I'll say it at the outset. With or without the health care reform legislation that's being shaped over the summer, we will be heading to bankruptcy. Of the U.S. government, of families, businesses, Medicare.
The causes of the impending wreck are simpler and more obvious than you may believe.
The solutions to turn it around, to my mind, are straightforward too. From a political standpoint though, they're not pretty. Not when you're trying to woo constituencies.
Giving people enough of the product they want – access to diagnosis and treatment – will require an economic solution. (Not an ideological one.)
First, let's lay out the biggest contributors to economic sickness. They are: (1)university-imposed ceilings on the number of suppliers who are trained, including nurse practitioners and MDs by med schools - these limits have been the outright preference of the AMA for decades. (2) Here's where it gets edgy. We've got too many pockets of millions of consumers whose near-100% inclusive coverage is mainly responsible for runaway cost escalation. The price of care for providers, technology, pills, diagnostics is not the real cost of care; these costs are propped up artificially —
and have grown to the size of to one-sixth of the entire economy. And for every cohort that is insulated from the cost, there's a less lucky cohort out there that has no inoculation from cost at all.
I'll say it again: insurance that pays 90%-100% of the cost of in-network care has not been the solution, it has been the driver, of the mismatch of access to care and patients in need.
Why? Because for 40 years there has been no resistance to price, or far, far less than if reimbursement for tests, office visits, and in-network specialists, was limited at 60% to 70%. [Higher coverage for catastrophic care makes sense, but that's not your month-to-month care.] If you're a provider or a pharma company, and when a large swath of your consumers including Medicare patients have no price resistance whatsoever, then your fees, and the wages paid to your staff, and the price of the technology you purchase will inexorably climb. Companies that sell you equipment take advantage of the uplift as well. As provider, you may cut an occasional deal with an uncovered or less than fully covered person, but your base prices are propped up.
When it comes to insurance for homes or autos, insurance companies and regulators know this pitfall of 100% reimbursement. In those markets, a standard policy carries a sizable deductible of $1000 or so (you can pay a huge premium if you want to buy into a stepped down deductible), so that you don't come out ahead even if you're reimbursed for an accident. (The insurance market for autos would be a better working market if automobile companies sold the after-market parts at justifiable, instead of jacked up, prices. Which they don't. But that's another story.)
The last problem with the system is the payer for group insurance in this country is the wrong payer. Having the employer pay used to make terrific sense up to 1980 when the US manufacturing position in the world economy was dominant, and seemed unassailable. If the only serious competition to industry was confined to the 50 states, then we would have been able to keep the employer-based system indefinitely.
That world is long gone. It began to unravel with the "strong dollar" policy that Ronald Reagan pursued with relish in the early 80s, an economic rebalance that worked to widen the wage gap between US and foreign factory workers, and make US products too costly to sell overseas. With the phenomenal growth of international trade and competition, for US employers to be saddled now with $9300/year insurance premium cost per worker with family coverage and $3900/year for a worker who has a single-person policy makes for a huge competitive disadvantage that can never be surmounted.
That's because many nations whose industries we compete with cover health care costs through their government finance system, leaving their domestic industries unburdened by the cost of medical care.
So I've laid out my view of the facets of our health delivery and insurance system that are in conflict for dollars. [1] the artificial limits on numbers of nurse practitioners (who can write prescriptions but are less pricey than a physician) and on the numbers of MDs trained each year, leading to cumulative shortages of doctors; [2] absence of fee resistance and percent cost-sharing by patients who have limitless coverage [this includes Medicare enrollees]; [3] responsibility for payment that rests on worker and employer, instead of a society-financed arrangement. We're hanging onto an employer-based approach of insuring citizens that is undermining the survivability of U.S. industries. It's an approach that has to be wound down.
I propose:
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- First, start up a public option system, like Canada and Europe, and a tax source to pay for it. It's not a cakewalk coming up with the tax stream to pay for it. Bush financed his elimination of most inheritance taxes on the back of the automatic, surreptitious upward spiral of AMT taxes, which are unindexed. Maybe that invisible swap of tax burdens should be undone.
- It's time to expand the pool of new trainees for nurse practitioners and physicians. This will take a willing partnership between the federal government and medical schools.
- The public option for new enrollees and current Medicare enrollees will need to pull back from 100% reimbursement of all procedures and tests. As a start, reimbursement should be kept at 85% for routine diagnostics and treatment. Catastrophic coverage should kept approaching 100% of cost.
You may say this is politically impossible. As far as seniors, politicians have always given them more and more, any not any less. But now it is at the expense of every other generation that comes of age.
Who can rebalance the expenditures on health care between the oldest old (age 80+) and our children? It would take political bravery we haven't seen in eons. Can Obama take the lead for it? (I'm reminded of Nixon; he was able to bring his fellow Republicans into the fold for his startling rapprochement with China. I'm hopeful a Democratic administration and Congress can extend health care access by not guaranteeing unlimited care.)
What do you think?