AZ Week: Health Care Costs Unsustainable

The federal Affordable Care Act is not the panacea for health care reform that some say it is, although it has some positives, say several industry professionals. But an economist says it continues the current flawed system…

“Let’s keep in mind that health care is pretty expensive, partly because of the insurance model,” said economist Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute in Phoenix.

Schlomach argued for doing away with the third-party payer model, which he said isn’t true health insurance but rather a prepaid system that helps drive costs.

The Affordable Care Act continues that model, he said.

He likened the system to the idea of a benefactor agreeing to pay for everyone’s meals at a high-end restaurant. Because price isn’t a factor, everyone orders the most expensive meal, and the restaurant pushes the meals that get it the highest profit margins, Schlomach said. That, he said, is what happens under the current health care insurance model.

“There’s no incentive … for patients to do anything to control costs, and consequently, no incentive for the caregiver to control costs,” he said. Everyone pays for that, but it is so indirect — through employers and state and federal programs — that the immediate impact is not felt.

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