McCain to talk about healthcare costs this week …

Mccain

Health industry executives have few reasons to worry about the so
called health care reforms, or health insurance industry reforms, being
proposed by the presidential candidates.

Sen. John McCain, the presumptive GOP presidential nominee, is focusing his attention on heath care cost containment this
week, but a report in yesterday’s Wall Street Journal shows that he
doesn’t understand the problems any better than Senators Clinton and
Obama. Americans need regulatory changes (no laws are “reforms") that
make health insurance something consumers can use to protect themselves
against catastrophic losses and let individuals buy their policies
directly from insurers instead of buying policies selected by their
employers. And consumers should pay for their primary care and
preventive care services out of their pockets, or, at the least, buy
unbundled insurance for those services instead of buying bundled
insurance that is unaffordable for so many.

The real question is how much could a President McCain do about
health insurance costs with a Congress controlled by Democrats, and
would he pay much attention to the problem if it were clear that
Congress would mark his proposals dead on arrival?

Fortunately, the presidential candidates’ wild and undeliverable
promises of comprehensive health insurance reforms and universal health
insurance are being questioned by Congressional Democrats
as well as by the policy wonks quoted by the wsj.com. No wonder health
industry executives aren’t worried about who’s elected in the fall.
They apparently have decided it won’t make a difference for them or
their stocks.

The impact and concluding graphs from wsj.com and some of my comments follow (click on headline):

Some of Sen. McCain’s other ideas are more
controversial. He would change the tax treatment of health benefits so
that people wouldn’t need to go through an employer to get a tax break
on their premiums. That could promote competition based on price,
whereas most employees today have no idea how much their insurance
costs.

The idea is opposed by many Democrats for fear that older, unhealthy
people will be pushed into buying insurance on their own and won’t be
able to get it or to afford it.

The answer to that problem is simple. Community rating would make
health insurance more affordable for older and sicker people, but that
idea is opposed because it would make insurance a bit more expensive
for younger people. Community medical risk rating with age rate bands
could make community rating more acceptable. Individual and small group
medical risk rating must be regulated out of existence. In addition,
each insurer should be required to create metropolitan, state or
regional risk pools for all of their insureds, which would effectively
implement a form of community risk rating and eliminate individual risk
rating.

Sen. McCain would also allow people to buy insurance
across state lines, creating a national market where competition based
on price could occur. Democrats also oppose that because the same state
regulations that can increase the price are also needed, they believe,
to protect consumers.

This is a political problem. Insurers pour millions of dollars, if not
billions, into the campaign coffers of Congressional candidates and
state legislators. Taking the states out of the health insurance
regulation business would cost the politicians both money and power.
They aren’t about to give up either.

Implementing even proven, bipartisan solutions can be difficult.

Mr. Reischauer, who serves on a Medicare advisory panel, pointed to
a demonstration project that showed competitive bidding for durable
medical equipment, such as oxygen tanks or wheelchairs, lowered
Medicare costs without compromising quality. But he said spreading that
practice to the rest of the country is meeting resistance in Congress
because some equipment makers will lose business.

Sen. McCain is proposing bundled payments for providing care to
Medicare patients with chronic conditions, with the doctors and
hospitals involved forced to divide up the money on their own. That
would allow reimbursement for cheap but effective activities such as
talking with a patient about how to manage his or her condition and
would discourage extra visits and procedures that are now paid a la
carte. Sens. Clinton and Obama have similar ideas.

But this kind of change can be threatening to health-care providers,
said Gail Wilensky, who ran the Medicare program under former President
Bush and is now advising Sen. McCain. “It’s a big power shift as to
where the money goes and how it is divided up.”

It’s all about money and power. The hidden earmarks are the laws
politicians enact to to protect the weak, inefficient and
technologically lagging businesses from their stronger competitors and
changing markets and regulations.

Even if the candidates’ cost-cutting agenda were
implemented, Ms. Wilensky said, it’s unclear how successful it would be
at lowering costs, or even at slowing the increases.

“The real answer is we don’t know,” she said. But if these ideas
don’t work, she said, the alternatives are largely disturbing: price
controls, stifled innovation and stemming the spread of new technology.
“It gets real ugly real fast.”

Ugly sells. Look at the Clinton and Obama health schemes, which promise more than they can ever deliver.


Donald E. L. Johnson has been blogging since early 2003 at www.businessword.com on health care policy,
economics and stocks and writing about them since 1976.

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8 Responses for “Election no big deal for health industries”

  1. Matt says:

    No candidate has any plan that is capable of making real changes for this country regarding Health Care Reform. Sad thing is we all buy into it, and some people will even base who they vote for off of the health care reform plans. I think people need to start taking more responsibility for themselves. Health care is expensive so I don’t understand why people are surprised that coverage is expensive as well. Its not a perfect system, but it’s better to keep the status quo then to implement a plan that could possibly only make things worse.

  2. Matt says:

    No candidate has any plan that is capable of making real changes for this country regarding Health Care Reform. Sad thing is we all buy into it, and some people will even base who they vote for off of the health care reform plans. I think people need to start taking more responsibility for themselves. Health care is expensive so I don’t understand why people are surprised that coverage is expensive as well. Its not a perfect system, but it’s better to keep the status quo then to implement a plan that could possibly only make things worse.

  3. Bradley says:

    Mr. Johnson
    Can you elaborate more on below:
    Democrats also oppose that because the same state regulations that can increase the price are also needed, they believe, to protect consumers.
    Taking the states out of the health insurance regulation business would cost the politicians both money and power.
    Thanks

  4. Bradley,
    This is quoted from wsj.com: “emocrats also oppose that because the same state regulations that can increase the price are also needed, they believe, to protect consumers.”
    My comment says that politicians aren’t going to federalize health insurance regulations and put the states out of the business of regulating insurers because insurers use campaign contributions to win access to the state legislators and influence their votes. State legislators aren’t going to give their sugar daddies up without a fight. This means, it probably will be a long time, if ever, before we will be able to buy insurance across state lines as proposed by McCain and others.

  5. Peter says:

    As long as we look for an “insurance solution” there won’t be any real change. Not enough suffering yet by enough people to get meaningful reform. Of course Washington can’t solve anything else either – so we’re not surprized. Maybe they can hand out more, “stimulus” checks to solve healthcare, yea that’ll work.

  6. Alex J says:

    The status quo will become increasingly unacceptable as more people drop (or downgrade) coverage, postpone diagnosis and treatment fearing the costs, and then raise everyone’s premiums when they finally go in for expensive intervention. Add onto that the high overhead of private health insurers, the moral question of allowing healthcare to become more of a luxury, and the costs to American business, and something’s got to give. Just not sure what.

  7. Alex,
    The first thing policy makers have to do is re-regulate current insurers without creating new health programs that the government can’t afford.
    1. State legislators or Congress need to eliminate costly coverage mandates, regardless of the pleas from the providers who profit from them.
    2. Legislators need to regulate the size of deductibles and co-pays in terms of the percentage of individual prescription costs, annual deductibles and life-time maximum claims. Nobody should be allowed to buy insurance that can cost $37,000 out of pocket up front or per year.
    3. All insurers should be required to offer pure catastrophic insurance that puts the insured’s into community rated risk pools and provides coverage for the most expensive acute and chronical illnesses.
    Take care of the insureds, and they’ll be willing to pay taxes to care for the small number of uninsured who really can’t and won’t be able to buy health insurance.

  8. Peter says:

    1. State legislators or Congress need to eliminate costly coverage mandates, regardless of the pleas from the providers who profit from them.
    That’s not cost control, that’s pay less for less. Which diseases are you going to predict you won’t get?
    2. Legislators need to regulate the size of deductibles and co-pays in terms of the percentage of individual prescription costs, annual deductibles and life-time maximum claims. Nobody should be allowed to buy insurance that can cost $37,000 out of pocket up front or per year.
    Regulate? That’s not the free market. If you regulate co-pays and deductibles the premiums will be higher.
    3. All insurers should be required to offer pure catastrophic insurance that puts the insured’s into community rated risk pools and provides coverage for the most expensive acute and chronical illnesses.
    Catastrophic as in by disease or by days in hospital? I looked at a catastrophic policy once and it only covered the expenses if I was in a hospital – NO out patient care. Community risk pool? Which community, city, state, county?
    “Take care of the insureds, and they’ll be willing to pay taxes to care for the small number of uninsured who really can’t and won’t be able to buy health insurance.”
    Really, like anyone in this country wants to pay taxes. Small number of uninsured? Which small number are you picking? How about the under-insured? Didn’t you read the post about Americans loosing coverage at work?

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