What Can We Fix; What Can We Wreck?

In the current push to fix the American health care system, Washington legislators are attempting to tackle these items:

1. Increase the number of covered Americans to about 98% of the population--in the process bringing about 47 million uninsured Americans and illegial aliens under coverage.

2. Control ever growing costs in a way that won't create further damage to the rapidly growing US public debt. Here is a projection of Medicare expenditures from the Office of Management and Budget (OMB).

It's a huge challenge. What seems to get lost in the debate are a number of constructive things which could help the situation.

For example, over-utilization of health services.

The current tax exclusion for employer-sponsored health care:

• Benefits the rich and those who a have negotiated lucrative labor contracts,
• Arbitrarily ties insurance to employment, and
• Results in over-utilization because the exclusion rewards employees who opt for high cost plans with few incentives to discourage unnecessary or wasteful health care use.
  

Economists say this could be replaced with a refundable tax credit or standard deduction for the purchase of health insurance.

Things can be wrecked if costs get out of control--as they currently are with the Medicare & Medicaid programs.

The Congressional Budget Office (CBO) says Kennedy-Dodd bill will cost up to $1.5 trillion over 10 years. The cost over-run is similar for other proposed bills.

No government entitlement has saved money. Medicare and Medicaid both cost far more than originally anticipated. Once money starts flowing from Washington, special interests groups lobby hard to keep their fair share.

Here is an interesting example of a current national TV campaign to convince everyone to move ahead soon on the current health care bill in Congress. Please notice who paid for this ad--then recall my July 23 blog, 10 Questions About Health Care Overhaul, to see who stands to benefit significantly from new federal legislation (Q&A #7).




Instead of treating those 47 uninsured Americans as some great monolith, we could concentrate on those who need help the most. Only about 10-12 million can't afford to buy health insurance and don't qualify for public programs or work for businesses that don't offer health insurance.

We can eliminate waste and fraud in Medicare and Medicaid. Experts estimate that Medicare alone may lose $60 billion a year to fraud.

According the US Department of Health & Human Services, Most health care providers are doing the right thing and providing care with integrity. But sadly, due to the illegal actions of a small but active group of heath care fraud perpetrators, billions of dollars are stolen from taxpayers each year. Medicare fraud schemes have grown bolder and more elaborate, resulting in billions of dollars in false billings and fraud schemes which are robbing Medicare and Medicaid blind.

O Canada; No Canada

Canada is a wonderful country. Every year I head to Florida for a couple weeks of golf--and I always enjoy talking to our friends from the north...on the course or in the whirlpool at the close of the day.


Canadians like to visit the US for another reason: When they need health care and cannot afford to wait in line in their country: A consequence of their system of national health care and the undesired consequence of rationing.

Over 1/2 of the personal income taxes Canadians pay are required to cover the cost of health care. Given this expense, you might expect that Canadians would receive world-class health care. But no Canada.

Waiting for access to health care in Canada reached a new all-time high of 18.3 weeks (2007) from general practitioner referral to treatment by a specialist. Access is particularly poor for ophthalmology, obstetrics and gynecology, gastroenterology, plastic surgery and orthopedics.

The wait for radical cancer care is 46 days (nearly 7 weeks). The majority of these treatments exceeded the Canadian Association of Radiation Oncology benchmark for curative cancer treatment of 4 weeks. This is troublesome given the clear link between a delay in radiation therapy and a chance of cure.

Canadians are likely to wait six days or longer to see a doctor when ill.

The wait time for patients requiring a hospital bed is 19 hours. That's 3 times more than their 6 hour guideline. The longer wait is often due to the inability to find an available hospital inpatient bed.


Canadians are likely to experience waiting times of more than six months for elective surgery.

I hope we won't disappoint our Canadian friends who today opt for excellent, available US health care.

However, based on the current direction of health care bills in Congress these days, we are likely to inundate our system--creating long lines for US citizens...and turning away Canadian residents who seek help at Mayo and other hospitals throughout the US.

Now, I invite you to enjoy the beauty of Canada as you listen to their national anthem.

10 Questions About Health Care Overhaul

Janet Adamy, health care reporter for the Wall Street Journal, recently published an excellent article in a question & answer format about health care issues. Before we get into a summary of her Q&A piece, here is a brief video from her.



1. What is the problem with health care, anyway? Is it as bad as they say?

The problem boils down to two big areas: high costs and lack of coverage.

Even though the U.S. spends $2 trillion a year for health care, some 46 million people don't have health coverage. To be sure, that oft-cited number from the Census Bureau is somewhat misleading because it includes:

• Illegal immigrants,
  
• Healthy young adults who don't think they need insurance and
  
• Poor people who are eligible for Medicaid.

2. Can Democrats and Republicans agree on anything?

Actually, yes.

• There is broad support for changing the way hospitals and doctors are paid so that they are compensated for the quality of care they provide, not the quantity of procedures they do.

• Democrats and Republicans also back the idea of creating online marketplaces where consumers and small businesses can comparison shop for plans.

• Both parties want to bar insurance companies from denying coverage to people who are already sick.
  

3. Where are the main points of disagreement?

The sharpest divide: Whether to create a government-run insurance plan (otherwise known as a "public plan") that would go up against private plans in online marketplaces. President Barack Obama says a public plan will keep private insurers honest. Republicans say it would give the government too much control over health care.

The other main battle, which doesn't break down as easily along party lines, is how to pay for a plan expected to cost at least $1 trillion over a decade.

Congress also remains divided over whether to make employers (except really small ones) provide insurance. House Democrats propose that if companies don't offer insurance, they should contribute as much as 8% of their payroll spending toward helping workers buy insurance on their own. Republicans argue that companies will make up for it by cutting jobs and lowering wages.

4. What would a public plan look like?

The country already has a huge public plan -- Medicare, which covers the elderly and some other groups. It generally pays doctors and hospitals less than private insurers.

Liberal Democrats would like to replicate it in the new marketplaces. They want the government directly to set premiums and services under the plan, perhaps with basic and premium options.

Conservatives figure the government would quickly drive private insurers out of business by undercutting them on price.

Two other scenarios have emerged as compromises. One is to hold off on creating the plan and instead impose heavy regulations on insurance companies aimed at making coverage accessible and affordable. If that doesn't work, then the government insurance plan would kick in after several years.

The other idea is to create a batch of regional nonprofit insurance cooperatives to compete with private insurers.

5. Why is the total price of the overhaul so expensive, especially considering that it is designed to bring down costs?

The cost mostly comes from giving people subsidies to buy insurance, and from expanding Medicaid, the federal-state insurance program for the poor, to cover more low-income Americans.

6. What are the most likely ways to pay for the overhaul?

The White House has proposed about $950 billion in savings over 10 years to pay for the plan that include things like lower reimbursements to hospitals that treat Medicare patients.

The wealthy are a natural target. One proposal is limiting itemized tax deductions for families who earn more than $250,000 annually.

7. Which industries are most likely to lose, and which to gain, from any overhaul?

Pharmaceutical companies would sell more prescription drugs because more people would have coverage for drugs and access to doctors who prescribe them. Hospitals and doctors wouldn't have to provide as much free care as they do now.

Health insurers could be hurt if some kind of public option drives down their profit margins. Other losers would be retailers, restaurants and other businesses with low-income workers who provide little or no health insurance, since they would be forced to start paying for it.

8. I already have insurance through my job - what happens to me?

Not too much at first. A handful of tax-free perks for the insured could get axed. For instance, lawmakers want to end the practice of allowing people to put money into so-called flexible spending accounts.

Longer term, a lot could change. For instance, your employer could drop coverage, preferring to pay the penalty for doing so and deflecting employees to Uncle Sam's plan.

9. Politicians have tried for decades to push universal health insurance. Why did they always fail before?

These efforts stretch back to the 1930s, when President Franklin Roosevelt proposed creating a compulsory health-insurance system for all Americans, run by the states. Doctors, worried it would hurt their pay, helped kill the measure, buoyed by opposition from business and labor groups.

Another attempts by President Bill Clinton died because powerful interest groups feared their members would either earn less or have to pay more under the new system.

10. What happens if the effort once again fails?

Lawmakers would likely scale back their plans and try to at least pass a measure that partially expands insurance coverage or helps stall the increase in health costs.

Complexity of Health Insurance Reform

Congress truly has its hands full as they deliberate about health insurance reform in the United States. Legislators & citizens are on both sides of this issue.

It is indeed complex as this flow chart depicts. (Click to enlarge) It reveals all the interconnections necessary to support the provisions of the current bill that were debated in the House recently.

This is not to say that the current, private system of coverage is simple!!


President Obama offered the following remarks about the importance of health care reform and the challenges it presents (February 24, 2009): I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.

We recently found that the House bill would fail to contain costs--one of the primary goals--and could actually worsen the problem of rapidly escalating medical spending.

We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount, says Douglas Elmendorf, director of the Congressional Budget Office. On the contrary, the legislation significantly expands the federal responsibility for health-care costs.


Upon hearing these remarks, leading lawmakers are expressing concern. Representative Mike Ross (Arkansas-D) said, We have to take steps to hold health-care costs to the rate of inflation, or we will never balance our federal budget again and health-insurance costs will continue to become less and less affordable for the American people.

From Utah we heard Representative Jim Matheson (D) opine, If we don't reform the system to get costs under control, then nothing else matters. We're just putting more people into a broken system.

When asked whether the bill moving through Congress would bring the health-care cost curve under control, the CBO director replied, The cost curve is being raised.

The House bill is estimated to cost $1 trillion to $1.5 trillion over 10 years. To pay for it, the White House has proposed raising taxes by $544 billion, almost all on the rich. That still leaves a massive shortfall. Where will it come from??

Our government proposes that it will be able to save that amount. But how will that happen? Most likely it would be through rationing of health care, ie, less medical care and perhaps lower quality. CBO director Elmendorf sees no savings from the health reform plans offered. He figures that current legislation would raise costs.


If savings doesn't work, then we either need to tax the middle class, or hope to borrow massive additional amounts--further bloating the US debt.

So what can we learn from Massachusetts? Three years ago they enacted a law that required every resident to have medical insurance. Commonwealth Care was created to subsidize those who couldn't afford to buy their own. This received bi-partisan support.


It didn't take long for the program to run into trouble. Costs soared from $158 million in the first year to $630 million in 2007, then doubled in 2009 to $1.3 billion.

Demand overwhelmed the system, just as demand has led to medical care rationing in Great Britain and Canada.

Now the state is dropping coverage for 30,000 people because not enough money is around to pay for everyone.

Recently a Massachusetts panel proposed that the state scrap traditional payments to doctors and hospitals for each office visit or procedure, and instead adopt a system where they receive a monthly or annual fee per patient. The proposal is an effort to control the state's health-care costs, which are among the highest in the nation.

The Massachusetts health care law has attained near-universal health insurance coverage. It has served as a model for national plans now being debated in Congress. But the Massachusetts plan has done little to control costs, which now are 33% higher than the U.S average and projected to grow faster than the rest of the country.

You now see some of the enormous complexity surrounding this issue; and the danger of getting this federal program wrong. It is indeed a monumental challenge.