Tuesday, April 5, 2011

How does the Ryan proposal stack up with ACA (Obamacare)?

I've included a few links below to "The Incidental Economist" which, in my opinion, is the best source for unbiased information regarding health care on the Internet. One of the main themes of their blog is the fact that quality health care is comprised of three things:
  • Cost- which has obviously been soaring over the past decade
  • Coverage-we currently have 50 million people uninsured in the US, is this acceptable?
  • Quality-what is the best way to look at the quality of care in the US versus the world?
Usually it is difficult to improve all three of these areas at the same time, in fact you often can only improve on two of these areas at the expense of the third.  As the blog points out, the Affordable Care Act's (ACA) goal was to increase coverage to roughly 95% of the population while pushing for methods to slow down cost inflation (which opened it up to criticism over quality). The Act called for this plan to be implemented over a ten year window so we have yet to see if it effective or not. Now, we compare the ACA with the recent health care provisions mentioned to Rep. Paul Ryan's budget proposal. Rep. Ryan language focuses on the cost.

Unfortunately, I believe,  this savings may come at the expense of coverage and/or quality. I say this because current ideas being thrown around include limiting medicare benefits to increases only at the level of general inflation (2-3%) as opposed to the much high inflation of medical costs (double this level). This means that every year the net benefit of insurance will decrease by this 3%+ gap. Also, there is talk of moving Medicare to a program less like a pension (where the government centralizes the contributions and expenses of the population) and more like a 401k (individuals have more say on what coverage they want to pay for). The main problems with this are the fact that individuals have a horrible track record with 401k-type investments, they routinely contribute too little and have a hard time planning for adverse events. Also, when it comes to health care, people may not put enough value into their own health risks which would lead to future burdens being place on the government anyways. For example, if I decide that I don't want to spend money on cancer insurance and reduce my contributions for this service, would the government eventually be left on the hook for my medical costs if I was terminally ill with cancer? Or would the hospitals/doctors simply refuse my service and let me die?

For much more insightful analysis on this debate, please follow this link.
http://theincidentaleconomist.com/

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