Thursday, August 27, 2009

Defining Health Care's Problems

Let's step back from the health care debate for a moment, and define exactly what the problems are (in no particular order):

1. PATIENT COSTS: Even for the middle class, the costs are exorbitant. Between health insurance and deductibles, health care is becoming a burden on Americans of every class. CAUSES: The main cause is the tax deduction for health insurance, which has increased employees covered by health insurance by giving employers a reason to provide it. In turn, it has created a vast third party payer system whereby those covered under health insurance see little expense in utilizing our health care system. However, employees also see their own health insurance costs rising as employers cannot afford to cover their employees health insurance 100%.

2. DOCTOR COSTS: Doctors and hospitals have found their own costs going up. While they can pass along some of these costs to their patients, it is still a burden on our health care system any way you look at it. CAUSES: Medical malpractice has become a gold mine for the legal system (just ask John Edwards who got wealthy from it). Juries are more than delighted to decide for plaintiffs, since the only ones who they see being hurt are the doctors and the insurance companies. Unfortunately, this view is short-sighted, since insurance companies just pass along their costs to ALL doctors, who further pass it along to patients. There is some disagreement about how much of a burden this is on the health care system, but there is no doubt that these costs get passed along.

In addition, because of the hurdles both insurance companies and government programs put in the way of doctors and hospitals receiving payments, staff must be maintained just to deal with third party payers. These staffing costs also get passed along.

3. TREATMENT/DRUG COSTS: Recent years have seen vast improvements in both treatments and drugs, but also a corollary increase in the prices for these. CAUSES: Medical research doesn't grow on trees. For every advance, there are billions of dollars worth of failures. The only way to recoup these losses is to add their cost onto the successes. In addition, FDA requirements add onto the research costs, without necessarily guaranteeing safety. No matter how much research you do, some problems won't become apparent until a drug or treatment is in widespread use. Regardless, the health care consumer is the one who must bear the burden for these advances.

4. THE UNINSURED: This is a gray area. The number frequently quoted is 47 million uninsured, which is true. The problem is who is included in this figure: low income people, illegal immigrants, people between jobs, wealthy people who can afford their own medical costs, young people who could buy health insurance but don't think they need it, people with pre-existing conditions who cannot get health insurance, and poor people who don't realize they are eligible for Medicaid. The only ones here which should be a concern are the low income people, people between jobs, and people with pre-existing conditions who cannot get insurance. The rest either don't want it, shouldn't have it, or are just plain too stupid to live. CAUSES: The only reason this is a problem at all is because of the overall costs of health care. Would anyone worry about the uninsured if health care was available at Wal-mart prices? In addition, the main reason we have uninsured is because the first three items above are causing the health insurance rates to increase.

5. THIRD PARTY PAYER COSTS: Any costs incurred by third party payers, whether they are private insurance or government bureaucrats, will be passed along to the insureds in premium increases. In the case of government bureaucracies, some of these costs can be passed along to taxpayers. CAUSES: In the case of private insurance, their costs are varied, including everything from mail room staff to stock market losses. In the case of government, their costs are relatively fixed, but you still end up paying for government bureaucracies which have no incentive to perform efficiently. Regardless of whether you are covered by private insurance or Medicare, you are paying for an army of people who perform absolutely no function in health care, other than to pay your bill.

Feel free to add any health care problem which I have not covered above.

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