The HSA Healthcare Blog

In a recent editorial, the Wall Street Journal hits the highlights of why allowing Uncle Sam to become Dr. Sam is an inherently flawed concept.

As the Journal recognizes, a new Gov’t plan would become yet another middle-class entitlement (as if we don’t have enough already).

So what’s wrong with entitlements?

Nothing.

It’s just that somebody has to pay for them, and inevitably, tomorrow’s cost is always higher than projected and always underfunded.

In this case,

As an entitlement, Congress’s creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do. As people gravitate to “free” or heavily subsidized care, the inevitably explosive costs will be covered in part with increased outlays to keep premiums artificially low or even offer extra benefits. Lacking such taxpayer cash, private insurance rates will escalate.

Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopoly purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis — an offer hospitals and physicians won’t be able to refuse. Medicare’s current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.

Those in favor of this wacked-out idea tend to be the same ones who complain about the high cost of health insurance today. But what they fail to understand is that the Government is a primary contributor to the escalating cost of PRIVATE health insurance:

A 2006 study in the journal Health Affairs concludes that around 17 cents of every dollar in relative reductions in Medicare payments to private hospitals are shifted onto private patients — and that such cost-shifting accounts for fully 12.3% of the total increase in private payer prices between 1997 and 2001.

This share would be far higher were government payment rates not limited to the elderly and the poor but imposed over the entire system. This will only hasten the flight to government. Meanwhile, employers small and large will have every incentive to dump their plans and transfer their workers to the public rolls. The result will inevitably be a cascade of failures or withdrawals from the market by commercial insurers, with the public option as the only option for the diaspora.

For my two cents worth, it all comes down to money - something more and more of us have increasingly less of.

A solid floor plan needs to be installed for the truly needy. The rest of us need to continue to support ourselves - it’s the responsible thing to do.

I ran across a few new articles on the net this morning that I thought should be shared with blog readers. As most of you know, I have taken a sit-back-and-watch-the-circus approach to this health care “reform” discussion. Inevitably, if you’re quiet long enough, someone else will speak up in support of positions you favor. Here are two such examples from this morning’s review of posted articles on the net (5/8/09).

First, here’s an interview with Joseph Antos, a health economist, posted on MSNBC. In this interview, Antos makes several well-reasoned points, including:

The main problem with our system is its ever rising costs
Our current system is designed as though it has no financial restraints whatsoever
Dealing with cost is the most important factor we should look at
We should eliminate spending on unnecessary expenses, which is not popular with politicians

But he may have saved his best advice when asked what Obama should do:

He should reduce his promises and the rhetoric
The focus should be on 1) reforming Medicare and 2) taxing health benefits

I found nothing in that interview with which I fundamentally disagree.

In another article, Arthur Foulkes from Terre Haute, Indiana makes some great points about how government is running up the cost of health care by excessive mandates.

For example:

Today, about 80 cents of every health care dollar spent is paid by insurers, which means people are not bearing the brunt of the cost - someone else is.
Real insurance should protect against catastrophic losses, not the little stuff. It is very inefficient when the opposite is true.

Here’s the real eye opener:

In 1965, there were a total of 7 state mandated benefits in place around the country. Today, at best count, there are more than 1,800 state mandated benefits - and every one of them drives up the cost of insurance.

This is something I have been crowing about forever. Yet, politicians continue to ignore me, so I have more or less given up.

For some insane reason, legislators simply DO NOT SEEM TO UNDERSTAND that when you force insurance companies to offer any specific benefits, the cost of the insurance MUST GO UP to fund those benefits, although they are going to be paid out for only a relatively few insureds, everyone must pay more to fund the mandates.

Our agency has essentially stopped doing business in some states where it is almost impossible to get a new policy issued due to ridiculous state mandates. This includes states such as Minnesota, Michigan, Oregon, and of course, virtually all New England states. Politicians in those states are utterly ridiculous in their failure to understand that state mandates are killing their own state insurance plan options.

The real problem is that you have ill-informed politicians monkeying with something they do not understand - which of course, is precisely what they are elected to do.

Ever the pessimist on this subject, I’m afraid I still so no light at the end of the tunnel. The train continues on its runaway course.

Testifying before the Senate Finance Committee, Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group, said that insurers were willing to stop charging females higher premiums than males.

It was the latest concession by insurers as Congress drafts legislation to overhaul the $2.5 trillion health care industry.

In November, insurers said they would accept all customers, regardless of illness or disability, if Congress required all Americans to have coverage. In March, insurers offered to stop charging higher premiums to sick people.

New York Times article

Since the New York Times in its article did not spell out the consequences of these “pricing concessions,” allow me to do so:

Lower rates for females means - higher rates for males

Agreeing not to surcharge sick people means - higher rates for healthy people

I never cease to be amazed at how nobody seems to want to face the music. With respect to virtually every “reform” being suggested, the net result is: HIGHER COSTS. These costs will come in the form of higher premiums for most everyone, and inevitably higher taxes as well.

Meanwhile, more and more people are going without health insurance, waiting on the sideline for the president to deliver that “free health care” that he never promised in the first place.

One of the complaints I hear most often from my clients is this: “My premiums keep going up even though we never file claims.”

A recent article published by Money supports the theory we have all suspected for a long time: Hospitals keep raising their rates to compensate for the rising cost of providing mandated care for everyone who arrives via the ER (emergency room).

By law, hospitals have to treat all emergency admission regardless of insurance.

“If the underinsured can’t pay the bills, the hospital either writes it off as bad debt or shifts the cost to its charity care program,” said John Pickering, principal and consulting actuary with consulting firm Milliman Inc.

Increasingly, hospitals are shifting costs to “those who can pay,” said Wynn Bailey, partner and health care expert with consulting firm AT Kearney. “That’s the government, private insurers and the self-insured.”

Bailey said hospitals are negotiating higher treatment rates with insurance companies to offset the bad debt.

In turn, commercial insurance providers are charging higher premiums to their clients, both businesses and individuals, to cover their cost increases. As businesses struggle their employee health care costs, they are shifting a higher percentage of overall premiums to their workers, charging higher deductibles, or encouraging greater use of generic drugs.

“It’s a vicious cycle,” said Pickering.

And there you have it.

This is one of the major reasons why health insurance companies are willing to support the president’s attempt at “universal” coverage with one major caveat: Mandatory coverage for all.

Because you see, if everyone were equally responsible for their own health care expenses, you and I wouldn’t have to end up paying for everyone else’s expenses, only our own.

It still makes sense — even more so — to self-insure the small bills with a health savings account. Contact our offices for fast, easy quotes from multiple A-rated insurers for high deductible health plans.

In another blow to the idea of universal health care coverage, states such as Washington are dropping plans to expand health insurance for kids.

Today, about 76,000 children are uninsured in Washington, or about the same amount as in 2002.  Story from Seattle Times.

Sounds like virtually no progress has been made toward insuring all the children. Doesn’t it?

If it is so difficult to insure the children, then how difficult is it going to be to insure the adults?  Will this become Washington’s (as in D.C.) latest excuse to print money?

One of these days, perhaps we’ll all face the reality that health care coverage simply is too expensive for society to undertake funding of for the populace.

Either that, or we’ll all go broke trying to pay for it.

The day before Bush leaves office, a new executive rule goes into effect that allows medical providers to refuse to provide service on consciencious grounds.  Historically, medical providers were required to provide treatment within the scope of their license regardless of their personal viewpoints, etc.

The general thinking is that this rule will have the greatest impact in the area of women’s reproductive rights and certain experimental treatments.

Obama may want to overturn the rule but that presents challenges.  For one thing, the process of overturning an Executive Order can take years.  For another thing, does Obama really want to be known for forcing people to provide medical services that their conscience otherwise might prevent them from doing?  Interesting dilemma, is it not?

Here’s the article, from the LA Times.

On a day when Obama announced his selection of his drinking buddy Tom Daschle to head HHS, it was readily apparent that Obama plans to move forward with his own plan to bankrupt the country.

The trick to getting their plan to work — at least on paper — is that they have to get the young healthy people to enroll so that their premiums will go to help pay for the older, most sickly people. But because younger people are healthier, their general tendency is not to purchase health care coverage, especially given its high cost, in comparison to their meager wages.

What to do?

Ah ha! They’ll just make ‘em enroll. Mandated coverage. Pay us here or pay us there. Buy coverage or pay a fine.

But what about the other people who aren’t covered at all because — well, because they can’t afford it? Don’t they have to be enrolled to?

Of course they do.

But — but — they can’t afford the cost. But — but — it’s mandated.

Oh, well THAT makes a big difference.

How about good old government subsidies? Why wouldn’t that work?

Remember on the campaign trail when Obama was talking about spreading the wealth? THIS is a CLASSIC example.

Initial ballpark estimates put the cost of funding a subsidy program at $150 Billion. And the keyword is not billion, but initial — because everyone knows what happens to an initial Washington cost estimate. It doubles or triples before the ink is dry.

Because these subsidies would go to families at up to 400% of the poverty level, these estimates are already known to be extremely low.

As the WSJ explains in this article , eventually this option will be forced to add Medicare’s price controls as it tries to manage inevitable cost overruns. When that doesn’t work, Congress will be forced to deal with the problem by capping overall spending and rationing care through politics.

Mark it down. This is one campaign promise that has the potential to bankrupt the country

In a startling report, the WSJ indicates that the cost of an average health plan is approaching half of an average family’s income.

This must be a misprint.WSJ Health Blog Link
But it’s not, of course.

The reality is that few people actually pay $12,000 a year for their health plan — the majority of that cost is subsidized, typically by an employer. Nevertheless, an increasing chunk of everything we buy is being allocated to health care costs.

But don’t worry. Help is on the way.

I have it from a very reliable source that Obamanomics will “solve” this problem, once and for all.

As if the downturn in the economy weren’t enough, small businesses are looking forward to increases in health care costs after seeing nominal hikes in the recent past.

For the last few years, increases have been lagging behind the stratospheric numbers seen just a few years before.  But now, companies are seeing big time increases once again.  In some cases, increases are double what they were just a year or two ago.

The WSJ Health Blog reports on higher rate increases.

COMMENT:

Hold on to your wallets, friends. If you think current rate increases are high, just wait until after Obamanomics grabs your company’s checkbook.

In a sure sign of the economic times, more people are putting off surgeries and other hospital treatments.  The postponement of hernias, knee replacements, weight loss surgery and the like are creating cash flow havoc in many hospitals.  The situation is so dire that some hospitals are being forced to close.

Lucrative surgeries being postponed

As fewer paying patients show up, it has a disproportionate impact as more and more non-paying patients continue to flood America’s emergency rooms.

Will Obama rescue the hospitals in time?

(last statement seething in sarcasm)