There have been a number of articles recently and some misguided statements by proponents on both sides about the cost and implementation of "Medicare for All" or publicly provided health insurance.
It would be expensive, but mathematically it wouldn't require new money, just a switch form privately funded to publicly funded.
How that would happen is the real problem, if in fact we even see it proposed seriously as opposed to a talking point by certain politicians.
To be clear, the cost of health care reflects the cost of health services being provided. Currently most is provided under private insurance plans which are obtained in any number of ways.
Ultimately this cost might rise if more people get covered or it might decrease if the preventive care leads to earlier detection and less late intervention.
That's a matter that can be argued but, the switch from private to public funding wouldn't have a particular impact on overall costs, although of course the cost would show up as a Government expense.
As a reference point the United States has the highest per capita health care costs of any country although Switzerland is close, per the World Health depending of how you value the currencies.
The cost has been going up but it is going up partly because of inflation but also partly because new
and improved technology has been introduced.
By most measures health outcomes do not correspond to the high cost, not that they are bad, but in many measures we are relatively average. Of course because of our profit model, we attract some of the very best specialists in every discipline if, in fact, you can afford them.
The point is unless we are increasing this per capita cost, the total cost will not go up. It's only a matter of how we pay for it.
Showing posts with label health care cost. Show all posts
Showing posts with label health care cost. Show all posts
Wednesday, December 5, 2018
Thursday, July 20, 2017
A Hero
Sad news about John McCain who I have always admired even if I didn't always agree with him.
I wish him the best care in the world and hopefully a full recovery and many more years.
I sometimes see him on the news and it seems like the current Republican party is a mystery to him.
They became the not so loyal opposition and now as the majority only know hoe to oppose each other.
Of course they may have bought into the rhetoric that has surrounded a lot of issues, like health care.
The vast majority of Americans were only impacted by the Affordable Care Act is good ways, dependents up to 26 being on your policy and a lot of preventive care being required.
Some saw increased premiums, but its hard to say if the total cost of health care increased for those people without knowing what they actually used.
If you never use your health care, any cost is too much, except maybe as an emergency backup.
The only real way to stabilize the cost is have large groups that include healthy and not so healthy people. This means the healthy people pay a bit more but the unhealthy people can afford coverage.
The math is simple and the idea that you can let young healthy people escape the group until they get old and sick simply doesn't work and doesn't understand how insurance works.
The only group that actually makes sense is a national group under a single payer system.
Instead of premiums we would pay taxes and the ones paying taxes would subsidize the ones who don't but, everyone would have coverage that works.
What else do we want?
I wish him the best care in the world and hopefully a full recovery and many more years.
I sometimes see him on the news and it seems like the current Republican party is a mystery to him.
They became the not so loyal opposition and now as the majority only know hoe to oppose each other.
Of course they may have bought into the rhetoric that has surrounded a lot of issues, like health care.
The vast majority of Americans were only impacted by the Affordable Care Act is good ways, dependents up to 26 being on your policy and a lot of preventive care being required.
Some saw increased premiums, but its hard to say if the total cost of health care increased for those people without knowing what they actually used.
If you never use your health care, any cost is too much, except maybe as an emergency backup.
The only real way to stabilize the cost is have large groups that include healthy and not so healthy people. This means the healthy people pay a bit more but the unhealthy people can afford coverage.
The math is simple and the idea that you can let young healthy people escape the group until they get old and sick simply doesn't work and doesn't understand how insurance works.
The only group that actually makes sense is a national group under a single payer system.
Instead of premiums we would pay taxes and the ones paying taxes would subsidize the ones who don't but, everyone would have coverage that works.
What else do we want?
Friday, June 30, 2017
Negotiation is the Answer
I recently saw an article in which Warren Buffett says single payer is the solution to our health care issue.
http://www.msn.com/en-us/money/healthcare/heres-how-buffett-thinks-we-should-fix-american-health-care/ar-BBDqF35?ocid=spartandhp
Now what he is saying is actually common sense and it is that we should take the burden of health care off employers and go with a single payer.
He makes some good points, which have been made by others, but maybe they will get getter traction coming from him.
Unfortunately health care and other issues have become so politicized because well that's what we do now.
Republicans think Democrats are evil and vice versa, even though all the evidence shows we share almost all the same values with each other.
However both parties have allowed the debate to be controlled by the fringe elements who are more motivated and who show up to vote in primaries.
Once someone is nominated in a safe district he will get elected and because he was probably a bit fanatical from the start is unlikely to be a compromiser in Washington.
Now there may be some issues that have "bright" lines but the vast majority of issues such as health care, immigration reform, our tax system or how we spend our tax dollars are things that should be negotiated to ensure we end up with something fair.
Of course it is now news that a bi-partisan solution is even being considered by the Senate to pass health care.
Shameful really.
http://www.msn.com/en-us/money/healthcare/heres-how-buffett-thinks-we-should-fix-american-health-care/ar-BBDqF35?ocid=spartandhp
Now what he is saying is actually common sense and it is that we should take the burden of health care off employers and go with a single payer.
He makes some good points, which have been made by others, but maybe they will get getter traction coming from him.
Unfortunately health care and other issues have become so politicized because well that's what we do now.
Republicans think Democrats are evil and vice versa, even though all the evidence shows we share almost all the same values with each other.
However both parties have allowed the debate to be controlled by the fringe elements who are more motivated and who show up to vote in primaries.
Once someone is nominated in a safe district he will get elected and because he was probably a bit fanatical from the start is unlikely to be a compromiser in Washington.
Now there may be some issues that have "bright" lines but the vast majority of issues such as health care, immigration reform, our tax system or how we spend our tax dollars are things that should be negotiated to ensure we end up with something fair.
Of course it is now news that a bi-partisan solution is even being considered by the Senate to pass health care.
Shameful really.
Thursday, June 29, 2017
Health Cost
The issue about health care is the cost of it. What we call insurance has morphed into something else.
Insurance is something you buy to protect yourself from a potential risk and you pay based on the likelihood of that risk occurring and the cost if it does. So for example is your home is worth $100,000 and the risk of losing it to a fire is 1%, you would theoretically pay 1% of that $100,000 or $1000 to insure it (plus admin and profit). As long as the number of people in similar circumstances buy insurance at the end of the day everyone is covered, claims are paid and the insurer makes some profit.
Now if you want to cover a house that has already burned down, it is no longer insurance. If your house burns down and you can get it replaced by paying a premium of $1000, it would be a pretty sweet deal and you would have no reason to buy insurance before the loss occurred.
Obviously no one could make money selling you that coverage so it would be impossible to get.
Now in health insurance we cover things that are guaranteed to happen and now we cover pre-existing conditions.
So the issue is no longer one of risk, the risk is 100% but simply how do we provide this coverage at a reasonable price. Well if you take those 100% risk people and add them to people who have no existing condition you can average out the cost.
Of course this makes healthy people pay more but allows those with catastrophic bills to pay something they can afford.
This is sort of what the Affordable Care Act did and why it mandated coverage, to force young healthy people to pay some of the cost of the ones already ill. Now of course there was some chance that the young healthy people would switch ranks and end up on more or less even, but in this case is it better to have your house burn down to collect insurance or better to nor have it burn down? I think we all prefer the latter even though it means we pay year after year with no return.
Similarly, the best thing that can happen to young people is that they live a long healthy life, even if they then pay for almost nothing.
Insurance is something you buy to protect yourself from a potential risk and you pay based on the likelihood of that risk occurring and the cost if it does. So for example is your home is worth $100,000 and the risk of losing it to a fire is 1%, you would theoretically pay 1% of that $100,000 or $1000 to insure it (plus admin and profit). As long as the number of people in similar circumstances buy insurance at the end of the day everyone is covered, claims are paid and the insurer makes some profit.
Now if you want to cover a house that has already burned down, it is no longer insurance. If your house burns down and you can get it replaced by paying a premium of $1000, it would be a pretty sweet deal and you would have no reason to buy insurance before the loss occurred.
Obviously no one could make money selling you that coverage so it would be impossible to get.
Now in health insurance we cover things that are guaranteed to happen and now we cover pre-existing conditions.
So the issue is no longer one of risk, the risk is 100% but simply how do we provide this coverage at a reasonable price. Well if you take those 100% risk people and add them to people who have no existing condition you can average out the cost.
Of course this makes healthy people pay more but allows those with catastrophic bills to pay something they can afford.
This is sort of what the Affordable Care Act did and why it mandated coverage, to force young healthy people to pay some of the cost of the ones already ill. Now of course there was some chance that the young healthy people would switch ranks and end up on more or less even, but in this case is it better to have your house burn down to collect insurance or better to nor have it burn down? I think we all prefer the latter even though it means we pay year after year with no return.
Similarly, the best thing that can happen to young people is that they live a long healthy life, even if they then pay for almost nothing.
Saturday, June 24, 2017
Cost of Health Care
Health care costs have tow components, the actual cost and the profits taken. I include the cost of administering health care in the actual cost because it is probably unavoidable.
Now if you are an insurance provider the rates you provide will include all your projected costs plus desired profit.
You can shuffle that about as to who get to pay how much or if you even provide coverage but the total will be the same unless you reduce demand.
Now you can reduce demand by making use of health care too expensive causing people to forego preventive or needed care.
This is a short term fix, which likely increases future costs as well as leading to worse consequences for the patients.
There is another way to reduce total cost, which would be to reduce the actual cost of treatment or prescriptions. This of course requires doctors, nurses, and pharmaceutical companies to charge less, which is possible but a hard path.
So any health care plan has to address these issues and realistically no plan can change the dynamic of how cost is generated.
So plans can try to more evenly share the costs between those who can afford it and those who can't and get greater participation, (premiums).
Now if you undo that, you will be faced with the dilemma of people who can't afford need care being forced into bankruptcy or dying when they didn't have to.
This is more of a moral issue than an economic one, but we see it debated as an economic one.
Either you believe everyone should get care, or you don't.
If the first, the only fair way to do that is to do what almost every civilized country in the world has done and go with a single payer system which is government sponsored and financed by taxes.
It has many advantages including cost reduction via profit elimination.
Everything else will be flawed, just how flawed is the only question?
Now if you are an insurance provider the rates you provide will include all your projected costs plus desired profit.
You can shuffle that about as to who get to pay how much or if you even provide coverage but the total will be the same unless you reduce demand.
Now you can reduce demand by making use of health care too expensive causing people to forego preventive or needed care.
This is a short term fix, which likely increases future costs as well as leading to worse consequences for the patients.
There is another way to reduce total cost, which would be to reduce the actual cost of treatment or prescriptions. This of course requires doctors, nurses, and pharmaceutical companies to charge less, which is possible but a hard path.
So any health care plan has to address these issues and realistically no plan can change the dynamic of how cost is generated.
So plans can try to more evenly share the costs between those who can afford it and those who can't and get greater participation, (premiums).
Now if you undo that, you will be faced with the dilemma of people who can't afford need care being forced into bankruptcy or dying when they didn't have to.
This is more of a moral issue than an economic one, but we see it debated as an economic one.
Either you believe everyone should get care, or you don't.
If the first, the only fair way to do that is to do what almost every civilized country in the world has done and go with a single payer system which is government sponsored and financed by taxes.
It has many advantages including cost reduction via profit elimination.
Everything else will be flawed, just how flawed is the only question?
Saturday, March 25, 2017
How About Fixing Things?
The Affordable Care Act survived another challenge yesterday, but while I believe it is far superior to what the GOP was proposing, it isn't perfect.
It isn't of course in a death spiral, it is going through some adjustments as the markets try to hit the right levels.
The cost of a policy is simply the estimated cost of services for the group, plus admin and profit divided by the number of customers. Because of the pent up demand of people with serious health conditions, the amount of care provided per customer was higher than initial estimates, since more healthy people opted not to participate.
Getting them to participate is an important aspect and there are certainly ways to add incentives, but solutions require people working together as opposed to taking stances.
There are some issues in health care that have nothing to do with the Affordable Care Act, such as a shortage of doctors in certain parts of the country or the high cost of prescription medicine. The first is a problem that we have had for a very long time, and training more doctors or importing more is the obvious solution, the second is a bit more problematic because of how research has to be recovered.
Drug companies incur a lot of cost developing new medicines. Once a drug is approved, they have a monopoly for as long as the patent lasts, often less than ten years from marketing (patents are applied for early in development, so run during the approval cycle). The actual cost of producing the drug is often a much smaller amount than the recovery of these costs plus add in the costs of drugs that aren't approved yet.
So they have to charge all of this in the first 10 or so years before the generics enter the market and drive the prices down.
Increasing doctors, reducing the cost of care and getting young people to sign up are really not political issues, they are issues that benefit all Americans.
What about it?
It isn't of course in a death spiral, it is going through some adjustments as the markets try to hit the right levels.
The cost of a policy is simply the estimated cost of services for the group, plus admin and profit divided by the number of customers. Because of the pent up demand of people with serious health conditions, the amount of care provided per customer was higher than initial estimates, since more healthy people opted not to participate.
Getting them to participate is an important aspect and there are certainly ways to add incentives, but solutions require people working together as opposed to taking stances.
There are some issues in health care that have nothing to do with the Affordable Care Act, such as a shortage of doctors in certain parts of the country or the high cost of prescription medicine. The first is a problem that we have had for a very long time, and training more doctors or importing more is the obvious solution, the second is a bit more problematic because of how research has to be recovered.
Drug companies incur a lot of cost developing new medicines. Once a drug is approved, they have a monopoly for as long as the patent lasts, often less than ten years from marketing (patents are applied for early in development, so run during the approval cycle). The actual cost of producing the drug is often a much smaller amount than the recovery of these costs plus add in the costs of drugs that aren't approved yet.
So they have to charge all of this in the first 10 or so years before the generics enter the market and drive the prices down.
Increasing doctors, reducing the cost of care and getting young people to sign up are really not political issues, they are issues that benefit all Americans.
What about it?
Thursday, March 23, 2017
Its Simply Stacked Against You
In general the Health Care industry has every advantage possible when it come to dealing with individual patients. They are big, they deal with important and complex issues which are vitally important to the patients, and they do it all the time while each patient does most of it just once.
It is a stacked deck and while you can try to do your homework and try to even the odds a bit, its not like most other things where you know, for example, that you plan to buy a car, its more like your car died and you need one today.
When you get subjected to a real health emergency you are faced with decisions and details that are difficult to deal with, especially since it is of vital interest to you and you really don't know what they are telling you.
Obviously some things like routine physicals and minor illnesses are easy to deal with, but when you go in for a sore throat that won't go away and get subjected to a series of tests and referrals that ultimately tell you that you have a serious illness and need surgery followed by post surgery treatments, you are pretty much in a no win situation.
You can get a second opinion, or try to deal with the situation via non traditional means, but the vast majority of us simply do what they tell you to do.
I should also point out that up to this point health care was probably just something that you didn't think about much except to complain about how much it cost or how expensive it was.
However, when faced with a serious illness, the expensive really kicks into play and that insurance you paid for becomes a real bargain, assuming you can actually keep it.
This is why Government has a role to play in health care and why most civilized countries take the responsibility to make sure all residents have access to health care without worrying about the cost.
Faced with a life threatening illness, cost becomes no issue, until in fact you can't pay anymore.
Universal insurance makes all of us pay a bit more so that the truly sick don't have to sell their homes or go into financial ruin trying to stay alive.
The United States is fairly unique in not guaranteeing health care to its residents and its likely we are getting ready to in fact make health care less available and affordable while returning about $800 billion dollars to wealthy people who of course have great coverage.
The answer is of course, don't get sick.
It is a stacked deck and while you can try to do your homework and try to even the odds a bit, its not like most other things where you know, for example, that you plan to buy a car, its more like your car died and you need one today.
When you get subjected to a real health emergency you are faced with decisions and details that are difficult to deal with, especially since it is of vital interest to you and you really don't know what they are telling you.
Obviously some things like routine physicals and minor illnesses are easy to deal with, but when you go in for a sore throat that won't go away and get subjected to a series of tests and referrals that ultimately tell you that you have a serious illness and need surgery followed by post surgery treatments, you are pretty much in a no win situation.
You can get a second opinion, or try to deal with the situation via non traditional means, but the vast majority of us simply do what they tell you to do.
I should also point out that up to this point health care was probably just something that you didn't think about much except to complain about how much it cost or how expensive it was.
However, when faced with a serious illness, the expensive really kicks into play and that insurance you paid for becomes a real bargain, assuming you can actually keep it.
This is why Government has a role to play in health care and why most civilized countries take the responsibility to make sure all residents have access to health care without worrying about the cost.
Faced with a life threatening illness, cost becomes no issue, until in fact you can't pay anymore.
Universal insurance makes all of us pay a bit more so that the truly sick don't have to sell their homes or go into financial ruin trying to stay alive.
The United States is fairly unique in not guaranteeing health care to its residents and its likely we are getting ready to in fact make health care less available and affordable while returning about $800 billion dollars to wealthy people who of course have great coverage.
The answer is of course, don't get sick.
Saturday, January 9, 2010
Health Insurance and Hiring
If you run a business, one of the big impediments to hiring is the cost of benefits and in particular the cost of health insurance and until recently, pensions. This country had evolved a system where the primary responsibility for the providing of health insurance for most has become the responsibility of the employer. Over the years we have seen skyrocketing increases in this cost and while many employees have attempted to reduce cost via HMOs and other changes such as higher deductibles, the incremental cost of hiring an employee now includes an ever growing tab for health insurance. Add to that the uncertainty related to what the Government is going to require and even further what the economy is going to look like and you would have to be very confident in your future business to hire anything other than temporary or contract workers.
Until recently and in some cases still, the growth in pension liabilities was becoming a great strain on employment. However, very few small businesses attempt to offer pensions any more outside of a 401 plan. This type of benefit is a defined contribution plan and defines the costs you as an employer are responsible for in a pre-determined way. When I first reviewed compensation plans, most companies offered defined benefit plans that required them to pay a certain level of benefit for the employees retired life. This puts all the risk on the employer. A defined contribution plan switches the risk to the employee largely since the 401 plan will only provide income until it is gone. Of course most employees also have social security to fall back on and employers face some risk in that area if the rates go up, but nothing like the risk of a defined benefit plan.
It would seem we could learn a lot from this pension change. If the costs of health insurance could be defined to the same extent that the pension cost have been, employers would be more likely to risk hiring. One way to do this would be for everyone to effectively fall under a Government plan funded by taxes and where the variable cost of hiring an employee no longer included a health insurance risk. This solution is politically difficult with many arguing that the Government is unable to run anything well. I personally don't agree with that but it is not a viable option at this time. The other option would be to have a defined contribution health benefit for employees where the cost to the employee was defined, similar to a defined contribution pension plan. There has been some movement in this area via the use of savings funds, but I am not aware that there is any widespread movement in this direction. To some extent this is the way the federal employee plans work although the contribution amount is determined by a formula related to the average cost of all the health plans included. Employees pick up a variable cost depending on the plan they choose and the more expensive plans actually cost the employees more. The net result of this has been some cost containment as a certain number of employees switch to more affordable plans every year, reducing the average cost below what it would have been and therefore reducing the Government contribution below what it would have been otherwise. The Government pays the lower amount of the following
a) 72 percent of the overall weighted average; or
b) 75 percent of the total premium for the plan you select.
What you will note from this is that if you pick a plan that has higher than average costs, the Government contribution for you is less. The formula has a built in incentive to control costs.
Now, the size of the Government workforce gives them significant influence and most companies only have one health insurance provider. However, even in the absence of a public option, we could and should have a benefit pool that employers could join where the benefits from many insurers were available to that companies employees and where the employers could define the amount they would contribute, either as a percentage of the average or a set amount. The difference would become the employee's responsibility but the employee would get the benefit of being part of a large pool with many choices.
This blog for today has gotten a bit longer than I like so I'll return to this subject and explore more options tomorrow.
Until recently and in some cases still, the growth in pension liabilities was becoming a great strain on employment. However, very few small businesses attempt to offer pensions any more outside of a 401 plan. This type of benefit is a defined contribution plan and defines the costs you as an employer are responsible for in a pre-determined way. When I first reviewed compensation plans, most companies offered defined benefit plans that required them to pay a certain level of benefit for the employees retired life. This puts all the risk on the employer. A defined contribution plan switches the risk to the employee largely since the 401 plan will only provide income until it is gone. Of course most employees also have social security to fall back on and employers face some risk in that area if the rates go up, but nothing like the risk of a defined benefit plan.
It would seem we could learn a lot from this pension change. If the costs of health insurance could be defined to the same extent that the pension cost have been, employers would be more likely to risk hiring. One way to do this would be for everyone to effectively fall under a Government plan funded by taxes and where the variable cost of hiring an employee no longer included a health insurance risk. This solution is politically difficult with many arguing that the Government is unable to run anything well. I personally don't agree with that but it is not a viable option at this time. The other option would be to have a defined contribution health benefit for employees where the cost to the employee was defined, similar to a defined contribution pension plan. There has been some movement in this area via the use of savings funds, but I am not aware that there is any widespread movement in this direction. To some extent this is the way the federal employee plans work although the contribution amount is determined by a formula related to the average cost of all the health plans included. Employees pick up a variable cost depending on the plan they choose and the more expensive plans actually cost the employees more. The net result of this has been some cost containment as a certain number of employees switch to more affordable plans every year, reducing the average cost below what it would have been and therefore reducing the Government contribution below what it would have been otherwise. The Government pays the lower amount of the following
a) 72 percent of the overall weighted average; or
b) 75 percent of the total premium for the plan you select.
What you will note from this is that if you pick a plan that has higher than average costs, the Government contribution for you is less. The formula has a built in incentive to control costs.
Now, the size of the Government workforce gives them significant influence and most companies only have one health insurance provider. However, even in the absence of a public option, we could and should have a benefit pool that employers could join where the benefits from many insurers were available to that companies employees and where the employers could define the amount they would contribute, either as a percentage of the average or a set amount. The difference would become the employee's responsibility but the employee would get the benefit of being part of a large pool with many choices.
This blog for today has gotten a bit longer than I like so I'll return to this subject and explore more options tomorrow.
Thursday, September 10, 2009
Health Reform
If you consider the issues that face the United States, we have some that have the potential to weaken the very fabric of our nation. Now, one of the things that makes America great is that we don't all have to agree on anything, but we all normally want to treat each other fairly. There is an ongoing debate between those who oppose Government involvement in just about anything and those who favor Government involvement.
Last night the President gave a speech to a joint session of congress and the nation of his proposal to fix health care in this country. For most Americans, health care is represented by the relationship they have with Doctors, Nurses, Dentists and other providers. They don't much think about the business of health care, until something happens that causes them to bear unexpected costs, either because they lose health coverage or have some other catastrophic event.
For some Americans health care simply is something they either do without or provide to themselves. Now, I'm not talking about those who believe in alternative medicine or holistic approaches. I'm talking about people who are not poor enough or old enough to get Government health care and don't have affordable health care options via their employee or on their own.
These folks are working Americans or small business owners who simply are unable to afford health insurance and gamble that they won't need it until they can afford it. Now, sometimes they win and sometimes they lose. After all, insurance is a gamble by its very nature. You can pay premiums for many years and never use the benefits, or use them much less than average. The real purpose is to provide protection from unusual costs that can not be covered from normal income.
The President proposal basically provides that these people will form a group and because of the size of the group, they will be offered affordable insurance. It will become mandatory for people to have health insurance, similar to auto insurance and there will be a concerted push to eliminate waste from the current system while pushing preventive medicine to further reduce cost.
There are of course other ways to solve the problem we face and there is still time to discuss them. The providing of cheap catastrophic protection is a good idea and should not only be used temporarily, but makes sense as one of the options is an ongoing insurance exchange.
What we do need it honest debate and honest commitment by all Americans to help solve the problem and move forward. We need to assure all Americans have access to health care in an affordable way and we also need to change the cost growth curve. Lets do it.
Last night the President gave a speech to a joint session of congress and the nation of his proposal to fix health care in this country. For most Americans, health care is represented by the relationship they have with Doctors, Nurses, Dentists and other providers. They don't much think about the business of health care, until something happens that causes them to bear unexpected costs, either because they lose health coverage or have some other catastrophic event.
For some Americans health care simply is something they either do without or provide to themselves. Now, I'm not talking about those who believe in alternative medicine or holistic approaches. I'm talking about people who are not poor enough or old enough to get Government health care and don't have affordable health care options via their employee or on their own.
These folks are working Americans or small business owners who simply are unable to afford health insurance and gamble that they won't need it until they can afford it. Now, sometimes they win and sometimes they lose. After all, insurance is a gamble by its very nature. You can pay premiums for many years and never use the benefits, or use them much less than average. The real purpose is to provide protection from unusual costs that can not be covered from normal income.
The President proposal basically provides that these people will form a group and because of the size of the group, they will be offered affordable insurance. It will become mandatory for people to have health insurance, similar to auto insurance and there will be a concerted push to eliminate waste from the current system while pushing preventive medicine to further reduce cost.
There are of course other ways to solve the problem we face and there is still time to discuss them. The providing of cheap catastrophic protection is a good idea and should not only be used temporarily, but makes sense as one of the options is an ongoing insurance exchange.
What we do need it honest debate and honest commitment by all Americans to help solve the problem and move forward. We need to assure all Americans have access to health care in an affordable way and we also need to change the cost growth curve. Lets do it.
Saturday, August 8, 2009
Health care debate
Right now in this country we are trying to decide the future of health care. I believe that everyone agrees that the current escalation in costs can't continue and I would also like to believe that everyone agrees that everyone is entitled to adequate health care. Now, if some people want to continue to see costs escalate, or feel that some people should be denied health care, I don't understand why and would be interested to hear their reasons.
What I believe is under debate is the best way to achieve these outcomes. Clearly there is a fairly clear divide between the best way to control cost and the best way to provide health care to all. Some argue that a pure free market would accomplish this. Now, I don't think it would since in free markets there are always winners and losers. In health care, losers die or at least go broke. Currently, the system provides that if you get sick enough and don't have the right health care coverage, you will become poor and the taxpayers and health insurance companies will end up paying for what you couldn't manage to pay.
I don't find this result satisfactory. Now I should say, that I have what I consider quite wonderful health coverage. I don't have any reason to think the coverage will end so my position isn't dictated by the fact that I need coverage.
Going back to the pure free market approach, the main flaw in it is that knowledge is simply not equally shared. Those who have enough information and knowledge would do quite well while many others, possibly the majority, would be persuaded by questionable sales tactics and end up with inferior, overpriced products.
One way to address this, and this would be my preferred method, is simply to set up rules related to health insurance and also to make sure that any plan sold to the general public was held accountable for the claims it made, lets call it truth in advertising. Now some may feel that we don't need this since consumers and customers have some legal rights now, but arguing or suing a company following a serious illness is not a satisfactory solution if you were denied adequate care when you needed it.
While choosing health care can be complex and deciding whether you want an HMO or a PPO or are willing to pay more for even more choices should be made easier by knowing that the promises made by the plans were in fact legitimate. It would also seem important to me that any plan covered preventive medicine and catastrophic insurance.
Will this cost more? I think it should cost less, especially if the preventive medicine part is effective. Now when I say it should cost less, I am talking about the total amount spent on health care in this country, not the way that cost is proportioned. Currently we have a significant part of the population who utilize the most expensive type of health care imaginable, trips to hospital emergency rooms. Of course many of these trips are absorbed in the costs we already pay.
Now, it is possible, that costs could go up. The increased demand for health care may result in price increases. I think this won't happen, but the simple question remains, do Americans really think some people are not entitled to care?
Certainly there should be a debate about the amount of Government involvement and whether there should be a Government plan as part of the mix. However, I would like to think we could have that debate in a rational way. Currently, we are seeing activists trying to prevent debate by using tactics intended to disrupt meetings. This tactic is designed to get press coverage and influence the public. It may or may not work, but those who advocate it are clearly not proponents of honest debate and democracy.
What I believe is under debate is the best way to achieve these outcomes. Clearly there is a fairly clear divide between the best way to control cost and the best way to provide health care to all. Some argue that a pure free market would accomplish this. Now, I don't think it would since in free markets there are always winners and losers. In health care, losers die or at least go broke. Currently, the system provides that if you get sick enough and don't have the right health care coverage, you will become poor and the taxpayers and health insurance companies will end up paying for what you couldn't manage to pay.
I don't find this result satisfactory. Now I should say, that I have what I consider quite wonderful health coverage. I don't have any reason to think the coverage will end so my position isn't dictated by the fact that I need coverage.
Going back to the pure free market approach, the main flaw in it is that knowledge is simply not equally shared. Those who have enough information and knowledge would do quite well while many others, possibly the majority, would be persuaded by questionable sales tactics and end up with inferior, overpriced products.
One way to address this, and this would be my preferred method, is simply to set up rules related to health insurance and also to make sure that any plan sold to the general public was held accountable for the claims it made, lets call it truth in advertising. Now some may feel that we don't need this since consumers and customers have some legal rights now, but arguing or suing a company following a serious illness is not a satisfactory solution if you were denied adequate care when you needed it.
While choosing health care can be complex and deciding whether you want an HMO or a PPO or are willing to pay more for even more choices should be made easier by knowing that the promises made by the plans were in fact legitimate. It would also seem important to me that any plan covered preventive medicine and catastrophic insurance.
Will this cost more? I think it should cost less, especially if the preventive medicine part is effective. Now when I say it should cost less, I am talking about the total amount spent on health care in this country, not the way that cost is proportioned. Currently we have a significant part of the population who utilize the most expensive type of health care imaginable, trips to hospital emergency rooms. Of course many of these trips are absorbed in the costs we already pay.
Now, it is possible, that costs could go up. The increased demand for health care may result in price increases. I think this won't happen, but the simple question remains, do Americans really think some people are not entitled to care?
Certainly there should be a debate about the amount of Government involvement and whether there should be a Government plan as part of the mix. However, I would like to think we could have that debate in a rational way. Currently, we are seeing activists trying to prevent debate by using tactics intended to disrupt meetings. This tactic is designed to get press coverage and influence the public. It may or may not work, but those who advocate it are clearly not proponents of honest debate and democracy.
Tuesday, July 28, 2009
Health care politics
One of the problems we constantly have in this country is that we argue over the politics without actually dealing with the issues.
Now, I'm sure this is not unique but we have failed to address major issues over time as we throw accusations such as socialism, greedy capitalists, etc, etc instead of somehow agreeing on a common outcome.
If you consider the problems we have now, I think many would agree the providing universal health care, reducing our dependence on foreign oil, improving the economy and specifically unemployment, and making sure future generations have a livable environment are important.
However, we continuously fail to make significant progress on these issues because of politics. Consider the current argument on health care. Currently in this country we spend more money per capita on health care than any other country. We do have better results for some of the population, but for many people in this country, health care consists of infrequent visits to emergency rooms and clinics with less than ideal outcomes.
Now, all of this is paid for now. Much of this cost is borne as a cost of employment. Much of this cost (Medicare and Medicaid) is borne by taxpayers. Generally the cost of the uninsured is passed on as overhead to all as part of hospital overhead.
Now, the other fact is that if you are not a senior, or not employed at a company that provides health insurance, the cost of private insurance is onerous for the average worker.
So we know how much this all costs us and one would think that a system that fixed the cost issue should be able to provide better care for many and not decrease care for those who already have insurance. One would think that the removal of health insurance as an employment cost would also level the playing field for business and reduce a barrier to employment.
Not everyone shares these views. It often seems that those who are at the top of the health care pyramid, either because they profit from the current system, or because they have secure and excellent health care due to wealth or employment status, don't want the less fortunate to get adequate health care. They couch this argument in other terms, but either you want everyone to have adequate health care or you don't. If you do, the argument should be about how to get there. Clearly, the system we have now doesn't get there. I hear very wealthy people saying the current system fails because it is not a free market system and the fact that Government is so involved has led to increased costs and inadequate care. Of course much of this argument revolves around Medicare its cost and its impact on health care, but one thing that is not a problem is whether seniors can get health care.
Now, one hears many allegations about the failure of health care in countries that provide universal coverage. On the other side liberals point to the failures of our health care system. Clearly, it is always easy to find individual instances where any health care system, or in fact any system, fails. However, on a macro level our health care system does not provide the best results. Where we do produce the best results is at the extreme top level where we do go to extraordinary levels. This relatively minor aspect is constantly cited by those who oppose health care change. They cite examples where incurable diseases are not treated elsewhere but where we go to extraordinary levels.
There is one inescapable fact of life, it will come to an end. I'm certainly not going to say that extending life a few years or even months is not worthwhile. The cost of certain procedures, versus the result are a legitimate concern. If we had a true free market system, many people would never be able to afford those procedures anyways. Our current system often bankrupts people at the end of their lives and prolong those lives for relatively short periods, often with very little quality of life.
It is an emotional issue but society shouldn't prevent people from spending their money however they want to, but it is not a cost that should be ignored and paid no matter what, if it is going to increase taxes or the cost of insurance.
Now, I'm sure this is not unique but we have failed to address major issues over time as we throw accusations such as socialism, greedy capitalists, etc, etc instead of somehow agreeing on a common outcome.
If you consider the problems we have now, I think many would agree the providing universal health care, reducing our dependence on foreign oil, improving the economy and specifically unemployment, and making sure future generations have a livable environment are important.
However, we continuously fail to make significant progress on these issues because of politics. Consider the current argument on health care. Currently in this country we spend more money per capita on health care than any other country. We do have better results for some of the population, but for many people in this country, health care consists of infrequent visits to emergency rooms and clinics with less than ideal outcomes.
Now, all of this is paid for now. Much of this cost is borne as a cost of employment. Much of this cost (Medicare and Medicaid) is borne by taxpayers. Generally the cost of the uninsured is passed on as overhead to all as part of hospital overhead.
Now, the other fact is that if you are not a senior, or not employed at a company that provides health insurance, the cost of private insurance is onerous for the average worker.
So we know how much this all costs us and one would think that a system that fixed the cost issue should be able to provide better care for many and not decrease care for those who already have insurance. One would think that the removal of health insurance as an employment cost would also level the playing field for business and reduce a barrier to employment.
Not everyone shares these views. It often seems that those who are at the top of the health care pyramid, either because they profit from the current system, or because they have secure and excellent health care due to wealth or employment status, don't want the less fortunate to get adequate health care. They couch this argument in other terms, but either you want everyone to have adequate health care or you don't. If you do, the argument should be about how to get there. Clearly, the system we have now doesn't get there. I hear very wealthy people saying the current system fails because it is not a free market system and the fact that Government is so involved has led to increased costs and inadequate care. Of course much of this argument revolves around Medicare its cost and its impact on health care, but one thing that is not a problem is whether seniors can get health care.
Now, one hears many allegations about the failure of health care in countries that provide universal coverage. On the other side liberals point to the failures of our health care system. Clearly, it is always easy to find individual instances where any health care system, or in fact any system, fails. However, on a macro level our health care system does not provide the best results. Where we do produce the best results is at the extreme top level where we do go to extraordinary levels. This relatively minor aspect is constantly cited by those who oppose health care change. They cite examples where incurable diseases are not treated elsewhere but where we go to extraordinary levels.
There is one inescapable fact of life, it will come to an end. I'm certainly not going to say that extending life a few years or even months is not worthwhile. The cost of certain procedures, versus the result are a legitimate concern. If we had a true free market system, many people would never be able to afford those procedures anyways. Our current system often bankrupts people at the end of their lives and prolong those lives for relatively short periods, often with very little quality of life.
It is an emotional issue but society shouldn't prevent people from spending their money however they want to, but it is not a cost that should be ignored and paid no matter what, if it is going to increase taxes or the cost of insurance.
Wednesday, July 8, 2009
Health care costs
In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.
This spending represents about 17% of our GDP and by that measure exceeds all other industrialized nations. The question that we have to address is are we spending too much and are we getting sufficient value for the health care dollar.
Another factor we have to consider is that despite the massive amount of health care cost, many people do not have access to preventive health care and/or health insurance. Ignoring the fact that preventing a disease is much cheaper and more beneficial to the patient, we have a system that does not make preventive medicine a high enough priority.
Numbers are often thrown around about the number of uninsured. I was watching a show last night where one of the panelists argued that a certain number of the uninsured were uninsured by choice because they were young and did not feel the need for health insurance. This is probably true and that group is probably not a major health care cost driver, however, what has to be realized is that many of the insured are really underinsured in the event of a catastrophic event. The major cause of personnel bankruptcies in this country is medical costs (including long term health costs).
The system we currently have goes back to a paternalistic model that is breaking down. Most health insurance for people not eligible for Medicare is provided by their employers. This expense has increased tremendously over the years and has become a significant burden on many companies. Companies have been looking for ways to reduce costs and this has led to a greater shifting of costs to deductibles and co-payments and the use of HMOs.
Now, lets realize that the health care system does work fine for certain groups in this country. Most of those you see arguing the issue on TV are most likely fully covered. It should also be noted, that our system can and does provide excellent care for certain types of diseases and health emergencies. It often does this at a very high cost, but, if you are in need of an organ transplant and have money (ie Steve Jobs), you can probably use our health system to your advantage.
Of course, there are many more people who don't have those type of resources. The true crisis is the fact that so many Americans only receive health care on an emergency basis. Yes, if you show up in an emergency room with a health crisis, you will receive care. However, a lot of patients in emergency rooms wouldn't be there is they had access to routine health care.
So, I'm going to assume that we all agree that everyone should have the right to health care. The only question that remains is the best way to deliver it and how much involvement should the Government have?
I have trouble seeing how a system without Government involvement can work. If having health care requires a choice between paying a high premium and putting food on the table, the food on the table will win, since there is always a chance that you won't need health care. However, it would seem that the primary areas that the Government should get involved are in providing preventive health care and protection from catastrophic loss. Suppose that every citizen had a Government health care policy that entitled them to certain preventive care services. Treatment beyond preventive care would be at the patients expense up to some level after which catastrophic insurance kicked in? This would create a gap that could either be paid by the individual or could be filled by purchase of a supplemental policy.
The Government policies could be provided by private insurers who would compete for customers. So, assume the Government determined that insurers would be reimbursed $x per customer. The insurer would then compete for customers and if they were more efficient could offer slightly better benefits than their competitors. The only two things the Government would monitor would be that the benefits provided met the requirements and that the number of customers was accurate for reimbursement purposes.
Every American would have to choose their health provider or be assigned to a default provider through a random process.
This would provide universal coverage for the two areas that most need improvement, maintain choice and, I believe lead to a reduction in the increases in health care costs. Obviously, this system would have to be paid for via taxes, but these costs are being paid for already, so the percentage this represents would flow via the Government instead of the current method. Businesses wouldn't have to offer health care, or could offer supplemental packages as part of a compensation plan. Small business might benefit the most since they struggle to compete with large businesses in providing health benefits.
The increase use of preventive care this system would encourage should actually help to reduce overall cost although it would increase demand for certain services.
This spending represents about 17% of our GDP and by that measure exceeds all other industrialized nations. The question that we have to address is are we spending too much and are we getting sufficient value for the health care dollar.
Another factor we have to consider is that despite the massive amount of health care cost, many people do not have access to preventive health care and/or health insurance. Ignoring the fact that preventing a disease is much cheaper and more beneficial to the patient, we have a system that does not make preventive medicine a high enough priority.
Numbers are often thrown around about the number of uninsured. I was watching a show last night where one of the panelists argued that a certain number of the uninsured were uninsured by choice because they were young and did not feel the need for health insurance. This is probably true and that group is probably not a major health care cost driver, however, what has to be realized is that many of the insured are really underinsured in the event of a catastrophic event. The major cause of personnel bankruptcies in this country is medical costs (including long term health costs).
The system we currently have goes back to a paternalistic model that is breaking down. Most health insurance for people not eligible for Medicare is provided by their employers. This expense has increased tremendously over the years and has become a significant burden on many companies. Companies have been looking for ways to reduce costs and this has led to a greater shifting of costs to deductibles and co-payments and the use of HMOs.
Now, lets realize that the health care system does work fine for certain groups in this country. Most of those you see arguing the issue on TV are most likely fully covered. It should also be noted, that our system can and does provide excellent care for certain types of diseases and health emergencies. It often does this at a very high cost, but, if you are in need of an organ transplant and have money (ie Steve Jobs), you can probably use our health system to your advantage.
Of course, there are many more people who don't have those type of resources. The true crisis is the fact that so many Americans only receive health care on an emergency basis. Yes, if you show up in an emergency room with a health crisis, you will receive care. However, a lot of patients in emergency rooms wouldn't be there is they had access to routine health care.
So, I'm going to assume that we all agree that everyone should have the right to health care. The only question that remains is the best way to deliver it and how much involvement should the Government have?
I have trouble seeing how a system without Government involvement can work. If having health care requires a choice between paying a high premium and putting food on the table, the food on the table will win, since there is always a chance that you won't need health care. However, it would seem that the primary areas that the Government should get involved are in providing preventive health care and protection from catastrophic loss. Suppose that every citizen had a Government health care policy that entitled them to certain preventive care services. Treatment beyond preventive care would be at the patients expense up to some level after which catastrophic insurance kicked in? This would create a gap that could either be paid by the individual or could be filled by purchase of a supplemental policy.
The Government policies could be provided by private insurers who would compete for customers. So, assume the Government determined that insurers would be reimbursed $x per customer. The insurer would then compete for customers and if they were more efficient could offer slightly better benefits than their competitors. The only two things the Government would monitor would be that the benefits provided met the requirements and that the number of customers was accurate for reimbursement purposes.
Every American would have to choose their health provider or be assigned to a default provider through a random process.
This would provide universal coverage for the two areas that most need improvement, maintain choice and, I believe lead to a reduction in the increases in health care costs. Obviously, this system would have to be paid for via taxes, but these costs are being paid for already, so the percentage this represents would flow via the Government instead of the current method. Businesses wouldn't have to offer health care, or could offer supplemental packages as part of a compensation plan. Small business might benefit the most since they struggle to compete with large businesses in providing health benefits.
The increase use of preventive care this system would encourage should actually help to reduce overall cost although it would increase demand for certain services.
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