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General Electric’s Virtual Healthcare Economics
By: Click Broker   Tuesday, May 19, 2009 1:30 PM

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The Wall Street Journal’s “How Washington Rations” opinion piece, subtitled “ObamaCare omen: a case study in 'cost-control’”, opens a worm’s nest into rationing vs. choice. As usual, the Journal is only choosing the juiciest worms to reel in the healthcare reform whale. The Journal would like its readers to believe they are entitled to unlimited choices in healthcare without any economic consequences. And in the payer choice vs. the patient choice argument, the government should not be the chooser even when they are the payer.

The Journal extrapolates Medicare’s decision not to reimburse for virtual colonoscopies to the inevitable rationing of care when or if the public “Medicare for All” health insurance option becomes available. Medicare noted in its ruling, "if there is a relatively high referral rate (for traditional colonoscopy), the utility of an intermediate test such as CT colonography is limited." The Journal interprets this as “duplication would be too pricy.”

Given that Cigna (CI), UnitedHealth Group (UNH) and other private insurers reimburse for the added comfort of virtual colonoscopies, the Journal implies that rationing does not exist in the private sector. When you consider deductibles, co-pays, limits and other traps in private insurance, the rationing argument can go both ways. But one thing is as clear today as in the future; very few real healthcare choices exist within insurance plans. Healthcare has always been and will always be rationed. What will change is just the allocation formula.

The almost hidden revelation at the end of editorial is that General Electric (GE) and Siemens (SI), makers of the big iron CT technology, are exerting pressure on both Medicare and Congress to stop curtailing use of their equipment for virtual colonoscopies. As healthcare reform evolves, more of the purely comfort choices will have to be funded completely out of pocket by patients. This will force not only medical equipment manufacturers, but also the pharmaceutical and medical device industry to prove their value directly to consumers.

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The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.
  
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