Tuesday, November 3, 2015

Healthcare Is Still A Broken System!

Its Not Over-The System Remains Broken!
Many people think that since Obamacare  has been around for a while it is proof that the law works, but the fact is it will be several more years before its sustainability can be verified. The few aspects of the law also known as the Affordable Care Act that have been popular such as, a person can no longer be banned from getting coverage because of prior healthcare problems, could have been achieved in a much less disrupted manner than how they are handled in this law. More important and seldom considered is the long-term ramifications it has on society and the economy. This is a subject that has been spun every which way to serve the views of the person presenting their opinion or argument. One thing impossible to refute is the cost of healthcare insurance has soared for many Americans since it was enacted into law.

The long-term effects of Obamacare are slowly becoming apparent and by far the biggest problem is that it has driven healthcare cost through the roof for many Americans. The promise that this law would give the average family better coverage at a lower price has vanished into thin air. Insurance buyers have been forced to overpay for stuff they don't need so the money can subsidize other people. Obamacare is not about healthcare, it is a massive transfer of wealth through  hidden taxes, penalties, mandates and coverage requirements that yield a surplus of over-payments. Washington did not address or focus on the crux of our healthcare problem which is how to cut healthcare cost so we could get more and better coverage for our money spent. Obamacare has put this issue on hold so the real and important issues behind high and rising healthcare cost will now only be addressed after the pain has become unbearable.

The U.S. healthcare system is an unplanned mess that was not designed, but grew and developed on it own. The system of employers providing healthcare insurance began as a means of offering a bit of extra compensation in the 1940s era of wage/price controls. A situation developed that those without jobs were covered by the government at horrendous expense, and those with coverage became terrified of risking it by moving to less secure employment or self-employment. Employees and the self-employed are often expected to pay their co-pays and fees but are given little real choice. Most regions are served by two or three insurers or in reality a sort of cartel making any "choice" purely illusory, and this means costs are soaring.

It is clear the ACA has shifted consumer spending and is altering economic growth. Healthcare in 2015 ran about $4 trillion and accounts for almost 23% of the $17.4 trillion GDP. This is big business at it worst and the cost of the two behemoth government programs, Medicare and Medicaid, even exceed the Pentagon's budget. Gone is the infamous promise Obama made on how the average family will save $2,500 a year on healthcare coverage, it has been supplanted by frustration about affordability. It’s not just about your premium, it’s your deductible, it’s your co-payment, it’s this combined package of expenses that everyone faces. In reality getting more people to sign up has just become an issue of forcing Americans into choosing the "least worst option" and the suggestion people should "tweak" their plans and adjust them to make them more affordable is simply another term for self rationing to millions of Americans unshielded from rising cost.

On the PBS Newshour just last week Judy Woodruff did a piece that was the second part of of a series looking at the Affordable Care Act which is now starting its third year. She stated "This weekend marks the beginning of open enrollment in the health exchanges, and we’re looking at some of the questions about costs and coverage. One development this fall that’s turning into a concern for some consumers, a series of collapses of an alternative to traditional insurance plans known as co-ops. Nearly half of them, which were created through the Affordable Care Act, are now shutting down." It seems roughly a half a million people in the ten co-ops that have folded that are going to be out there again looking for plans because their co-ops have been unable to remain financially solvent. Those that had been in these co-ops are now facing paying more and getting less.

The administration says there are about 10.5 million people that are eligible to enroll in the exchanges this year and  they hope to enroll about one in four of those, but they admit it is an uphill battle. They have on their side rising penalties, the first year, it was $95 or 1 percent of your income, whichever is greater, for 2016, that increases to $695 or 2.5 percent of income. So, while the administration is emphasizing they want people to shop on the exchange, they also want to make it clear that you must have coverage, unless you meet a hardship exemption or other exception. What they may be underestimating is how many people drop coverage, regardless of the penalty because they simply cannot afford to buy what is being served, or even worse move onto the government roll because of healthcare cost. The silver plan with the second lowest-cost is often viewed as the "benchmark plan" by which all the subsidies are tied, and its cost is going up in many areas, Oklahoma, for example, is facing an average increase of 36 percent.

The fact is Healthcare in America is still a broken system by any measure. Americans spend more on healthcare then people in other developed countries with very poor results. Our system allows insurance companies to not only stick their nose into every interaction you have with a health care provider, but to take a large cut as well. It has become virtually impossible to find a modestly-priced traditional insurance plan that protects a person from unforeseeable catastrophic accidents while letting them own responsibility for the accumulation of their lifestyle choices which remain a big part of healthcare cost. Healthcare companies are not allowed to base and price policies on past use history or reward the healthy 50 something marathon runner from a fat slob suffering from self induced diabetes.

The largely unplanned system that has developed is totally unresponsive to economic factors, and this is the heart of the current system's dysfunction. We have removed the consumer from the equation and pricing has become purposefully opaque. The cost for a test or procedure is all over the map, and insurers have little interest or incentive to demand truly transparent pricing. Huge hidden discounts lurk and are dispensed only to the powerful at the cost of others. The federal/state healthcare programs of Medicare and Medicaid are riddled with the same lack of transparency and are vulnerable to fraud, over-billing and paying for needless tests, medications and procedures. This contraption of private insurance paid by employers, co-pays paid by employees and state programs means paperwork consumes an estimated 40% of all healthcare expenditures. This is a huge inefficient and needless expense.

The bottom-line is nothing is waiting in the wings that will save us from the mess Washington has created, no fix or fiddling can solve the many problems embedded in this system. I'm not saying its "crunch-time" or that it will suddenly become obvious to everyone that Obamacare is a dismal failure, but instead that as time passes it will grow abundantly clear that the healthcare system has not been set right. Currently, the visible problem is the burden falls squarely on the shoulders of people who pay for their own coverage and are not eligible for subsidies. The invisible problem is that lurking in the shadows is how tax payers will react to the mega cost fostered upon them as the system moves forward and groans under the weight of rising cost never anticipated in the original figures. This means we must again revisit the crux of the issue, and that remains how to cut healthcare cost and get more and better coverage for the money spent.

 Footnote; Below is a related article that looks at some of the reasons healthcare in America is so expensive. Other related articles may be found in my blog archive, thanks for reading and comments are encouraged.

1 comment:

  1. Oklahoma Surgery Center

    Transparent Pricing

    Now match these known prices with a statistical risk pool grouped by age, gender, etc. and you have insurance product that makes a modest profit of say 5-10%. No more complicated than life insurance. If the insurance company digs deeper into other risk factors they can have a more profitable pool as they offer even lower prices to lower risk individuals, but eventually other insurance companies do the same. The net result is correctly priced product by individual that pays for the actual cost of the service being performed and rewards individuals who lowers their risk when the can.

    The government simple pays the going commercial rate, just like EBT card holders pay the same price for food. The primary variables are the total program budget and allocation per risk pool/procedure. Yes this means rationing but with more resources going to the actual true competitive cost of the procedure our existing budget will go further and actually help more poor individuals.

    All the free market advantages of competition and product improvement over time can come into play. What about lawsuits when things go wrong? We can cover that as well by individuals also being required to purchase an add on policy that interacts the risk of the procedure by individual to the doctor/medical centers track record. Track records that are also open to the customer as well. The only question is how much coverage you want should various less than desirable outcomes occur. Centers, doctors, individuals, and procedures with a bad track records are progressively priced out of the marketplace until someone figures out a better way.

    Unfortunately this puts the various cartels in control of the existing system on the street, which is always the other side of any solution that actually solves the problem. What the customer sees as a solution, the cartel sees as big problem.