William McGurn wrote an interesting opinion piece in today’s Wall Street Journal.   With the debate on health care reform still raging in the United States, many — including ourselves — believe that the country is moving the wrong direction on this (see prior posts).  Our biggest complaint about the Obama plan and its assorted congressional variants is that it does nothing to address the root cause of America’s out-of-control health costs — by far the most expensive in the world.   In the American system — which is less a “system” and more a hodgepodge of conflicting policy objectives — moral hazard runs rampant because the patient is rarely the person who pays the medical bill, or even the insurance premium.  Because they do not pay or pay only a small percentage of the true cost, Americans do not understand or appreciate the value of the health benefits that they receive from their employers.  This encourages wanton overuse by both patient and doctor and contributes to the spiraling cost. Read the rest of this entry »

I want healthcare reform, or insurance reform, or whatever it is we want to call it.  I want a system that doesn’t require me as an employed, well compensated person to pay five figures for “insurance,” knowing all the while my coverage will be canceled if I ever dared to use it beyond the normal child afflictions like Strep throat and a broken arm.  I want a system that doesn’t send me an Explanation of Benefits (EOB) form six months later that requires a decoder ring to figure out, but then the same company who sent it to me won’t discuss anything on it because of some idiotic interpretation of HIPPA law.  I want a program that makes sense in terms of who gets paid, what they get paid, and how they get paid.  I want transparency.  I want a system that doesn’t have two, or three or four, different charges for the exact same procedure depending on your association (insurance company, self pay, etc.).  I also want a system that makes financial sense.

Both the NYT and the WSJ ran articles this morning concerning polls about healthcare.  Respondents say they don’t understand what they are being asked to support, so while there are significant supporters and detractors, the largest group is undecided.  The reason they, or rather we, are undecided is because we are being lied to so consistently that no proposal put forth so far seems to get at the underlying issues. 

Read the rest of this entry »

In a prior post on the subject, I noted that health spending in the United States is vastly higher than anywhere else in the world.  Our government, via Medicare and Medicaid, spends roughly the same amount as a percentage of GDP as Canada and the UK.  How is it that we spend as much on the elderly and the poor as the Canadians and British spend on their entire populations?  Meanwhile, private insurance,which most Americans use, roughly doubles the total money spent.

The question remains: WHY? Read the rest of this entry »

While watching the president defending his health reform package on TV today (which is, as we have written in prior posts, an expensive mistake), we found an interesting headline in today’s Wall Street Journal: “Retail Health Clinics Move to Treat Complex Illnesses, Rankling Doctors.”

The Journal writes, “Retail health clinics are adding treatments for chronic diseases such as asthma to their repertoire, hoping to find steadier revenue, but putting the clinics into greater competition with doctors’ groups and hospitals….  The clinics are helping alter the practice of medicine.  Doctors are expanding office hours to evenings and weekends.  Hospitals are opening more urgent-care centers to treat relatively minor health problems.” Read the rest of this entry »

Exhibit A - The 2009 Annual Report of the Board of Trustees of the Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (in other words, a report on how Medicare is doing).  The diagnosis?  Not good.  The program has been in ill health since 2003, and has operated in a deficit since 2005.  At this rate the program will use up all of its surplus funds by 2017, much sooner than anticipated.

 But wait, where are those “surplus funds?”  Ah, they are squirreled away in special government bonds, meaning there is no surplus funds, instead the trust funds are just one more holder of US govt debt.  We all knew this, but it is worth repeating.

Exhibit B - The oddity of the current health care reform debate where Republicans respond to Democrat bills with a “Senior’s Bill of Rights” that further cements the place of Medicare Benefits with Social Security benefits as sitting on the third rail of politics.  

When the party that historically (not recently, by any stretch) is associated with fiscal restraint works to make sure that the level of benefits offered by a bankrupt program cannot be adjusted, we have a problem.  Again, we already knew this, but worth repeating.

Over the past decade as I’ve given speeches and interviews regarding our research, I have occasionally been asked about these unsustainable programs.  What will be done?  My answer was always the same, “Absolutely nothing, until the economic pain is so great that everyday Americans stand up and demand that their elected officials change the systems.”  We are not there yet.  Americans are standing up, but too few are calling for what we need - rationing. 

You read that correctly - rationing.  We need limitations set on the level of benefits that will be extended by the national treasury.  It doesn’t matter what the program, there must be a limit to what level taxpayers are on the hook to fund any program.  This is the only responsible way to approach any issue funded through the government.

The problem with rationing anything is that it sets the stage for what happens next - those with extraordinary assets are able to get more than the rationed level of benefits and class warfare ensues.  This is the real fight.  So far, we are still rich enough and optimistic enough to have politicians that gloss over the funding aspects of healthcare and give a wink and a nod to notions of rationing. 

We’ll get there, but it’s not today.

With the healthcare debate raging in the United States, we found the following chart from the OECD to be interesting:

Many Americans fear that we are heading towards a government-controlled, socialized medical system.  But what few seem to realize is that we are essentially already there, at least by some measures.

The governments of Canada and the United Kingdom — the two countries most often mentioned — spend 7.0% and 7.3% of their respective GDPs on healthcare.  The United States, via Medicare, Medicaid, and other smaller programs, also spends 7% of GDP — and a MUCH larger GDP at that! Read the rest of this entry »

The healthcare system is flawed, no doubt.  As a small business, we are on the front lines of how inept and expensive the system has become.  Because we do not have group insurance (too few people), we buy individual policies, and therefore pay the highest rates.  Not only are the costs astronomical, but so are the regulations as to who can offer us insurance and what form it can take.

So agreeing that healthcare needs reform is easy.  What is not easy is understanding how the US government would be the best provider of such reform, because any reform would require a measure of cost cutting as well as cost bearing, and the judgment to determine who gets the short ends of those sticks.  That’s where the problems lie and the shouting begins.

Look no further than today’s WSJ, p. A1 and A5.  On A1,  there is a story about Congress “retreating” on the purchase of several jets worth hundreds of millions of dollars.  Apparently, before public outrage at the fact that Congress was requesting new jets in the teeth of a terrible economy, our esteemed legislators had no problem requesting these items.  On A5 there is the continuation of the story,  tucked underneath a story of where several Congressman are traveling during their summerbreak - Asia, Africa, etc. - all on our dime.

The reason these stories are instructive about healthcare is because they point to the most basic issue - there is a lack of trust that the US government, led by Congress, will be good stewards of our tax dollars on ANY program, much less one of monumental proportions and so dear to us individually as healthcare.  The source of our skepticism is Congress itself, through actions such as the jets requisition and summer jaunts.

Our lack of trust is only heightened when we ask for very specific details of how such a plan would work and are given generalities. 

On the side of how to pay for such a change as we are contemplating, we are told that much of it will come from “savings.”  If that is true, then I have a charge for my Congress.  I want them to spend the next 24 months pursuing those savings.  In fact, I’m somewhat annoyed that if such savings are obvious, then why have they not pursued them previously.  But back to the point, let’s go after those savings for two years, and at the end of the trial period we will have a clear understanding of exactly how much we have been able to trim from the budget and therefore how much we can count on for the remake of healthcare. 

My guess is that we will find the total amount “saved” is nil, just as many people suspect.  Which would mean that most if not all of any changes in healthcare would have to be paid for with increased taxes, right in the middle of the greatest downturn since the Great Depression.  After such a plan is instituted there will be no turning back, no chance to unwind it.  Taxpayers will be left holding the bag for the foreseeable future.  That is the fear, and a well-grounded one at that.

Buried deep within the pages of today’s New York Times, we saw a headline that, unfortunately, came as no surprise: “More Doctors are Opting Out of Medicare.” Many doctors have concluded that the reimbursements from Medicare and the time and money wasted to paperwork make it uneconomical to take Medicare patients.  This is big news for Baby Boomers who planned to use the government program upon reaching retirement.  Read the rest of this entry »