Tag Archives: medical costs

Health Care Costs Without The Parachute

We are going to do a real brain teaser so sharpen your imagination and thoughts.  The country has endured endless debate and ultimately a mind-blowingly large health care overhaul.  You will recall that one of the major arguments of the proponents of the health care bill passed last spring was that it was a deficit fighter.  That health care change with government takeover of virtually the entire sector was essential to bring down costs.  It was argued that only government could do this.   It was offered as a way to reduce the deficit, the total US debt and “bend the cost curve” down in the out years.  You heard those arguments if you were awake during ’08 and into ’09.  The cost savings was a central mantra of the pitch for that massive 2700 page bill that Pelosi promised we would like once it was passed and we got to see what was really in it.

Of course this summer several major companies reported the increases to their costs for the Bill.  You will remember the WH yelled back saying they were just playing politics with the issue and trying to embarrass the President.  Then quietly the WH backed off because it became evident that those companies were merely doing what was required by law and if they hadn’t they would have been in trouble with the SEC for not making a disclosure of material information regarding their financial condition.  Recently, several insurance companies have submitted applications for increases in rates.  They are now having to cover more circumstances and take greater risks than before so, surprise, surprise, it will cost more for those risks.  The Secretary of Health and Human Resources has already lashed out at these companies too, accusing them of unjustified rate increases.  I don’t know how much each company is seeking but it goes without saying that there will be an increase; they can’t cover additional risks without all of their insureds having to pay more to cover that or they go broke which probably wouldn’t do anyone any good.

How about a radical idea for a change. Neither liberal or conservative.  Imagine for a moment a world with no health insurance, none, zip, nada.  None for individuals, union members, retirees, government employees.  No, really think about it and what would happen as a consequence.

First, there would still be a demand for medical services.  People would need care.  Those doctors and hospitals and specialty clinics would need to pay their bills and feed their families.  The competition for patients would be fierce and proactive.   The costs would drop, dramatically.   Each health care provider would be very interested in market share and volume.  Those MRI’s that used to cost $2000.00 would suddenly  be going for $750.00.   Those $800.00 a night hospital rooms would be $200.00 a night.  Doctors and nurses would make less but it probably wouldn’t be nearly as dramatic.  But the surgeon who used to charge $15,000.00 for a pacemaker would now be doing it for $5000.00.   The drugs and all other medical devices would likewise drop tremendously in price, they would have to because the patients couldn’t afford them anymore at the higher costs.  It doesn’t do a health care provider any good if it has the best product on the market but no one can afford to pay for it.  The price would adjust to the level the market (patients) could afford.

The savings would be in the billions.  Don’t forget too that there would be enormous savings in the health insurance premiums we all have been paying and those paid by our employers.  That would also be in the billions every year, year in and year out.

Now the patients, us.  First, the overwhelming majority of us do pay health insurance premiums each year and so do most of our employers.  Let’s be arbitrary but within reason to assume a family of 4 would have been expending $10,000.00 per year for insurance.  Now they have that money in their own pocket to spend as they think fit for their health needs.  They will be good consumers and shoppers.  It is their money they are spending and they will use it much more wisely than any government program.  That facts are that many of them won’t have to spend that much in any given year and would be thousands of dollars ahead each year.  Those routine visits for the kids and regular flu treatments and arthritis, etc. don’t and wouldn’t cost that much for a visit.  You can bet your bottom dollar for sure that they would all ask questions  everytime the doctor ordered and MRI or Catscan.  They would want to know why and what it cost and if there was another way to find a diagnosis without it.  Or here is an idea, maybe just wait and see what happens.  The old Hippocratic doctrine of first do no harm.  There are millions of people like me who hasn’t cost his health insurance company but maybe a couple of thousand dollars over the last 40 years.  I am healthy and work at it.

For those really necessary and expensive treatments like heart transplants or cancer treatments we would pay those out over time.  The cost for them would drop because of the competition but when they were still too high the banks and other lenders would step in and make loans to be repaid over time.  The health care providers would likely jump into that lending market themselves.  Remember, everyone would be saving money each year equal to the old premium they had been paying.  Over the course of years that would a very tidy sum indeed and could cover even expensive procedures if utilized for its purpose.

Yes, there would be the need for charity.  There would still be those who are down on their luck, suffer a permanent disability or whatever circumstance prevents them from having the ability to pay.  Almost every community in America already has a charity hospital and it is paid for with local taxes.  In our community it is hundreds of millions per year and there are private charities available.  There is lots of money already spent on those in need almost everywhere.  Those taxes are already baked into the cake as it were.   We haven’t covered all the issues that would arise but the basic idea of dramatically lower cost is sound.  That most people most of the time would save thousands per year from medical premiums to cover current medical needs is obvious and so is the fact that most, most years would have thousands of dollars left over to add to next year’s savings.  You think about it.  Do we really need government intervention?  Do we really need medical insurance?   The market is efficient if left to operate.  Not only is it efficient, it is fair as opposed to government picking the winners and losers based on status or political influence.

Edison, Bell and Morse all were prolific innovators.  They advanced our industrial development in an astonishing manner.  What is of current value to remember is that they did all that without any government grants or loans.  Today, the government has its hand in everything from clean energy to stem cell research believing that only it can provide the direction for the future.  Thank God it wasn’t around when those guys were at their peak.  They would have spent all their time doing grant applications rather than inventing things that changed our nation and the world.    www.olcranky.wordpress.com

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A Little Can Affect A Lot

I am always amused at the way some arguments are presented in political debates when one side is trying to sell their program.  The current controversy over health care costs is only the most recent example of this propensity.  One of the major arguments of those favoring a government takeover of health care insurance and health care delivery is that the costs will continue to escalate and do so exponentially until the entire economy is overwhelmed with nothing but health costs.  By definition liberals are all for change.  Change is their mantra and has been my entire life.  They have never met a situation or circumstance that they didn’t want to change.   The moss back conservatives like to take their time with change and not tinker too much and make changes in an incremental way slowly testing the waters.  The liberals like to leap right in without knowing the depth of the water but assuring everyone they know what is best because they are the elites and know better than the rest of us.  When it comes to medical costs the liberals argue that the costs will continue to increase without drastic changes and that the increases will always outpace inflation and earnings.  

Of course that argument is severely flawed.  The old adage about diminishing returns comes into play at some point and likewise the economy functions on the supply and demand concept but demand is calibrated by costs.  If someone built the most magnificient and fuel efficient car in the world and it had ever feature known to man and everyone wanted to have one it would not sell if the price was $100,000.   That price would control the demand.   If the price was projected to increase with each passing year that would not induce additional sales.  People will only pay so much for any product or service.  Forget the super rich and the totally impoverished because they won’t and never have set the bar for pricing of products and services.  It is that great sweep of the middle that drives the economic bus.   Right now I pay about $7000 a year for medical insurance for the wife and me.  I gulp with every payment but I can eke it out and I pay and frankly would pay even more if that were required for coverage.  But there is a limit.  If my  medical insurance was $17,000 a year, I wouldn’t pay.   Sure I would worry about a health issue but the bottom line is I wouldn’t pay, period.  The same analogy is true for the nation as a whole.  “We” are willing to pay only so much for health coverage.   Our betters might try to persuade us that it is in our best interest to pay more through premiums or taxes but there is a limit.  

That is probably the biggest flaw with the current proposals coming out of the House and those being discussed in the Senate–costs.  The politicians misjudge our willingness to pay.  They believe they can set the costs and then we will all fall in line like lemmings.   I trust the collective wisdom of the people.  They know that it doesn’t matter if the cost is called a tax, fee or premium, a cost is a cost.  Those costs will come out of our pockets one way or the other.  The hospitals and doctors aren’t going to close their doors if none of us had coverage.  In fact that might be the best way to go.  No insurance and start all over.  The  hospitals and doctors have to make a living.  Even though that heart surgery might normally costs $50,000 dollars under today’s insurance coverage scheme, if there were no insurance company to pay for it and you offered them $15,000 for the surgery and everyone else was in the same boat, I think you would find that many of them might accept your offer.   I offer this as a point of departure for discussion.  The costs of insurance and health care will not overwhelm the economy because we won’t pay for it at some level.  There is a limit to what each of you would pay whatever that limit is.   The costs will come to a level the people are willing to pay or else all the health care professionals will be out of work.

We can work on the little things that make such a big difference when multiplied by over 300 million people.  Mostly we need economic incentives for consumers and providers to improve care and costs.  People will respond to that much more willingly and efficiently than  they will to the lash of higher taxes.   Slight improvements can have big consequences.

During the Amercian Revolution one of the biggest problems facing the American army under Washington was something as mundane as gunpowder.  Both the quantity and quality were lacking.  A Frenchman, named Lavoisier was a famed chemist of the age and was put in charge of the munitions of France by the King in the mid 1770’s.   He had learned a lot about the subject from James Priestly (a close friend of Ben Franklin).  Lavoisier within a couple of years had greatly improved the quality of the French gunpowder.  Franklin arranged to purchase this improved gunpowder for the American war.  France was our arms dealer and sold and shipped over a 1000 tons of it to the  Colonies.  Washington was elated.  Our cannons had not been able to compete with the British, they simply couldn’t shoot as far as their cannons and the same was true with our musket, we were out-ranged.  The gunpowder made a difference, our fighting forces were more effective.  Likewise later the rifled barrel of the cannon made an enormous difference in cannons and thus battles.  During the War Between the States the Yankees had the Parrot cannon which was a much better weapon than the smooth bore cannons in the South.  Their artillery could hit a target from farther away and not be hit with counter battery fire.  Small changes, big effects.  We can and should make the necessary small changes to our medical care to have big effects down the road.   The current proposals are much more about ideology than economics or health care.  The left wants Government, Inc. to run health care so they can have one more goodie to distribute to the little people in exchange for votes and perpetual power.

The crossbow was an innovation that finally ended the era of the armored knight.  For several centuries the armored knight ruled the battle fields of Europe, but the metal tipped bolt from the crossbow could penetrate even that armor.  The knight became a target rather than a weapon on the battle field and the knights became  historical pagentary rather than an actual fighting weapon.  http://www.olcranky.wordpress.com

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Health Care Reform–Crimes, Costs and Choice

The papers and TV news are filled these days with several stories each day about the current debate and proposed legislation to expand the scope of Nanny Government into another major area of our lives with so-called health care reform.  It seems that every day one committee or another of Congress is passing or proposing or marking up a bill to completely change the health system in the US.  It would be great if they would focus on just the issue of how to reduce costs without the knee jerk reflex of the left to expand government power.   Our we getting a change in health care costs with the proposals on tap or are we getting the old bait and switch once again?

First, we were assured over and over that everyone would be able to maintain their health insurance they now had if they were satisfied with it.  That promise is as solid as the one about no one having to pay more in taxes if you earn less than $250k per year.  The Cap and Tax proposal will tax everyone that lives, breathes, watches TV, washes their clothes, drives a car or public transportation or flips the light switch, not to mention the costs of every single product we buy going up in costs.  Those products have to be shipped to us and that takes energy.  All energy will be taxed under the cap and tax system.  If you look at the House proposal you will see that you really don’t have complete freedom about how you select your health insurance.  The Government will create three levels of health insurance policies. You will be able to buy it from the private sector but only those programs chosen by the government and only at the premiums and benefits approved by the Government.  It of course remains to be seen if any of the private insurers will even want to participate in that process.  After all they are in the business of making money and contrary to the Government they can’t print money.  We WANT them to make a profit so they can pay our claims when we submit them.  If you have never had insurance you will have to participate in this three tier system; there is no option.  Likewise, if you are employed but lose your coverage due to lay off or you quit then  you also MUST participate  in the three tier program. Only those already insured can keep their existing insurance and if they ever drop that coverage they must go into the new three tier pool.   Naturally, due to aging that pool of people with private insurance will decline every passing year.  So that in a matter of a few years everyone will be forced into the three tier program.  Then of course since the Government doesn’t have to make a profit and can print inflated money the Government option will become the only one that people can afford.

There is also a mandate there everyone have health insurance coverage.  If you don’t there is a fee, fine or tax of 2.5% of gross income, that is gross, not taxable income.  You will be required to list it as a line item on your annual tax return.  If you don’t then you have filed a fraudulent tax return and that is a crime.  You may recall that was one of the reasons Hillary-Care never worked because they wanted to make it a crime if you didn’t follow the rules they were going to establish.  Here the Dems have been very clever.  They have made non-compliance with their health program criminal but without passing a specific crimianl provision.  But that tax return requirement will work just fine for them.  It will be a crime if you don’t participate and report it on your tax return.  

A whole new bureaucracy is being created to determine the best and most cost efficient methods of practicing medicine.  That is really scary.  You can be assured that the three tier health coverages required by the Government will have exclusions for any treatment that is not approved by that bureaucracy.  That will also lead to the Government being in charge of research and development for new drugs, medical procedures and medical equipment advancement.   If you are a research doctor you will have to not only satisfy your peers with new techniques and the FDA but now you will have to make an application and get clearance from the bureaucrats who are watching the cost factor and which group in society is benefitted the most.  The profit incentive will be inviscerated.  I mean the Government approved programs will be setting the fees and costs for everything and what is the reward for an individual or company do develop a new drug or procedure.   Obviously, they think that profits are nasty things.  That is until there  are none and then Government, Inc. realizes there is no one or no entity left to tax. 

I believe we do need serious revision in the way we pay for medical care.  We need to give incentives to consumers to bargain and negotiate prices with doctors and hospitals so they pay attention to all fees and costs.  Our current system has perverted the competitive factor in health care.  The new system proposed will eliminate it altogether in a matter of a few years and that can’t be a good thing.   If you are one of those who blindly believe in big government and central planning you will love the new method.  If you want choice and more freedom then the proposals will ring not the Liberty bell, but the tocsin calling in the serfs from the fields of the collective.

Is anyone surprised that the CBO said the proposal would add to the deficit?  You don’t reduce costs by spending more and even expanding coverage for those that aren’t even US citizens.  I don’t pay for a Frenchman’s health care, why am I expected to pay for a Mexican here illegally?  http://www.olcranky.wordpress.com

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Physician Heal Thyself

We have a new nominee for Surgeon General.  Her photos have now been flashed across the screens of cable TV and elsewhere.   The job of Surgeon General isn’t to actually be out there treating patients on a daily basis but to serve as an advisory for the general health policies of the nation.   Their role is to lead those efforts against diseases and conditions that affect the general health of the nation.  They also project an “image” of our nation to the world as the spokesperson for all of us on those issues.   They should serve as a role model in some form.  Those role models are not the be all and end all but they have a significant place in a modern society founded on communications.  Words and pictures communicate all kinds of messges.

Be honest, when you saw those pictures of the new nominee what was your immediate reaction?  Mine sure wasn’t of someone who is the picture of health.  That lady must be at least 75 pounds overweight.  Merely standing there without saying a word she sends the wrong message to everyone.  She is a professional and knows more than I do about the dangers of being overweight yet she carries around lots of extra heft.  Her mere presence says to the young people it is ok to be way overweight, you can still become an important person.  She is the poster child for saying that weight doesn’t matter and that it is ok to be like that and have a much higher chance of developing those debilitating diseases and conditions and others will pay all your expenses.  I think she is a terrible choice.  She is a living negative about everything wrong with modern health issues and self control and taking responsibility for your own life and well-being.  The Surgeon General doesn’t need to look like an Olympic champion but they sure shouldn’t look like that lady that sings at the end of the opera.

We have been advised in recent years repeatedly that obesity is the major cause of at least four of our deadliest and costliest medical issues: heart disease, high blood pressure, diabetes and cancer.  Those by far consume the bulk of our national health care cost.  If you reduce obesity you dramatically would reduce the incidences of those four medical conditions and the attendant treatments, medicines and hospitalizations associated with them.  We know and our common sense tells us that obesity is self imposed.   I realize that they are few medical conditions that can cause obesity but those are quite rare.  The overwhelming majority of obesity is caused by over eating.  In spite of those hundreds or thousands of diet books on the shelves at the book store and promoted on TV or radio, the issue of weight is really very simple.  It is chemistry and physics.  It is gross calories in and gross calories out.  If you consume more calories than your body uses each day then for sure you will gain weight.  That isn’t opinion but science, facts, physics and the laws of chemistry at work.  If you are taking in on average 2900 calories a day and your body’s metabolic rates and the additional exertions you make on your body are burning up on average 2000 calories a day then, yes, you will become obese at some point.   The simple solution is to stop eating so much and/or ramp up your burning of calories.   When you burn more than you consume the weight will drop.  There is nothing magic about any of that.

Why are so many of us having to pay for the self indulgence of so many others?   I know you can make the argument that if you don’t even have a car why should your tax money be spent on the highways.  But I think this issue is very different because it is a problem that is self induced and then the problem has to be paid for by others.  I think that is a quite a different kettle of fish.  My behavoir shouldn’t cost you money and likewise I don’t want to pay for your bad mistakes and choices.  When folks choose to indulge in harmful behavoir that is their right and freedom but I shouldn’t have to bear the risk attendant to that behavoir.   As those politicians ramble about health care costs I hope they will consider both incentives and downsides for those who wish to lead risky life styles.  I have enough government on my back already to carry and I don’t need a bunch of overweight folks with high blood pressure expecting me to pay for their medication.  Lose weight.  That doesn’t require any medicine or diet pills or frankly any expense.  Just eat less.

I guess before they appoint a health czar they might want to check into how that is working for Rattner.  The car czar is gone.  He came in to do Goverjnment, Inc’s dirty work and did fire lots of people at GM, hand picked new board members, ignored all shareholder rights, and strong armed the creditors into submission.  Submission is the right word. Those weren’t bargaining sessions, they were platforms to deliver threats.  After all Mr. Rattner represented the creditor,  new shareholder, regulator, labor negotiator, banker and car designer extraordinaire.   It seems he forgot some of that “luggage” from his past in his hurry to feel the rush of pure power.  I predict he will lay really low.  Let’s see if the investigation goes anywhere into his company’s dealings.  It won’t unless it is so obvious that it can’t be swept under a really big rug.

Bulgaria is the latest European nation to join the list of those that are leaning to the “right” as the US runs downhill to the left.  Those progressive folks across the P0nd are trying to send us a message but Reid, Pelosi and that guy don’t  read their mail from over there.  www.olcranky.wordpress.com

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