A few days ago, I received an email from the daughter of our Congresswoman. In the email she explained that because of Health Care Reform, which her mother supported, she no longer had to pay a $25 co pay for each prenatal appointment. This will save a family “that lives paycheck to paycheck” over $500 per year. Such savings makes healthcare reform sound like a wonderful gift until you stop to reflect- who pays the $25 that the consumer no longer has to pay each time she visits the doctor? The answer: for those who have health insurance, the elimination of copayments will mean higher premiums. In other words, paychecks will become smaller as insurance rates rise to cover this new government mandate.
Proponents of this new rule emphasize that if people do not have to pay for preventative care, they are less likely to require more expensive hospitalization or treatment in the future. Thus, mandating no copayments on preventative care may reduce health care expenditures in the long run. This line of argument is fundamentally flawed. It assumes that the government knows or can find out how much preventative health care each person needs and mandate insurance companies to pay for the required number of visits. How many doctor visits are covered as preventative will be a political decision, and self-interested medical professionals will undoubtedly play an important role in that decision. Thus we should not be surprised if the government mandates more free preventative care than would be cost effective for most patients.
We live in a world of scarcity. Money spent on health care cannot be spent on something else. If the insurance company provides a certain number of free doctor visits, each person covered by insurance will pay for the number of times the average person visits the doctor, regardless of how often he visits the doctor. One person’s visit to the doctor has an imperceptible impact on the per capita cost of health care borne by a large insurance company. Thus the monetary cost to each patient of a visit to the doctor for “preventative care” is effectively zero. The quantity of health care demanded will be greater at a zero price than at a $25 price. Since almost everyone will demand more health care at the zero price, insurance premiums will rise for everyone, and because more health care is being consumed, the total cost of health care will be greater than if everyone had to pay a $25 (or higher) copayment.
If you are covered by a typical health insurance plan which requires you to pay part of the cost of each doctor visit, Congress has not saved you money by passing health care reform. Instead they have mandated that you spend more than you might choose to spend on so-called preventative health care. If you don’t pay for it up front with a copayment, you will pay for it through higher premiums. The only way to keep people’s premiums from rising is if the “free” care is taxpayer funded, and then someone still pays for it.
Instead of Obama Care, which takes away our freedom, what we need is health care reform that gives the consumer more freedom to decide how much health care to purchase with his own money.