Whose Life Is It Anyway?

Lewis Randall, Norman Rogers, and Brian Hall don’t want to join Medicare. It turns out they don’t have to, as long as they are so wealthy they can agree to forgo all of their Social Security benefits and return any benefits they have already received.

According to the Institute for Health Freedom, Social Security regulations state that:

Individuals entitled to monthly [Social Security] benefits which confer eligibility for HI [Hospital Insurance] may not waive HI entitlement. The only way to avoid HI entitlement is through withdrawal of the monthly benefit application. Withdrawal requires repayment of all RSDI [Retirement, Survivors, and Disability Insurance] and HI benefit payments made. [Emphasis added]

Yet this is inconsistent with the text of Sec. 1803 of the 1965 Title XVIII amendment to the Social Security act, the amendment that created Medicare. It says:

Sec. 1803. OPTION TO INDIVIDUALS TO OBTAIN OTHER HEALTH INSURANCE PROTECTION: Nothing contained in this title shall be construed to preclude any State from providing, or any individual from purchasing or otherwise securing, protection against the cost of any health services [emphasis added].

So, what can you do? Sue, of course. With help from the Fund For Personal Liberty, the three plaintiffs plan to sue the federal government for the freedom to choose their own medical care in old age. The case is expected to be filed this month in the U.S. District Court in Washington, D.C.

Why might they want out? Medicare, like all other government controlled health care programs of a certain age, responds to medical progress at a glacial pace, is fiscally unsustainable, and plagued by shortages.

Worse, it is not accountable when its policies harm patient care. Its price controls prohibit patients from using their own money to pay for extra services or better service from a physician. Its auditing practices make it impossible to maintain a confidential doctor-patient relationship. It dictates services and treatments to patients, physicians, and hospitals without knowing anything about a specific person’s situation.

For example, the October 15^th Wall Street Journal has a story about how private insurers are taking advantage of improvements in drug delivery systems. Rather than pay for someone to spend two months in a hospital or nursing home exposed to all kinds of pathogens and inconvenience, or to travel long distances to a central infusion center, private insurers are paying for at home infusion using backpack pumps and visiting nurses. The at-home cost is generally $150 to $200 a day.

Getting Medicaid to pay for at-home infusion will require an act of Congress. Medicare Part D pays for the drugs but not for the pharmacy, equipment, and nursing services that account for roughly half the $200 a day at-home infusion costs. It will, however, pay a hospital $1,500 to $2,000 a day for the same drugs administered on an inpatient basis. This is a tremendous waste that will never show up in studies of Medicare efficiency.

A reform that is long overdue is to allow people trapped in Medicare to head for the exits. One result might be the development of consumer pressure leading to innovations in health care delivery and real health insurance for the elderly.

The money is there. A study [gated, but with abstract] of lifetime health care costs in the United States by Alemayehu and Warner in 2004 found that per capita lifetime health expenditure is roughly $350,000 in 2000 dollars, with nearly half of that spent after retirement. The amount covered by Medicare is likely quite a bit less, as these estimates include spending nursing home expenditures and out-of-pocket costs not covered by Medicare.

These numbers suggest that health insurance policies for retirees with lifetime deductibles of $200,000 could be profitable. The Internal Revenue Service estimates personal wealth using estate tax data. It finds that millions of people have over a million dollars in assets at age 65, a market that might be worth developing if government would only get out of the way.

Print