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Guest Columnist Author: Jason Beans, CEO of Rising Medical Solutions Last Updated: Sep 7, 2017 - 10:11:01 PM



Get Back to the American Way to Solve Healthcare

By Jason Beans, CEO of Rising Medical Solutions
Oct 31, 2009 - 9:29:18 AM



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(HealthNewsDigest.com) - With all the talk about national healthcare reform, our nation seems to have fallen into the traditional party line debate, leaving only two opinions: you are either pro-ObamaCare or anti-reform.

This way of thinking is extremely dangerous for all of us.

The healthcare industry represents one out of every six dollars spent in the US. Changing it and not getting it right can have catastrophic results on our healthcare and our economy. No change is also not a viable option since medical inflation has been skyrocketing at an unsustainable rate.

For our elected officials, this has become a political battle. All that matters is garnering power to support their agenda. For the rest of us, this is our lives, our health and our financial future. We need to make sure this is done right. So, what can we do? We must first determine what we are trying to solve.

The healthcare “crisis” basically boils down to two issues: high costs and lack of coverage. We’ve all heard the story of the sick patient who has their insurance cancelled or rates increased to unaffordable levels. Those stories are emotional and powerful. However, when you look at the numbers, a different story is told. The vast majority of the uninsured are the young and healthy who don’t think they need health insurance. Many have more than adequate incomes but have made a personal choice not to be insured. When something goes wrong, society has to unfairly pick up the tab for their choices. We do provide healthcare for the catastrophically injured and the impoverished through Medicare disability and Medicaid. It’s the lower-middle class who don’t meet the government’s arbitrarily determined levels of desperation that do not receive societal support and who are in the worst situation.

It is a painful fact that medical and insurance costs have been outpacing basic inflation for years. Medical costs in most countries are about 10% of their GDP. In the US, we’re about 17% and growing. High healthcare costs impact people adversely on many levels. First, high costs reduce the number of people who can afford coverage. Second, high costs make hiring employees expensive thereby reducing employment and increasing the tax burden to support the unemployed. Third, high costs drive jobs overseas where there is less regulation and much lower employment costs. Fourth, high costs make starting and sustaining a business difficult. Last, high costs force many individuals into dire economic straights when an unexpected health issue arises.

Under the proposed plans can the two main issues of excessive costs and coverage deficiencies be adequately addressed? Will America’s healthcare crisis be resolved? Do the plans effectively control costs and provide top-quality healthcare to Americans? The answer to every question is no.

Let’s look at the number one goal: controlling the cost of healthcare. Recall, we are trying to slow-down healthcare’s rate of inflation (so we don’t exceed the current 17% of GDP) and remove unnecessary costs from the system so we migrate back towards 10% of GDP. Every study, and all economic common sense, shows that the proposals will increase the cost of healthcare. We can’t increase benefits, require carriers to insure people who they’ll lose money on, increase taxes on healthcare companies and still expect a decrease in costs.

Instead we have proposals in place that may or may not expand coverage and that will definitely increase the cost of healthcare over and above our current pace. How did we get off track?

To compound issues, our government cannot afford costly reform right now. If you do the math, and consider governmental accounting practices and the plan’s timing, we would essentially be adding two trillion dollars to our nation’s deficit the first 10 years the program is in effect. We are in the midst of one of the worst economic downturns in our history. Unemployment is at all time highs since the Great Depression. We have two ongoing wars – a war on terror and a war on drugs. An educational crisis. Environmental issues. Medicare and Medicaid are going bankrupt. We have 60 trillion dollars in unfunded future liabilities, and forty cents of every dollar our government spends borrowed, basically from China. If we are being realistic, the US is broke and essentially living on credit cards. How often has that worked out for people you know?

The good news is there are several actions we can take to control the cost of healthcare that don’t involve driving up the deficit.

We can address the costs of physician malpractice suits and insurance. Special interest groups throw around that only 1% of healthcare costs are malpractice awards. This is one of the most comically misleading numbers I have ever seen. This number does not include out-of-court settlement amounts, the costs to defend the cases, or the unnecessary patient tests that doctors prescribe in order to protect themselves from legal actions. The issues associated with malpractice insurance are likely closer to 10% of healthcare system’s costs, not 1%. Additionally, if we want to bring more people into our healthcare system, we also need more doctors to treat them. Cutting their pay (as much as 50% of a doctor’s income goes towards malpractice insurance), intensifying regulation, and not reducing their legal costs is no way to increase the number of people who want to be in healthcare. Eliminating the waste and abuse from the legal system would vastly increase the resources available to treat patients, as well as remove approximately 1.7% of the GDP that’s associated with that portion of healthcare costs.

We can do many things to increase healthcare coverage as well. People who do not purchase catastrophic insurance could be taxed and automatically enrolled in a form of Medicaid. It is inappropriate for them to shift the burden to society if they have the means to purchase insurance. This would lower the deficit and provide protection for the rest of us and them. We can also change the laws to allow small businesses to band together to buy insurance. Large companies pay up to 35% less than individuals or small companies because the numbers are more statistically valid (less risk) and there is more volume. Banding small businesses together would give insurance carriers more statistical stability so they can quote lower rates with more accuracy. We can eliminate underwriting for genetic conditions and ailments out of people’s control. On the flip side, we should make it easier to charge higher rates for health-related choices and issues within a patient’s control (i.e. smoking, obesity and drug-use.) Why should other people pay higher rates to cover someone else’s poor choices? We can allow carriers to sell health insurance for many years, like life insurance. This would lock a patient into a “policy” for a long period, eliminate price increases during that time and eliminate the pre-existing condition debate in most cases. We can increase competition by allowing carriers to write business across state lines. All of these options cost the government nothing and would increase healthcare coverage and reduce costs in many instances.

Technology is another issue to address. Currently, most of the healthcare data exchange formats are government “standards” that were designed for mainframe systems in the 1970’s. Remember, with Medicare and Medicaid, the government is already the largest healthcare insurer in our country. The rest of the industry has to follow their lead and their standards, which is a big part of the issues we face. In typical government fashion, the standards are not standard. They often require custom programming for integrations. They do not take advantage of innovations in technology seen over the last 20 years that would allow systems to work seamlessly, like the financial systems have for ATMs. Working to update the standards to contemporary methodologies would save the industry (and government programs) billions in administrative costs and would involve minimal cost to the government.

Finally, if we really want to control healthcare costs, we need to get the consumer more involved. Personal responsibility must be added back into the system. What we’ve had for years hasn’t been health insurance, it has been pre-paid healthcare. Insurance helps protect against the unforeseen. Pre-paid healthcare can become an entitlement. With the advent of high deductible healthcare accounts, there is a huge opportunity to return the system to a consumer-based model. Using today’s technology, consumers could shop for healthcare providers and research rates online prior to ordering a service. They could shop around for best prices or outcomes. When this happened with laser eye surgery (which is not covered by most insurances), rates dropped dramatically and quality improved. In this instance, healthcare behaved like every other competitive industry. It got better and cheaper. If the government makes the regulations for health savings accounts more flexible and increases the amount of tax deductible contributions, then a consumer-driven process could solve the healthcare crisis all on its own.

As a society, we need to return to our roots. We are the land of freedom and opportunity, not the land of control and entitlement. Most of our ancestors came to America to flee government intervention in their lives and beliefs. Personal responsibility, innovation and competition are the American way. These are the reasons our country became great. These are the same attributes that will solve the healthcare crisis and make our country great once again.

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