Healthcare Reform and some valid Statistics

Medicare passed in 1966, and at that point in time the private sector (the insurance we as Americas have state in 2009 that we like over 85% of the time - employer-sponsored or buy it ourselves, or if we own small businesses etc...) funded over 75% of total healthcare expenditures. Following that percentage began to pull back and fell to 63% by 1967. Since that time the private sector has continued to fund less of the national health expenditures.

As of 2007 that number was down to 53%. Why? Again, we reference the "health care wedge" which is the separation of the consumer and provider as there began to be more and more government intervention through this time period. What is amazing, if we compare this phenomenon to auto insurance, or other types of insurance (life etc..) which by definition is a tool to manage risk, and in exchange for premium payments, provides protection against large but uncertain risks. We have completely flopsided the way health care is purchased, and for what services. There is a great article now by Laffer & Moore that I am referencing (The Prognosis for National Health Insurance) and in it they compare auto insurance paying for oil changes, brakes, you name it. Even a layman can quickly state "wow, wouldn't that cost way more?" Answer is simple and yes.

As the government has already intervened, driven this wedge up, and taken control of the payment and funding methodology almost half of the time as of 2007, the spike in health care spending is actually more because of the existing system that has pulled away from the private sector funding versus the government. As an expert in this field, I quickly jump to, "well, go back to the 60's before the government destroyed the system with it's now bankrupt Medicare program, and completely reformed by whom and how Medicare is run and funded. Government already seems to be the obvious problem here."

Back to my example above, again referencing Laffer & Moore, now the private sector funds just above 50% of health care expenditures, with only slighltly more than $1 out of ever $10 coming out of the consumer's pocket (no consumerism here either). Where was that number in 1960? It was about 47%, or $4.70 out of every $10. So today, and back to the automotive example, if we overlayed (apply?) this to the auto industry, pricing would be fixed whether you crash all the time or not, or whether you are 21 years of age or 50, and the "reckless" would be funding the "safe."

This does not appear to be a fair system, and does not promote any type of "thinking" before we research or spend. If I can go to a $400 dollar a visit cardiologist 5 times a month just to check in, and it does not cost me very much (but is killing the overall system), why wouldn't I?

I can go on and on, but my point is straight-forward and simple. The private industry NEEDS to control more of health care funding and expenditures, and we as Americans also need good tools to use to research, examine, and compare doctor's and hospitals to see their outcomes, infection rates, readmission rates, etc. If I choose a doctor that my mother says is incredible - "we all go to her" - but that doctor readmits patients to the hospital for the same services over and over because their health immediately deteriorates after they are released, does it seem like a problem? Yes, maybe I would like more information on this physician and her practice patterns? It is a proven fact that most American's spend more time researching the purchase of their new SUV than they do gathering information before having a hip replacement. Amazing isn't it? We need more of this valuable information to help American's see that what most politicians say on TV is self-motivated by lobbying interests and perhaps not always with an eye on the common good of us as tax-payers. I can beat up on both Republicans and Democrats on this very point, for they are the government. Private insurers, if regulated differently, and if their cost structures change to bring down the enormous profits they make at the expense of consumers in this country solves two problems. First, it would make affordability radically increase and coverage availability soar. Second, it would place the profit mechanism for businesses that want to sell health insurance under much greater scrutiny and management.

Enough for now...please provide comments.

Obamacare?

It was been a while since I blogged on this subject, but the Obama plan seems to have lost most of it's muster and it's steam. Most economists, and folks from both sides of the isle seems to think we will see insurance reform, but perhaps this turns more in to insurance carriers being reformed in the private market. Seems to us that if pre-existing condition exclusions are removed, and guaranteed issue coverage takes a national state (like they have in NY, NJ, CT, MD for example) that would certainly be a piece of the pie. But there will invariably need to be business tax credits for folks that offer group coverage to their employees, and tax penalties if folks do not, which would in turn offset the internal cost structure to insurance carriers in order to be able to have bigger pools of people (both healthy and sick) to bring down premiums. What seems to have sunk the Obama plan is the fact that an already bankrupt Medicare and Medicaid government run program, if given the opportunity to bring in a government plan for all (the Public Option) would then force hospitals and private physicians to take drastically lower reimbursements, hence forcing them to drive up their charges to the privately-insured - this in turn would radically push private insurance higher, and also force providers to increase the already staggering 29% of Medicare covered senior (and then now also non-seniors with a public option) to run in to access issues - this 29% has been referenced many times in all forms of media, as the percentage of people covered under Medicare that can't get treatment because physicians prefer to not treat for such low reimbursements when they can see privately-covered patients and more reasonable reimbursements.... I have not even starting talking about Medical Malpractice tort etc...another huge piece of the pie.

That brings us to the place we are today, we need everyone in a room together, insurance companies, doctors, hospitals, and legislators, working out a better private system to continue to give Americans access to the best healthcare in the world. We have lots of work to do -