Beyond the Deficit Commission’s non-report total cop-out on health care, what disturbs me is what changes they do recommend: embracing the economagic myth that the way to control health care costs is just to make regular people pay even higher co-pays, deductibles, and out of pocket costs. This idea that we can reduce overall health care spending by making people pay even more is pure economic theology. It is support by free-marketeers like a religious doctrine despite the fact that all evidence shows it is not successful.

Making regular people pay more for health care does not control cost

Looking back at America’s health care over the past few decades, or at a comparison of health care costs among industrialized nations, the foolishness of this thinking becomes clear. Over the past two decades, most Americans have seen their co-pays, deductibles, and premiums grow sharply, yet we still have the most expensive health care with costs growing far beyond the rate of inflation.

Internationally, there is no real positive correlation between out-of-pocket costs and lower health care spending per capita. The United States has the highest personal out-of-pocket cost and the most expensive health care. Switzerland has expensive health care and also high private and personal cost sharing. Meanwhile, the UK and Norway have low out-of-pocket costs and much cheaper per capita health care than both the US and Switzerland.

This economagic is based on a belief in savvy consumer economics, which just doesn’t apply to health care. Consumers need to have a deep knowledge, the ability to bargain, and the ability to turn down an offer for a market to bring down the price. This inherently does work with health care. Patients don’t have the vast medical knowledge the hospitals do to know what treatments they need and how marginally less effective a cheaper methodology often is. Many health services are monopolies, like patent-protected drugs. Critically, much of the expensive care is emergency based. When you are being rushed to a hospital with a heart attack, you don’t have time to shop around or decide to come back in two months during the hospital’s special President’s day sale. People aren’t going to refuse emergency life-saving surgery because they think the doctor is going to overcharge.

Though the theory is unsound, it is useful to those looking to justify making the middle class shoulder all of the “shared sacrifice.”

Not surprisingly, many of the Catfood Commission’s recommendations to reduce health care costs are wholly based on this economic theology. This includes proposals to increase cost-sharing in Medicare, end “first dollar” Medigap coverage, and change the way federal employee health care works. For example, from the draft:

Reform Medicare cost-sharing rules.
(Saves $10 billion in 2015, $110 billion through 2020)

Currently, Medicare beneficiaries must navigate a hodge-podge of premiums, deductibles, and copays that offer neither spending predictability nor protection from catastrophic financial risk. Because cost-sharing for most medical services is low, the benefit structure encourages over-utilization of health care.

The logic is effectively that senior citizens on fixed incomes so love colonoscopies and hernia surgeries that they are getting unnecessary ones just for fun but would stop if they had a higher co-pay. Of course, the reality is that most people don’t like going to the doctor, and, due to their lack of medical knowledge, undergo whatever medical treatment the doctor orders.

While the national and international health care data fails to support this line of thinking, it is useful as a justification for the commission’s desire to force regular Americans to pay more for health care while keeping taxes for the wealthy very low. Just a reminder that “deficit reduction” is mostly just a disguise for class warfare against the working class.