Several years ago, at a meeting of America’s Health InsurancePlans, I listened to a futurist speak of America’s Health costs and what they
might be in the future. His approach was
different from what I had been exposed to in the Insurance industry, where we
are absorbed in Loss Ratios (what portion of premium actually goes into care)
and Profit (what shareholders expect from their investment in the companies
that provide health product and services).
His approach was from the perspective of what tolerance level the
American public might have for supporting health care and what they might expect from
that investment.

At the time, the U.S. was investing about 17% of the
Gross Domestic Product in healthcare.
The devils in the details surrounding that are many, and he mentioned
several: What about the billions of
dollars in over-the-counter medications and supplements included in that
number? How to separate from the number what is making people healthier and
improving quality of life from what is sustaining life? How to explain the U.S.
position in infant mortality (quite high, relatively) and longevity (quite low,
among industrialized nations)? In short,
how to analyze the bang for our very big buck?
He mentioned that, at that time, Japan was spending
about 23% of their GDP on healthcare, but that much of it was going for diagnostic
technology, much of that at the consumer level.
For instance, they had an attachment on the commode that could check for
colon cancer on a regular basis, thus increasing the likelihood of early
diagnosis and successful treatment.
Similarly, saliva samples could provide early detection of many diseases
at an affordable, self-provided level.
He suggested that the American public would be tolerant of a similar
investment with similar expectations.
That must have been ten years ago, and I am struck
by the fact that none of that seems to have been considered in the Affordable
Care Act. More important, little regard
seems to have been given to consumers supporting the ACA for services they
might actually find of greater value than the traditional services delivered by
and paid to a health community held to little accountability for Outcomes.
President Obama is currently stressing how great the
ACA has been in providing care for uninsured children under the age of 26, and
for preventing denial of care for prior conditions. Even before my retirement from WellPoint, both
of these situations were embraced by the industry, and, partially in response
to regulatory action, were being addressed at no additional premium cost, and
there has been little effect on premium since the law required these changes,
at least as a consequence of those two factors.
What has me terribly concerned are the planned
conditions of future funding for providing care to many millions (300,000
estimated in Riverside, California) of new additions to the insurance roles.
For example, to support the program, there will be a new 3.8% tax
on Capital gains. Last year my Capital
gains (a significant portion of my planned retirement) were more than $10,000, new tax $380. Capital gains on property sales would also be
similarly affected, in a depressed market. Medical appliances,
including anything from artificial hips, dental implants, and heart valves, to
contact lenses, would be subject to a similar tax on SALES. A friend in the health appliance industry
says that the margin of profit is probably close to that number for established
companies, and would exceed start-up costs so much as to guarantee no new
entries in the field. Those who might
try would likely find themselves bankrupt and still owing taxes.

This post is too time-limited to discuss the true
cost problem in healthcare, but in shorthand, it is caused by a payment system
based on number of services provided instead of value of those services. There is also a component that the U.S. has
failed to make patients responsible for their own treatment, failed to prevent recidivisms
(backsliding into unhealthy behavior), and failed to develop an efficient
system for healthcare delivery. If only
trained Internists or family Practitioners can be trusted to diagnose disease
and refer to trained specialists, we will never be able to provide necessary
care, no matter how we decide to finance it.
Please feel free to comment if I hit a nerve
regarding how you feel about the cost of healthcare. I read and respond to every one.
My next post will be a little lighter. I discovered a new word: murmurations and I
think you will find facts surrounding it to be interesting.
Dee, you missed so many more taxes that people will either be paying directly out of their pocket, or indirectly through pass-through costs! These are Obamacare's fine print at its best. Below are just a few links that outline them better than I can. Also, make sure you google "Cadillac Plan excise tax" so that you can see how that if you personally have too fancy of health insurance (hence the Cadillac reference) you will literally be subject to a 40% excise tax. Taxed more by the Affordable Care Act for having "too good" of affordable care! Irony at its worse.
ReplyDeletehttp://www.foxnews.com/opinion/2012/07/05/five-major-obamacare-taxes-that-will-hit-your-wallet-in-2013/
http://www.washingtonpost.com/blogs/fact-checker/post/president-obamas-unspoken-payroll-tax-increases/2012/07/25/gJQArLRq9W_blog.html
http://www.usnews.com/opinion/blogs/peter-roff/2012/07/10/how-obamacare-taxes-hurt-seniors