Why Healthcare Is Killing America
By Bud Conrad, Editor, The Casey Report / Jun 09 • Categorized as Asset Protection •
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Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don’t stop to understand just how large a portion of our society’s money is dedicated to healthcare.
For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt.
Going forward, the situation is guaranteed to get worse. The Obama administration is committed to major reform to cover the 40 million people not now covered by insurance. Once everyone has insurance, with many paying nothing at all for coverage, patients won’t care what it costs, and the system will quickly spin out of control.
And it’s already out of control. I recently spent one day in the hospital due to a broken arm, which cost on the order of $100,000. Remarkably, that eye-opening amount still doesn’t include the ambulance, the doctors, the x-rays, the CT scans, or the anesthesiologist. I’m still getting bills. The system is far more broken than is widely understood, unless you have had a recent bad experience.
Projections for healthcare are particularly problematic because of the demographics of so many people born just after World War II. Soon, there will be less than three people in the workforce for each retired person. That will result in huge taxes on the few workers to supply the expensive end-of-life medical care for the retirees (and it is in the latter years where medical expenses really begin to rack up).
This bubble was predicted and a government trust fund was set up. Unfortunately, as is typically the case, the government couldn’t keep its hands off the money, and so it has already been spent. The outlook is not good. In fact, in just over 10 years from now – by 2020 – the demands on the government for Social Security and Medicare will get so high that they cannot be met. And it gets worse from there.
It’s a safe bet, based on history, that the government will once again try to print its way out of the problem – but all that will do is further destroy the dollar and drive interest rates up even more. Just to be clear, this is not just about a government program gone awry, but as much or even more so a demographic problem – which makes it all the more intractable.
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Robert,
I think you are confusing discounts with overhead.
Nevertheless, your observations about payments vs. charges touch on two of the most glaring flaws in our current system.
Why should payments to a provider be based on anything other than performance? Instead, we have a system where payment depends on who the patient is. if the patient is poor and medicaid is the insurer, payment is significantly below costs.
If the patient is old and the payer is medicare, payment is roughly equal to costs. So providers make up their needed shortfall, elsewhere – from those with private insurance and those with no insurance. Usually, those with no insurance involve substantial debt collection costs, which is only one reason why your providers are so willing to accept less than their “book rate”.
But there is another issue going on here, that has much more to do with the argument in your last paragraph. No one in our society accepts full responsibility for health care costs. There are too many examples here to enumerate – but just look at what goes on with employer sponsored health insurance – a topic that I have been professionally involved with for 25+ years.
See http://thehealthcaremaze.us
Employers continually search for ways to shift costs to employees, they offer incentives to elect their spouses coverage, they make it prohibitively expensive, they deny claims because they are work related and then workers’ comp denies the claim because it was a pre-existing medical condition. The list goes on. Meanwhile, government payers like Medicare and the VA chase after these same private payers who don’t want responsibility in the first place. See
http://www.cms.hhs.gov/mlnproducts/downloads/msp_fact_sheet.pdf
To eliminate the paper chase you refer to, we need a single payer system. Keep in mind that very few people have the means to pay for major health care services up front.
By the way,I would like to challenge you to the following. The next time (which I highly suspect will be the first time) you need major medical work (and I do hope it is elective), shop around in advance to find the best value and then get that facility to agree to a case rate reimbursement with a guaranteed service follow up. After all you would expect no less if you were paying $30,000 for a car.
Hundreds of millions of dollars are being syphoned out of the U.S. health care system by insurance companies and placed into their profit accounts. With the Blue Cross/Blue Shield plans who declare they are non-profit, that account is called reserve. In 1985, a friend of mine who worked at one of the BCBS plans told me that their plan had enough in reserve to pay claims until 2000 without collecting another penny in premiums. You have Medicare, Medicaid, VA and insurance companies. Combine them into a single payer system. Those with jobs can pay a single or family rate. Without the insurance companies syphoning their exorbiant profits, there would be plenty of money to provide services for the elderly, the infirm and those who need assistance. The next item would be regulation since the companies providing health care would try to do a scam just like the military contractors do with the government and hospitals do now with their supplies (have you seen the $40 aspirin bill on your hospital bill?). There is no mystery here on how to solve it. The challenge is removing the obstacles out of the way from implementing it.