Tuesday, April 17, 2012

Diagnosing the High Cost of Health Care

     As I mentioned in my previous post, the cost to cover a family of four under an employer health-care plan is now $20,000 a year -- and going up by 7 to 8% annually (which seems like a good deal to me, since my health-care insurance premium increased 15% for the upcoming year). The cost of health care has doubled in the last ten years.

     Why is health care so expensive? There are as many causes of high health-care costs as there are causes of cancer. And like cancer, some of them we don't even know. But we do know that improving technology, longer life spans, and greater expectations cause a lot of it. Everyone expects to be able to get a pacemaker if they need one, whether they can afford it or not, at a cost (according to my friend who's replacing his this summer) of $90,000 . . . to be paid by someone else.

     There's also the cost of malpractice insurance, to protect doctors from ambulance chasing lawyers. The cost of the increased medical bureaucracy. The cost of emergency room visits by the uninsured. The cost of all those unnecessary doctor visits and medical tests for the "worried well" who feel entitled to the medical care because they're paying insurance premiums, but don't have to pay extra for the unnecessary care.

     The list goes on and on. And we're all "guilty" of running up those costs. I do think the Republicans are right when they claim one reason health-care costs are so high is because there's no free market. The Federal government pays about half the cost of health care, mostly through Medicare -- and 30% of that Medicare bill goes toward taking care of people just in the last year of their lives. Private insurance companies pay most of the rest of the bills -- while we only have to plunk down a $10 or $15 copay to see the doctor. (Actually, those copayments are getting higher -- mine's up to $25 for my primary care physician and $50 for a specialist -- but you get the point; we don't pay directly for the services we get, so we don't care very much about how much it all costs.)

     However, I don't agree with Republicans who say we should have a free market in health care. It just doesn't work when you have a situation where you may not use services for a long time, then suddenly have huge expenses -- at a time when you're not in a position to shop for price. And besides, since the government already pays for half of our medical expenses, doesn't the government really set the price?

     I got taken to task in my last health care post because I referred to the "Affordable Care Act" as "Obamacare." Apparently, Republicans have tagged the health-care law Obamacare in the belief that it's unpopular. But for one thing, I don't know if that's correct -- I don't think it's so unpopular, it's just that the subject is scary, literally a life-or-death issue for people. And also, I believe Obamacare is more accurate than the Affordable Care Act since there's no way the new law will make health care more affordable for most of us. It only makes sense that Obamacare will increase medical costs. How can it not, when it will insure another 50 million people who currently either can't or don't want to pay for care.

     Also, if you can call the Massachusetts health plan "Romneycare," why not the Affordable Health Care Act Obamacare?

     Actually, Romneycare has apparently been reasonably successful in Massachusetts. As a result of the law, about 97% of the state's residents now have health insurance, and it's serving as a model for the neighboring state of Vermont, which has passed a bill that will move the state toward a single-payer system -- and some say a model for Obamacare itself.

     Speaking of Vermont, last year far-left Senator Bernie Sanders introduced another health plan, called the American Health Security Act of 2011 that would provide health care "for every American through a Medicare-for-all type single-payer program."

     Sam Baker at The Hill's Healthwatch blog explained: "The bill would be funded through a series of tax increases on businesses and individuals, as well as money that otherwise would have been set aside for subsidies and tax credits under healthcare reform.”

     Dr. Garrett Adams, president of Physicians for a National Health Program, supported the legislation saying it "would cover nearly all 51 million people who currently lack coverage and improve benefits for everyone by eliminating co-pays and deductibles and restoring free choice of physician," and "by slashing overhead and bureaucracy would recapture about $400 billion annually that is currently wasted on unnecessary paperwork. That money, in turn, would be channeled back into high-quality clinical care. Further, by using a single-payer system’s bargaining power, we would be able to negotiate lower prices for pharmaceuticals and other goods and services, allowing us to rein in rising health care costs.”

     I'm no leftist, but I'm definitely against our current employer-based health insurance -- it's discriminatory, inefficient and a relic of the past -- and in favor of some kind of national health plan (or, as an alternative, the kind of state-based plans pioneered by Mass. and Vt.).

     But let's get real. No government plan is going to save us money, not when these plans are promising medical care for another 50 million people -- people who are currently not paying and for the most part can't afford to pay that $20,000 a year. (By the way, where are all the primary-care physicians going to come from?)

     Here are the problems I see with the Sanders plan:

     The state sets payment rates. In other words, price controls. Doesn't work in other areas. Why would it work in the medical field? What it means is that people who can afford it will try to skirt the system or go elsewhere for their medical treatments, like the many Canadians who cross the border to Buffalo, NY, to get better medical care. (There's a whole industry in Buffalo catering to Canadians dissatisfied with their medical options.) And James Surowiecki in last week's New Yorker broached another aspect of this, reporting on Americans -- and others as well -- who travel overseas for health care.

     Sanders also readily admits that his new health plan would be funded through a series of tax increases. Obviously. But that's pretty loose language. Is it going to be like Social Security, where we all pay 15% of our income to support the program? Are you prepared to pay 15% of your income for your federal health insurance?

     He also wants to eliminate co-pays and deductibles. But I think there should be co-pays and deductibles, as an incentive to prevent hypochondriacs from overusing the system. Very few people are so poor they can't pay $20 to go see the doctor. And it would keep at least a small measure of free-market common sense in the system.

     He claims that a government program will slash the private insurance overhead. Do you really think the government will have less overhead than private business? Right, sure.

     Finally, Sanders says the government program will be in a position to negotiate lower drug prices. Now that's a good idea!

     Regardless of the plan we end up with, whether it's Obamacare, Romneycare or Sanderscare, we all should know that we're going to pay more for health care, mostly because we want to benefit from the latest drugs and services and procedures. Whether there's an Affordable Care Act or not.

     But to end on a positive note, I heard of one pioneering project at the International Union of Operating Engineers that is eliminating waste and duplication by targeting the sickest members and directing them to appropriate care. The goal is to avoid the bigger expenses that come with error and delay -- with the added benefit of offering people better outcomes through accurate diagnoses and targeted treatments. And that's another good idea!



Stephen Hayes said...

Lots to think about here. The healthcare problem is certainly not going away anytime soon. I travel to Europe frequently and I know that our inability to resolve our healthcare issue is a joke over there. Yes, they pay far more than we do in taxes, but they get more back than we do, such as total healthcare coverage and free college tuition with childcare taken care of.

Olga said...

It seems that we hear about our health care being the "best" from politicians, but it doesn't seem to be so in terms of cost or the overall health of citizens. It's a complex issue, but other places seem to have worked out better systems. I think we have to get past stubborn independence and "best" mentality.

schmidleysscribblins,wordpress.com said...

As my old boss said, quoting Shakespeare, "First we need to kill all the lawyers." Lawsuits are wrecking our economy. The second thing we need to do is overhaul the federal tax law (longest law in the Federal Code) and then overhaul the Tort system.

Democrats who have their sacred cows protect their donors (lawyers and unions who have made a large contribution to driving up health care costs). Republicans protect their donors too, mostly upper income folks.

Alice Rivlin, a respected economist (by me) and Democrat appointee to the Simpson-Bowles Commission, and head of another group, suggests we get rid of the current tax deduction for health insurance, which would make you and me pay more for our health care insurance premiums and lose certain tax breaks.

She also says along with governor Mitt Romney we should get rid of the mortgage deduction for second homes and mortgage deductions for primary home mortgages above a certain value (linked to local real estate prices, we assume).

It is unconscionable to not pay for health care for the poor while letting those in upper income brackets escape paying for their health isurance which is covered by employers.

Obviously, this is complicated.

Where I stand on Obamacare (he calls it this as does Romney, who is NOT running away from what he did in Massachusetts) is "Mend it don't end it." There are many "free market" things that could be done to repair the law. Even many Democrats agree there are issues with the law as it stands.

I like many of the provsions in Obamacare, such as expanding Medicaid, but we must pay for them. We can do this by overhauling our tax code. If necessary, kill the lawyers who stand in the way. Dianne

Kay Dennison said...

What Diane said.

Sightings said...

I always hear that health care in Canada and Europe is so simple and so great -- but if that's the case then why do Canadians cross the border to Buffalo to get work done? I'd like to think that the Canadians and Europeans have it figured out -- but I'm not quite sure I believe it.

I agree the lawyers are a problem (but maybe we shouldn't kill them; most of them are smart; can't we just get them honest work?) and I agree it's probably a good idea to limit the mortgage deduction (although I don't know what that has to do with health care) but I do not agree on getting rid of tax deduction for health insurance. We WANT to have people insured. Heck, we may mandate it. So we want to make health insurance less expensive and more attractive, not make it MORE expensive by taxing it. (Although I think it should be tax deductible for EVERYONE, not just for people who happen to be employed by companies with good benefits.)

Anyway, I guess when all is said and done I agree: Mend it don't end it.

Janette said...

As far as the Canadian cross over, I think the answer is ...because they can. It is like people who go to surgery centers instead of waiting in line for the next available bed in the US. My mom was on a six month waiting list to get her hip replaced. Once she put money on the table and her very good Medicare suppliment, she went in two weeks later. She spent a month in rehab and six months with PT. without the extra$$ she would have waited, done a week in rehab and a few weeks in PT.
The Flip side was my daughter who went to the hospital delirious. They removed her appendix in the emergency room and discharged her six hours later. They didn't know she had health insurance (ours) until the next day...
Canadians who have money are willing to use it. . They can buy their health care where ever they can get it. How is that different than our system- except everyone has a standard base level of care?

schmidleysscribblins,wordpress.com said...

Tom, not all national health insurance schemes in Europe are alike. I am partial to the German national health service, not the NHS in Britain.

Believe it or not Bismarck set up the pension and health schemes at the end of the nineteenth century and they have survived two wars and a depression. Modifications were made along the way which were probably for the best. I think we can take a leaf from the German playbook. Dianne

sbobet said...

thnx for nice work
and pretty simple example but
where can i see the form i m not able to see the dorm created by module??livescore

Jenni said...

Telemedicine under the MD247 program could end with a patient getting to talk to a nurse to reassure themselves over a course of treatment, but the telemedicine program takes things to the next level by also providing prescription refills.

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