The Los Angeles Times today is reporting today that California’s 12.4 percent unemployment rate — the third highest in the nation — has wiped out so much employer paid health insurance through job loss that the health care sector is being adversely affected. Those who are employed are paying higher deductibles and co-pays, further depressing medical utilization, according to The Times. As a result, many newly minted health care workers are themselves unemployed, the newspaper notes.
Neeraj Sood, an associate professor at the Schaeffer Center for Health Policy and Economics at the University of Southern California, sees decreased medical utilization as ultimately a positive development for the overall economy by making it less dependent on the healthcare sector for growth, according to the Times story.
I would agree with Sood, provided lower use of medical services is driven by people taking better care of themselves. However, in the context of the Times story, that’s clearly not the case. It’s people’s inability or reluctance to pay for medical services — even doctor visits — not necessarily less need for them.
This story might also herald a time where medical utilization and costs are being reconciled with buyers’ ability to pay for them. Medical costs cannot keep rising at a rapid pace. Eventually they will hit a price point of resistance and they may be fast approaching that point. We may be on the verge of a fundamental shift in the health coverage back to the old “major medical” model that covered only hospitalizations, surgeries and other high cost services and not the routine and minor care people have come to expect in recent years.
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