Thinking About Health Care

With the hubbub over making changes in the way healthcare is funded and delivered, it seems to me that our elected officials are truly missing the point on what we need in the way of reform. The focus seems to be on the 15% of the populace that doesn’t have proper coverage with poor accounting to the 85% that does. There also seems to be a total disconnect on what the real problems are and a misguided belief that government delivery systems – as evidenced in Medicare, Medicaid, and Veteran’s administration – are good models for addressing the healthcare requirements of the nation despite the problems inherent to each of these programs.

Today, the United States seems to have the best and worst of healthcare options. The best boils down to one component: choice. Comparatively, we have far more options associated with healthcare than the rest of the world. The worst also boils down to one component: cost. We spend far more as a percentage of GDP than any other industrialized nation. We appear to fall somewhere in the middle (depending on whose studies you read and what the focus of the study is) for most of the other measurements such as quality of care, access to care, and medical advancements.

Since I fall into the 85% of the population that does have coverage and pay a large amount of money each year on insurance coverage (yes, my employer subsidizes it but the majority of the burden for family coverage falls on me), my voice and needs have not been a large part of the discussion on health care reform. Worse yet, rather then looking at addressing the real issues for healthcare in America and making structural changes to address them, we are looking to spend trillions enhancing the broken parts of our system.

If we could take a step back from the abyss, here are some areas that should be driving the reform process:

Cost Control – Let’s face it, we spend way too much on health care. The idea that the cost of healthcare can increase by more than inflation each and every year and business and individuals can continue to absorb this indefinitely is crazy. But this is exactly what has been happening. The impact of the increased costs causes businesses to become uncompetitive in the global economy, flattens or depresses wages in real terms, and limits access to healthcare based on affordability. Our current system needs serious changes to support reform and there have been too many sacred cows that restrict progress. Adopting a health insurance approach instead of a health care payment program, expanding pool sizes, enacting tort reform, reducing administrative costs, eliminating minimum coverage requirements, etc., etc., etc. should all be on the table. Rather than focusing on spending more (which is what Congress is working on now), the first step should be enacting structural reforms that will reduce that overall cost of healthcare. We simply can not continue in our current model.

Health Insurance vs. Health Care Payment Plan – Everyone talks about health insurance but what we really have is a health care payment plan. Our health care payment plan is expected to cover the majority of medical costs while minimizing out of pocket expenses. The idea of insurance is to create a safety net that protects us from the unexpected and manages our exposure to risk. With our current system, we have no real idea what a procedure costs (ranging from an office visit to open heart surgery) and it is difficult to make informed decisions on how best to seek care because we are almost totally isolated from the financial considerations associated with going to the doctor, med-center, or emergency room. If every time we needed an oil change, we used our car insurance but had no idea what the cost of oil change was and no way to differentiate the services associated with one service provider from another, then we’d also have out of control costs on car insurance – even if risk factors were identical. One idea that has been tried but hasn’t stuck is the concept of healthcare savings accounts. If instead of paying $10,000 per year for my families Health Care Payment Plan I was able to put $5000 into an HSA AND then apply the other $5,000 to actual insurance that would cover the expenses occurred above the HSA, then we’d begin to see both the potential of allowing people to make decisions on their own while still providing the safety net of coverage needed when you or yours require more than a regular checkup or assistance with a common malady. As a one-off approach (as now implemented) HSA’s don’t create the economy of scale needed to impact costs; with universal implementation HSA’s would promote savings, create better informed healthcare consumers, and drive down costs or both health care and insurance coverage.

Catastrophic Coverage – The idea that you can walk into an emergency room sick or injured and walk out bankrupt is a serious problem and represents a lose – lose – lose situation since the patient loses most of his/her assets; the hospital, doctors, and related entities don’t get paid; and the losses associated with the bankruptcy are passed on to the rest of us in the form of higher costs. Enacting a national insurance program that covered everyone up to retirement age / medicare enrollment would address this issue.

Insurance Scams / Pre-existing Conditions – The underlying goal of insurance companies is to limit the amount of money they pay out in claims in order to maximize their profits. When done legally and ethically, this is simply good business but the industry has a track record of abusing their trust with little or no repercussions for acting inappropriately. Similarly, insurance companies have no problem accepting payments for years and then citing a “pre-existing condition” to deny coverage. To address these abuses, there should be significant dis-incentives for insurance companies to arbitrarily / wrongly deny coverage and the concept of a pre-existing condition could be eliminated by the creation of larger coverage pools and catastrophic coverage options.

Government involvement – Somewhere in the Constitution I missed the part where it says healthcare is a God granted right to which all Americans are entitled. There are other countries that have this in their constitution, but we do not. So if you feel slighted by this omission either work to change our Constitution, move, or stop whining. We “don’t give a damn about what you think you’re entitled to”. The focus of government should be to provide a structure that balances cost with choice, allows America to compete in the global economy, and supports the quality of life we both expect and appreciate as Americans. We do not need the Federal Government to become the core provider and assume responsibility for roughly 1/6th of our economy to accomplish these objectives.