President Obama's commitment to reforming the nation's healthcare system has sparked debate over how it should be changed. Whether you advocate free-market principles and you want to continue to receive a new and improved form of private insurance, or you are a fan of government-run healthcare and see this as an opportunity to move in that direction, most people are in agreement that the system needs to change.
Some may ask, "Why can't we just keep it the way it is?" To that I always like to ask people, "Do you like your health insurance the way it is right now?" Most people can think of something they don't like. If people cannot think of a problem with the plan's benefits, they usually complain about the high premiums.
Perhaps you are one of the lucky people whose plan has worked well and doesn't cost much as a percentage of your income. Most people I have talked to have something to complain about. But when you listen to the debates on radio programs or TV news or read about them in the newspapers, it is difficult to get at the real reason healthcare needs reform and why it is so difficult to do that. The main problem is C-O-S-T. Find out what it means to me:
It's obvious that liberals want a single-payer, government-run, Medicare for all and conservatives want a free market plan that will inevitably leave many people still uninsured. I could debate the pros and cons of each side, but I am instead going to focus on why cost is the biggest hindrance for either.
The cost of healthcare is increasing faster than inflation, and faster than most other services in our country. This means that government plans like Medicare (for old people and disabled) and Medicaid (welfare for poor people) and private plans through insurance companies are all having to spend more for care. So government is spending more tax dollars on care and private companies are spending more for those who have non-government plans. Everyone is losing out except, perhaps, hospitals and doctors offices. But even they are sometimes operating at a loss or are non-profit organizations.
How do we stop the growth in the cost of care, which burdens beneficiaries ultimately through higher taxes or through the various ways private plans past costs on - higher premiums, deductibles, copays?
There are two ways.
1. Government plan takes over completely to cover everyone at a lower premium and then dictates the prices for all procedures. Medicare and Medicaid already do this. If they didn't the providers would milk those public funds to death.
2. Eliminate all government plans except for the very poor (if we want to cover them at all) and eliminate private insurance as we know it (which covers everything at a copay) and just make it catastrophic like with a $10,000 deductible per family. This would make people more choosy about spending their own money on care, would negotiate prices with providers, and get at the real market price for all services.
Right now, providers are charging way too much for services. If we leave aside the natural price increase for quality care, technology, and efficient administration, much of the costs have been driven up by insurance! How? Health insurance is the only kind of insurance plan you buy where you want to use it a lot. If we have even small services paid with just a copay, it artificially distorts the real true cost of services. Providers bill insurers for much more than a service is worth. This is why it's so hard to not have insurance and be able to afford services with cash.
Note that both solutions I proposed above are not on the table for President Obama and Kathleen Sebelius. Neither solution is politically doable. Therefore what we are going to end up with is an augmented version of the existing system. We will probably get an optional government plan available to all and mandates for private insurers to be easier with their medical underwriting. But note, these don't attack the problem of cost. The efforts to create electronic records, focus on prevention, and base care on keeping people well are good steps, but they aren't enough to stop the growth of healthcare costs.
What to take away from all this: Don't get sick.
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