Posted tagged ‘health care cost’

How Long Will The Grand Bargain Take?

July 31, 2013

I can understand some of the critical reviews of President Obama’s time in office.   The more serious reviewers find him as only an average chief executive.  His opponents find him an utter failure, worst ever.  Hmmm.

The expectations for this “post racial” President were very high indeed.  Living up to the hype would be very difficult for anyone.    President Obama’s shortcomings, however, lay not so much in his goals (what he wanted to do), but in how he has tried accomplished his agenda.  As chief executive, he has proposed legislation and Congress has said “no thanks”.

The President identified (correctly in my opinion), healthcare, as the most important strategic objective.  He wanted to correct health care injustice and get control of its spiraling cost.  For example, Obama pointed to upwards of 50 million Americans who had no coverage, to Americans who were denied coverage on the basis of a “pre-existing condition”, and to millions who were one illness away from complete financial failure.

His goals were worthy but his actual achievement, the Affordable Care Act, is a pigmy compared to what is actually needed (and what is found in the rest of the modern world), and ACA is still a fight he must wage every day.

Compounding his problems, the President has been pushing on a rope trying to get anything through Congress.  The GOP has lapsed into a “just say no” approach.   In their zeal to blacken (get the pun) President Obama’s record, Congress has turned its back on the needs of the greater USA.  The President has tried to stand above the “food fight-like” Congressional behavior but instead has too often appeared aloof.  (It took former President Bill Clinton to adequately explain President Obama’s first term because Obama either couldn’t or wouldn’t try.)  The end result, no action.

Today the New York Times published an article comparing the US performance on global inequality measures.  Simply stated, the US appears to be “exceptional”, unfortunately in a disappointing way.

Comparing other countries, the US rated on (1) Income inequality (5th worst), (2) literacy inequality (5th worst), (3) Infant mortality (4th worst), (4) child poverty (4th worst), and (5) single parent families (worst).  Hmmm.

The President has said often “we can do better”.  And for sure doing better is not lower taxes for corporations or the top 2%.  Rather “doing better” is far more likely linked to increasing the economic strength of the middle class which should raise all boats (even those of the top 2%).

Improving the middle class’ economic strength will require a greater share of corporate returns being shared with ordinary workers.  It must also involve bringing under control the staggering cost of health care, particularly the annual increases.   A revamped health care system such as a universal system like Germany’s would replace Medicare and Medicaid and allow the US to focus on the costs of a single health care delivery.  If the US could find the resolve to move to a system like Germany, health care costs would drop by as much as 50% while health outcomes would increase.  Businesses would no longer be saddled with contributing to health care through employee contributions, and the Federal Budget could more easily be studied with Medicare and Medicaid eliminated.

Regrettably, there is no interest in Congress.  To improve the US position in these “inequality” measures will require an interested and dedicated set of public servants.  And to turn the current crop of Congress Members into public servants seems just as remote a possibility.

So maybe all that is left for President Obama is to lay out just how exceptional the US really is (pretty nice place for the top 2%), and what strategic changes need to be made (much less income inequality, tax reform (including new taxes), sharply lower health care spending, and corresponding reduction in government spending (Medicare, Medicaid replaced by universal health care).

The chances for any serious action seems not timely at this moment.  I wonder how long it will take?


Doctor In The House?

July 29, 2012

An article in today’s newspaper herald a looming shortage of doctors… just as the Affordable Care Act is about to make health care more available to millions of Americans, there will be too few doctors.  What are they trying to say?

The quoted experts said the shortage is already baked into reality.  It takes about 10 years to produce a doctor, these sources said, and so ACA or not, there will be a shortage.  What are we to do?

Some will blame the Affordable Care Act for putting demand upon the system when the system cannot respond.  Others will say this is a problem of spot shortages.  That is, in big cities or populated suburbs, no problem.  In rural areas or economically depressed regions, not so good an outlook.

So should the call go out for “full steam ahead”, train more doctors and fast?

It might be instructive to also remember that US health care costs (per capita) are almost twice that of Germany and France (and about 15 other modern countries).  Outcomes arguably are not even as good.  Why then should US doctors in aggregate, be making so much money?  And, how can the US afford to increase the number of doctors even further?

The answer of course lies in fixing an inefficient health care delivery system.  At present the US pays for service and not for outcomes.  Why not run 10 diagnostic tests and be more sure of your diagnosis?  Why not discharge a patient and readmit a few days later when both events are paid for?

Some are calling for repealing ACA and hint that this will reduce the pressure on health care delivery.  They may be correct since health care, other than emergency room access, will be out of reach for millions.  How can these advocates sleep at night?

Doctors, especially those highly skilled, deserve to be well compensated.  The question is how much is enough?

Our society is not much help with the widening gap between the wealthy (job creators) and everyone else.  Doctors are as smart (or smarter) than most CEOs and senior executives.  Specialists are very well paid.  In comparison, however, general practitioners make a comfortable living but do not make as much money unless they abandon general practice and specialize.  This adds more years of study and training and reduces the number of preventive care physicians.

In a free market, customer driven, society, how can there be a shortage of well paid doctors?  Repealing Affordable Health Care can not be the answer.

I have confidence, however, that the medical profession could fix both the availability and cost issues it if politicians stayed out of the discussion.

What Are Those Justices Thinking Now?

March 23, 2012

The Supreme Court begins deliberations Monday on the Affordable Care Act.  Pundits are abuzz on whether the Justices will decide the individual mandate is allowable under the Constitution.  Just how much the Constitution will play in this matter remains to be seen.  Political leanings may play a big role too.  Interpreting the Constitution will be necessary since the issues involved could never have been anticipated in the 18th century.  But how will the Justice interpret?

It has been said that former Justice Sandra Day O’Connor always tried to form her opinions close to the main stream of public opinion.  Public opinion, in this matter, is not easy to read.  Those opposed to the Affordable Care Act have done an effective job of saying the government can not make you buy a product, and if they could, maybe they would make you buy broccoli.  This, of course, misses cleverly the real point behind ACA.

Health care is like no other private sector product.  It is a product we all need and will use in varying degrees through out our lives.

In general, one is healthier in early years, and encounter more needs for health care as they age.  When preventive health care measures are not used, patients usually end up consuming a lot of health care services at a much higher cost than if they had consumed preventive measures.

Most Americans do not have a clue what health care actually costs.  They are insulated by employer provided health insurance and by the government through Medicare and Medicaid.  They may experience a co-pay or have to pay a fraction of the premium but for the most part Americans have no direct knowledge of health care’s cost.  To them, health care insurance comes with the job.

If you are unemployed or for any reason do not have employer supplied coverage, the picture looks different.  First, coverage of single subscribers is expensive.  Second, for far too many, coverage is even more out of sight expensive or just not available due to some pre-existing condition.

Why should someone with medical condition A be covered when they are part of an employer’s group plan and someone else who also has medical condition A, not be able to obtain coverage (or pay more for it) just because they are a single (not part of a group)?

Of, course there are business answers.  Insurance companies assess risks of large groups (composed of younger and healthier individuals) and determine that a single individual represents a higher risk of costing them more.  But, why are rates set on groups and not for the entire population?

So, back to the individual mandate.

There are many people who choose to be self insured, that is they do not purchase insurance coverage.  There are many reasons from “I don’t need it” to “I can’t afford it” to “I am going to get insurance next week”.  But today, they don’t have it and suddenly must go to an Emergency Room.  Under the law, hospitals can not refuse service to anyone simply because they can not afford to pay.  These unreimbursed costs get plowed back into all other fees charged by the hospital or doctors.  In this way, everyone else pays more than we might otherwise have.

The first order of Court business will be to decide whether the individual mandate is Constitutional.  Is it ok to make everyone buy insurance?

The implications are serious.  If the individual mandate is held constitutional, the US may be stuck with our current health care delivery system for much longer, probably until Medicare/Medicaid collapse financially.  Then, the Country will be faced with having to revamp the entire health care delivery system.

If the mandate is struck, the long term expectancy for our health care system is the same, Medcare/Medicaid will topple the delivery system eventually.  Unfortunately, the Country will have to live with the shame of denying some proper health care by discriminating against those with pre-existing conditions.

Budget Delusions

February 1, 2012

Mitt Romney won the Florida primary yesterday quite convincingly.  He did it on the strength of an ocean of negative campaign ads designed to tear down Newt Gingrich.  In a school yard, Romney would have been flagged and sent to the detention hall.  Gingrich, of course, was guilty as charged but Romney outspending Newt 5 to 1 is not the sign of fair fighter.

It is hard to think of a single national issue upon which this campaign was fought.  Size of government was the closest issue and that was poorly explained.  It seems the right side of the GOP are convinced that a smaller Federal Government is a good thing.  Forget any details, just go for the words, smaller government.

In other venues, Republicans do connect the “size” of government to the deficit, the debt, and bingo, the need for lower taxes.  An incredible leap of logic but they accomplish it with ease.

Not surprisingly the actual figures do not support this.

The 2011 proposed federal budget can be broken into two pieces, I will label the “real budget” and the “old age and healthcare” budget. The “real budget” is design to cover costs that knit the 50 States into America.  The “old age and health care” budget is targeted to provide benefits to all Americans who are above a certain age or are without means to pay for health care.

  • In the “real budget”, we see the government anticipated income tax revenues of $1.1 trillion.  Adding all other receipts we would normally consider taxes, contributes an additional $523 billion.  So the total tax collection was projected to be about $1.6 trillion.  This revenue is designed to cover, however, about $2.2 trillion is spending.

Hmmm.  Now before we begin drawing conclusions, there is more.

  • The government also collects $684 billion in social security wage taxes and $260 billion in Medicare/Medicaid wage taxes.  These are intended to cover the “old age and health care” expenditures of $730 billion in social security and $763 billion in projected Medicare and Medicaid spending.


When you break the overall deficit issue into these pieces, one can see we have two problems, each requiring a unique solution.  For the “old age and health care” budget, the social security short fall is relatively small and very small changes in the pay out rules should be able to fix it.  The Medicare/Medicaid, however, is woefully short (almost a half trillion) and solving this is a big problem by itself.

Looking at the “real budget”, we can see a $600 billion shortfall.  The major pieces of the “real budget” are defense ($900 billion), safety net such as federal employee benefits, unemployment payments, food stamps ($650 billion), interest on the debt ($251 billion) and all other departments and expenses ($520 billion).

Here’s the question.

  • Will the GOP campaign on the specific principle of reducing federal employee benefits?
  • Or, cutting food stamps or unemployment payments?
  • Will the GOP proposed much steeper cuts in Defense?
  • Or, how about eliminating all the government agencies and departments?
  • Or, do you think they will propose some combination of tax increases combined with cuts in defense and government agencies?

With the “old age and health care” budget, according to the numbers, Medicare/Medicaid is a problem of collecting too little and paying too much.  What if the withholding percent was increased, some of the Medicare costs were transferred to recipients, and the overall US health care system was reformed so as to bring US per capita health care cost more in line with the rest of the modern world?

There, that was easy.  I wonder why Newt and Mitt aren’t discussing the size of government this way?

It Could Be Worse

March 5, 2011

As the two political parties stumble and bumble around, neither one wanting to cede any slop from the public troth, the rest of us are left wondering whether there is a real crisis or not?  It could be worse, however.

One must realize that the US has the ability to end the drama over the deficit and the debt in a flash.  A combination of tax increases (across the board, but progressively hitting the wealthiest fully) and spending cuts through the fat of inefficiencies and policy priority updates, could turn the $1.6 trillion deficit into a surplus.  If this is true, why won’t political leaders agree on this?

The simple answer is there is more money in it to keep things the way they are than to fix things.  The complex web of industries and their special interest support groups which have woven links between them and the campaign and personal wealth of our politicians is a bird in the hand.  Upsetting this web is too risky for those who understand the “system”.

So, we will see the trench warfare go on.  Republicans, wrapped in the flag and toting their bibles, will strike at the poor and middle class.  They will use fear and false promises to garner enough support to win elections.  Democrats will counter with the promise of more jobs and benefits for the poor and middle class without having any interest in whether their programs work as advertised or whether they are cost effective.  For both parties it is all about getting elected and retaining their place at the public troth.

With the rest of the world experiencing some type of difficulty, there is at present no incentive for the global money lenders to abandon US debt obligations.  As long as there are buyers for US treasuries, at a low interest rate, the Democrat-Republican food fight can and will continue.  Serious work on issues such as health care cost, social services safety nets, affordable higher education, infrastructure repair, defense spending reduction, and immigration will be delayed.

One day, all these will come do.  And then we will know how bad it can be when things get worse.


Plan B

September 21, 2010

Previously I have associated the term “plan B” with what do you do when what you want to do does not work? Even the morning after birth control treatment was aptly named plan B. Now there is a new concept associated with plan B but this new application raises unpleasant questions.

Today’s newspapers are carrying a story about the Republican Party’s “plan B” campaign rhetoric. Their “plan A” was to hype the repeal of President Obama’s health care reform. This was catchy and appealed to many of the Republican base and even better to the far right, act now-think later faction. When it became clear there would not be enough votes to overcome a Presidential veto, voila, we need a plan B.

The Republican plan is to gut the bill of certain provisions, each that would seem innocent by itself and therefore might carry a majority and might even be popular enough to overcome a veto. An example might be the provision that requires all businesses to offer health insurance and if they do not, then the business is subject to a special tax. You can hear the cry now. We are taxing our businesses to death. How can we expect new jobs when we tax our businesses so heavily. And so on.

Well if we do not fund health care through payrolls, how do Republicans propose that it be paid for? At the end of the day, employer’s contributions are really tax supported (these costs are tax deductible) and for the most part, are an outright hidden tax where the remaining cost is built into the price of goods and services. What are their ideas?

The most troubling aspect of Plan B is that the discussion is not about health care cost. Further, unwinding the Obama plan will mean denying certain groups of people coverage, either directly or by pricing them out of the market. Health care is not free and should not be viewed as free. The discussion must come around to how do we make basic health care affordable and available (as in all other modern countries)? Sadly, the American voter does not see a con when it is coming right at them.

The Role of Free Enterprise

October 10, 2009

Ask most Americans about the economy and they will say that it is what makes America different from other countries. We have “free enterprise”. This unbounded freedom drives entrepreneurship and from that innovation. We have a steady flow of new goods and services.  We are a rich country because of that.

Since wealth can only be created by mining, growing, or manufacture, most Americas may not be taking into account the richness of the land that makes up the US, or the strategic advantage the Atlantic and Pacific Oceans have provided. I think it is safe to say that while free enterprise has been important, other factors have played at least an equally important role.

Is there a role for Government? For example, should your City, State, or even Federal Government establish roads or sewers or harbors, or should these be left to “free enterprise”? In most cases, the answer (if not just the common practice) is that Government undertakes these projects on the behalf of the “commonwealth”. Government pools our money and spends it on projects that directly contribute to our well being and interestingly, facilitate other “free enterprise” activities.

So when it comes to health care, is there a role for Government?

Most of us think of health care as a “free enterprise” domain. Private insurance, private doctors, private hospitals, and of course, private drug companies. What’s wrong with this picture?

In one sense nothing is wrong, in another sense, everything.

If you have insurance or can afford to buy it (at any price), you can receive very good health care services in the US. We hear the cry that US medical care is the best in the world. Wrong. And even more dangerous, all the other industrialized countries have systems that deliver as good (and most better care), and all cost far less per capita. This is not some big mystery. Canada, Germany, France, Japan, and some 14 others all have life expectancies greater than the US. All these countries have health care where no resident is denied coverage for any reason.

So why are we being told that health insurance belongs exclusively to the free enterprise arena? Why are we being distracted with arguments that suggest our system will collapse if the Government offers a “public options” (expanded Medicare)? Why are private insurers dropping coverage everyday?

One of the unspoken justifications of free enterprise is that the service or products involved are continually changing to meet new and emerging needs, and do so in order to make profit. Do you think private insurers are offering Americans better coverage, or simply improving their profits? Do you think Americans are likely to overtake other countries in the world in life expectancy any time soon? Do you think that private insurance health care is likely to cost less, or ever match that of other modern industrialized countries?

I ask you, then, how can the public option be a misstep?