OBESITY: Treating conditions it causes adds $117 billion to the nation's annual tab—before the costs of workplace absenteeism are factored in.
OLD AGE: An estimated one-third to one-half of all health care costs are incurred during the patient's last six months of life.
LACK OF RESPONSIBILITY: A work force accustomed to first-dollar coverage too often means we don't fully realize the true costs of our health-care choices.
INSURANCE BARRIERS: Because insurers are not allowed to operate across state lines, inefficiencies are built into the system, forcing up premiums.
EMERGENCY-ROOM OVERUSE: Too many people use the nation's ERs as their access point for health care, and too many of those are the uninsured or illegal aliens.
Our health care/health insurance debate is generated by competing philosophies, which can be described as the “Equality Philosophy,” the “Rising Tide Philosophy” and the “Libertarian Philosophy.”
The “Equality Philosophy” espouses the same health care for everybody. Although our constitution does not grant a right to health care, we have the ability to amend our constitution and/or laws and regulations. This principle is appealing from a fairness perspective. Its disadvantages are cost and the possibility of a lower level of care for many.
The “Rising Tide Philosophy” espouses a safety net, allowing people to purchase more health care. It is appealing in terms of individual rights and stimulating health advancements. Its disadvantage is that people who can afford to purchase additional health care may not support what others consider to be an adequate threshold.
The “Libertarian Philosophy” espouses no threshold, arguing that the constitution does not provide health care guarantees, so none should be instituted. It maximizes freedom but results in the greatest disparities in health care.
In our complex world, each side of an issue can draw upon many pieces of “evidence” to justify their position. Few people, however, really question the evidence that supports their preconceived notions. Supporters and opponents of various health care reform ideas have trumpeted such partial truths or twisted arguments.
For example, the “death squad” arguments have addressed a very real issue in a very distorted fashion. On the other hand, promises of transparency in producing a plan have been violated with false accounting that ignores true costs. We’ll explore both of those practices below, but regardless of philosophy, we must honor key principles and issues to have a sound health care system.
Among them:
1. Incentives should exist to live a healthy lifestyle (not smoking, no drug abuse, not drinking to excess, maintaining healthy weight, exercising, complying with medical instructions, eating a nutritionally-balanced diet, etc.). Such incentives may include lower insurance premiums, lower deductibles, or higher maximum benefits for those who practice wellness. Actuarially, this simply levels the playing field. For example, obesity costs us $117 billion a year in health care costs, not counting the additional costs of workplace absenteeism, etc. Our sedentary lifestyle appears to be a major contributor to our increased health care costs compared to other countries.
2. Incentives should exist for preventive care (such as annual visits to the dentist and eye doctor) and use of non-pharmaceutical solutions.
3. To the degree possible, people must have meaningful personal financial responsibility for their health care. Lots of money is wasted when people have no financial incentive to review or manage their costs.
4. People who truly cannot afford health care should get a threshold level by direct health care services or by insurance. The fundamental issue is not whether people are insured, but rather whether they receive health care. However, insurance may help assure that they receive quality care.
5. An aging population and medical advances will continue to fuel a huge increase in health care costs no matter what we do. We must acknowledge these costs regardless of how we choose to pay for them.
6. Funding on a pay-as-you-go basis means that payments will increase dramatically over time. If each generation covers its own costs on that basis, its payments will explode as it ages and will be considered unaffordable. The dramatic impact of pay as you go makes it politically convenient to burden future generations with the cost of our care, instead of paying for it ourselves—an extreme form of taxation without representation. The appropriate alternative is pre-funding, which requires that reserves be established to recognize future liabilities.
7. To make intelligent decisions, people must know the cost of their health care, their alternatives and the costs of alternatives. Consumer-driven health care works; the question is how best to apply it.
8. It is important to continue development of electronic health information and communication systems to reduce costs, improve care (via faster and more accurate information), provide necessary information to consumers and analyze the effectiveness of various care alternatives.
9. Accurate, comprehensive, and transparent accounting and cost projections are critical. Income and outgo should not be mismatched; analysis should not be limited to an arbitrary period that distorts the true long-term cost. Off-ledger liabilities must be included in financial reporting. If recommended programs will cause a loss of tax revenues, that reduction in tax revenues must be recognized as a cost.
10. It probably would be a good idea to levy all income-related taxes in the income tax process, rather than spreading them out among Social Security, Medicare, health care, etc. When they are spread out, advocates of a more graduated tax focus on income tax rates, losing sight of the “income taxes” levied elsewhere.
11. A system of checks and balances is necessary to achieve the reporting/projecting integrity mentioned above. When private industry runs health care, the government provides checks and balances by requiring that adequate reserves be set aside to cover future liabilities, auditing the insurers’ financial filings, and enforcing corrective action if necessary. Our Medicare, Social Security and Medicaid program have $137 trillion of off-ledger unfunded liabilities, which the government and media generally ignore. The required annual trust fund reports identify these shortages, but there are no means of forcing corrective action.
12. Aggregating entities can negotiate lower health care costs. The government can do so (e.g., Medicare) and other sponsors can do so (e.g., insurers or employers). If inadequate government/insurer reimbursements result in higher costs for services that are paid-for privately, the cost should be quantified and acknowledged. We might want to take steps to avoid or offset the cost transfers
13. Plan administrators should be allowed to limit the number of providers, if participating providers will offer lower prices in return for the increase in business. Plan administrators should also be allowed to exclude providers if their quality of service is inadequate. On the other hand, it is appropriate to require plan administrators to provide adequate accessibility across a plan’s footprint.
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