Monday, December 20, 2010

Flirting With Unintended Consequences in Massachusetts

The December 18, 2010 Boston Globe illustrates yet another unintended consequence of mandatory insurance benefits in Massachusetts, this time involving flirtatious models wearing short skirts and blue wigs (!)

Here's an excerpt from, "Surge in marrow testing probed":
The state’s largest health insurers began noticing at least a year ago that UMass Memorial Medical Center was submitting an extraordinary number of expensive claims for bone marrow testing and charging higher rates than other providers.

But it was not until this week that one reason for the surge in claims became clear: The Worcester hospital hired models who wore short skirts, high heels, and sometimes sported neon blue wigs to recruit bone marrow donors at malls in Massachusetts and New Hampshire, Red Sox and Patriots games, and flower shows.

The article continues:
The situation is a window into how costs can spiral in the health care system, and the unintended consequences that can occur, when insurers are required to pay for a particular service, even a worthy one.

In the last decade, Massachusetts, New Hampshire, and Rhode Island became the only states where legislators mandated insurers pay for bone marrow testing.
(Read the full text of "Surge in marrow testing probed". The issue is also covered in this December 16, 2010 New York Times story "Flirty Models Were Hired in Bid to Find Bone Marrow".)

This should come as no surprise to journalists. Whenever the government compels insurance companies to pay for a specific service, it creates a natural incentive for others to artificially inflate both the price and the demand for that service. The only unusual aspect about this case was how blatant the manipulation was, which was what allowed the hospital to get caught more easily.

Otherwise, the high costs incurred by the hospital of hiring these attractive young models would have been quietly passed along to the insurance companies, then eventually to Massachusetts residents forced to purchase mandatory insurance (or to the taxpayers).

What we don't know yet is how many more similar-but-stealthier examples of this are still happening with respect to other medical services in Massachusetts? Or how much of this will happen in the other 49 states under ObamaCare?

(Link via @Bettina702.)