Your health care overhaul questions answered
The United States spends 17% of its gross domestic product on health care - more than any other country in the world. Health insurance premiums, Medicare and Medicaid have nearly doubled in cost in the past 8 years. Millions of Americans go without health insurance. Employer based insurance is frequently lost or changed. Clearly, there is room for improvement.
WHY ARE HEALTH CARE COSTS SO HIGH?
• Americans demand the best care possible: When it comes to life and death medical care, American wealth enables us to demand the best care possible, but that care comes at a high price.
• There is no incentive by decision makers to curtail cost: Naturally, we wish for doctors and their patients to make decisions based on what’s best for the patient. With most medical costs being paid by third party insurance companies, the decision makers have little incentive to curtail costs, and insurance companies face significant pressure not to scrutinize and deny services.
• Government regulation limits competition and innovation: The federal government currently has over 132,000 pages of regulations on health care. While some regulations are necessary, every artificial government requirement not only adds direct cost to services, it inserts another barrier to businesses and individuals who wish to enter the health care market and compete. Regulations also favor standardized processes and discourage more efficient innovation.
• Mandates force higher costs: State and federal laws rarely allow patients to forgo specific coverages in exchange for lower rates (i.e. mental health treatment, diseases/injury resulting from high-risk behavior, etc.) Regulations also limit insurance companies’ ability to price health insurance based upon an individual’s behavior, similar to automotive insurance.
• Government programs artificially shift costs to private insurance: Medicare and Medicaid pay well below the going market rate for doctor visits and medical services; meaning many providers serve those patients at a loss. Those losses are shifted via higher rates to privately insured individuals.
• Excessive litigation raises costs and encourages unnecessary testing: Frivolous and questionable law suits require doctors to carry extremely expensive malpractice insurance – cost that is passed on to consumers. Doctors also feel pressure to practice “defensive medicine,” ordering tests and procedures they wouldn’t normally consider prudent, for fear of litigation if they are wrong.
WHAT CHANGES ARE BEING PROPOSED?
Most of what is being discussed within the current administration and congress involves what is called a single-payer system (the federal government) or some sort of public/private hybrid. Some have proposed more market-driven solutions that would require much less government intervention, but those plans are receiving little consideration.
OTHER COMMON QUESTIONS:
Aren’t U.S. health care services and life expectancy rates ranked well below countries like Canada, the U.K. and France? Many factors figured into the often cited 2000 WHO study that had nothing to do with health care such as obesity, smoking and other lifestyle related factors. In categories directly related to health care service such as responsiveness, the U.S. ranks number one.[1]
Life expectancy rates are not that simple either. For instance, people in the Netherlands have a higher life expectancy at birth, but after reaching 65 (which minimizes differences in homicide rates, accidents, etc.) American life expectancy is actually longer, despite poorer lifestyles.[2] As for the often cited infant mortality rate: “[T]he rates of Canada and many European countries are artificially low, due to more restrictive definitions of live birth. There also are variations in the willingness of nations to save very low birth weight and gestation babies.”[1]
What about the ‘47 million uninsured’? While undoubtedly some Americans do fall through the patchwork of state safety nets, this figure is misleading. Some already qualify for help and don’t realize it. Between 5 and 10 million are in the country illegally. Of those that are American citizens, half are without insurance temporarily for four months or less. Over 14 million live in households earning $50,000 or more, half of those $75,000 or more, both of which could afford basic high-deductible catastrophic insurance.[3] A significant portion of the uninsured are young and prefer to ‘roll the dice’ and forgo insurance rather than pay premiums.
Don’t insurance companies waste money in administrative costs? It’s actually a little absurd to think they would; it is to their advantage to keep costs low. A 2006 PriceWaterhouseCoopers’ analysis states only 6 cents of every health care premium dollar is devoted to administrative costs – far less than government agency averages.
Doesn’t Medicare and Medicaid prove the government can provide less expensive care? “Savings” from those government programs are achieved by paying artificially low reimbursement rates, often below cost to the provider. Providers are then forced to pass that cost to private insurers who pay artificially high rates to make up the difference. That type of cost shift will be unsustainable if private insurers are further pushed out of the market.
When government intervention reduces expenditures, where do those savings come from? The overwhelming bulk of savings come from cutting reimbursement rates for doctors and other medical professionals, by limiting services (a.k.a. rationing) and by squeezing out profit margins. Cutting reimbursements discourage the best and brightest from entering the medical profession, diminishing the quality and quantity of professionals. Reduced profit margins leave providers with less capital for expansion of services, and less research and development for new treatments.
Aren’t the threats of ‘rationing’ and ‘waiting lists’ just scare tactics? Every major country around the world that has implemented some form of centralized public universal health care ultimately resorts to rationing. Waiting lists discourage patients from seeking services and in extreme cases, patients expire before receiving care. Care is limited based on age and behavior of the patients, or on cost of the procedures or medications. Patients miss out on the latest medical breakthroughs and bureaucratic central planning moves painfully slow when responding to changing needs. Consider this:
• Canada’s state run system has been plagued with shortages. “Between 2006 and 2008, Ontario sent more than 160 patients to New York and Michigan for emergency neurosurgery” [4]
• “[In Canada] only half of ER patients are treated in a timely manner by national and international standards… The physician shortage is so severe that some towns hold lotteries, with the winners gaining access to the local doc.”[4]
• According to a December 2006 Fraser Institute report , Canadians wait over four months to be seen by a specialist.[1]
• “[O]verall, about one out of every seven Canadian physicians sends someone to the United States every year for treatment.” [5]
But don’t government-run universal systems provide better access to care? While cost barriers are reduced, waiting lists and shortages limit access. Consider these facts:
• “Americans have greater access to preventive screening tests and have higher treatment rates for chronic illnesses… the poor under socialized medicine seem to be less healthy relative to the nonpoor than their American counterparts.”[4]
• Despite universal coverage “the number of middle-aged Canadian women who have never had mammography for cancer screening is nearly double that of the United States”[6]
• U. S. cancer survival rates are significantly better across the board. “Some uninsured cancer patients in the United States encounter problems with timely treatment and access, but a far larger proportion of cancer patients in Europe face these troubles. No country on the globe does as good a job overall as the United States.”[6]
Are uninsured people denied treatment in the U.S.? No. Though not ideal, if the uninsured fail to find treatment among the patchwork of state and federal health programs or charitable organizations, ultimately hospitals are required by law to treat individuals regardless of their ability to pay.
WHAT OTHER UNINTENDED CONSEQUENCES RESULT FROM A GOVERNMENT SYSTEM?
Less medical advancements: As one of the last remaining large markets for profit-driven health care, the U.S. system provides financial incentives that birth many of the worlds cutting-edge medical advancements. If this last vestige of a significant profitable market is eliminated, the world will lose a key outlet for medical breakthroughs.
Reduction in state autonomy and experimentation: By leaving individual states to enact medical reform, states are free to experiment and compete with one another. States with poor results learn from those with better results and implement improvements, enabling a steady gradual experimentation and improvement in systems across the country.
But eliminating private insurance will put medical decisions back in the hands of doctors and their patients. Eliminating market-driven insurance would remove the gate keepers at the insurance companies who’s job it is to reduce costs. But costs still have to be controlled; government monopolies will just replace the insurance companies. Doctors won’t make the decisions, government bureaucrats will.
Waste, fraud and abuse: The G.A.O. estimates 10% of all government health spending is lost to waste, fraud and abuse. [7] A New York retired chief state investigator of medical fraud states his colleagues agree that 30 to 40% of their state’s Medicaid program expenses are either fraudulent or unnecessary spending.[7] Services seen as “free” are prone to abuse and governments don’t police it well. After all, they don’t have to pay the bill, you do.
Increased debt: Free health care isn’t free. The C.B.O., an organization with a track record of dramatically underestimating costs, just released a study that showed the Kennedy plan under consideration would add $1 trillion to the national debt over the next 10 years.
IF NOT NATIONALIZED CARE, WHAT WOULD BE THE PROBLEM WITH OPTIONAL PUBLIC INSURANCE?
This idea has been floated as a public/private hybrid. The problem is a public plan, backed by tax payer money, has no incentive to directly pass on its true cost, giving it an unfair advantage. The federal government, would serve as a ‘referee’ in the marketplace while at the same time owning one of the ‘teams.’ Free market companies will be driven from the market place until we arrive at a single payer system.
BUT OTHER COUNTRIES SEEM OK WITH SOCIALIZED HEALTH CARE.
Actually many are facing a real crisis. Ironically, as the U.S. moves toward more government control, Canada and Europe have experienced socialization failure and are moving away from it.
“In 2005, Canada’s supreme court struck down key laws in Quebec that established a government monopoly of health services. Claude Castonguay, who headed the Quebec government commission that recommended the creation of its public health-care system… [has] declared the system in “crisis” and suggested a massive expansion of private services.” [4]
“In Canada… According to the New York Times, a private clinic opens at a rate of about one a week across the country… In the United Kingdom… the present Labour government has introduced a choice in surgeries by allowing patients to choose among facilities, often including private ones. Even in Sweden, the government has turned over services to the private sector.” [4]
SO WHAT’S THE ALTERNATIVE TO A NATIONALIZED SYSTEM?
Health care reform in the U.S. needs to focus on affordability, accessibility, portability, and quality; but it doesn’t have to abandon proven free market principles. Switzerland and the Netherlands have achieved universal coverage with private plans.[1] Any legislation must ensure the following:
• Allow insurers to offer incentives and discounts for healthier lifestyles. Current federal limits block reflecting true costs for unhealthy habits.
• Include curbs to reduce malpractice lawsuits including some form of ‘loser pays’ legislation.
• Require full reliance on free-market insurance, free of unfair competition from subsidized government plans that would quickly become monopolies.
• Use consumer-driven market incentives to minimize unnecessary costs and encourage consumers to be prudent with their expenses.
• Reduce and streamline regulation where possible and lift insurance mandates to allow more consumer choice and pricing competition.
Where do we go from here?
If history is any guide, the odds aren’t good. Citizens must pressure their representatives to create true health care reform that maximizes choice, competition, and market-driven cost reductions, not simply expand the broken Medicare/Medicaid system. Call your representatives and let your voice be heard.
Sources: [1] www.biggovhealth.org; [2] - WHO data for 2002. [3] “Moore’s ‘Sicko’ is Sickening” - townhall.com, July 12, 2007 [4] “Canada’s ObamaCare Precedent” - Wall Street Journal, June 9, 2009; [5] “Canada’s Expectant Moms Heading to U.S. to Deliver” - FoxNews.com, October 10, 2007 [6] National Center for Policy Analysis [7] “New York Medicaid Fraud May Reach Into Billions” - New York Times, July 18, 2005
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