Mark Perry Asks/Answers Why Medicare Patients See the Doctor More? Short Answer: OPM Disease

A SUBJECT NEAR AND DEAR TO MY HEART. Why do people who pay nothing for something, in this case Medicare for healthcare, actually use it more with no appreciable results and care nothing what it costs?

Mark Perry at Carpe Diem has the answers via WSJ and it's not rocket science, it's called spending other people's money:

Almost all discussions about Medicare reform ignore one key factor: Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions. In other words, given two patients with similar health-care needs—one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance—the senior will use nearly 50% more care.

Several factors help cause this substantial disparity. First and foremost is the lack of effective cost sharing. When people are insulated from the cost of a desirable product or service, they use more. Thus people who have comprehensive health coverage tend to use more care, and more expensive care—with no noticeable improvement in health outcomes—than those who have basic coverage or high deductibles.

In addition, Medicare's convoluted benefit structure encourages the purchase—either individually or through an employer—of various forms of supplemental insurance. Medicare covers roughly three-fourths of total costs, but about 85% of the Medicare population has expanded coverage with small to limited cost sharing. This additional cost insulation pushes seniors' out-of-pocket costs toward zero, thereby increasing overall utilization."

Because I have an individual health insurance policy with a very high deductible, I care what a health care service is going to cost on the front end. If I don't like the estimate, I shop around for a better deal and can usually get it. I also negotiate. I'm the one who tends towards keeping costs down in the system, whereas the unlimited user who gets it paid for by taxpayers, causes rising costs for everyone. The upward spiral goes on and on. But it bears repeating: It can't go on forever this way.