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Sustainable Healthcare Reform

Senator Harry Reid speaking at a press conference announcing the opening an art exhibit benefiting the State Children's Health Insurance Program
Last week Senate Majority Leader Harry Reid was quoted as raising the possibility
we could take the $600 billion in new revenue projected from a
"cap-and-trade" plan to cut green house-gas emissions and use some or
all of it to help pay the estimated $1.5 trillion cost for
comprehensive health care reform.

Energy and climate change issues aside that would be a bad idea–a really bad idea.

The biggest health care challenge we face in America is the cost of health care. To really reform the system we have to bring its costs under control. The only way we can achieve sustainable health care reform
is to pay for most of the cost of any reform plan out of the savings we
achieve fixing the system and its perverse incentives to spend more
without regard to what we receive.

Finding $600 billion from
another part of the budget to simply subsidize these out-of-control
costs would be tantamount to just raising taxes to keep paying this
unsustainable bill. Pouring another $600 billion into the system would
have the supply-side inflationary effect of just pushing costs up even
more–pour lots more money in and it will get spent. Why would any
stakeholder–provider or beneficiary–have any incentive to reduce health care costs?

But
finding $600 billion would go a long way to also meaning no one in
Washington would have to face the hard choices needed to actually
reform our system. It would mean we could just promise everyone
painless access to whatever health care services they want. Just think how happy consumers, doctors, drug companies, hospitals, and all the rest would be.

That is until the money ran out.

But, you know, this is just shortsighted and politically expedient enough to go somewhere.

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Bob StonePraveen GhantaFL PCPtcoyoteinchoate but earnest Recent comment authors
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Bob Stone
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Bob Stone

Let me suggest — for consideration and comment — that the greatest challenge we have is not “the cost of health care,” but rather the number of people whose use of the system could be avoided if we spent any time, effort or money on helping them stay healthy. When supply can’t meet demand, adding more supply is not likely to result in lower cost

Praveen Ghanta
Guest

Controlling health care costs in the US will involve fixing the lopsided supply-demand equation in US health care. Since Medicare/Medicaid must currently pay for all treatments, no matter their cost-benefit, and since government heavily subsidizes private health care, we’ve ended up driving up demand and therefore costs as well.
Here are my ideas for increasing the supply of healthcare, and reducing demand for healthcare, thereby bringing the system closer to balance:
http://truecostblog.com/2009/04/09/lowering-healthcare-costs/

Merle Bushkin
Guest

FL PCP, I agree that abuse is abuse wherever it occurs, and the case you cite is a good example. However, I have to ask: who’s the bad guy in your example? The developer of the device? The doc who prescribes the device and doubles its cost with his/her fees? Would you rather not have the device available for those who truly need it? Moreover, if the device is truly beneficial, will other defibrillator manufacturers introduce a competing product at a lower price? That’s what should happen in a competitive marketplace. Finally, if we had a single payer system, do… Read more »

FL PCP
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FL PCP

Merle asserts that a single-payer (government controlled) system akin to Medicare “merely substitutes one payer for others and doesn’t change the structure of our healthcare delivery system.” I would argue that Medicare operates with a 3% administrative overhead, while commercial insurers skim over 30% of profits for administrative costs, which largely go to executive compensation, shareholder returns, and bureaucracy designed to bog down physicians in interminable paperwork. Innovation is surely desirable, but my observation is that is only increasing costs without guaranteeing improvements in outcomes. Example: thanks to the Multicenter Autonomic Defibrillator Implantation Trial II (MADIT II), nearly all of… Read more »

Merle Bushkin
Guest

Peter, If your concept of “government run(controlled) single-pay” means extend Medicare to everyone, I consider that “tweaking.” It merely substitutes one payer for others and doesn’t change the structure of our healthcare delivery system. Additionally, I believe a single payer system will kill innovation and make our system more rigid rather than less and will put control of healthcare delivery in the hands of administrators and bureaucrats rather than physicians. What I want to see is innovation throughout healthcare! I want our delivery system restructured so that we match resources (i.e., organizations and facilities) to needs. I want new types… Read more »

Peter
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Peter

“So Peter thinks we should all pay $120 in taxes or $100 in insurance premium for our $80 of medical care.”
No Nate, we should pay enough taxes to pay for proper healthcare – for everyone. Contolling costs (which insurance companies don’t know how to do) will mean we pay $80 of taxes for $80 of healthcare. Notice we’re not paying $80 costs + $20 profits in insurance premiums.

Peter
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Peter

“You can delude yourself into thinking that a tweak here and a tweak there will improve the quality of our care and reduce its cost but that simply won’t happen!”
One thing I have never advocated is “a tweak here and a tweak there”. The implementaion of government run(controlled) single-pay is not a tweak, it is though a revamp of the “system”. All I’ve seen until now IS tweaking because we all want a different system but can’t figure out how to not give up anything to get it.

Nate
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Nate

inchoate but earnest PTE 84-24 is different from 5500 reporting. ERISA has specific reqirements about disclosing fees and expenses to the plan fiduciary. 5500 is reporting to the DOL who just like collecting paper, they don’t actually do much with them.
Our disclosure is also done upon sale not lagged.

Merle Bushkin
Guest

Hello Peter, Re: government’s role in healthcare – my statement isn’t contradictory at all. There is a major difference between dictating how, what and when medical care is to be delivered, and using fiscal policy to foster innovation and change which can engender better care and lower costs. I, for one, favor the latter! Re: insurance companies and their execs getting rich – I agree that exec compensation is excessive (and it undoubtely will come down in the future) but even if you reduced it by 90% you wouldn’t dent the cost of healthcare in the country. And by focusing… Read more »

tcoyote
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tcoyote

Much better idea to take the cap and trade $$$ and offset the Social Security payroll tax, shifting net tax burden of Social Security off the wage base. It is way more important to do that than to flush it into the health system. I agree with Robert.
Reid’s idea is authentically terrible social policy. The Democratic majority in Congress is a huge liability for this new administration.

inchoate but earnest
Guest
inchoate but earnest

Nate, let’s not be disingenuous: you & I know that 5500 reporting for welfare plans (for the laypersons, those are health, disability, life & other non-retirement plans) is – shall we say – faith-based. Compliance has dwindled, and the #s on admin cost & PR have always been somewhat fanciful – not in every case, nor even most, but many, for employers large & small. The lax filing standards, coupled with the lagged filing schedules & glacial availability of the resultant data make ERISA reporting compliance a joke without a punchline. Your posts indicate you hold yourself to high standards,… Read more »

Weiwen Ng, MPH
Guest

I agree that climate change is one of the issues that absolutely need to be addressed. Cap and trade is a key part of that puzzle, since it provides individuals and businesses with a clear cost to their carbon consumption and the economic incentive to contain their carbon consumption. On its own, cap & trade would be a broad-based tax increase (unless everyone adapts very quickly, which may not be possible). To make life under cap & trade more feasible, the revenues raised by that provision should be rebated to individuals. They will still have the incentive to contain costs… Read more »

Nate
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Nate

rbar,
“3. If we keep private insurance, companies have to reveal admin. cost and PR”
PTE 84-24 this is already required for self funded ERISA plans. Oddly government plans are exempt from this, your local city or school district doesn’t have to comply with ERISA.
The large national carriers Congress wants all of us in don’t have to comply with this either.
There is a rason ERISA plans are the most efficient plans in the country and have better satisfaction, thats also the reason politiicans are trying to kill them off.

Nate
Guest
Nate

better arguments Peter! “Let’s see, pay the mortgage (or rent), save for retirement, save for college, now just save in an HSA along with putting enough money away for that high deuctible health plan – exactly which income bracket is this helping?” So Peter thinks we should all pay $120 in taxes or $100 in insurance premium for our $80 of medical care. No matter how many times we tell him he can’t grasp that paying small items directly is more efficient then paying them via premium or taxes. If you can afford to premium or the taxes then you… Read more »

Peter
Guest
Peter

“when was the last time government control fostered better quality, better service, lower costs and/or innovation of anything?” “What’s the solution? We have to revamp our system — and the federal government should adopt policies that will cause change to happen (this is where government can do good without actually getting involved in healthcare delivery).” Arn’t the two above statements contradictory? Government is the solution, government is not the solution. Governemnt should innovate, government can’t innovate. How can the government enact solutions without getting involved in delivery? “The fact is that no one is making a killing from our outrageously… Read more »