Government Health Care - Too Expensive - Too Controlling - Too Important. Part Three

The US Government in the Health Insurance business? The arguments, when you can get down to those that are A) Real and B) Relevant, are varied. I've had a bit of difficulty drilling down to this list but think I've come to the gist of it. In part one we discussed the costs, in part two we discussed control and in part three we will review why American Healthcare when viewed in the long term is too all encompassing an American Problem we can no longer ignore.


Since this is America and short of revolution nothing, not even morals, weighs in heavier than money we will take another broader look at the economic impact our current health care system and it's lack of complete coverage for all Americans takes on us.


When your representative speaks to you about the cost of a plan, and how it will be paid for, there are always the stipulations that can be quantified either in costs or savings, but there are too those that cannot. The actual dollar amount of savings by providing a person basic health care (prevention and education) thereby avoiding high cost end stage treatments will not be fully addressed by the agencies responsible for providing data. Neither will the increased tax and wage dollars gained by small businesses opening that couldn't without the reform because the cost of employee health care put opening out of reach. No one will try to tally the money gained from increased productivity either, healthy people are happy and more productive, clearer thinking and dependable.


Why CBO Cannot Calculate the Savings That Will Come With Healthcare Reform -

"The CBO’s track record in predicting the effects of health legislation is abysmal,” observes Bruce Vladeck, the man who ran Medicare while serving as administrator of the Health Care Financing Administration from 1993 to 2997. “Over the last two decades, the CBO has routinely overestimated the costs of expanded government health care benefits,” Vladeck adds, “and underestimated the savings from program changes designed to reduce expenditures.”


In the early eighties, Congress adjusted the way in which Medicare would pay hospitals. Under the new Medicare woudl pay a fixed amount per admission based upon primary medical condition. “CBO predicted that by 1986 total spending would be $60 billion. Actual spending in 1986 was $49 billion.”
That’s $11 billion on 60. That’s wrong by more than 18%,” .Ricciardelli observes.

In the second case, Gabel “found that savings from the Balanced Budget Act of 1997, which changed the way skilled nursing facilities and home health services were reimbursed under Medicare, turned out to be 50 percent greater in 1998 and 113 percent greater in 1999 than the budget office forecast.”
“Wrong by 50% and by 113%.”

The Institute for Healthcare Improvement (IHI) has identified some 70 U.S. communities that already have managed to do what progressives claim health care reform can do: change how care is delivered so that it is both less expensive and more effective. As I reported here, IHI spotlighted 10 of those communities at a recent conference where IHI president Don Berwick stressed: “We don’t have to ration needed care. We don’t have to raise taxes” for the middle-class or the upper-middle class. Structural changes in our health care system can ultimately provide the savings needed to pay for universal coverage. This is not a theory dreamed up by ivory-tower academic physicians. It is an idea that has been realized in some 70 communitites. Health Beat 2009



4 Hidden Costs of Healthcare

Health care is by far the most cartelized, anti-competitive big business in America. The market is crippled by a web of quotas, entry barriers, monopolistic licensing laws, and discount limits that wouldn't be tolerated in any other industry.

Health insurance: Low-dose competition
In most cities or regions, the health insurance market is dominated by one or two giant carriers, the biggest being the Blue Cross/Blue Shield plans. A recent study by the American Medical Association found that in 56% of America's 314 urban areas, a single insurer held over half the market.

The prices these gigantic players charge are soaring: A General Accounting Office study found that over the past ten years, premiums have risen 120%, compared with inflation of 44% and wage growth of 29%. "Profits in the industry are as high as we've ever seen," says John Sheils of the Lewin Group, a health care consulting and research firm.


Certificate of need laws: Rationing goods and services
One of the most damaging and obsolete -- but stubbornly pervasive -- restrictions on the supply of medical goods and services is the Certificate of Need Law.

The laws make it impossible for the numbers of hospitals and diagnostic centers to grow naturally with rising patient demand. Instead, they create artificial shortages as entrenched providers lobby state governments tirelessly to prevent competitors from entering their markets with sorely needed state-of-the art equipment.


Acute Pain: America's Doctor Shortage
The essential raw material needed to treat the tens of millions of new patients is our supply of physicians. Today, America is suffering from a painful doctor shortage that is another legacy of poor regulation. And it will get worse. The population of new doctors who go into practice each year is governed by the number of residency slots in America's teaching hospitals. Incredibly, those positions have been frozen for 25 years at around 25,000 as demand has soared.

The Medicaid 'Best Price' Policy: Putting a Floor on Discounts
Working Americans are often paying too much for pharmaceuticals because of still another wrongheaded regulation. It's called the Medicaid "Best Price" policy.

But here's the catch: If an HMO or another private buyer got a bigger break, the manufacturer had to extend the same discount to all the Medicaid programs in the fifty states. Suddenly, it became extremely expensive to give deep discounts to pharmacy benefits managers or drugstore chains. The additional business didn't come close to paying for the lost revenue from Medicaid. In a short time, the rule put a floor under discounts of -- you guessed it -- 16%.
Fortune 2009


Hidden Drain
Many of the most compelling reasons for health care reform are medical or moral in nature, such as insuring the 46 million Americans without health coverage and expanding access to care. But health care is also an economic issue, and there is a strong case to be made that reforming the system is essential to the long-term recovery of our economy. At a health care reform summit in March, President Obama said that “[i]f we want to create jobs and rebuild our economy and get our federal budget under control, then we have to address the crushing cost of health care…”2 This is exactly right. Health care is an evermore-costly-burden that weighs down government, businesses, and workers alike. In the midst of recession, these costs become even more unbearable, greatly hindering all parties’ ability to recover from economic catastrophe—and making health care reform a top priority.


Crippling Government Costs
This year, the United States is projected to spend a whopping $2.5 trillion on health care—about the same amount of money that the federal government has spent on recession-related bail-outs since December 2007.3 (And this is without taking into
account the indirect costs of an ineffective health care system, such as the $207 billion in economic losses that the U.S. suffers every year because of the poor health and shorter lifespan of people without health insurance.)4 According to the most recent OECD data, health care spending eats up more than 15 percent of the U.S. gross domestic product(GDP), a far greater proportion than in comparable countries around the world. New America Foundation 2009




Will the Deficit Save Health Reform?
If the latest budget projections are keeping you up at night, the best way to ease your troubled mind is to support health-care reform.

You've probably already heard that the deficit projections released yesterday are a threat to the president's plan to reform health care. In fact, Reuters tried to tell you this a week ago, in a story headlined "New deficit projections pose risks to Obama's agenda." But these critics, and Reuters, are wrong. The latest deficit projections make reforming health care -- the inclusion of a public insurance option -- all the more important.

Opponents of health-care reform are using that jaw-dropping number to say that Americans can't afford to pursue health-care reform, never mind that the president and congressional Democrats intend for the bill to be deficit neutral or that the math and budget experts both testify that most of the deficit is a hangover from the Bush years. (Indeed, all of the measures enacted by President Barack Obama to combat the recession have only added about $300 billion to what the deficit would have been had President George W. Bush's policies continued through 2009.)

The single major driver of growth in government spending is health care, which is increasing widely out of proportion to population growth and, if left unchecked, could make up 25 percent of the United States' gross domestic product by 2025. Proposals currently under discussion in Congress aim to slow the growth in health-care expenses with a variety of policy tools, including a public plan that could increase competition (and thus lower costs overall), cutting deals with various industry stakeholders to find savings, new studies to determine the most cost-effective ways to treat illness, and an independent board to study Medicare and Medicaid reimbursement and set more realistic prices.

First of all, reform will provide more information to policy-makers. Studies of comparative effectiveness and data from a public insurance plan will provide a deeper understanding of inefficiencies in the system and the solutions to those inefficiencies. The White House Council of Economic Advisers has also estimated that health-care reform will lead to increases in GDP, reaching over 2 percent in 2020 that would lead to proportional increases in tax revenue and lower deficits. But most important, eliminating the "crazy system of cross-subsidies," as Center for Budget and Policy Priorities economist Jim Horney calls the complex interweaving of publicly and privately subsidized care for the under- and uninsured, would create a much simpler framework for future cost-reduction efforts.

"It really is important to get universal or near-universal coverage in order to help create a system that is more sensible," Horney explains. "That system will help us to design [more efficient] reimbursement systems." The American Prospect 2009

Our health is our future, it impacts everything we do. If we're to be the best country, we need to be the best people, and that means healthy people utilizing education, experience and science to enact thoughtful legislation that keeps us on the cutting edge. We've fallen off the map when it comes to health care, we have the money and the technology to be the best and in doing so we secure our future.


Ten Myths About Health Care Reform
Myth 1: Health care reform will limit patient choice.
Myth 2: Americans will lose their existing coverage.
Myth 3: The government will ration care.
Myth 4: Affordable health care reform will create a government monopoly.
Myth 5: A new public program will only drive-up health care costs.
Myth 6: Health care reform in Massachusetts is “an unfolding disaster.”
Myth 7: Being uninsured is not a problem; it’s people’s own fault.
Myth 8: Illegal immigrants are driving the nation’s uninsured problem.
Myth 9: Health care reform won’t save money.
Myth 10: Deregulating the health care industry will solve the health crisis.Wonkroom at Thinkprogress 2009