Loop Holes in Heathcare Reform

Healthcare Reform Controversy
James Wise
Class: HCA 202

Abstract

If members of Congress slow down long enough to read the detailed reports of their own Congressional Budget Office (CBO) or even its director's recent Senate testimony they will understand that many of the slogans they use to justify government intervention are false. Insofar as there is a cost shift, it derives from the government programs Medicare and Medicaid, which reimburse providers at rates roughly 20% to 40% lower than the private providers. ( Pipes, Sally). This article goes on to state that in recent events the passing of large reforms without proper scrutiny of facts will not achieve the goals it is proposing because of loop holes. The article also reveals the propaganda machine that plays on needs, fears, and attempts to engender hope of a better cost effective and quality healthcare system. I focused my research on cost because that is the cornerstone to sustaining a vibrant healthcare system. I will contras the actual facts to the Democratic point of view and their drive on getting the new healthcare reform passed quickly.

Health “Reformers” Ignore Facts

The Democrats' case to expand government health care is so full of holes that passing it quickly is their only hope. If Americans slow down and ask questions, they will be hard-put to come up with answers.
Status health-care reform, for example, is said to be needed to help the economy recover in a period of deepening gloom. The president has made this argument on numerous occasions, such as earlier this week when he announced Kathleen Sebelius as his pick for Secretary of Health and Human Resources. So too has Henry Waxman (D., Calif.), chairman of the House Energy and Commerce Committee. "The costly failure of our health care system affects the financial health of our businesses," Mr. Waxman said at a conference at Families USA, the national nonprofit dedicated to health care for all Americans. "It affects our competitiveness in the world. This isn't something to put off; this is something to do right now to help fix our economy."

Health care certainly plays a major role in the U.S. economy, and by almost any objective account a highly positive role. It employs 13 million Americans and accounts for one out of 10 jobs. But the assertion that the costs of providing health insurance cripple American corporations in the global economy is simply wrong.

CBO director Douglas W. Elmendorf explained this last week to the Senate Committee on Finance, which is chaired by Max Baucus, a leading proponent of government health care. The point is that for employers, health care is merely a part of total compensation: It reduces cash compensation for employees but it does not increase costs of employment. To argue otherwise is to argue for lower total U.S. compensation; that is, lower wages for U.S. workers. Mr. Elmendorf said, "The costs of providing health insurance to their workers are not a competitive disadvantage to U.S.-based firms."

Another common argument for more government insurance is that the uninsured shift costs to private payers when they avail themselves of the health-care safety net, thus jacking up healthcare premiums in the private sector. Many reform advocates make this claim, including Sen. Edward M. Kennedy (D., Mass.) and Sen. Baucus. This is not the case. In the first place, a recent CBO report ("Key Issues in Analyzing Major Health Insurance Proposals, " December 2008) is clear on one issue: Working to achieve universal coverage through expanding government's role in health care will increase total costs and therefore either increase premiums or taxes, not reduce them. As for the argument that the uninsured shift costs, Mr. Elmendorf was quite direct dispelling this myth in his testimony before Mr. Baucus's committee. "Overall," he said, "the effect of uncompensated care on private-sector payment rates appears to be limited."

In fact, insofar as there is a cost shift, it derives from the government programs Medicare and Medicaid, which reimburse providers at rates roughly 20% to 40% lower than the private providers. This has been detailed by the widely used and quoted health consultant firm, the Lewin Group. But this is conveniently ignored by those who want to expand government health care.

Preventative care, disease management and electronic medical records are also constantly cited as big cost-savers. The idea here is that if our healthcare system was set up to prevents disease rather than just treat it, and could do so without duplicative paper records, it could save money. It's a great hypothesis, but research does not indicate it amounts to much. "In many cases," as Mr. Elmendorf testified regarding such initiatives, "those studies do not support claims of reductions in health spending or budgetary reductions."

Americans like their current health care, its plethora of choice and its intensive, high tech approach to fixing our ailments. A Gallup survey in December reported that "on balance, Americans still favor maintaining the current system, 49% to 41%." But the CBO is very clear that saving money on health care involves doing less of the very things Americans like the most.
"Studies attribute the bulk of the cost of growth to the development of new treatments and other medical technologies," the CBO notes in a report issued last December, later adding, "Given the central role of medical technology in cost growth, reducing or slowing spending over the long term would probably require decreasing the pace of adopting new treatments and procedures or limiting the breadth of their application."
In other words, reducing costs means rationing the care of those who currently have private insurance and Medicare.

Reference:
Sally C. Pipes. Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 6, 2009. pg. A.15
Sally Pipes is president and CEO of the Pacific Research Institute and author of "The Top Ten Myths of American Health Care" (Pacific Research Institute, 2008).

Barrack Obama’s healthcare reform proposal: http://www.barackobama.com/issues/healthcare/ Retrieved March 22, 2009.

Congressional Budget Office--CBO (NAICS: 921120 ), Retrieved March 22, 2009.

Democratic Party (NAICS: 813940), Retrieved March 22, 2009.

High Cost of Heathcare

Running head: High Cost of Heath Care Services






High Cost of Health Care Services
James L. Wise
Class: HCA 209

High Cost of Health Care Services

There are several factors which lead to increased costs. First, the government (both federal and state) meddles in the matter; refusing, for example, to allow policies to be offered across all 50 states. Secondly, there are now just a handful of large insurers and they routinely violate contract law and antitrust law. By violating antitrust law, they drive up costs in the markets they control and reap larger profits than they should. That is compounded by their not paying legitimate claims as well; Linda Peeno, MD testified that she had often denied treatment just to save the insurance company money

Furthermore, the vast majority of health insurance policies are through for-profit stock companies. They are in the process of "shedding lives" as some term it when "undesirable" customers are lost through various means, including raising premiums and co-pays and decreasing benefits (Britt, "Health insurers getting bigger cut of medical dollars," 15 October 2004, investors.com). That same Investors Business Daily article from 2004 noted the example of Anthem, another insurance company. They said the top five executives (not just the CEO) received an average of an 817 percent increase in compensation between 2000 and 2003. The CEO, for example, had his compensation go from $2.5 million to $25 million during that time period. About $21 million of that was in stock payouts, the article noted. A 2006 article, "U.S. Health Insurance: “More Market Domination, More CEO Compensation" (hcrenewal.blogspot.com) notes that in 56 percent of 294 metropolitan areas one insurer controls more than half the business in health maintenance organization and preferred provider networks underwriting. In addition to having the most enrollees, they also are the biggest purchasers of health care and set the price and coverage terms. The results is double-digit premium increases from 2001 and 2004-peaking with a 13.9 percent jump in 2003-soaring well above inflation and wage increases. Where is all that money going? The article quotes a Wall Street Journal article looking at the compensation of the CEO of UnitedHealth Group. His salary and bonus is $8 million annually. He has benefits such as the use of a private jet. He has stock-option fortunes worth $1.6 billion. There is also the fact that of the folks who declare bankruptcy, more than half are over medical bills and 75% of those folks have insurance. So it is clear that insurance is not meeting its responsibilities because the actual purpose of it is not to pay for the "sniffles," but to be there for serious illness which can bankrupt a person.
One last insight is the Heath Care industry it is the only industry that has a lack of price transparency. The hospital cannot tell you because your healthcare insurance is a confidential contractual agreement. If you call your insurance carrier, they will say the price may be this or it may be that depending what the surgeons have to do. So in the end you do not know what it will cost you until services rendered. This makes it hard for the consumer to shop for the best value, and truly stops it from being a free market.

The answer is forth coming once you have seen all the statistics concerning the rising cost of health care. The insurance companies, as it stands, needs to be abolished. Putting all the moral issues aside which are many, the men/women that have put 12 years of academic study and all the clinical and only make 210,000 a year v. an insurance executive earning in the millions is just turned upside down in my opinion. Health care prices should be set by the government through global market research this will make it a free market “money transparency.” The pre-existing clause must go away. Insurance companies should be made into non-profit organizations, their focus changing to quality of service and financially rewarded by the government. I am in general proposing standardization and accountability in the heath care system, not to be confused with socialism. My thoughts on capitalism, well they are wavering in Today’s financial climate.

Bibliography

Dr. Peeno, Linda. (1996) The Doctor’s Testimony. Retrieved November 29, 2008 from
http://www.thenationalcoalition.org/DrPeenotestimony.html
Wally R. Smith, MD (2006) Health Care and Health Insurance. Retrieved November 29,2008 from http://www.hcrenewal.blogspot.com
Britt, (2004) Health insurers getting bigger cut of medical dollars, retrieved November 29, 2008 from http://www.investors.com