American-Ideal.com

Health care is driven by politics and economics. The economics don’t look too hot. Americans spend more on health care than most any other industrialized country and we are less healthy. Costs are going through the roof and the ranks of the uninsured keep rising. Given the dismal state of the economics of our health care system there is a push for a political fix. What will the fix look like? If we rely too much on pure politics and don’t look at economics I suspect that the fix will be nothing more than rearranging the problems while fixing nothing. For the sake of the debate let’s look at the politics and the economic reality of health care.

The Politics

First we have the big dollars of industry speaking in Washington. Prescription Drugs and medical technology are high risk businesses with a fantastic profit potential on a successful product. Given the risk and rewards involved, drug makers pursue political protection of their industry by extending patent protection and limiting competition, especially from foreign markets.

The second political driver is you and me. The baby boom generation is aging and our country is entering a period where a large segment of our population will require more of our health care resources than ever before. The attitudes of this aging demographic will drive politics. The baby boomers have spent a lifetime consuming. From birth, baby boomers have been showered with the good life that our parents, mine included, did not have as children. What else would a generation that grew up in a depression and then went to war do, but shower comfort onto their children? Unfortunately a generation has learned that what is best is what has been paid for by someone else.

The third political driver is that health care is a right. People rightfully argue that health care is a right, and I agree. The principal purpose of a society is to provide a better life for everybody by binding people together and sharing a common good. Even if you don’t agree with this premise, isn’t having everybody as healthy as possible better than having the wealthy cured and the poor diseased? Since health care is perceived as a right, and society has at its disposal the means to create medical miracles, health care is automatically elevated to the political arena.

Economic Reality

Health insurance for a family can easily top $14,000 per year. What are we getting for that $14,000 per year? It is not insurance in the traditional sense. Insurance protects people from unexpected catastrophic costs. Think of auto or home insurance; we don’t insure our car against oil changes or our house against pealing paint. We insure ourselves against the loss of our car or against the cost of repairing our home after a fire or after the wind rips off the roof.

Health care insurance should be thought of in the same sense; we should insure ourselves against major medical procedures, not day to day health care. But that is not how we perceive health care insurance. We don’t want any cost but the $20 co-pay. Is that all we are paying, twenty bucks? Nope, we pay a lot more. Let’s look at the economics.

In realty, an “insured” person pays about $887 per doctor visit. How did I get to that number? For a typical family, “insurance” will cost about $14,000 a year. You may think of that $14,000 as your employer’s money, but in fact it is yours. Your employer could have given you the money and said go and buy whatever insurance you want. About $3,600 of your annual premium is for catastrophic care coverage, the rest is to get that co-pay for a doctor’s visit down to twenty bucks – that’s $10,400 for the “benefit” of a $20 co-pay per visit. If you visit the doctor once per month, each visit cost you $887.

What I would Like To See

My ideal health care program would provide preventative care such as check-ups, blood screenings, and typical cancer screening at a very low cost. We would also be covered for catastrophic care. General care should be paid for through personal health care savings accounts. General care includes such items as broken limbs, ear infections, rashes, poison oak, and alergies. Why do I like this health care scenario: it lowers our costs while keeping our health care industry motivated to advance technology.

How can we afford this type of insurance? We get there by having benefits paid directly to employees and letting us select insurance. Small companies could pay into a fund that is used to provide benefit stipends for those of us that don’t receive company benefits. By buying our own insurance we would make better decisions. Insurance companies would lower the cost for preventative care because staying healthy makes money. We could provide tax incentives to insurance companies and Doctors that provide low cost preventative care.

More people would buy policies that paid less for general care and invest in policies that covered them for catastrophic costs. This change in emphasis would lower insurance costs allowing people to put a significant part of their benefit cash into health care saving accounts (HSAs). As people age their bulging HSAs would keep their out of pocket health care costs to near zero and would save a lot in Medicare Dollars.

Health care providers would have to be more cost conscious because people would be spending what they perceive as their own money. Lower cost general care providers would pop up everywhere offering general health care at a much lower cost than a hospital. Hospitals would no longer by burdended by the uninsured. Pharmacies would have to compete with generic drugs and overseas sources as people demanded the lowest cost medication available. Care would be better and costs would go down. Factored onto all these market driven cost savings, we need to get rid of the archaic paper work process that adds about 30% to our health care bill.

Reality can be nice, but it demands from us personal responsibility. Politics provides us an escape from responsibility, but at a cost. My ideal is that we reform health care and rely on responsibility. I would be much more secure in my health care insurance if I had had my benefits as cash and had been educated on how to spend it. Instead, I look back on twenty eight years of “benefits’ going up in smoke every year as I erroneously thought my employers were paying my freight.

Copyright: American-ideal.com - 2007

This entry was posted on Thursday, January 25th, 2007 at 10:25 am and is filed under Health Care Policy. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.