THE REAL COST OF HEALTHCARE

By Tom Brown

 

In the United States we are approaching 20% of GDP spent on healthcare.  This is the greatest in the world; double what many developed countries are spending, with no worse life outcomes.

It is too much! And it is growing faster than the economy.

It is highly significant for people with middle class incomes or less, and not simply a chosen expenditure.

Employees only pay a portion of their insurance costs yet they often decline to take insurance for themselves or for their dependents.

Clearly health insurance adds to the cost per employee, more so than employment taxes, and it is reducing hiring.

It definitely adds to the cost of living even if the employee doesn’t buy the employer offered insurance, since the public sector pays for necessary health care for the uninsured, or it is somehow paid for as more costly deferred care.

And it definitely adds to the cost of products we make and services we offer, so we are less competitive on a global basis. And it adds to our public budget to support insurance for seniors, poor people and veterans.

We must reduce it

Obama care will not reduce health care costs sufficiently, or perhaps at all.

Offering health insurance to all will not reduce health care costs even considering reducing future health care costs of an individual because of preventive care according to reported Medicare studies on the effect of preventive care.

Reducing health care costs significantly means changing the system for:

--greater use of clinics where a cheaper person than the is the first contact of the patient

--greater use of generic drugs

--less defensive medicine including imaging and lab work

--pre-approval for non-emergency treatment and drugs, where the payer looks at the patient’s overall health, life prognosis and treatment history

--use of treatments and drugs with the lowest calculated cost benefit

--giving everybody a financial incentive to minimize their health care costs

--giving everybody an incentive to have a healthy lifestyle

--the end of group insurance, where some people pay too much and others too little, and the ones paying too much do not know

Obviously there will always be individuals who can afford to pay for costly treatments or what is called concierge care themselves or to pay extra for insurance to do so.

Ideally the individual will choose his insurance trading off copays and maximum out of pocket costs and HMO network coverage versus using any provider and even tax deductibilty.

In that sense, private insurance companies would seem to be a good way of creating a variety of offerings for this transition.

Also it would seem valid to allow an individual’s dedicated health savings to reduce that individual’s insurance cost by matching the deductible to the savings amount at the beginning of each year, and charging accordingly.

It is clear that this is not simply a discussion about Medicare. It is about health insurance for corporate employees, poor people, working families, self-employed people, veterans and retirees. Most, by the way get subsidized health insurance, including a tax subsidy.

All health care costs must come down.

Everybody should have some access to health care.  All tax subsidized health insurance including insurance offered employees and company retirees should operate with the same rules and principles.

No one should be advantaged or disadvantaged by the size of their employer, and whether they are full time, part time or self-employed.

Finally, no one should be able to game the system by not being insured. You need to have minimum insurance yourself or pay a tax to have access to a high risk uninsured individual insurance program to insure that need treatment will be paid for.