The result was a system in which a third party manages costs of healthcare, rather than the people receiving the service. This leaves little incentive for people to shop around for price or quality.
Medicare and Medicaid were introduced in the 1960s, mostly as a means to ensure the nation’s health care providers could operate profitably. During the first five years of the program, reimbursements to providers grew by 72 percent, while enrollment grew by just 6 percent.
Today, the nation spends $3.4 trillion on health care, or about 18 percent of the total economy. If total national health spending would have grown at pre-Medicare rates, today we’d only be spending $220 billion.
Health care is labor intensive, and lives depend on it. It’s hard to picture it operating without lots of government oversight and licensing. But as the state looks to address one area of excessive costs in health care with Medicaid, it’s following a familiar pattern of government trying to solve problems created by government with more government.
What if there were a retail market in health care, where those receiving the services were directly involved in shopping for price and quality? This is what we do with cellphones, computers, and household appliances — all of which have seen costs go down while quality went up.
We don’t have to theorize on what would happen. There already is such a market in health care services with cosmetic procedures, which are generally not covered by insurance and receive no federal funding.
Of the top 10 cosmetic procedures that were available both in 1998 and 2016, prices increased less than the inflation rate. Lasik procedures, which are also sold directly to the buyer, have likewise seen increased quality and decreased price.
The Surgery Center of Oklahoma, in Oklahoma City, is a clinic which caters to patients who pay cash. It posts prices online. It charges less than $20,000 for a knee replacement. The national average for the procedure is $57,000.
Anywhere the federal government tries to make things affordable, quality goes down and costs go up. Then, we look toward government for more help.
There’s not a whole lot state officials can do about a problem created by the feds, but let’s not pretend that there’s a free market in health care causing prices to spin out of control. There hasn’t been one for generations. And that is the problem.