Monday, September 7, 2009

Health Care Reform: Small Business Owner Perspective

I could go on and on about this, but I will keep it short with just a few points.

The most recent government accounting office report indicates that Medicare will be broke by 2017. We still have more people working and contributing to Medicare than using it, so how can the government insure everyone and not totally bankrupt our country.

The other area where the government is already heavily involved in health care is the VA, and have you seen some of the reports in the last couple years about the horrendous conditions at some of the VA hospitals?

I will readily admit that I do not believe that insurance companies have done as good as they could and should have. Let us not confuse the terms health care and health insurance. The root of the problem is the escalating cost in health care, and those escalating cost directly impact what insurance companies have to charge in premiums. The main thing I think insurance companies need to reform is denial of coverage ....and exclusions to coverage that everyone can get coverage.

My biggest issue with the government plan is that it need not compete fairly with private plans, and it won't. Private plans must make a profit. The government plan is subsidized with our tax dollars and need not make a profit. It won't take very long for them to drive private insurors out of business, which would fulfill the administation's objective of having federal government power over your health care decisions. It's all about power.

Having said that, what are the alternative solutions. There is only one. Self-insurance. If the person seeking the health care is the person paying for the health care, then, and only then, will the proper cost/benefit decisions be implemented. If the costs are paid or subsidized by others in any form of risk pooling, whether it's taxpayer funded government risk pooling or subscriber funded private risk pooling, the impetus is always to buy more service. The result of more demand is of course higher prices.

Risk pooling is also the genesis of denial of service, or rationing. Private risk pools ration by denying service for pre-existing conditions. Public risk pools will also ration. We can look to subsidized health care in other countries for the myriad of forms that rationing takes.

Risk pooling also reduces supply of health care by "income averaging" providers. When you reduce the ability of individual buyers and sellers to negotiate prices by "risk pooling", you may cap prices at an imposed level where suppliers choose not to operate. See Florida's current shortage of Ob-Gyn's. This is the same mechanism which encourages some Drs. to not take new patients or new medicare patients. It's the financial mechanism also responsible for our shortage of GPs and RNs.

So for all these myriad of reasons, the only solution to improving health care is to take the governors off the industry by removing imposed caps and by allowing people to self-insure. There is no federal place in this process.

You may ask "what about the people who can't afford to self-insure". Those people have decisions to make, as we all do. It's the price of freedom. You don't get everything handed to you. You make choices in your life which lead you to results, including health results and financial results. If the choices are poor and the results are poor, you have the freedom to make new choices. And no, it's not easy. It may require sacrifice. That's the price of freedom.

And of course there is the subset of people who are less than fully abled and therefore may not be capable (as opposed to willing) to make the decisions and sacrifices to ensure their own freedom. This is why we have private charity. And there is a huge benefit to private charity over public assistance. With private charity, there is a judgement. A person must earn private charity. It's not a birthright. This promotes social value. People behave kindly toward others in their own enlightened self interest. Social outcasts and misfits don't receive charity when it's needed, so there is a vested interest in not behaving in such a manner.

Anyway, my two cents. The answer is less government, not more. People need to take personal accountability for their own health care to the degree they as individuals value it.

For those who suggest that this will change healthcare costs, I'd like to remind people that insurance companies don't impact health care costs. They only pay the price of health care. They can reduce the price paid for health care by refusing to go to the price charged by the provider, but that doesn't change the cost. It only squeezes or eliminates the profits accrued to the insurance company, the provider, or both. And when the profit from practicing medicine or insuring health is less than the profit from other alternative uses of resources, those resources are redirected. Shortages. So again, yes, government can "force" insurors to charge less. But they can't do so without creating shortages of Drs, insurors, or both, depending on how the reduction in profit is shared. Economics 101.

The supporters of this proposed Bill understand neither business behavior or personal behavior.

Business want to make a profit. They'll "do the right thing" as well - but not at the expense of reasonable profits. That's why insurers will leave the field when profits start to fall.

Personal behavior - they may not say it, but at the heart of it, people want "something for nothing". If they can't get that, they'll take "something for really cheap" (that's why discounts, rebates and garage sales are so popular).

When the "irresistable force" (e.g., "private medical insurance") meets the "immovable object" (e.g., "patients with preexisting conditions who are looking for reduced medical insurance costs"), "something's gotta give".

In this case, it will be medical insurers leaving the market - just as property insurers abandon the Gulf coast following a major hurricane.

HALF the reason our costs are so high is because of the quality AND level of care that (nearly) everyone gets. No other country pays for such aggressive cancer-fighting treatments, heart transplants, quadruple-bypass etc in the "average Joe" -- even if you're 80 years old or 100 pounds over-weight. In the US, it's joint-replacement surgury for everyone!

The other HALF of the reason our costs are so high is because someone will pay the price. The health companies would not charge such high rates if someone would not pay them (with government collected taxes, or by forcing businesses to pay). The critics say that already no one can afford health care. Well that is not true or the companies providing the services would not provide them, or they will lower their costs.

Is it just me, or is the plan to have the government throw more money at the problem the wrong way to go? Stop subsidizing health care with so much tax money and prices will come down. Stop increasing the burden on businesses and the prices will come down. Stop encouraging everyone to have an MRI every time they have a headache and the prices will come down.

Only problem: Perhaps the health-care industry will not be able to employ 11% of the entire work-force. But then, is it really necessary for one in every fifteen people (6.8% of the total US population) to be working full time to care for the rest of us? Then again...maybe we wouldn't need 10% of the entire population (15% of the work-force) employed in government either. That's right! Fully 25% of everyone working in the US is employed in either health care or government. What are the chances of "right-sizing" that mess without a full-blown default?