Monday, February 15, 2010

Low Cost Healthcare

Here we have a third party attempt to inject a simple program on health insurance into the debate.  It seems to be largely modeled after the Canadian experience which has worked well enough for forty years.

Critically, they have understood it is necessary to pass administration downstream to the states.  This is totally necessary.  At the end of the day you have a single payer system however long it takes.  You have lost competition in one sense that must be found in another sense.  This way the fifty plus states and territories are competing with each other to optimize the system.  The first constraint comes from the least prosperous who must pay attention to costs and management.  That disciplines less troubled states to keep the pressure on.

Even more important is that this removes political responsibility from the federal level down to the State level.  I suspect that the actors in Washington have no appreciation for the grief they are opening the door to if they set up a government monopoly out of Washington.  This way the problem completely leaves their world.

The present regime has handed pricing control to an insurance monopoly who continues to drive pricing and costs all of which must accrue to their advantage.  That is why we are subjected to their bleating whenever it looks like we are close to having a working system.

I think that no one fully understands this.  The present regime has abandoned pricing to the insurance companies who are only competing for market share of the consumer’s wallets. They have only used whatever pricing power that they have to optimize their profits.  Their share of the pie is effectively fixed as a percentage so in their world they must expand the pie.  A thousand dollar charge out for a procedure is better for them than one hundred dollars for that reason.

Obviously they do best if they service a third of the population who can pay any price structure they can get away with.  Service costs avoided from the other two thirds passes instead on to the bottom line.  The Government gets the bill for the third of the population who cannot afford any level of insurance at the inflated pricing structure.  The other third simply are not covered.  This system has produced the highest per capita cost for health care in the developed world.

Remember then if you are paying health insurance your dollar represents the $0.75 needed to provide every American as good if not better health care.  Not only are you out of pocket the $0.25, but that one other citizen has not been served and your taxes are paying for yet another citizen.  You likely earned $1.50 in order to pay that $1.00.  Your $0.50 went to pay for someone else’s health care.

That this is wrong should be obvious.  That the business itself is operating with no risk whatsoever should also be obvious.  That this is possible only in a monopoly situation is a reasonable deduction.  It is bankrupting governments by bankrupting the taxpayer. It presently is the only financial system that seems to go on untouched by a severe recession.  Simply put, financial engineers have utterly gamed the medical payments system until it is staggering under its own weight.  As the decline continues, way more people will lose coverage than are acquiring coverage.  I do not know were this disaster will end up, but state level single pay systems are likely to start popping up.

Remember one thing.  The same product suppliers who sell you drugs and other medical supplies are selling exactly the same products in Canada, Mexico and throughout Europe at sharply lower prices and much, much cheaper in China and India.  I also see no creditable evidence that an average doctor is doing better financially in the USA than his counterparts elsewhere.  We are not talking about the stars here. We are talking about that chap in a small town somewhere who has trouble collecting his billings. The single payer system eliminates the cost of collection and unpaid billings for these folks.

When I was growing up, an old country doctor with an excellent reputation passed on.  He lived modestly and the bulk of his estate was in the form of uncollected bills. The single payer system that was then put in place ended that level of financial abuse. These chaps did their work as before, except that they then got paid.

The Low Cost Solution to Providing Healthcare

by  The Association of Mature American  Published on January 25th, 2010

Now that the “People’s Revolt” has reached Massachusetts with the election of Scott Brown as Senator, a sensible Health Care alternative plan must be found. Please take a look at how AMAC’s plan compares to the other proposals.

The AMAC solution provides changes in our Health Care System that will result in all citizens being covered.  It lowers the cost of medical care and does so within the free enterprise system.  It will cost approximately one-fifth (1/5th) of the cost of the plans presently being proposed in Congress.

There are five points to the plan.

First, the plan is administered by the states using their already existing Departments of Insurance.  No need to create eighty plus new government bureaucracies, as proposed in House and Senate bills.  The already existing National Association of Insurance Commissioners (NAIC) will create uniform regulations to govern health insurance programs. Exceptions would be allowed in certain states.

Second, coverage will be required for all, phased in over a four year period.  Individuals would receive tax incentives to help pay the cost.  Those eligible for group insurance would be required to join the plan and employers would pay a portion of the premium.  Tax credits would be given to employers according to a schedule.  A “basic” low cost plan would be available for low income households.
Third, pre-existing medical conditions would be covered.  Insurance plans could not stop payments because of use of the plans.

Fourth, costs would be reduced by:  Reforming medical malpractice lawsuits, establishing peer approved practice protocols to reduce unnecessary tests, allowing incentives to be paid to those who uncover Medicare and Medicaid fraud, encouraging hospitals to review management of their operations and finances (share cost saving ideas) and encouraging competition between providers of medical devices.  Further cost reductions can be achieved by providing incentives for the free market to expand its role.  For example, open low cost medical clinics (for minor illnesses) in stores like Wal-Mart, Sears, and drug stores.  This has already been started by some stores that offer very low prices for generic drugs.

Fifth, achieve massive savings from the Federal government by reducing its size.  As a start, six to eight of the Departments of the U.S. Government will be eliminated and merged into existing Departments.  The funds saved would be put into a separate account to be used to help defray the costs of health care. 

Likewise all government programs would be reviewed with an eye to eliminate or greatly reduce costs during this time of economic crisis.  If we are to provide quality health care for all our citizens, we have got to start making serious decisions.

1 comment:

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