Stanley Feld M.D.,FACP,MACE
There are many disconnects between President Obama’s goal and his strategy to reach the goal of universal coverage, affordable coverage and increase in quality of care.
Universal coverage is a critical element in healthcare reform. Who is going to pay for universal coverage? Should it be the government? Should the “richer” taxpayers pay for the poor? Should physicians pay for it?
Should we ration care? Former Mayor Ed Koch (New York City) is a vigorous 82 year old male with coronary artery disease. Should he be able to decide on treatment for his coronary artery disease or should the government panel make the decision? Mayor Koch, a Democrat, is upset that the governments panel will decide for him under President Obama’s healthcare reform plan.
Affordable coverage is another goal of President Obama’s healthcare reform. Can America achieve affordable premiums without increasing deductibles, increasing taxes or rationing care? If a citizen cannot afford the deductibles who is going to pay it?
It is not plausible.
Increasing the quality of care is another important goal of President Obama’s healthcare plan. What is the definition of quality of care? Is the definition of quality what the government panels decide is quality care? Should quality medical care be defined as treating people back to health and having them satisfied with the service? Quality healthcare has not been adequately defined.
The healthcare system is dysfunctional and wasteful. How much waste is in the healthcare system? Where is the waste?
President Obama is not attacking the factors that add to the majority of the waste? He is proposing a healthcare system that is destined to create more waste. Stakeholders are profiting from the waste. Those who are profiting do not want to eliminate the waste. The healthcare insurance industry profits most from the systems’ waste.
Waste should be defined as non value added services to medical care;
- The 15% administrative services fee by the healthcare insurance industry on premiums for private and government healthcare plans.
- The increased laboratory testing and procedures done to avoid malpractice suits. 700 billion dollars wasted on defensive medicine testing per year.
- Consumers concern about their own health, overuse of the healthcare system because of first dollar coverage and the obesity epidemic are large factors in increased healthcare costs
- Imposition of a large bureaucracy that increases non medical care documentation to evaluate physician performance creates additional waste.
- Slow adoption of electronic medical records creates risk for healthcare reform failure. The cost of EMR’s is high, functionality low. As reimbursement decreases physicians are hesitant to make investments in EMRs even with President Obama’s subsidy. The promised subsidy simply will increase the price of an EMR.
Even with all this inefficiency and unnecessary care the average costs for the entire Medicare population including end of life issues is $6,600.00 per person. This includes the healthcare insurance industry’s administrative services fee.
Medicare Advantage was design by the government and the healthcare insurance industry to help the government unload its Medicare entitlement liability and cost over runs. The government pays an additional $3,000.00 subsidy or $9,600.00 per person for the Medicare Advantage program..
If President Obama and his administration concentrated their efforts on eliminating this waste they would not have to concentrate on reducing costs by decreasing reimbursement of physicians and hospitals.
What exactly are we paying for when we pay insurance premiums? Figure 1 is the breakdown of the percentage each segment costs. Notice in 1988 the out of pocket expenses(17.4%) for private insurance policies almost matched the entire Medicare costs(18.8%). Increased deductibles with President Obama’s healthcare plan will double this percentage. The result will not be affordable coverage. It will result in a rationing of care for everyone but predominately seniors.
DOUBLE CLICK ON EACH FIGURE TO ENLARGE
Figure 1 Sixty five percent of private insurance dollars in Minnesota went to administrative services including brokerage fees. Only 15% went to physicians and 20% to hospitals. Figure 2
"The social contract for medical care should be between the physician and patient. Private Insurers aggregate 32.6% of the dollars that Americans pay in the hope of getting care, and insurers pay out only 4.9% of the money collected from the nation’s Consumers to physicians. Insurers pay out only 6.5% to hospitals. Administrative service fees could not possibly add 15% value to the care of a patient. The administrative service fee can and must be reduced markedly."
President Obama has been accused of putting the healthcare insurance industry out of business. He will not. He will continue to pay it an inflated administrative services fee. The healthcare insurance industry will be more profitable because it will have more customers and make a greater profit.
“The half-dozen leading overhaul proposals circulating in Congress would require all citizens to have health insurance, which would guarantee insurers tens of millions of new customers — many of whom would get government subsidies to help pay the companies’ premiums.”
"It’s a bonanza," said Robert Laszewski, a health insurance executive for 20 years who now tracks reform legislation as president of the consulting firm Health Policy and Strategy Associates Inc”.
The insurers are going to do quite well," said Linda Blumberg, a health policy analyst at the nonpartisan Urban Institute, a Washington think tank. "They are going to have this very stable pool, they’re going to have people getting subsidies to help them buy coverage and . . . they will be paid the full costs of the benefits that they provide — plus their administrative costs."
In his speech to congress President Obama essentially repeated his generalities. He did not get to the essence of creating affordable healthcare reform. His plan will fail to Repair the Healthcare System if it is passed by congress just as the Massachusetts plan has failed.