As government sinks its tendrils more and more deeply into healthcare, residents may find it difficult to stop themselves from pulling out their hair.  Even government agents with academic economic knowledge, like Rhode Island’s Health Insurance Commissioner, Cory King, who studied economics along with political economy and public policy on his way to a Master’s degree, manifestly view healthcare through the wrong lenses.  They therefore target the wrong solutions and will drive us more deeply into danger.

And so, we get Katie Castellani reporting for Providence Business News:

Under the new regulations, commercial insurers will have to raise the amount they spend on primary care service from 5% of the money they collect in premiums to 10% by the end of 2028. Data from 2022 shows that insurers’ investments in primary care fell from 6% to 5%, according to Cory King, the health insurance commissioner.

One of the problems with the way our healthcare system has developed is that “insurers” are acting as go-betweens for patients, who rarely have to consider the entire price of the services they use, much less the long-term financial benefits of increased early effort and spending.  Imagine an uncomfortable preventative measure or screening for an illness that can be easily, but very expensively cured.  If insurance will cover the costs either way, the patient has little incentive to choose the option that costs the system less.

Insurers can only do so much to increase members’ use of primary services — especially because there’s no way regulators would allow them to impose a consequence for those who refuse — so they’ll find ways to increase spending anyway.  Thus, Blue Cross Blue Shield is increasing the rates it pays to primary care providers by 30%.  That may attract more providers, which would be a beneficial effect, but it won’t necessarily increase Rhode Islanders’ regular visits or compliance with their doctors’ advice.

Another way to increase spending in the “primary care” category is to expand services that fall under the definitions of that category.  This may be helpful, depending what form it takes, but it certainly invites creative accounting and additional layers of complexity that remove the end-customer (patients) from spending decisions.  This makes prices increasingly arbitrary and systemic imbalances worse.

Moreover, all this money has to come from somewhere.  Sure, maybe we can hope some of it is squeezed out of insurer margins and administration, but investors and administrators have strong incentive to pass along costs.  As competent as the Health Insurance Commissioner may be to deserve his quarter-million-dollar salary, the system is already too complex for one person, or even one team, to track every dollar and understand every incentive, every cause, and every effect.

Controlling by spending, in short, allows for nice clean charts and metrics, as well as plenty of political grandstanding, but mandating more spending in some area can only increase spending overall.

Featured image by Justin Katz using DALL-E and Photoshop AI.