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Obama health plan, silliness

Enter David Cutler. Result is more silly meaningless numbers

<sigh>

It is truly worrying when the single most sensible quote in the whole damn article comes from AEI’s Joe Antos.

How is this worth the NY Times’ attention? And what happens when the Obama bill comes up in Congress and somehow there isn’t a $2,500 check to be mailed to each household?

I thought this guy was going to treat us like grown-ups. After 8 years of insanity that would be nice.

If Cutler, who doesn’t exactly strike me as a major league populist, thinks that Obama has to “find a way to talk to people in a way they understand” how about he steers him to talk more about some insurance reforms that are both possible and very understandable. Like stopping this.

 

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16 replies »

  1. Healthcare costs and healthcare insurance are two distinctly different things. Insurance companies make billions and provide no care.
    Regulations and conflicting standards are the largest cause of healthcare costs and no regulation or politician (except Frist) has ever provided care.
    Hospitals and doctors are going out of business due to overhead, regulations, conflicting standards, government and insurance company oversight, malpractice, and other insurance costs. Hospital profits are in the one to two percent area.
    For every patient who sees a physician, there are at least twelve others who get paid. We need to eliminate the additional money grabbers and give healthcare back to the professionals.
    Here is my take on Obama’s plan for saving money on healthcare.
    In the US, we spent $7,600 per person in 2007 on healthcare, according to the National Coalition on Healthcare. That is more than any other country, including those with national healthcare.
    If we add 47 million uninsured as Obama suggests and we multiply 47 million times the $7,600, we get
    $357,200,000,000. Easy calculation from the governments own statistics. PS – that 47 million includes 42 million uninsured Americans and 5 million illegal immigrants. (Calling an illegal immigrant an undocumented alien is like calling a Pharmacist and undocumented drug dealer.)
    That is over 357 billion additional dollars. That is on top of the current $2.3 trillion (as of 2007) we spend annually. By the way, the number is projected to be $4.2 trillion in the next ten years, without the additional 47 million or national health care.
    My numbers are way conservative because I have not added any dollars for the government organizational oversight and new regulations, etc. Think about adding a few billion more for incidentals like that.
    Just to provide a perspective, insurance premiums increased 6.1% in 2007 and worker’s share increased 10% more of the tab last year. According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 2000. The average employee contribution to company-provided health insurance has increased more than 143 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.
    Just do the simple math – add more, pay more. What’s a few billion among friends.
    If you take the roughly 150 million people (according to US Dept. of Labor) actually employed in the country, it comes to an additional $2,400 per year per person to pay the tab. Of course a third or more are under the wage limits, so they would pay nothing additional, so that leaves about $3,500 for each of us to pay on top of everything else.

  2. Obviously Nat has never actually worked in the healthcare system. tcoyote’s point about the “low” administrative costs of Medicare being propaganda is correct. Medicare writes regulations that passes the administrative burden from the government to the provider, increasing provider costs. As for not having marketing expenses, do you not remember the massive amount of marketing paid for by the government when Part D was rolled out? That was to inform people who were already medicare beneficiaries abut Part D. Now Medicare only provides coverageto seniors. To get people to sign up for the “public plan” you have would be marketing to a larger portion of the public, spending more marketing dollars than even the Part D advertising spent. Granted, I don’t have a number of what was spent on Part D marketing, but it certainly was a model of efficency that included direct mail to 28 year olds like myself.

  3. I find it interesting that Obama’s advisors casually assume that health care savings to employers would be passed on to employees in the form of higher wages. Then why, I’d like to ask, is it not safe to assume that the benefits of lower corporate tax rates would also be passed on to workers?

  4. The resistance from the ‘middlemen’ is understandable. Once the public plan is available, the ‘middlemen’ will vanish.
    1) ‘Public Plan’ is not a new business; just follow the Medicare process where the rates are published and private insurers will be contracted to process the claims.
    2) The rates need not be the same as what Medicare pays; the ‘new plan’ can have different rates. Basic assumption is the rates will be equivalent to what private insurers pay.
    3) The rates are transparent. And the process is simple where private insurers are not involved in ‘decision making’ while processing claims.
    4) Litigation level will be much less; why? Patients can choose and keep the same doctors for life. They will have a better and long-standing relationships/understanding. Medical decisions are taken by doctors & patients only.
    5) Docs hate insurers; if they get paid at the same level, they would swarm the public plan.
    Besides, to simply put it, why should I pay for private insurers’ sales & marketing, lobbying, excessive admin costs?

  5. tcoyote is correct about a new public plan having to compete for enrollees. This is the problem with a two tier health network. It will have to attract docs as well, which will kill any chance of cost control. I advocate (as I have always done – it’s a windmill thing) for a single-singlepay system where we can really get control of costs. But as long as all the system players want to keep all the money circulating we have now then cost control will not happen.
    Sorry for the above double post, computer glitch I guess.

  6. To tcoyote and others, the above post “Without wrangling the outrageous problems with medical malpractice litigation in this country,…” is by Peter Zavislac, pzavislak@life.uiuc.edu, not me the usual Peter who has been commenting here for quite a while. I have asked him twice now to make a small change in his name to avoid confusion.

  7. tcoyote and others, the above post; “Without wrangling the outrageous problems with medical malpractice litigation in this country,…” was done by Peter Zavislak, (pzavislak@life.uiuc.edu) not by me, the usual Peter commenting on this blog. I have asked him twice now to make a small change in his name to avoid confusion.

  8. Agree w/ Peter to a point. There is a ton of unnecessary testing and care that is driven solely by the fear of being sued. I remember a doctor friend telling me that every time a new patient walks into his office, he has to think of him first and foremost as a future potential adversary, a thought which chilled my blood.
    However, unless there is a parallel change in how physicians are paid, e.g. to remove the powerful economic incentives which presently exist to overtreat, malpractice reform alone will not achieve much in the way of savings. Having said that, when asked what contribution malpractice risk makes to our health costs, the answer is still in the low single digits.
    To Tom, remember there are a lot of docs dropping Medicare, something that will accelerate quickly on the primary care end unless there is significant payment reform. For a new plan which pays Medicare rates or less, there will be a lot of docs who will not sign up. After all, it’s fear of loss of access to 34 million Medicare beneficiaries which gives Medicare its financial clout. How many people will sign up for the new plan? Who knows. . .
    To Nat, the whole point of being a coyote is that you don’t have “cohorts”. You have to fend for yourself and live off the land. (Your math doesn’t add up). How successful a Medicare like private plan will be is one of those great empirical issues. You can hallucinate all the potential benefits from a new public plan you want, but some poor sap still has to go out and set it up. Remember those are probably the same people who run our current plan, who are, because of the very low overhead you speak of, grievously understaffed and, though conscientious and high minded, remarkably naive about how to run a new business.

  9. Without wrangling the outrageous problems with medical malpractice litigation in this country, Obama’s plan will be worthless. The dubious money “saved” will mean more money available to lawyers in lawsuits anyway. What are the chances that Obama, a LAWYER, will fight against his brethren?

  10. Wow! It looks like, the ‘public plan’ will solve the cost problem significantly. Savings will be much more than 25%; I did a small math and accordingly it will be around 40%.
    Not just that, there are tons of other benefits:
    1) You can choose your own doctor and keep for life irrespective of your employment. A solid Doctor-patient relationship will develop and it is CRITICAL for timely treatments especially for chronic illness. While people can live a healthy life, the potential long-term cost saving will be enormous.
    2) Because of better doctor-patient relationship, potential law-suits will be far less. Another big cost saving.
    3) Less ‘defensive medicine’ (unnecessary tests like imaging) due to improved doctor-patient relationship. Another cost saving.
    4) Tons of existing regulations can be streamlined as third party (private insurers)involvement is absent.
    5) Cost Transparency: Every one in the world would know how much each procedure costs.
    I am not seeing any cons for this ‘public plan’.
    What are we waiting for?

  11. Response to tcoyote & his cohorts:
    1) New “public” plan does NOT need to create a new network; the rates can be published for every single procedure code and geography (just like Medicare). If a doctor provides service, that is the fee he/she gets; no more network and no more ‘fee schedules’. Best of all, patients can choose any doctor and no question of in or out of network.
    2) Govt contracts private insurers to process Medicare claims; can do the same for “public” plan. Admin expenses can be further reduced…volume pricing; it will only be around 3%.
    3) ATLEAST 25% SAVINGS IS CERTAIN. But, insurance industry that spends $150 million a year for lobbying will make a big false CRY just like tcoyote.

  12. Medicare has a built in “entitled” constituency. The new “public” plan will have to create a new network, unless some way can be found to force providers to accept Medicare rates. It will also have to compete for enrollees, and will thus have marketing expenses, like any start up. And remember Medicare does not process its own claims; they are outsourced to private plans, so starting up a new claims management operation won’t be cheap either. This idea looks great on paper, but will be fun to watch. Starting up Part D was a circus, and so will this. . .
    The “low” administrative expenses of Medicare is largely propaganda.They are certainly somewhat lower than private plans, but In the real world, a lot of Medicare’s administrative expenses are buried in hospitals and doctors’ back offices, in complying w. 100 thousand pages of regs, or are outsourced to the Medicare beneficiary’s family, who have to hassle with the claims. If you’ve ever tried to do that after a serious illness, it’s an enormous hassle. It is a very user unfriendly benefit.
    And for the record, private health insurers do not make 5-10% profits, and they do not have, as the previous post implied, a 30-50% spread between premium and medical expense. Their admin costs are higher than they ought to be, and these plans need to finish the job of automating and web enabling their back offices.

  13. Though I am not a supporter of Obama, I am clearly seeing a big cost control measure in his plan. He proposes a Medicare like ‘Public Plan’ which will be available anyone who wants it. This plan will be much cheaper compared to any private insurance. How?
    In private insurance, 10-15% goes to Administrative expenses; 10-15% goes to Sales & Marketing expenses; 5-10% for Lobbying, and 5-10% for profit. Whereas for public plan, the admin cost is under 5% and no sales & marketing, no lobbying and no profit components.
    Here itself I am seeing a reduction of 25-50% of insurance cost in the public plan.
    Simply go for a public plan and without doing anything else, the cost saving will at least be 25%.
    Go for it.

  14. I see Obama’s commitment to a $2,500 per family reduction as a constructive going out on a limb. An 8% reduction in health care costs is eminently achievable. What we need is political will, not more studies. If Obama is elected and puts leadership energy into meeting the $2,500 commitment, he’ll accomplish it. Over the years, when I’ve asked physicians I respect in different areas of medicine how much they could save in their area with no loss of quality if they were the czar of their field, no one ever said less than 25% and many said 50%.

  15. Obama risks loosing the young voters that have carried his campaign. He’s looking more like McCain and the other politicians who brought us this mess. If young voters don’t show up for Obama then McCain could be our next war president.

  16. Right on, Matthew. This is Jon Stewart material. Some very young people were responsible for this foolish promise, and a lot of ambitious policy types who want jobs in his administration are piling on to validate it. Not a good sign.

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