Health economics

Shut Up Stupid, and Take Your Medicine

by Bill O'Connell on March 22, 2010

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“We have to pass the bill so that you can find out what is in it” – Nancy Pelosi

The White House claimed, incredibly, that most Americans support ObamaCare.

“If you take the last 12 independent polls, and you throw out four by Rasmussen, whose results the White House doesn’t like, and you throw out six others that show a wide margin of opposition, then you have two polls with results consistent with the Washington Post poll showing a fairly small margin of opposition to the Democrats’ national health care plan. And that is Benenson’s case. By the way, the headline of his article? “Most Americans want health care reform.” – Byron York, National Examiner

Governor Ed Rendell of Pennsylvania, gushed on Fox News last night, about how ObamaCare was good for Pennsylvania. Why? Well, he said, today Pennsylvania is only reimbursed 50% for Medicare while under ObamaCare Pennsylvania will be reimbursed 90%. Very cool. Er, who’s picking up the tab for that extra 40%? That question goes to the heart of the Liberal/Progressive movement which is basically you are too damn stupid to recognize a shell game when you see one.

Unless the plan is to have ObamaCare paid for with the profits from GM and Chrysler, the only thing the government does for a profit, it is all a giant shell game. The giddy governor of Pennsylvania knows that this is a shell game and that extra 40% will either come out of Pennsylvanians federal tax pocket instead of their state tax pocket or it will be subsidized by citizens in other states through their taxes. Oh wait, no, there is always those evil drug and medical device companies to tax. But where do they get their money? That’s right taxes are built into the price of their products, so expect drugs and medical devices to cost more.

The Evil Health Insurance Company Myth

Obama & Co. jumped all over a 39% premium increase by Anthem Blue Cross in California as Exhibit A justifying their takeover of the health care industry. This is not going to be fixed with ObamaCare but only made worse. An example is given by a doctor who says for the last seven years he has been reimbursed $50 for an office visit under Medicare. In that time his expenses have risen 30%. (Quick check — if the good doctor gives his staff a 4% raise each year for 7 years that comes out, compounded, to about 30%). Under ObamaCare they are proposing a 21% reduction in Medicare reimbursement, so the doctor will now get a $40 reimbursement for an office visit. The doctor can do one of two things. He can stop seeing Medicare patients, or he can charge his other patients more to make up the difference. If he chooses the latter course of action, then private insurance companies, like Anthem, will have to pay for the increase. How do they recover their costs? That’s right by increasing premiums.

Just like you never hear statists blaming government polices of HUD, Fannie Mae, and Freddie Mac for the housing bubble that triggered the financial crisis and recession (it was all those greedy, evil bankers), you won’t hear them mention their policies regarding Medicare as triggering the premium increases. It was all about greed. So government will need to step in and make sure those greedy insurance companies cannot increase prices like they have. So expenses rise, premiums are capped, insurance companies fold, and voila you have a public option, which becomes the only option. Next to keep expenses from rising, health care will have to be rationed because there are no market mechanisms in ObamaCare to actually reduce costs. No tort reform. No elimination of 3rd party payers. No true insurance that protects against catastrophic costs while you pay for the routine, like all other insurance. Just government fiat. Obama can no more order health care costs to decline than he can turn off gravity.

News flash to people around the world living under socialized medicine who travel to the United States for critical care when they need it, that door will soon be closed.

Who Is Really Stupid?

Statists believe the average American is too stupid to make decisions, or should I say the right decisions, about their lives, health, safety, etc. We need the really, really smart people in government to tell us what is good for us and follow their instructions. Or…in November we can send them the message that they were really, really stupid to ignore what the American people were screaming at them, STOP!!!! If Jefferson, Madison, Washington, Adams, Hamilton, et al, thought Americans were smart enough to look out for their own best interests, who are Pelosi, Reid, Waxman, Boxer, Rangel, Schumer, Dodd, et al, to say otherwise?

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Health Care Cost Control – It’s Hard But Can Be Done

by Bill O'Connell on February 27, 2010

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There’s a commercial that has been running recently that shows someone considering the purchase of a consumer item and they ask question after question about the product. In the next scene they are in the doctor’s office and when the doctor asks if they have any questions they hesitate and then say, “No.” The message is that you should ask as many questions of your doctor as you would of the salesman selling you a flat screen TV.

What if the flat screen TV were free? Or what if it was limited to a $20 co-pay? Would the consumer ask as many questions? The consumer is probably asking the questions because he or she is about to lay out $1,000 of their own money. If the TV costs you only $20 do you bother with the questions? If the TV doesn’t work, you can go buy another for $20, no?

For most of our health care plans we have what is called 3^rd party payer. We go see the doctor and except for a nominal co-pay, someone else picks up the tab. But what if the health care consumer was put front and center in the process? How would that look?

Insurance as Insurance

We call it health care insurance, but it doesn’t look like any other insurance we may own. We buy insurance to protect ourselves from financial catastrophe, not to cover everyday expenses. If our house needs a paint job, we don’t file a claim on our homeowner’s insurance. If we need gas for our car, we don’t ring up the gecko at Geico. When we need food we don’t submit the grocery receipt to our life insurance company. So why is virtually every expenditure related to health submitted to our insurance company?

I was once covered by a health insurance plan, through my company, that cost around $10,000 per year. I was healthy and didn’t often need a doctor, but that didn’t affect my insurance premium. I found a plan that was a “high deductable” plan with a Health Spending Account. It worked like this. My insurance premium was cut from $10,000 to $5,000. In addition I opened a Heath Spending Account (HSA) that I could fund with up to $5,000 per year, tax deductable. So overall, if I fully funded HSA, the cost was still $10,000. So why do this?

The plan came with a high deductable of $4,000 per year, in other words, the first $4,000 were paid by me, not the insurance company. I could use the money in my HSA to cover that. But the kicker is that the money in an HSA rolled over from year to year and if I never used it, I could roll it into an IRA later. Do you think there is a strong incentive there for me to be involved in my medical care? Do you think I would ask more questions, before going to the doctor and when I met with him? You bet I would.

The Broken Health Care System

But how does our government screw this up? Easy. When I left that company and was out on my own and tried to buy the same type of policy I found that many plans were available until I told them where I lived. “You live in New York? Sorry, that plan is not available in New York for an individual. It is only available through companies.” I checked with my state insurance regulator and they said, “Sure, we have a plan like that for individuals. Do you make over $27,000? Oh, you do? Then it’s not available.”

So a plan that involves the consumer in making informed health care choices, which is the only way market forces can truly come into play, was not available for me by government dictate. But the federal government wants to take over health care and give it to everyone on the model of 3^rd party payer where the consumer doesn’t care a whit what it costs.

Informed Health Care in Action

Fortunately, my experience being involved in health care choices didn’t evaporate with my ability to get the insurance plan of my choice. I was advised by my doctor that I was of the age to start screening for colon cancer. The most effective way to do this is through a procedure known as a colonoscopy. I will spare you the details of the procedure.

As an informed consumer I looked up the risk factors for colon cancer:

A personal or family history of colorectal cancer or polyps.
A diet high in fat and low in fiber.
Inflammatory bowel disease (Crohn’s disease or ulcerative colitis).
Obesity.
Smoking

Okay, I have none of the above. What is the chance of dying of colon cancer? In the U.S. the chances are 0.017% and that is based on the whole population, regardless of whether or not you have any of the behaviors listed about, or about the same chance as being killed in a car crash. I decide to have the procedure.

The procedure gives me a clean bill of health and the recommendation is to repeat the procedure every 5-10 years. In processing my insurance claims, to be paid by a 3^rd party, I noticed that the procedure cost $3,000 about evenly divided between the doctor performing the procedure, the anesthesiologist, and the hospital. So if I have the procedure as recommended, it would cost $10,000 – $20,000 to screen for an illness for which I had low risk, no history, none of the bad behaviors, a current clean bill of health. No thanks. If I had the plan that I wanted that could be $10,000 – $20,000 in my retirement plan. How many other possible diseases should I screen for and pay similar sums? As a consumer I am making a risk/reward judgment and in doing so, I have reduced health care expenses in the United States by $10,000 – $20,000.

In the ObamaCare plan, that money will be spent because the typical consumer doesn’t care if the procedure is done every year because it has no financial impact on them. Do you think that is why health care costs continue to rise? What doctor is going to take a chance that he did not recommend that procedure and find out that you and your trial lawyer are asking him why he didn’t because you contracted colon cancer?

The counter argument will be, “Well what if you get colon cancer and you could have prevented it if you had screened for it? What is that going to cost and who is going to pay for it?” Well, with my liberty still intact, I can make some further decisions. I still have that money, and more of it, in my HSA that I can use. If the cost of treatment exceeds $4,000 then my insurance company can use that premium money that I have been paying them for years without them having laid out one dime over that period due to my good health and good choices, to help with my treatment. Or I can make the personal decision, if I am say 80 years old, that I had a pretty good run and I would rather leave my wealth to my family, if the government isn’t salivating to grab that, than to spend it all to eke out another few years. I can choose to go quietly into that good night.

Liberty and Tyranny

I want to have the liberty to make those choices. Everyone having the liberty to make those choices will bend the cost curve down. The medical community, which is a business, will have the incentive to find a way to drive down the cost of a $3,000 procedure to say $300. If they did so, I just might show up every 5 – 10 years at that price. That’s how markets work. If your flat screen TV set, or your medical procedure is too expense the demand drops. If you find a way to keep lowering (get that? lowering) the cost the demand will rise. But if you don’t pay the bill, if you don’t see the bill, you don’t care about the bill. If you don’t care about the bill and no one else does, then the government gets involved and the problem doesn’t get solved. Your liberty gets taken away along with your money and the government tells all their stupid citizens what to do, because, after all, government knows best. Right?

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Health Care You Can Believe In?

by Bill O'Connell on June 25, 2009

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If you look at President Obama’s record on what he says one day and one he says later when reality sets in, are we really ready to believe him when he says,

“Whatever plan we design upholds three basic principles,” he said. “First, the rising cost of health care must be brought down; second, Americans must have the freedom to keep whatever doctor and health care plan they have, or to choose a new doctor or health care plan if they want it; and third, all Americans must have quality, affordable health care.”

He told us we absolutely had to pass his $787 Billion stimulus package or the unemployment rate would hit 9%, but if the package passed, the unemployment rate would be held to 8%. It didn’t work. Unemployment is at 9.1% and climbing. He said bankruptcy for the auto companies would be disastrous for the economy. After pouring billions into the auto companies, where are they? In bankruptcy. It is estimated that his health care “solution” would cost between $1 and $1.6 trillion. Why should we believe it? What has he told us he would do that has actually come to pass? North Korea? Iran?

What confidence do we have that the government can do anything, other than national defense, better than private industry? The postal service? Amtrak? Farm subsidies? Earmarks? Speaking of healthcare what about Medicare and Medicaid? In a report from March 2008:

“We need to act quickly and effectively to address Medicare’s fiscal health, including enacting the steps proposed in the President’s budget, which would postpone the insolvency date of the Part A trust fund for ten years,” said Health and Human Services Secretary Mike Leavitt.

A Modest Proposal

Before attempting to overhaul one-sixth of the U.S. Economy, why doesn’t the Obama Administration fix Medicare and Medicaid? Show us your stuff Mr. President. Not your charm, not your winning smile. The campaign is over. Prove that you can make these government programs work before you take on any more massive health care undertakings.

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Kennedy Shouldn’t Rush Health Care Reform

by Bill O'Connell on February 20, 2009

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Two Doctors Operating. A Lawyer, A Bureaucrat, and An Insurance Agent Oversee the Procedure

In the category, be careful what you wish for, Ted Kennedy should be careful about pushing through Universal Health Care reform. It has been reported that this effort has taken on a sense of urgency because of Mr. Kennedy’s brain cancer. But what if we already had national health care?

Would Kennedy Receive Treatment?

Ted Kennedy will be 77 on Sunday. I wish him well. However in an opinion piece by Betsy McCaughey, she quotes Tom Daschle, who nearly became the architect of health care reform before his tax problems derailed his nomination.

Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. That means the elderly will bear the brunt.

In other words, sorry Ted, since any treatment is not likely to significantly prolong your life such that the expense would be justified, no treatment will be paid for. You will just have to pay it yourself or die. I guess the good news is that Senator Kennedy, like Senator Dascle, and most of the ruling class who pass these commandments down from Mount Capital Hill, are rich enough to pay for private treatment, if it is allowed by law. If not, they are rich enough to take a “vacation” to, say, India and while on vacation wander into a facility their for treatment by American trained Indian doctors.

But what about you and me? Oh dear, you better get your affairs in order.

Health Care Reform You Can Believe In

As long as the treatment received by a patient is paid for by someone other than the patient, the patient really doesn’t care what it costs. The liberal solution is to have the government take it over, and a bunch of bureaucrats will “act on your/our behalf” and make those decisions. The outcome of which is that you better stay healthy. Because if you don’t, you may not get treatment until you wait a very long time for your turn, or you may not get treated at all, if the bureaucrats rule the resultant quality of life is just not worth it.

Here’s what we should really look at doing:

Get the consumer of health care actively involved. How? It’s being done today with high deductible health care plans coupled with a Health Savings Accounts. The insurance company negotiates lower treatment costs and pays them only after a hefty deductible has been paid that year. The patient is then in a position of shopping for the best health care and deciding on what treatments and tests, in conjunction with their doctor they will or will not have. The Health Savings Account is where the patient can put funds, pre-tax, and then use those funds to pay the expenses not covered by the insurance.
Tort Reforms. Get the Lawyers out of the Examining Room. Too many doctors, in my opinion, are practicing defensive medicine. They think of every possible test so that if something does not go perfectly with the treatment they won’t get sued for the test they didn’t perform. Let’s follow the British System — fixed fees for the attorneys instead of a percentage of the settlement, and loser pays. There are too many cases of people getting a $12 million settlement or judgment for something stupid (think of the woman at McDonalds who spilled coffee in her crotch and sued McDonalds because the coffee was too hot). In these cases the lawyers typically ask for no money unless they get a settlement and when they do they get 1/3 ($4 million in this example). It’s like buying a lottery ticket. Who wouldn’t take a free lottery ticket on a jackpot of millions? But who really pays for all these law suits and settlements? That’s right you and me in insurance premiums we cannot afford now.
Increased Insurance Competition. Right now most insurance is regulated by the states and in many cases policies available in one state are not available in others. Let’s open up the competition. If we have more insurance companies competing for our business, we are likely to get better and more creative policy choices.
More Tailored Insurance Policies If my wife and I are beyond the point of having children, then let me buy a policy that does not cover childbearing, birth control, well baby care. If I am young and starting out and I want those things, there are other coverages that pertain to older people that I may not want at this stage in my life. Let’s allowed tailored policies that reflect my actual insurance needs.
Immigration Control. The same people who are pushing socialized medicine are, for the most part, the same people who favor open borders. However, where do all the illegals go for the health care needs including having babies (new citizens)? They go to the only health care provider they know, the local emergency room. This is also probably the most expensive form of health care delivery and since they are illegal, they’re not paying for it, the rest of us are. I think immigrants built this great country and almost each and everyone of us can point to our forebears who came here as immigrants. I am in favor of immigration now and in the future. I believe these are hard working and basically good people. BUT, they have to come here legally and follow the process. If they are not here legally, they should be deported.
Medicare Reform. You probably want to sit down for this one, but shocking as it may seem this massive government programs loses billions upon billions of dollars every year to fraud. Who pays? Right! You and me. In higher payroll taxes, and in higher health care costs as doctors and hospitals have to make up the shortfall somewhere else to stay in business.

More Liberty Under Fire

The government in proposing universal health care wants to mandate that everyone must have health care coverage. You will not have the liberty to choose. The government demands that you comply:

“comprehensive health care legislation should include a requirement that every American carry insurance.”

That’s the requirement, now comes the heavy hand of government:

“The ideas discussed include a proposal to penalize people who fail to comply with the “individual obligation” to have insurance.”

You must obey! The government has spoken!

Here’s a novel idea. How about implementing the above points first and fix the broken system that we have before we throw it out and install another new, massive, government program. After all we can always go to the government solution in the end, confident in the knowledge that these programs work extremely well and efficiently. (e.g., Fannie Mae {bankrupt}, Freddie Mac{bankrupt} , Social Security {bankrupt}, Medicare {bankrupt}, US Postal Service {$6 billion deficit, while CEO get $850,00 salary}).

What Would the Founding Fathers Say?

A Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever. – John Adams

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