Thursday, September 10, 2009

Slowing the Growth of Costs

Most of the President’s speech was spent talking about the costs of health care, although he has returned to using the terms “health care” and “health insurance” interchangeably and as if they meant the same thing. I’m okay with what was left unsaid; an individual mandate with no explanation of the penalty for failure to comply, for instance. Fine, details still need to be worked out. There were some fairly serious contradictions in what he had to say, though, and those concern me.

We spend one and a half times more per person on health care than any other country, but we aren't any healthier for it.

Indeed we do. In fact, if you limit that comparison to nations of similar size, governance and affluence, we spend almost twice as much per person as the next highest.

United States: $7290
Canada: $3895
France: $3601
Germany: $3588
United Kingdom: $2992

So when the President states the goals of his “comprehensive health care reform” two of the three items concern insurance rather than health care, cost control is the third on the list, and look at how he phrases it,

It will provide more security and stability to those who have health insurance. It will provide insurance for those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government.

A goal of "slowing the growth of cost" is a pretty pitiful goal for a nation that spends nearly twice as much as our nearest comparison. No thought to maybe reducing the cost, bringing that cost down to a reasonable approximation of what everyone else spends? Why must we accept this kind of price gouging by our health care providers?

Stability in insurance and cost reduction to consumers is going to be provided by strict regulation of insurance companies.

Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition. As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it the most. Etc.

But the cost savings at the level of medical providers and drug companies seems to involve some sort of magic wand,

Now, because Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody. We have long known that some places -- like the Intermountain Healthcare in Utah or the Geisinger Health System in rural Pennsylvania -- offer high-quality care at costs below average. So the commission can help encourage the adoption of these common-sense best practices by doctors and medical professionals throughout the system -- everything from reducing hospital infection rates to encouraging better coordination between teams of doctors.

Notice that there is no, “It will be illegal to charge $325 to an insurer with whom you have a contract, and $937 to everybody else.” Or, “It will be illegal to charge $350 to warm a blanket.” The reform is merely going to “encourage” not doing that kind of thing. Good luck with that.

It’s difficult to comprehend how this,

And that is why not a dollar of the Medicare trust fund will be used to pay for this plan.

Is not to at least to some degree contradicted by this,

Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.

This promise made early in the speech,

First, if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: Nothing in our plan requires you to change what you have.

Is followed by this,

Now, much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. And this reform will charge insurance companies a fee for their most expensive policies,

Technically not a contradiction, I guess, because it does not require you to make any change. But if you have one of those “most expensive policies” you are going to see a change in what you have.

He also doesn’t explain how the revenues from drug companies is going to be achieved. The plan will tax charge a fee to insurance companies, but how did drug companies get into the picture, how are they benefiting from tens of millions of new customers, and how is the government obtaining the revenue? Leaving details to be worked out is one thing, but…

Tomorrow I’ll hit on the one really huge contradiction.

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