Politics & Policy

Check Your Freedom at the Door

The universal-coverage problem.

Hillary Clinton and John Edwards promise to deliver “universal coverage,” through some combination of government and private health insurance. Many on the left would prefer government coverage for everyone. Dennis Kucinich and New York Times columnist Paul Krugman advocate “Medicare for all,” and even Clinton proposes to open Medicare or a similar program to all comers.

Among the dangers of universal coverage is that when the system fails, patients may find they no longer have freedom to spend their own money to get the medical care they need. This threat to patient autonomy exists right here at home in the U.S. Medicare program.

Most would agree that patients should always be free to spend their own money on the medical services they desire. Over the past 20 years, however, the Medicare bureaucracy — and to a lesser extent Congress itself — has limited the freedom of beneficiaries to purchase medical services with their own money.

Medicare beneficiaries have complete freedom to spend their money on medical services not covered under the Medicare program. However, the federal government effectively prohibits them from purchasing Medicare-covered services themselves.

The restrictions work by prohibiting physicians who engage in such arrangements from seeing any Medicare patients for two years. Since 97 percent of physicians participate in Medicare, and being cut off from Medicare patients would devastate a physician’s practice, that prohibition effectively precludes most Medicare beneficiaries from ever paying for covered services themselves.

At present, that prohibition seldom denies care to beneficiaries — but only because Medicare generally pays providers enough to guarantee their participation. As Medicare’s fiscal pressures mount, however, Congress will have to reduce payments, which will reduce beneficiaries’ access to care. When that occurs, the ban on private contracting will deny care to beneficiaries, because it will prevent them from going outside Medicare to purchase those services themselves.

In the meantime, the ban effectively eliminates beneficiaries’ right to privacy, because it eliminates their ability to purchase covered services (e.g., psychiatric care) without creating a record in a government database. Privacy is a real concern: a recent Government Accountability Office report found that “47 percent of Medicare Advantage contractors reported privacy breaches within the past 2 years, as did . . . 42 percent of Medicare [fee-for-service] contractors.”

Critics argue that allowing beneficiaries and providers to opt out of Medicare on a service-by-service basis would create a system where the wealthy could obtain better care than non-wealthy beneficiaries. Ironically, however, the ban on self-payment itself creates the very type of two-tiered system its supporters fear: wealthy seniors can always get the care they desire by opting out of Medicare entirely.

Critics also object that private contracts could lead to situations where physicians bill both the patient and Medicare for the same service — a very real concern. The GAO has designated Medicare a “high-risk” program for nearly two decades because of its vulnerability to fraud, waste, abuse, and mismanagement. In 2005, the GAO wrote, “Medicare will continue to be a high-risk program for the foreseeable future.”

Medicare fraud, however, is an issue between the provider and Medicare. It is unjust to deny beneficiaries the freedom to purchase medical care with their own money based on the misdeeds of physicians.

Expanding Medicare, as Clinton and others have proposed, would cause spending to explode, and thus generate even greater pressure to reduce provider payments. It would take this freedom away from millions of additional Americans at the very moment they would need that freedom the most.

Similar threats to patient freedom have arisen at the state level. In 2006, the California legislature passed a universal coverage plan that provided, “No health care service plan contract or health insurance policy, except for the [state] plan, may be sold in California for services provided by the [state-run] system.” Only a veto by Gov. Arnold Schwarzenegger (R.) prevented the California legislature from outlawing private health insurance for most medical services.

Ironically, at the same time U.S. reformers are threatening this freedom, Canada’s socialized health care system is moving in the opposite direction. In a landmark case handed down in 2005, the Supreme Court of Canada ruled that the province of Quebec could not prohibit its citizens from purchasing covered services through private health insurance. That ruling recognized that imposing limits on a patient’s freedom to spend his own money can result in his being denied crucial and even life-saving medical services.

When Clinton and others claim that their proposals for universal coverage would expand patient choice, they should explain whether that includes the choice to spend their own money on medical care.

Kent Masterson Brown is an attorney and author of a new study, “The Freedom to Spend Your Own Money on Medical Care: A Common Casualty of Universal Coverage,” published by the Cato Institute.


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