Uncategorized

POLICY: Not So Fast By Eric Novack

Dr. Eric Novack is an orthopaedic surgeon practicing in Phoenix, Arizona. A frequent contributor to THCB, he has been following the recent debate over universal insurance with a growing sense of disbelief. Eric is also the host of The Eric Novack show, which airs every Sunday
on KKNT 960 AM in Phoenix. You can find an archive of his recent shows here.

Wow.  Wow.  The Rocky Mountain News, in an editorial today, writes what many of us have known for a long time:

As the clamor for a universal (meaning: single-payer) health-care system rises, one factoid needs to be discredited: the notion that the federal administration of medical services would be dirt cheap.

"\[T]he overhead for Medicare," says Dr. Stephen Rous of Brown University, a single-payer advocate, "is 1 percent to 2 percent. The overhead for various private insurance plans (HMOs, etc.) is 15 percent to 25 percent."

Not so fast. Medicare indeed reports administrative costs of less than 2 percent – it claimed $5.2 billion in costs and paid $273 billion in benefits in 2003. But those figures don’t include the costs of paying claims and tracking down fraud – those are accounted for by the Justice Department and other federal agencies, not Medicare. Nor do they include the building costs and taxes paid by insurance companies, doctors and private hospitals.

The Council for Affordable Health Insurance, a free-market think tank, pegged the actual cost of Medicare compliance at 5.2 percent. And since Medicare spends more than twice as much per recipient as the average private health provider, $6,600 vs. $2,700, the gap shrinks even more.

Even the council pegs overall private costs as more than those for Medicare. But as the debate over the proper medical system for Americans moves forward, the least we can ask for is an honest comparison of the sort the council attempted.

At a time when I am becoming skeptical about our ability to have an honest debate about healthcare, it is nice to see occasional rays of sunshine.

Livongo’s Post Ad Banner 728*90

Categories: Uncategorized

Tagged as: ,

128
Leave a Reply

128 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
20 Comment authors
Ken Heinrichjoe blowNancy SeatsPCBharrumph!! Recent comment authors
newest oldest most voted
Tom Leith
Guest
Tom Leith

> That, of course, assumes that they are as efficiently > run and have a similar cost structure which they > probably aren’t and don’t. This has been part of my point: some hospitals have operating margins of 15%, but on average it is closer to 5%. Around 1/4 of hospitals have operating margins of zero or less. Some of this may be due to poor accounting for charity care, but there’s also the efficiency question. I think if we get anywhere near universal coverage, the rationale for not-for-profit status at the very least narrow drastically, and I expect many… Read more »

Barry Carol
Guest
Barry Carol

Your #3 is close to what I’m thinking, but I don’t see a reason to earmark these corporate taxes vis a vis any other corporate tax. I really don’t either. I just threw that out as a possible way to win political support for the concept against entrenched hospital interests that will fight like hell to hang onto their tax exemption. Conceptually, if the average for profit hospital earns a pretax margin of 15%, for example, (before bad debt writeoffs at contract rates, not chargemaster) than non-profits should have to prove that they provided services (again, at contract rates) to… Read more »

Tom Leith
Guest
Tom Leith

Well, Barry, what you’ve said is certainly better than silence. With respect to #1, I don’t see why that should be tax exempt activity. With respect to #2, maybe it’d be ok to allow a tax deduction for whatever they can prove along these lines. Your #3 is close to what I’m thinking, but I don’t see a reason to earmark these corporate taxes vis a vis any other corporate tax.
t

Ken Heinrich
Guest
Ken Heinrich

As a 60-something FP, I would be happy to earn less caring for patients as long as everyone else in the United States earning more than $80,000 a year will
take exactly the same percentage cut in their take-home earnings.

Jack Lohman
Guest

Sure, “paying taxes on their profits” gets added to their product price and it filters back down to the public.

Barry Carol
Guest
Barry Carol

“If 100% of the people are ‘covered’ what is the mission of tax-exempt healthcare organizations that might justify that status?” Darn good question, Tom. I suggest the following possibilities: 1. Help low income people cover the cost of at least some worthwhile services that are not included in the basic benefits package. 2. If the basic package were high deductible catastrophic coverage, with a separate policy to cover expenses of between, say, $1 and $5,000 per person offered on a sliding scale, means tested basis, non-profits could write off at least some of the expenses that low and moderate income… Read more »

Tom Leith
Guest
Tom Leith

> it still does not cover 100% of the people
So here’s a question I have asked, and have been deafened by the silence I get in response:
“If 100% of the people are ‘covered’ what is the mission of tax-exempt healthcare organizations that might justify that status?”
Ideas?
t

Jack Lohman
Guest

I haven’t digested it all yet, Barry, but it looks like a workable alternative. Though it still does not cover 100% of the people.

Barry Carol
Guest
Barry Carol

And here’s the paper on vouchers…. http://www.robert-h-frank.com/PDFs/Emanuel-Fuchs.NEJM.3-24-05.pdf Jack – Thanks for this link. This is the best discussion I’ve seen on health reform. I especially like the following: (1) preservation of choice which is consistent with our culture, (2) creating a highly visible linkage (value added tax) between the cost of health insurance and the cost of healthcare, (3) it recognizes the need to keep long term care a means tested benefit, and (4) it establishes a mechanism (modeled after the Federal Reserve) to assess costs vs benefits of new treatments, promulgate information about best practices and challenge unwarranted geographical… Read more »

Jack Lohman
Guest
Jack Lohman
Guest

You are absolutely correct Joe, it is called “Follow the Money.” Above I provided the link to http://www.ThrowTheRascalsOut.org/NYT_Health_Care_Racket.htm. Here is another: A Health Care Plan So Simple, Even Stephen Colbert Couldn’t Simplify It In his State of the Union address, President Bush proposed tax cuts to make health insurance more affordable for the uninsured. The next day, Stephen Colbert had this to say on his show on Comedy Central: “It’s so simple. Most people who can’t afford health insurance also are too poor to owe taxes. But if you give them a deduction from the taxes they don’t owe, they… Read more »

joe blow
Guest
joe blow

I think you guys vastly overestimate the lobbying power of docs in the USA. AMA hasnt had any real power since the early 60s. Hell they fought tooth and nail against Medicare but in reality their power was already so diminished by that time they had no chance. Less than 30% of docs are members of the AMA. They are largely symbolic these days. The real power in lobbying that will stop any attempt at single payer is the insurance industry. Insurance lobbyists outnumber AMA lobbyists by factor of at least 20 to 1. The lobbying budget for the insurance… Read more »

Jack Lohman
Guest

John, you win again. Everything you say is absolutely correct. No spin. No excuses. Just plain fact!
I surrender.

John Fembup
Guest
John Fembup

“With all due respect, no matter how you choose to spin it, the data does not demonstrate that the US compared with the rest of the world today, a “success and competence of the U.S. health care system regarding life expectancy and infant mortality.”” Jack, in your continued zeal to “first try to disagree” with me, you fail again to think about what I write. My earlier comment nowhere compares the U.S. performance to other countries except to note that there are important differences in data gathering with respect to infant mortality. Ironic that you immediately spin the OECD data… Read more »

Jack Lohman
Guest

In another blow to the free-marketers, at least in my mind, is an excellent article in the NYT (not my favorite paper) called “The Health Care Racket.” Here are excerpts: “Like denial management, however, marketing and underwriting cost a lot of money. McKinsey & Company, the consulting firm, recently released an important report dissecting the reasons America spends so much more on health care than other wealthy nations. One major factor is that we spend $98 billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting — costs that don’t… Read more »