Thursday, June 30, 2011

HEALTHCARE - Easy Enough for Liberals To Understand

When it comes to the Health Care debate in this nation, one great quote always comes to mind:

“Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.” – Milton Friedman, economist

When shopping, one of the factors you consider when deciding where to shop is the price that stores charge for items. If a shop closer to you charges a higher price than a store farther away charges for the same item, you will probably go to the store farther away, with the consideration that the difference is worth your time and expense to shop there. If an item is of higher quality than similar ones you are considering, you might pay more for it; but if it is exactly the same item offered at different prices, you will likely want to pay the lowest price available. However, if someone else – say the government for instance – tells you just to buy the item wherever you wish and they will pay for it, you will likely go to the closest store to you and pay whatever price they have, even a higher one, since you are not spending your own money for it.

Before the mid-1960s, payment for health care was largely a private matter between the patient and the healthcare provider (doctor or hospital) - HCP. Health insurance was available, but it was not the major topic of concern that it is today. People paid their medical bills the same way they paid other bills. Those who could not afford to pay either did not go to the doctor or received some kind of charitable assistance (the doctor or hospital wrote off the expense or charged less, or the patient received help from a church or other group).

But the rules of the game drastically changed when the Federal government entered the health care field with the Medicare and Medicaid programs. For people over 65 who pay a small monthly premium, Medicare provides government payments for health care services. Medicaid is a Federally-funded program administered by the states that pays health care costs for the poor and others who cannot afford or cannot obtain traditional health insurance coverage. People covered by Medicare and Medicaid receive heath care, and the government pays for most of it. When the government began paying a large percentage of health care costs, those costs skyrocketed. Exorbitant medical charges, mismanagement, and corruption became common. Efforts to reform Medicare and Medicaid have been going or since shortly after the programs began, with little more happening than either elongated debate or worse – added bureaucracy!

In 1960, Americans paid about $28 billion for health care. By 1970, the total had almost tripled to $75 billion. Twenty years later still, the total had increased over nine times more, so that in 1990 the national health care tab was $717 billion. The rate of increase has slowed since 1990, but the figures are still astounding. In 2004, national health care costs totaled two trillion dollars. Health care now accounts for 16% of the country’s GDP. This share of the GDP is three times greater than it was in 1960. Health care costs consistently rise each year at a rate higher than the annual overall increase in the cost of living.

Prescriptions are a larger percentage of health care costs and hospitalization is a lower portion than in previous years. Providers have learned that it is cheaper to prescribe medication than it is to build and maintain a hospital, pay a staff, and incur all of the other costs of a facility. Prescription costs have also risen rapidly, and drug companies now have large advertising and marketing budgets to encourage patients and doctors to use their medicines.

Today local, state, and Federal governments pay one-half of all health care bills in the United States. Overseeing and paying for health care has become a major function of government. This fact helps to push the cost of health care higher for all Americans, including those who have private insurance and who pay their own medical expenses.

The United States does have an excellent health care system. We have good medical schools, good hospitals, great doctors and nurses, and a higher than average level of availability of drugs and medical tests. I would rather have a medical need in the U.S. than anywhere else in the world. Generally speaking, if you need medical attention in the U.S., you CAN get it.

The problem is paying for it. The costs are too high and the administration of health care involves too much bureaucracy. It is a complicated problem, and all of the parties in the system usually blame the other players for the situation.

Greed is a major component. Whether it be the insurance providers, the HCPs, the drug companies, other factions of the industry, or even health patients themselves, nobody wants to give up their money for things if they don’t have to.

Doctors play a part by wanting everything they do to be above question. This factor shouldn’t be the problem it is because most doctors are ethically bound to provide the best care to the benefit of the patient. But there are a few doctors who fight against the system which is designed to benefit both doctor and patient. Sometimes this is good, because the patient may need treatment that an insurance company doesn’t want to cover and the doctor has to fight for the benefit of the patient. Yet there are other doctors who are more concerned with fighting insurance companies while ignoring or forgetting the real need of the patient.

Insurance companies want to call the shots. As mentioned above, most insurance companies, who are trying to protect their bottom line, only let a HCP treat based on what the insurance company sees as a necessary treatment… this can sometime be to the detriment to the patient. But, in the United States, the insurance company does have outlets where a HCP can appeal to be able to fully treat a patient.

Medical malpractice insurance is terribly expensive, but doctors pay for it because they do not want to be ruined by a lawsuit, however frivolous it might be. This is one of the biggest travesties in the medical industry. Doctor’s are human and can sometimes make mistakes… but rarely there are HCPs who are negligent who need to be held accountable. However, until serious tort reform happens, doctors will have to pay malpractice insurance which will, in turn, raise the overall cost of healthcare!

Pharmaceutical companies want as much profit as possible. In the free market system we live in, this is an understandable desire to have as a business. And with the incredibly high cost of research and development of prescription drugs, high costs can’t be avoided. However, some of these companies merely develop drugs JUST to make a profit and that leaves little availability for full testing and keeps overall costs high.

Government oversight can be unreasonable and complicated. For example, when prescription coverage was added as a Medicare option, it was difficult for many users to understand. Waste and neglect were a side effect.

With all of these factors happening, consider the way that charges are calculated. When someone has a medical bill, say a test or an office visit, the charge is submitted to the payer, which is usually Medicare or an insurance company. The charge for the service is usually ridiculously high: perhaps $60.00 or $75.00 for a brief office visit, several hundred dollars for a test, or several thousand dollars for a hospital stay. The payer then uses a standard known as the “usual and customary” charge for such a service. Using that standard, Medicare or the insurance company approves a portion of the bill and pays the provider on behalf of the covered person. The provider says thank you for that partial payment and goes on to the next patient.

If a person does not have insurance, he is stuck with that inflated bill and has to either pay it, negotiate a lower price, or risk damaging his credit rating or declaring bankruptcy by not paying it (it is estimated that as many as HALF OF ALL personal bankruptcies involve at least some medical debt). One reason for the high medical charges is to cover the expense incurred by providers by those who do not pay. Doctors who receive government payments, which has come to be just about all of them, have their billing practices for all patients critiqued by the government.

All of this adds up to a system that is way too complex, way too costly, and extremely inefficient.

One thing to remember is that in most cases, when a procedure, like Lasik Eye Surgery, isn’t covered by insurance, the HCPs who offer the procedure compete to offer the lowest price. If an insurance company were involved, the cost would be much higher.

The health care delivery system needs fixing, but developing a completely government-run system of socialized medicine is not the answer. The goal of such tax-supported systems, which are used in the United Kingdom and Canada and some other countries, is to make health care equally available to all regardless of one’s ability to pay. The result, however, has been that less health care is available for everyone. Care becomes not more available but more limited and rationed. The system is inefficient, and it is not unusual for people to wait months and sometimes years for procedures that would take place within a few days in the United States. The government bureaucracy has no motivation to do a thorough or efficient job since it has no competition. Socialized medicine is driven by the bureaucracy and by the government’s desire to control health care.

A better approach is for health care to be patient-centered and driven by competition, with government’s role being to enable and encourage effective serving of health care needs. Some steps toward this goal have included the following:

• The ability of workers to carry their health insurance coverage with them when they change jobs has given people more freedom. Continuing medical coverage through an employer is one reason why many people continue to work for a company or are reluctant to retire.
• Medical savings accounts allow individuals to set aside a certain amount of their income tax-free to pay for medical costs.
• Insurance companies are currently regulated by the states, but national competitiveness would give consumers more choices that would force the companies to be even more consumer centered rather than only profit driven.

It is a humane and compassionate policy for people to be able to receive an adequate level of health care even if they cannot afford to pay for all of it. However, recipients of such care should also be expected to pay some of the cost. They need to bear the responsibility for a co-payment and for making lifestyle changes when that is needed. It is not right for taxpayers to bear all of the responsibility for the medical bills of people who do not take care of themselves. It is also a good policy to provide local clinics for those who receive subsidized care. This is more cost-efficient than simply having them go to an emergency room, which is the most expensive way to deliver health care. Ideally, Christians, among other charities, should be willing to help pay the medical expenses of those who need assistance.

But what about those programs that have already been run by states???

In 1994 the state of Tennessee initiated TennCare, a public health care system that was a trial program to replace Medicaid. TennCare uses Managed Care Organizations (MCOs, which are mostly private health insurance companies) to pay for services that patients get from doctors, hospitals, pharmacies, and other providers who participate in the program. The state government reimburses the MCOs for what they pay to providers. TennCare provides coverage for the poor and for those considered uninsurable by private insurance companies. Most TennCare recipients do not pay anything for the services they receive, although a small percentage of those covered by TennCare pay premiums and co-payments for office visits and other services. Payments for medical services under TennCare are usually LESS than what providers receive from regular insurance companies, and because of the TennCare bureaucracy, payments to providers are often SLOW in coming.

TennCare has seen the same explosion of costs that has characterized American health care as a whole. As of 2005, 1.35 million Tennessee residents were covered, out of a state population of almost 6 million. Just under one-half of those covered were children under the age of twenty-one. The program cost $8.7 billion in 2005, which means that the program paid out an average of over $6,400.00 per covered person that year. Two-thirds of the funding for TennCare came from the Federal government, while the other third was paid for by the state. The total TennCare bill included a ridiculously high amount that went for bureaucratic expenses in the state government and in the MCOs. Of the $8.7 billion, $2.9 billion went to the MCOs. $2.55 billion went for pharmaceuticals, $1.7 billion for long-term care, and $455 million for mental health services.

The program has experienced HIGH COSTS, CHARGES OF MISMANAGEMENT, and COMPLAINTS from both health care providers and patients. TennCare has had more than five different directors, and the original director who lasted just over a year in 1994-1995 returned in 2002 to head the program again. Counting acting and interim directors, TennCare had eight leadership changes between 1995 and 2002. In 2005 several thousand TennCare patients were dropped from the program in an effort to save money. All of those cut from the program were over nineteen. No coverage for children was eliminated.

So, in an attempt by a state to assume the costs for even some of its citizens, TennCare ended up dropping coverage because it is just too expensive and inefficient to work.

In April 2006, the state of Massachusetts became the first state to require all citizens to have health insurance coverage. Several different plans and levels of coverage were offered, and the state helped to pay the premiums of those who could not afford to do so themselves. The plan enabled the government to help some of the people but kept health care delivery in the private sector. And like TennCare, the bureaucracy, lack of efficiency and high cost has forced Massachusetts to drop coverage for some residents.

The American health care system has grown in piecemeal fashion, and all of the players want more of the pie. In order to continue to have the best healthcare system in the world, the U.S. government will need to minimize its involvement. To make the needed changes, everyone will have to give up something; but with proper planning and execution, individuals and organizations in the health care field will still be able to earn a comfortable living and more people will be able to get the medical care they need.