Healthcare Principles Made Easy – How Did We Get in this Mess?

The left constantly throws out challenges to the detractors of Obamacare such as: “Don’t you think those with pre-existing conditions should be covered by healthcare?”  “Don’t you think Children should be covered by healthcare?”

Let me say up front that if you believe that Healthcare is a Constitutional Right, then go read the funny papers because you won’t “get” this article!

Background on the Growth of Health Insurance:

In the 50’s and most of the 60’s most of our families did not have health insurance.  Gradually insurance companies started offering more affordable family plans families became more affluent and could afford to insure their risk against accidents and disease.  I used to pay my hometown doctor $0.25 per shot for my weekly Asthma shot and that was expensive back then.  As people viewed medical coverage as a way to protect their property, i.e. money, they become more attuned to the idea to buy health insurance.  Congress even recognized this and at one time allowed tax payers to deduct most of the costs of their health insurance premiums. (Pre Medicare)  Congress kept “widdling” away at the deduction until the eliminated it altogether.  So much for GOVERNMENT CARING WHETHER YOU HAVE HEALTH INSURANCE.  If they did, you could still deduct 100% of your health insurance. 

As disposable income rose in the 60’s, more and more families purchased health insurance to protect their families against catastrophic illnesses or accidents.  These policies were relatively cheap since they all had a cap on the total payout; had exclusions for pre-existing conditions; and the cost of medicine in general was pretty inexpensiveIn short, the insurer and the insured pretty much knew what their exposure was in terms of potential payout liability.  This lasted until 1965 and when the Social Security Act of 1965 was signed into law in 1965 and Medicare was created, the first foray of government into a single payer healthcare system for the US.

Medicare initially covered seniors over 65 and paid for about 80% of the healthcare costs.  The other 20% had to be paid by the insured or by a second insurance plan that the insured paid for themselves.  Until recently, Medicare was paid for out of Payroll Taxes at a rate of 1.45% paid by the employer and employee for a total of 2.9%.  Obamacare will raise this amount by 31% in 2013 to 3.8% for the vast majority of taxpayers.  The costs for Medicare doubled every 4 years between 1966 and 1980.  Today, Medicare taxes are short over $50B per year in paying for all of the coverage used by the recipients.   

Medicare and private health insurance are inextricably linked in costs and regulation.  When the government entered into healthcare in 1965, they undertook cost audits of hospitals, clinics, doctors, pharmacies, etc.  They also developed regulations that told these various service providers what costs they can use to calculate their cost of delivering these services.  The net result of the audits and the regulations was a 30% increase in hospital, clinic and doctor fees and these regulations continue to skew the true costs of healthcare delivery just because the government meddles in the details.  So the birth of Medicare started the inflationary spiral of healthcare costs for those with private insurance while these people were paying insurance companies for their current private insurance AND paying Medicare/FICA taxes for their “future” Medicare coverage. 

During the growth of Medicare and its inflationary price pressure that it exerted on the private sector health care delivery, various administrations allowed and even encouraged legislation that encouraged law suits against hospitals, clinics, doctors and anyone else involved in the healthcare industry.  Today there are virtually no caps on law suits filed based on medical malpractice, prescription drug related illness or death, or other healthcare related mishaps.  This is coupled with an open ended class action law suit environment that can cost a drug company billions to settle claims against one prescription drug.  Ever wonder why when the US Government’s Food and Drug Administration approves a drug to be sold that the government has no liability whatsoever later if the drug is found to have side effects?  What good is the approval if it does not protect anyone and drives the cost to bring a drug to market by 7 fold.

We find ourselves in 2011 being told that the new Obamacare, which is “Medicare for All”, is the answer to saving a healthcare system that was destroyed to a large degree by Medicare itself in 45 short years!

Common Left Talking Points:

  1. Shouldn’t those with pre-existing conditions be given the opportunity to have healthcare?
    1. Maybe, if the citizens of the US feel that this is a program that they want to fund out of their tax dollars.
    2. What Obamacare does:
      1. Initially forces insurance Companies to insure anyone with pre-existing conditions regardless of the disease or the prognosis. 
        1. Insurance Companies will have to raise premiums for everyone in order to pay for the medical expenses for those with pre-existing conditions.
        2. The Government will, and already has, start refusing to “allow” insurance companies to raise premiums.
        3. Insurance Companies will opt out of providing insurance as they are being forced into a failed business model.
      2. Obamacare then kicks into phase 2 and creates a single payer system since there are no private insurers left in the market.
    3. If the American People believe that it is this society’s obligation to cover people with pre-existing conditions, who cannot get or afford health insurance premiums, then we should create a program that is open, transparent and easy to audit that allows the people with pre-existing conditions to apply for premium relief so they can pay a private insurer to cover their medical expenses.  THE REST OF US IN THE INSURANCE POOLS SHOULD NOT HAVE TO SUBSIDISE THIS COVERAGE IN A SYSTEM WHERE THE TRUE COSTS ARE BURIED AND ARE NOT SUBJECT TO ANY DEGREE OF ACCOUNTABILITY.
  2. Shouldn’t Children all receive healthcare?
    1. No one would deny children healthcare when it is needed.
    2. The SCHIP program already covers children in families of modest income who are not eligible for Medicaid.
    3. Medicaid covers all other children from families who cannot afford private insurance.
    4. So, which children are we missing?  IF a child is not covered and getting healthcare, there is a parental issue to be dealt with.
    5. These programs need to be open and transparent as to their cost and who is receiving the benefits.  Today, families with a combined income of $80,600 can enroll their children in the SCHIP program.  $80,600 is 4 times the poverty level in the US.  This program is being funded out of Social Security without regard as to the original intent of Social Security.
  3. We should cover those who do not WANT health insurance today because they just go to the Emergency Room now and take away from real emergencies.
    1. Well Congress, you wrote the laws that force hospitals, clinics, and doctors to treat anyone who comes in regardless of their ability to pay, including emergency rooms.
    2. Congress, you wrote the laws forcing these same providers to provide services to non-citizens.
    3. If a hospital could refuse care, those individuals would have to apply for Medicaid or SCHIP if it for their children.  Or, they could work out a payment plan with the providers like we have all had to do from time to time.
    4. Burying these individuals and these costs inside of our current environment is wrong by forcing the providers to absorb the costs.  What the provider have to do then is overcharge patients with insurance or who are self insured in order to try to recoup some of their costs. 
    5. Our insurance premiums go up due to these “hidden” costs and then the government browbeats the insurance companies and the healthcare providers by calling them self-centered and greedy. 

How about we try some simple steps to get the real problem out of healthcare, THE US GOVERNMENT!

  1. All law suits would be limited to $300,000 payout to the beneficiaries.
  2. No Class Action law suits would be allowed.
  3. If the FDA approves a drug or a medical appliance, any claims against the manufacturer of the drug would be limited to $25,000 per claim.
  4. Hospitals and clinics would be allowed to use GAAP (generally accepted accounting principles) to determine their cost of operation for each service.  Our costs are subject to these accounting principles and are subject to audit and disclosure to the public and policyholders.
  5. Insurance Companies can sell policies to any citizen living anywhere in the US.
  6. Persons with pre-existing conditions who are turned down or get high premium rating quotes can apply for and receive payment assistance.
  7. Medicare services would be limited to those 65 or over who have paid into Social Security.  No other use of Medicare is allowed.
  8. Medicaid changed to be 100% funded by the US Government and not shoved off onto the States. 
  9. The Medicaid system would be changed so that the payments for premiums for those who cannot afford their premiums goes to an insurance company who successfully bids on that business.  The government is no longer in the business of running healthcare but merely acts as an agent to assist those who need assistance to pay their premiums.
  10. 100% of all healthcare premiums are deductible by the payer of the premiums.
  11. Insurance Companies, Pharmaceutical Companies, Medical associations and any other group or person providing medical services would have to disclose any campaign contributions or payments to lobbyists to the public and their policy holders.

Let’s start over with smaller steps that we can see, quantify, qualify and control.  Obamacare is the antithesis to an answer to our healthcare issues.  We have the best providers in the entire world, we just have to get government out of healthcare. 

GOVERNMENT CREATES PROBLEMS SO GOVERNMENT CAN COME IN AND FIX THOSE PROBLEMS AND SAVE US!

WE HAVE BEEN SAVED ENOUGH, AND FOR THE LAST TIME…

RD Pierini

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