Many people are seizing on the poor reputation of the government-financed US Postal Service to argue against having a public health care option available.
To be clear, the government doesn't run the postal service anymore. They provide it a monopoly on first class letters, and they regulate what prices it can charge.
The postal service is criticized for having high costs and poor service. But there are a few facts to consider:
-- The Postal Service has to deliver letters everywhere for the same price. You can imagine that the costs of bringing a letter to a home in a farm community would be higher than to a suburban apartment complex with a common mail area. But the rural residents aren't charged extra for their "pre-existing condition."
-- The Postal Service isn't bad everywhere. When I lived in Chicago, we tried to avoid using USPS because of slow delivery and lost/stolen items. If you had an alcoholic patient whose brain was so addled you couldn't imagine him being able to bathe and feed himself, yet he was still holding a job, it would be with the Postal Service. (There was subsequently an investigation that found some carriers were dumping bags of mail in remote areas and taking the rest of the day off.) But in Philadelphia, service tends to be quite good, and I've had much worse experience with FedEx losing items. Since I have the option of both the private and the semi-public carriers, I can choose to send my packages by USPS since I'm happy with the service here.
Meanwhile, my health insurance options are getting worse. As a small business, our premiums are based on the health status and age of each employee in the plan. Our premiums have been going up rapidly while our copays and deductibles are rising. (Those same insurers aren't paying the doctors any more money, but we won't go there.) Many of our younger employees, who are single mothers and qualify for medical assistance due to family size, are choosing that option rather than pay their portion of the cost of employer coverage.
We would love to have the choices of getting our commercial insurance at the same cost as big businesses or of choosing to pay for a Medicare-type plan. But currently, our only option is commercial plans, and the bids they are submitting each year are all within a couple dollars of each other. Not surprisingly, many other businesses our size who are less committed to health care coverage would simply drop offering coverage altogether -- making the rates even higher for those who remain.
Competition is a natural way of keeping all the parties involved efficient. Yes, there need to be rules that prevent the government plan from being underpriced, just as there need to be rules to prevent commercial plans from shunting their sickest patients to the public plan (as now tends to happen under Medicare Advantage plans when insurers are allowed to put caps on services they offer, so the healthiest patients get as much as they need of a particular service but the sickest ones stop getting it covered mid-year).
That's just fine tuning. But we need to have the option.
Wednesday, August 19, 2009
Saturday, August 15, 2009
Who would lose out with health care reform?
We've heard that this time around, the medical associations, pharmaceutical industry and health insurance companies have come to the table to try to make health care reform work. They know the current system is falling apart, and they want some say in what will replace it. So who's leading the opposition? Let's look at who's got something to lose.
One big loser could be print and broadcast media. Look at all the advertising drug companies purchase! And many of these media outlets are in precarious shape financially due to competition from free content on the internet. So it's no surprise Sarah Palin can get away with fear mongering about imaginary "death panels" without getting called on it -- it's more surprising how many news programs and publishers have the integrity to report the facts, even when it runs counter to their own interests.
The hospitality industry could also lose. Without a lot of excess money flowing around, there won't be free dinners and conferences to promote drugs and devices.
The pharmaceutical benefit managers could be left without a business if the federal government requires uniform pricing of drugs to allow supply and demand to control the costs. PBM's exist to secretly negotiate lower prices for their insurer clients, so if everyone paid the same price, no one would need an intermediary.
People who are currently uninsured could be caught in the middle. They will be getting a benefit they didn't have before, but they will have to pay for it when they pay nothing now as long as they don't get sick. Low income people will have subsidized premiums, but many self insured people simply didn't buy insurance because they considered the price unreasonably high -- they could have afforded it, or they could have afforded it if it cost less, but as long as they were healthy, it was not a priority. Of course, if those people become catastrophically ill under the current system, they will eventually get covered by government health insurance programs, but only after they lose their savings and probably their homes.
If you're afraid you will lose out because you're currently happy with the way things are, please understand they won't stay that way, even if congress does nothing. The costs are going up so fast that the quality of insurance coverage is declining for higher and higher income people. You may look at other countries where there are long waits for surgical procedures and say you don't want those waits. Well, plenty of people in the US already have to wait because of where they live or what kind of insurance they have. And no one even gets added to the O.R. schedule at all without advance approval from an insurer. The micromanagement of medical decisions began with the private plans serving medical assistance patients, and it now affects most of the employer-paid plans I deal with, too. Don't imagine the change won't make it as far as you, just because you live in a wealthy suburb.
One big loser could be print and broadcast media. Look at all the advertising drug companies purchase! And many of these media outlets are in precarious shape financially due to competition from free content on the internet. So it's no surprise Sarah Palin can get away with fear mongering about imaginary "death panels" without getting called on it -- it's more surprising how many news programs and publishers have the integrity to report the facts, even when it runs counter to their own interests.
The hospitality industry could also lose. Without a lot of excess money flowing around, there won't be free dinners and conferences to promote drugs and devices.
The pharmaceutical benefit managers could be left without a business if the federal government requires uniform pricing of drugs to allow supply and demand to control the costs. PBM's exist to secretly negotiate lower prices for their insurer clients, so if everyone paid the same price, no one would need an intermediary.
People who are currently uninsured could be caught in the middle. They will be getting a benefit they didn't have before, but they will have to pay for it when they pay nothing now as long as they don't get sick. Low income people will have subsidized premiums, but many self insured people simply didn't buy insurance because they considered the price unreasonably high -- they could have afforded it, or they could have afforded it if it cost less, but as long as they were healthy, it was not a priority. Of course, if those people become catastrophically ill under the current system, they will eventually get covered by government health insurance programs, but only after they lose their savings and probably their homes.
If you're afraid you will lose out because you're currently happy with the way things are, please understand they won't stay that way, even if congress does nothing. The costs are going up so fast that the quality of insurance coverage is declining for higher and higher income people. You may look at other countries where there are long waits for surgical procedures and say you don't want those waits. Well, plenty of people in the US already have to wait because of where they live or what kind of insurance they have. And no one even gets added to the O.R. schedule at all without advance approval from an insurer. The micromanagement of medical decisions began with the private plans serving medical assistance patients, and it now affects most of the employer-paid plans I deal with, too. Don't imagine the change won't make it as far as you, just because you live in a wealthy suburb.
Tuesday, August 11, 2009
Medical liability tort reform and health care payment
Yesterday, Charles Krauthammer's column was again slamming on "Obamacare." (Does anyone else think the Republicans might be very sorry they suggested that nickname for a program that could eventually be as popular as Medicare?)
I won't deal with his assertion that the Reagan tax reforms created tax savings and propelled a 20 year economic boom. I seem to remember Ross Perot's political career being based on the spiraling federal deficit that resulted from those reforms, but I'll leave that to more knowledgeable economists.
But I can speak on the issue of medical liability tort reform. To those unfamiliar with the system, it's a mess. Vast sums of money go to lawyers defending cases which 90% of the time are won by the doctors anyway. The system is fueled by the fact that when a plaintiff wins, the amount may be so astronomical that it offsets a lot of other lost cases for the law firm.
The problem is that there is little rhyme or reason to who wins or loses. Very deserving plaintiffs often lose, because if it were that easy to prove doctors incompetent, it would be easy to get them out of practice. Meanwhile, patients whose bad outcomes are the result of bad luck, their own failure to follow doctors' recommendations, injuries caused by uninsured third parties, etc., may win huge judgments against doctors who did nothing wrong.
Krauthammer's solution is to create a government agency that would review alleged cases of malpractice and award compensation from a pool funded by taxes on health insurance benefits. He feels that will solve the problem by removing the lawyers from the system.
Now, I'm all in favor of tort reform and removing the lawyers. But it's a bit Pollyanna-ish to think this sort of single-payer system will do it. (Did I just call Charles Krauthammer a Pollyanna?)
If you want to see how such a system would work, look at Social Security Disability and SSI. Not only are lawyers involved, a cynical person might say the Social Security Administration uses the presence of a lawyer as a test of the worthiness of an application -- "If you can't get a lawyer to take your case, it probably isn't worth our time, either." The system is widely regarded as coming up with inexplicable outcomes as far as who is awarded benefits and who isn't.
To deal with the medical liability mess, you have to look at the economic pressures fueling it. People who are gravely ill often have no insurance, because they lose their jobs. Medicare doesn't kick in until there have been two years of total, permanent disability. Medical assistance requires you to spend all your assets, and the state will probably put a lien on your home if you own it. Very few people have long term care insurance, and private disability insurance is often not what it's cracked up to be if you try to file a claim.
Meanwhile, the cost of medical care is priced in funny-money, because insurers refuse to pay the full cost -- they demand a discount, or they will send their insured members elsewhere. Meanwhile, uninsured people often can't or won't pay at all, and the prices are jacked up to offset the charges that are written off, which means even more people can't pay. To give you an idea of how crazy it has gotten, my recent one-day hospital stay and surgery generated a $56,000 bill, but the hospital accepted the insurer's contracted payment of $8,000.
So when a case goes to trial, a jury knows the plaintiff with a catastrophic medical condition may be facing the loss of his home, retirement savings, and children's educational savings. Once he goes on medical assistance, he may still have difficulty obtaining care, because medical assistance payment rates are so far below Medicare and private insurers that most doctors don't accept those patients. (No one ever lost an election by failing to look after the interests of welfare patients, so the payment rates have diverged widely over the years.)
Until you eliminate the problem with inequitable access to health care, juries are going to be sympathetic enough to hand out other people's money to plaintiffs whose injuries are nobody's fault. Shifting it to a government agency isn't going to help much, because the average person doesn't have the skills to prove that malpractice occurred without a lawyer and a lot of expert witnesses involved. If making false claims to the state board and getting a doctor's license revoked makes it easier to be awarded benefits, a lot of people will be desperate enough to do that, no matter what the consequences of removing doctors from practice will be on their community.
You have to remove the desperation before you can solve the problem. Health care reform is a prerequisite to tort reform, not a result.
I won't deal with his assertion that the Reagan tax reforms created tax savings and propelled a 20 year economic boom. I seem to remember Ross Perot's political career being based on the spiraling federal deficit that resulted from those reforms, but I'll leave that to more knowledgeable economists.
But I can speak on the issue of medical liability tort reform. To those unfamiliar with the system, it's a mess. Vast sums of money go to lawyers defending cases which 90% of the time are won by the doctors anyway. The system is fueled by the fact that when a plaintiff wins, the amount may be so astronomical that it offsets a lot of other lost cases for the law firm.
The problem is that there is little rhyme or reason to who wins or loses. Very deserving plaintiffs often lose, because if it were that easy to prove doctors incompetent, it would be easy to get them out of practice. Meanwhile, patients whose bad outcomes are the result of bad luck, their own failure to follow doctors' recommendations, injuries caused by uninsured third parties, etc., may win huge judgments against doctors who did nothing wrong.
Krauthammer's solution is to create a government agency that would review alleged cases of malpractice and award compensation from a pool funded by taxes on health insurance benefits. He feels that will solve the problem by removing the lawyers from the system.
Now, I'm all in favor of tort reform and removing the lawyers. But it's a bit Pollyanna-ish to think this sort of single-payer system will do it. (Did I just call Charles Krauthammer a Pollyanna?)
If you want to see how such a system would work, look at Social Security Disability and SSI. Not only are lawyers involved, a cynical person might say the Social Security Administration uses the presence of a lawyer as a test of the worthiness of an application -- "If you can't get a lawyer to take your case, it probably isn't worth our time, either." The system is widely regarded as coming up with inexplicable outcomes as far as who is awarded benefits and who isn't.
To deal with the medical liability mess, you have to look at the economic pressures fueling it. People who are gravely ill often have no insurance, because they lose their jobs. Medicare doesn't kick in until there have been two years of total, permanent disability. Medical assistance requires you to spend all your assets, and the state will probably put a lien on your home if you own it. Very few people have long term care insurance, and private disability insurance is often not what it's cracked up to be if you try to file a claim.
Meanwhile, the cost of medical care is priced in funny-money, because insurers refuse to pay the full cost -- they demand a discount, or they will send their insured members elsewhere. Meanwhile, uninsured people often can't or won't pay at all, and the prices are jacked up to offset the charges that are written off, which means even more people can't pay. To give you an idea of how crazy it has gotten, my recent one-day hospital stay and surgery generated a $56,000 bill, but the hospital accepted the insurer's contracted payment of $8,000.
So when a case goes to trial, a jury knows the plaintiff with a catastrophic medical condition may be facing the loss of his home, retirement savings, and children's educational savings. Once he goes on medical assistance, he may still have difficulty obtaining care, because medical assistance payment rates are so far below Medicare and private insurers that most doctors don't accept those patients. (No one ever lost an election by failing to look after the interests of welfare patients, so the payment rates have diverged widely over the years.)
Until you eliminate the problem with inequitable access to health care, juries are going to be sympathetic enough to hand out other people's money to plaintiffs whose injuries are nobody's fault. Shifting it to a government agency isn't going to help much, because the average person doesn't have the skills to prove that malpractice occurred without a lawyer and a lot of expert witnesses involved. If making false claims to the state board and getting a doctor's license revoked makes it easier to be awarded benefits, a lot of people will be desperate enough to do that, no matter what the consequences of removing doctors from practice will be on their community.
You have to remove the desperation before you can solve the problem. Health care reform is a prerequisite to tort reform, not a result.
Sunday, August 9, 2009
Paying for health insurance
Why do employers pay for health insurance?
One reason is that the corporate executives won't be able to get coverage unless they offer the same plan to all their employees. Otherwise they'd have to pay taxes on the benefit, and the insurers would charge them higher rates because the risk pool would be smaller and probably older and sicker.
The other is to attract and keep valuable employees -- the same reason they pay their employees more than minimum wage. If a company doesn't offer health insurance and a competitor does, the competitor will be picking off its best employees with the lure of health benefits. In the current market, where it's extremely expensive to get individual health insurance and you don't even get a tax deduction the way businesses do, that's a pretty powerful lure.
But if the competition doesn't offer health insurance, its costs are also lower, so it can attract more customers with lower prices for goods and services. There is a break point where the cost of the insurance doesn't make up for the benefit of having better employees. Once insurance costs get to that point, having a single business in a market drop health insurance could lead the others to quickly follow suit.
Most foreign competitors have no health care costs, either because they are in developing countries where employees get extremely low wages and benefits, or because their countries have national health plans that cost less in taxes than health insurance premiums cost in the U.S.
So those competitive pressures are already there, and they're driving jobs overseas. That's something people ought to keep in mind when they decide how to structure the new health plan. Current plans call for keeping the responsibility for most people's health coverage with their employers, then increasing that cost even farther by removing the tax deduction and by putting a surcharge on people with the highest income (a tax on a tax, for pity's sake).
Now those fabulously wealthy people can afford a little more taxes. And despite their protests, unless they want to move to a developing country, the taxes aren't going to be significantly different in other countries that already have national health plans. But many employers can't afford to pay more. In particular, unionized employers can't reduce wages without bargaining for it at the end of a contract, and raising prices may drive customers away without significantly increasing their gross income.
No one likes "taxes." People are willing to accept massive reductions in their potential take home pay under the current system. But if they actually get to see the money and then have to pay for something called a "tax," they're irate.
It's like the research that shows it's more effective to punish a child by giving him something and then taking it away than to not give it to him in the first place. If only the American public were willing to stop acting like children and accept a tax that wasn't hidden from them, the health care system would stop driving so many jobs overseas.
One reason is that the corporate executives won't be able to get coverage unless they offer the same plan to all their employees. Otherwise they'd have to pay taxes on the benefit, and the insurers would charge them higher rates because the risk pool would be smaller and probably older and sicker.
The other is to attract and keep valuable employees -- the same reason they pay their employees more than minimum wage. If a company doesn't offer health insurance and a competitor does, the competitor will be picking off its best employees with the lure of health benefits. In the current market, where it's extremely expensive to get individual health insurance and you don't even get a tax deduction the way businesses do, that's a pretty powerful lure.
But if the competition doesn't offer health insurance, its costs are also lower, so it can attract more customers with lower prices for goods and services. There is a break point where the cost of the insurance doesn't make up for the benefit of having better employees. Once insurance costs get to that point, having a single business in a market drop health insurance could lead the others to quickly follow suit.
Most foreign competitors have no health care costs, either because they are in developing countries where employees get extremely low wages and benefits, or because their countries have national health plans that cost less in taxes than health insurance premiums cost in the U.S.
So those competitive pressures are already there, and they're driving jobs overseas. That's something people ought to keep in mind when they decide how to structure the new health plan. Current plans call for keeping the responsibility for most people's health coverage with their employers, then increasing that cost even farther by removing the tax deduction and by putting a surcharge on people with the highest income (a tax on a tax, for pity's sake).
Now those fabulously wealthy people can afford a little more taxes. And despite their protests, unless they want to move to a developing country, the taxes aren't going to be significantly different in other countries that already have national health plans. But many employers can't afford to pay more. In particular, unionized employers can't reduce wages without bargaining for it at the end of a contract, and raising prices may drive customers away without significantly increasing their gross income.
No one likes "taxes." People are willing to accept massive reductions in their potential take home pay under the current system. But if they actually get to see the money and then have to pay for something called a "tax," they're irate.
It's like the research that shows it's more effective to punish a child by giving him something and then taking it away than to not give it to him in the first place. If only the American public were willing to stop acting like children and accept a tax that wasn't hidden from them, the health care system would stop driving so many jobs overseas.
Friday, August 7, 2009
How will we pay for a new health care system? Well, how do we pay for it now?
While we're talking about how we can pay for universal health coverage, let's talk about how we pay for health coverage in the present system.
Currently, we have a bizarre system in which employees pay for their health insurance as part of their total compensation packages. Yes, I know you've been told your employer pays for it. But it's money that would otherwise have gone in your salary. Think of it as a deduction from wages that is taken out before the wages are calculated on your pay stub. It's part of what your labor costs your employer.
You probably have no idea how much that insurance actually costs, either. And it costs a lot, much more than the extra taxes paid by people in countries with government-paid health care.
Employees also rarely have any choice about which insurance companies and products will be offered to them, and they certainly have no choice about which drugs will be on those companies' formularies or which doctors and hospitals will be in their network. They're several steps removed from the people who make the contracts that determine what those hospitals and doctors will be paid for each individual procedure or office visit.
And they accept having people make those important choices without their input because they think they aren't paying for it themselves. The consumer of the services has no choice in the purchase of the services.
And we wonder why market forces aren't controlling these costs?
Currently, we have a bizarre system in which employees pay for their health insurance as part of their total compensation packages. Yes, I know you've been told your employer pays for it. But it's money that would otherwise have gone in your salary. Think of it as a deduction from wages that is taken out before the wages are calculated on your pay stub. It's part of what your labor costs your employer.
You probably have no idea how much that insurance actually costs, either. And it costs a lot, much more than the extra taxes paid by people in countries with government-paid health care.
Employees also rarely have any choice about which insurance companies and products will be offered to them, and they certainly have no choice about which drugs will be on those companies' formularies or which doctors and hospitals will be in their network. They're several steps removed from the people who make the contracts that determine what those hospitals and doctors will be paid for each individual procedure or office visit.
And they accept having people make those important choices without their input because they think they aren't paying for it themselves. The consumer of the services has no choice in the purchase of the services.
And we wonder why market forces aren't controlling these costs?
Thursday, August 6, 2009
Cash for Colonoscopies?
It's interesting to see the unquestioned rush in the U.S. Congress to add funding to the "Cash for Clunkers" program. That's the one that pays part of the cost of a new car if the old one got really crappy mileage even when new. (Even a lot of SUV's don't qualify.)
After all, a lot of those cars are the same Hummers whose original purchases were subsidized with a tax deduction meant for farm vehicles. A large percentage of the jobs in the auto manufacturing industry have already moved outside the U.S., so it's not the most efficient way to stimulate the economy. And while I'm all for reducing emissions, manufacturing brand new cars instead of making old ones serve longer lives probably creates even more carbon emissions.
In contrast, health care reform has been met by decades of foot-dragging. Nobody is rushing to fund "Cash for Colonoscopies" or "Dollars for Delivery Rooms." It shows where our national priorities are -- the car is one of the gods of the American pantheon. No one questions socialized highways, either, but "Bucks for New Bus Routes" would meet howls of protest.
And I sure don't expect to see "Small Change for Class Size Reduction" any time soon, especially since education doesn't have a predominantly male work force
Just sayin.'
After all, a lot of those cars are the same Hummers whose original purchases were subsidized with a tax deduction meant for farm vehicles. A large percentage of the jobs in the auto manufacturing industry have already moved outside the U.S., so it's not the most efficient way to stimulate the economy. And while I'm all for reducing emissions, manufacturing brand new cars instead of making old ones serve longer lives probably creates even more carbon emissions.
In contrast, health care reform has been met by decades of foot-dragging. Nobody is rushing to fund "Cash for Colonoscopies" or "Dollars for Delivery Rooms." It shows where our national priorities are -- the car is one of the gods of the American pantheon. No one questions socialized highways, either, but "Bucks for New Bus Routes" would meet howls of protest.
And I sure don't expect to see "Small Change for Class Size Reduction" any time soon, especially since education doesn't have a predominantly male work force
Just sayin.'
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