Imagine if Medicare were to become insolvent. What would happen?
Would the sky fall?
Would people stop needing or receiving healthcare?
I don’t think so.
The implications of this are interesting to ponder.
I suspect the majority of us would be fine. Healthcare would be delivered, but the world of healthcare as we know it would rapidly change. Congress would likely attempt to take the path of least resistance to maintain solvency by raising taxes, imposing a healthcare mandate, or delaying the Medicare eligibility age.
But what if all hell broke loose and no Medicare were available. What would our healthcare world look like?
First and foremost, existing entities dependent on Medicare payments would scurry to assure their viability and potential for profitability any way possible. For most, rationing of healthcare benefits would rapidly accelerate. High risk individuals would be denied insurance coverage or face exorbitant premiums. Competition for low-risk patients would accelerate between insurers. The weak insurers would die out or be consolidated and the strong would likely survive. Hospitals would shift billing from their largest insurer to the patients themselves. Patients would have an eye-opening experience when the reality of their price markup reveals the perversity of health care prices. Grass-root advocacy groups would call for immediate change to include price transparency. Hospitals would be forced to compete for high-cost services. Simultaneously, hospitals would recognize the need to greatly restrict new debt obligations (like construction costs) to conserve resources to cover bad debt. The unchecked hospital construction boom would quickly cease. Unnecessary administrative and support personnel would be weaned. Hospitals would put pressure on suppliers to reduce costs: pharmaceutical companies and medical device companies would be forced to cut costs, lest their customers go bankrupt, too. Pharmaceutical companies, eager to cut costs, might remove the excess cost-ballast of direct-to-consumer advertising. CEO’s salaries and severance packages would come into line with reality. No one would be spared cost-cutting measures.
Regrettably, many patients with existing illnesses would likely be forced into bankruptcy as hospitals would increasingly employ legions of collection agents to extract payments from their patients' assets. Some would turn to Medicaid or another government safety net system. These stories would likely make heart-wrenching press stories and more pressure would be placed on the healthcare system to reduce costs or develop cost-effective options for the disenfranchised. Suddenly, patients will ask, “Could this happen to me?”
Doctors would immediately opt out of accepting any Medicare reimbursement due to the unreliability of payment. At least the threat of reimbursement cuts would cease. Especially since the ultimate reimbursement cut had just occurred. Patients would have to negotiate with doctors to provide care. Each test ordered on behalf of their care would be closely scrutinized for necessity. Costs would have to be transparent. Patients would become frugal lest they squander their life savings. Insurers would adapt to providing patients with insurance options to cover their costs. Employers would have the options of purchasing insurance for their employees at varying levels of coverage as a “perk,” provided the costs were not excessive. Since healthcare would no longer an entitlement, people would have to prioritize their savings to adjust for the inevitable need for late life care. Health savings accounts, or their equivalent, would flourish.
Admittedly, there are those less fortunate who cannot afford to contribute meaningfully to their healthcare costs, or there will always be individuals whom have been afflicted with a malady that has left them unable to contribute. For those, a bare-bones government-sponsored health plan would have to be available. To do otherwise would be inhumane. But healthcare, like hotels and restaurants, will gradually be tailored to meet the needs of patients. Those wanting 5-star Hilton-like accommodations and can afford them, will pay for them. Those that can only afford a Motel-6 accommodation will pay less. Nothing will be free any longer. Come to an Emergency Room? Expect a bill. Can’t pay? Apply for government assistance or a low-cost insurance or payment plan. That’s the way it’ll have to be.
Additional pressure would also be applied to limit unnecessary and costly testing in a non-Medicare era. Pressure to establish meaningful nation-wide tort-reform will simultaneously take place. Since medical errors in any healthcare system are inevitable, peer-directed health courts or a no-fault payment policy would have to be implemented. Perhaps then, and only then, patients with legitimate complaints will be heard and compensated, while exorbitant and costly legal posturing and judgments with grossly overpaid expert witnesses and the like, will end.
Without Medicare, for the first time healthcare policy would become a priority, not an afterthought.
Imagine. Real change.
And most for the better.