Monday, July 20, 2009

Just Say NO to a Public Healthcare Plan

First let me be entirely clear. I agree that healthcare should be available to all and affordable. I agree that the current healthcare system is fragmented, not patient or doctor friendly, and is out of control (that is why I wrote my book to help every individual navigate our current nightmare we call the US healthcare system).

The problem is that fixing the healthcare system isn't simple and certainly shouldn't be done by the government. Plenty of myths exist including the following.

1. Medicare works. Why not expand Medicare for all?
One of the biggest myths is that Medicare is a success.


Medicare will become insolvent if nothing is done over the next 10 years. Patients who are on traditional governmental Medicare and not some complementary version of it via an insurance company (supplemental plan or Medicare HMO aka Medicare Advantage) are finding fewer and fewer doctors willing to take straight Medicare. Why? It doesn't reimburse enough to pay the bills. The program Medicaid, which serves the poor, is even worse. If patients do find a doctor who is taking straight Medicare or Medicaid there is often an intolerably long wait to be seen.

2. Government can squeeze costs out of the healthcare system by offering competition.

Sure, by playing hardball and setting prices which may be artificially low. The Obama administration should be commended for tackling the difficult problem of providing universal coverage (not to be confused with nationalization of healthcare) as well as making it affordable. President Obama can get there by setting reimbursement rates to fit his agenda. Whether the rates reflect reality is another question. This is why insurance companies are so concerned about a public plan.

Also, realize this. If there was an insurance company that was able to offer great coverage at a lower price, then why wouldn't it do so already? Typically low cost goods and services which are comparable to more expensive options do well in the marketplace. Why not with health insurance? Simple. Because there is no individual mandate, that is everyone needs to buy health insurance, health insurance is pricey as the young and healthy don't subsidize those who truly need it. As a result, the only purchasers are those who will use it causing costs to skyrocket.

If the government is so good at squeezing costs out, then why don't we have the government produce cheaper cars and set up an airline?

If the government wishes to expand healthcare, it must do the following at a minimum.

  • Require everyone to purchase health insurance. With everyone participating, the costs of those who truly need it is spread across those who are healthy. Without an individual mandate, health care will be too expensive.
  • Change the reimbursement structure on how doctors are paid. Massachusetts learned with their universal coverage that having insurance doesn't mean access and certainly doesn't mean better costs because doctors are paid to do more. A state panel recommended that doctors get paid a salary.
  • Think seriously about capping damages for medical complications, malpractice, and misdiagnoses. Patients and families who are harmed should be adequately compensated, but not outrageous fees collected by lawyers, rather via an arbitration system. Too often, extraordinary damages may make the individual and family feel better, but often drive doctors out of the state. Many states have critical shortages of specialists for these reasons.
  • Standardize benefits packages across the states. A health insurance plan for a healthy individual shouldn't vary significantly from San Francisco to New York any more than a car purchased on the different coasts are similar, but not identical. The large difference in health insurance costs for the same coverage is due to varying state requirements and simply adds more administrative costs and hassles with little benefit.
If the federal government wishes to get into healthcare, then it must do so by setting up a delivery system like the VA, which has consistently outperformed doctors and hospitals in the community.

Simply offering a public insurance plan is not the answer and will drive insurance companies out of business.

When the government needed to step up and help citizens of Hurricane Katrina, it failed miserably and although it could be argued it was due to incompetence of certain individuals, the reality is that FEMA doesn't know how to move goods and people quickly and efficiently.

Who succeed to do their jobs exceedingly well and become the unlikely heroes? The private sector - specifically Fedex and Wal-mart, two organizations whose livelihood depend on getting things moved quickly and reliably.

President Obama should be commended. His goal should focus on changing the parameters which the healthcare system operates. It should not however have a new public plan as that would be a disaster.

As a side note, the Republicans are in complete disarray arguing that the healthcare system doesn't need fixing. It is broken. Simply saying no, doesn't help anyone deal with a crisis that left unchecked will bankrupt our country.

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