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Friday Discussion: The Need for and Cost of Health Care Reform

This article was written by in Health. 26 comments.


I visit a doctor once a year at the most, and I hardly require prescription medicine. The cost of my health insurance premium is about $800 this year for my HMO plan. My employer pays a larger percentage of the total premium, but the prices increase each year by a percentage much higher than inflation. A similar HMO plan, if I were to quit my job and buy individual health insurance in New Jersey, I would pay more than $800 a month, though there are less expensive options.

I’m lucky I don’t have any dependents.

The more individuals in the world with access to good and affordable heath care, the healthier the world will be in general, so I am in favor in reform that brings better care to more people. While reduced costs for me would be nice, that would be just an ancillary — and selfish — benefit. Will any of the various sets of proposed legislation succeed? I don’t know anyone who can answer that question with any sort of definitive answer. Health care is a monster, a complicated system with many moving parts that won’t be fixed right away.

The Congressional Budget Office released their cost estimates for the version of the legislation that is up for a vote within the Senate Finance Committee, and the numbers look better than expected: The bill would could $829 billion over ten years and actually reduce the budget deficit by $81 billion over the same time period. This bill doesn’t include a government-run plan, but it also leaves more people uninsured than some would like.

This legislation has a long way to go. The version of health care reform offered by the Senate Finance Committee needs to be combined with the version being considered by the Senate Health Committee. The Senate then needs to vote on and pass a bill. The House of Representatives also needs to vote on and pass its version of the health reform bill (H.R. 3200). Eventually the bills that pass both the House and the Senate need to be combined, voted on, passed and presented to the President.

None of this will happen without more changes and compromises, and even then it may not gain the votes needed to succeed.

Please share your thoughts and join the discussion. What issues should health reform address? What are your experiences with health care?

Published or updated October 9, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 26 comments… read them below or add one }

avatar Smithee ♦1,358 (Quarter)

For me it boils down to this: health insurance premiums have risen much higher than wages, making life very difficult to afford. Insurance companies make a profit from denying care, and they don’t have enough competition. The best competition we can introduce would be a national, not-for-profit insurance option, similar to Medicare.

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avatar Apex

health care costs have nothing to do with insurance. You can look up the stats yourself on insurance companies. They make profit margins in the 2-3% range. That is near the low end of any for profit company. Squeezing the 2-3% down close to zero changes nothing. You can argue its due to paper work and overhead related but I have seen no credible evidence that any savings can be had here. Medicare does not decrease paperwork, it increases it. And none of these bills address overhead as far as I can tell.

Health care does cost a lot. There are many potential reasons.

1. Perhaps doctors make to much money.
2. Perhaps hospitals charge too much (I have a relative in hospital accounting, they mostly lose money)
3. Perhaps drug companies make too much money (they make around 20% profit margins, one of the more profitable of the for profit companies — but dropping that down to 5-10% and reducing a 10 dollar pill to 8.50 is probably not what most people had in mind.
4. Perhaps doctors have to carry too much liability insurance and pass those costs on to consumers.
5. Perhaps we get too much expensive care and should get less.
6. Perhaps we use too many cutting edge technologies, equipment and pharmacudicals and should use those sparingly until economies of scale make them cheaper and the existing machines and facilities have better paid for themselves.

I am sure there are many others. But the cost issue will not be touched in the slightest by going after insurance companies because there is no cost to be squeezed out there. The cost is all on the provider side and that is the only place any money savings is going to come from. This can be seen by looking at how Obama plans to save money. over half of all of his “savings” comes from simply cutting payments to medicare providers by 500 billion. Basically he is telling the providers we are going to pay you less and thats that. So even his own tactic seeks the savings on the provider side.

Going after the insurance side might be fine if your goal is simple expanding coverage. But it won’t help costs at all. And if you expand coverage without addressing provider side costs, overall costs will go up, not down.

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avatar Dobie

First of all I need to point out that so far no one is talking about healthcare reform – they are talking about health insurance reform. As long as the costs of receiving medical care continue to sky-rocket, so will the costs of insuring people. It doesn’t matter who will be providing that coverage. We need to be talking about things like tort reform, tele-medicine, charging fees for inappropriate use of emergency rooms, reigning in out of control hospital construction, low-acuity clinics, and (the one thing that is part of the proposals I have read) electronic medical records and medical claim processing. We need to get more information into the hands our the consumer (aka patient) so they can make informed decisions – which hospital in your area has the best outcomes if you go in with a heart attack? Any idea? We need to address things like why we think our health insurance should pay for everything medical when we don’t expect our car insurance to pay for oil changes. I don’t think that’s just chance that a medical procedure that insurance companies don’t cover (laser eye surgery) is cheaper and more effective today than it was ten years ago. Can you name any other medical procedure that has gone down in price that is also typically covered by insurance?

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avatar Apex

Very Good Dobie, you understand where the cost side is. Unfortunately what you are talking about doesn’t sell very well. It’s complicated, and likely will take multiple iterations to get it right. There is little patience for that in politics. So I don’t have much hope for someone trying to tackle the real problem.

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avatar Dedicated

All I know is that my family could use some help in the health care department. We are all healthy, Thank God! And just the day to day check-ups and things that happen kill our budget. We pay $675 a month for insurance ($8100 a year). Already this year we have paid out over $3200 in just annual check ups and dental exams after the portion paid by insurance and the discounts we receive. My son needs to have his wisdom teeth removed, surgically, because they are growing in crooked and jeopardize the other teeth, for which we received a quote from the oral surgeon of $1960 yesterday! I have matched up each bill item to the insurance and see they will only pay $111. This is crazy. Normal people can not live with such a drain on their cash for everyday care. I can not even imagine the burden should one of us get sick.

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avatar Apex

I am sorry for you situation. I honestly don’t know what kind of insurance you could have that costs 8100 a year and still has you paying all that kind of money for routine stuff. It seems you could get those things done at a cost even less than 3200. It seems like your insurance covers nothing, why even have it?

My insurance probably costs around 12K a year (My employer pays about 80%). My wife had 50K surgery this year. It will cost us $1,200. Max we could ever pay for the entire family in the whole year is $2,600. I think you need real insurance, cause what you have doesn’t sound like insurance to me at all.

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avatar Dedicated

Apex – this is the world we live in. This insurance is only MAJOR MEDICAL. We could not afford to pay out $12k or more a year for full coverage of the day to day medical expenses. We have shopped around and actually this insurance was the most affordable of all insurances. Way surpassing in benefits even Blue Cross Blue Shield. We carry this because of the whatif’s in the world, not because it is a benefit in our daily life. Much like a large percentage of the under-insured in America.

This is why doctors charge so much. Many can not even afford this and so many walk away from their medical bills. So doctors raise prices and carry the cost to the payers. This is why health care is and should remain our number one priority.

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avatar Craig

I like you go once or twice max to the doctor. I think all should have some sort of option for coverage, but the reality is it costs money. And for us who look after our health and don’t go to the doctor, I don’t feel we should have to pay more in taxes for those who don’t bother to stay healthy.

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avatar Financial Samurai

Healthcare needs to be simplified and properly understood. Kind of like our tax system if you will. HSA, FSA, high premiums yada yada… it’s too confusing.

I spent 3 hours reading through my 100 page benefits book. I then wrote a 2-page summary for my team. It’s TOO complicated and we need to simplify!

Flexo, what’s the latest with looking for a staff writer? Saw it on Twitter.

Best

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avatar KC

I’m married to a physician who has worked in two different practices in the past couple of years (one a traditional privately owned practice, and the second a practice owned by a heath care corporation). Both practices he’s experienced the same problems. The most obvious problem in his opinion is the lack of competition from insurance companies. He has a terrible time getting certain medicines, procedures and devices approved for his patients because some high school graduate is reading from a manual of what the insurance company will and will not provide. He had a patient have a car wreck due to improper insulin levels. He recommended an insulin pump which would regulate levels in that patient (a pump is about $5k). The insurance company denied the request saying it didn’t see proper need for the pump. He deals with this …stuff everyday, sometimes it involves less expensive things such as medicines that the insurance company won’t approve of. If there was more competition (consumer choice) in insurance things like this would not be happening as often.

Others have touched on tort reform and other ideas that need attention and I whole-heartedly agree. Another issue needs to be insurance payout. Docs usually collect about 35-40% of what they bill (do you know of other businesses that operate on these margins? No, they are out of business). The average doc (not surgeon or other procedure intense profession) bills about $1M a year, which means they collect about $350-$400k/year. Sounds good, right? Well pay for rent, building maintenance, equipment, nurses, labs, triage, reception, medical records and other staff with this money and what you have left over is your salary. Usually you have several docs in a practice and they share most of those expenses, but still the average take home is still smaller than most people *think* physicians make. Now if you are a bright, young high school or college student and you can choose a profession would you go into something that requires 4 years of med school, 3-4 years residency, 2 years of fellowship, intense time away from your young family, and a quarter of a million dollars in loans? Or would you decide on a career in finance which requires a 2 yr MBA program that you can work on at night while you have a day job? Where are the bright people headed? It isn’t medicine and science. Again, I think the answer here is competition (consumer choice) among insurance companies.

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avatar Financial Samurai

KC, absolutely GREAT perspective. Thanks for this. I love hearing the other side of the story and from the source directly.

Best

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avatar Revanche

What you’ve said here is exactly why one of my best, and smartest, friends chose not to go to medical school. She was smart enough to earn full rides to undergrad, whup the MCATs, understand that becoming a doctor in this environment was not worth the time, energy, stress, financial stress, etc., at the end of the day.

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avatar Neal@wealthpilgrim

Flexo,

I think of this very simply – and maybe incorrectly.

1. I believe we have one of the finest health care systems in the world -if not the finest.
2. I don’t believe Government does anything well.
3. While our system is not perfect, we have other more pressing problems.

So, bottom line, I am waiting for someone to explain why this is the #1 issue facing our country right now.

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avatar Luke Landes ♦127,435 (Platinum)

Neal: I tink the system works well and is one of the best in the world *if* you are at least in the middle class. Even the middle class is susceptible to above-inflation cost increases. The rich and some of the upper middle class can afford concierge health care, so more power to them, but the system starts breaking down when you look at the working class and the lower socio-economic statuses.

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avatar Lacey

Some good points here. I think there are 2 major and distinct areas that need attention: cost and coverage. Unfortunately, congress is attempting to take on both at the same time, but the solutions may be quite different.

I think a lot of issues need addressing, possibly so many I don’t have the time to list and describe them all. A summary of what I think needs fixing:

Complicated system of coverage and payment, difficult to understand and navigate
Too many for-profit entities and administrative costs add unnecessary overhead
Complicated tax laws
Neither patient nor provider knows the actual price of services
Personal health records withheld or unavailable to the patient
Coverage tied to job
Excessive malpractice risk for doctors
Wasteful tests and procedures, the only incentive is more money, more treatment
No one who investigates, advocates or informs patients about low cost/no cost solutions
Politicians getting paid off by drug & insurance companies, to pass regulations that favor them
Those who could help keep costs down – like doctors – benefit from them going up (perverse incentives)
Politicians trying to reform the system are too far removed from what most of us actually experience, so they have no idea how to improve things, and they push ideas that will probably make things worse, like mandatory coverage. -I hope everyone has written to their representatives protesting the provision that everyone will all be REQUIRED to purchase insurance, forcing us all into the wretched clutches of insurance companies. How will they treat us then?

I don’t blame providers, I’ve had decent to fantastic experiences with them. However, my insurance company causes me more problems than I care to recollect.

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avatar Jim

The key things I’d like to see fixed are : keep costs under control, make sure everyone is insured and retain or improve the quality level. How they go about meeting those goals aren’t as important to me as long as the end result gets us there.

Little more on what I’d like to see…

1) We need to control the costs of our health care. We pay abut 2x any other industrial nation and thats way too much.
2) We need to insure everyone. Its embarrassing that we don’t insure 15% of our population. Those uninsured people are a burden on the system anyway. If we make every driver get auto insurance then theres no reason everyone shouldn’t have health insurance.
3) I’d like them to take drug advertisements off of TV. Thats about $10B or more a year in advertisements we’re paying for indirectly that is not necessary. Drugs should be prescribed by doctors not pitched directly to consumers.
4) They need to crack down on fraud. Medicare fraud is a big problem. To fix that we need money to find the fraud and enforce the law.
5) We need to emphasize preventative medicine and health care. Lets spend more on health education and regular checkups and spend less on surgery after a condition isn’t caught in time. Part of the problem are our own habits.. America has an obesity epidemic which needs to be addressed.
6) Reduce the cost burden that companies pay for healthcare. Paying for very expensive health insurance is a competitive disadvantage for US companies.
7) Increase technology use. It seems like doctors offices are usually stuck in the past with giant filing cabinets full of paper files. Everything should be computerized. That will reduce errors and overhead costs.

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avatar Neal @ WealthPilgrim.com

Flexo,

Fair enough. I suspect that what you are saying is true. And if that’s the case, why overhaul the entire system when the problem is restricted to a small sub-set of the population? Also, is this the most pressing issue we face as a nation right now?

It certainly is if you don’t have health care….but as a nation….it’s not our greatest challenge iMO.

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avatar Kelly

It’s not a small subset.
It’s the millions of people who don’t have any coverage, or families like the one above who pay hundreds of dollars a month for the most basic health insurance.

For my family it’s the what ifs. We have a friend who is extremely healthy who had to have an emergency heart surgery. The bills were astronomical, and while their portion was small, it was still devastating for their family. Even with a healthy emergency fund, most people can’t afford 10s of thousands on medical expenses, not to mention lost work time.

It may not be the most pressing issue for you, but I think it is probably the top issue if you polled all Americans.

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avatar Apex

It’s not the top issue in dozens of recent polls of all Americans

http://www.pollingreport.com/prioriti.htm

Economy about 45%
Health care about 20%
War about 10%

And interestingly if you go back to January you see health care drop down to under 10%. People are easily swayed and all the marketing about how bad the system is makes people believe it is bad even though very few Americans have had that experience personally (and I am not dimishing those who have as I know there is clearly a group of people who have had very bad experiences with the system). And that is why in a CBS poll in January about the most pressing problems facing the country (also found at the link above) only 2% listed health care/health insurance, and only 8% listed it as the single most important thing the President could accomplish.

Most Americans do not see health insurance and health care as the top issue for the country to be focusing on.

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avatar Luke Landes ♦127,435 (Platinum)

“Most Americans” don’t see *anything* as the top issue for the country to be focusing, according to that report. The top choice only has 45% of the vote. The fact that one-fifth of the country does think health care *is* a top priority (and the survey does not ask for the “second” top priority) indicates that health care is in fact a priority for enough people for it to be a concern for those who represent the citizens.

In addition, the people most affected by health care/insurance problems are most likely underrepresented in any survey designed by a major news organization.

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avatar Danielle

“For us who look after our health and don’t go to the doctor, I don’t feel we should have to pay more in taxes for those who don’t bother to stay healthy. ”

Do you see the irony in this statement? Sometimes, looking after your health involves going to the doctor. Even if it exceeds your 1-2x/yearly quota.

Sometimes, people get sick – even those who believe they’ve been “looking after their health.” Things happen, and sometimes those things need to be treated by a doctor. And if affordable primary care isn’t available, those things sometimes get worse, and people end up in the E.R., receiving tens of thousands of dollars worth of treatment – treatment that might have been unnecessary if they could have seen someone earlier. And if they couldn’t afford to see a doctor in the first place, then they certainly can’t afford to pay their emergency room bills. So they file for bankruptcy, and guess who ends up footing the bill anyway? Oh, also, because they now have a pre-existing condition, they’re fucked for life with regards to receiving individual health insurance. So the cycle continues.

This is just one example of million that demonstrates why the current system is unsustainable. Personally, I don’t give a shit if $20 extra needs to be taken out of my paycheck to cover people who for whatever reason get sick and can’t pay for treatment themselves. It’s not for me to judge whether or not they “deserve” it. The fact is, they’re sick now, we have the resources to take care of them, and we’re all in this together. Leaving them to suffer costs us all a lot more in the long run, monetarily and otherwise.

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avatar H Lee D

I used to be one of the “I go to the doctor once a year if that” people. I was in good shape, ate well, exercised regularly, etc.

And then I got cancer. At 31. I was in the hospital for three weeks, including one night in ICU, two lung drains, a needle biopsy, a surgical biopsy, a chest x ray every day, a bone marrow biopsy, a bone density scan, a muga scan, a CT scan, an EKG, 8 million blood tests, a PICC line… followed by 6 months of chemotherapy and a month of radiation … a total of four follow-up PET scans (over time), etc., etc.

Ten months before this hit, I was uninsured. I cannot imagine the nightmare of dealing with cancer and dealing with the stress of “how are we going to pay for this?”

My biggest concern in losing my job, should it happen, is not my loss of income (I can find a job doing *something* to make money) but loss of benefits. I am bound to a job with benefits because of my pre-existing condition. Cancer history aside, I am still one of the healthiest people I know.

Being poor (or uninsured for any other reason) is not a reason to have less access to healing. It disgusts me how many people believe that people who are un- or underinsured are that way because they *deserve* it.

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avatar Norris Hall

Many of us have always believed that greed is one of the factors that make our healthcare system the most expensive in the world.. Government has a place in keeping businesses…lawyers, drug companies, doctors, insurance companies…from making excessive profits off of people who can least afford it.

Even Republicans are starting to get behind the concept that government intervention on behalf of consumers is not only necessary…it is also good.

If we can put arbitrary caps on jury awards, we can put those same caps on the profits that drug companies, hospitals, doctors and insurance companies make.

Tort reform in itself will only save our 2 trillion dollar a year healthcare system about 0.5%

In itself…not a significant amount. But if you take the concept further and start putting caps not only on lawyers, but doctors, hospitals , insurance companies and drug companies…now you are talking real savings.

Government limits to jury awards. Yes.
Government limits to doctors fees. Yes
Government limits to drug companies profits. Yes
Government limits to insurance companies profits. Yes

Now we are all talking the same language

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avatar KC

I’m concerned too about the number of Americans who think the uninsured are poor, don’t take care of themselves, and don’t have the ambition to get a job with insurance. I was having lunch with 3 friends of mine who I knew were well to do (now remember I’m the doctor’s wife from above :) Anyway we are discussing the healthcare plan. They didn’t like the part about people making over $250k being taxed for this program. Two of them have husband’s in business management and one in insurance. It became clear from the conversation that they all were in households making well over $250k a year. They were surprised when I said my household wasn’t even close (again, bright people shouldn’t go into medicine if they want to get rich). But no matter how much I stressed to them that middle class people, not just underclass people, were having trouble they didn’t get it. I even tried to explain that the average US household income is $40k – take out taxes and its $30k, take out rent/mortgage and that’s $20k. Insurance premiums can be between $5k-$10k leaving only about 30% of their income for other expenses. I still wasn’t getting through. I just don’t understand how you can live among struggling folks (we live in a medium sized city so they do despite their wealth) and not notice it. Its so damn apparent that the middle class are affected by this and its not just poor people. And when the middle class is affected the entire economy is going to be effected.

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avatar wj

I have to second KC’s point. I’m astounded that so many middle-class people, who would benefit from universal healthcare, side with the rich and insurance companies who don’t want reform for obvious reasons. It is the middle class who won’t be able to afford health insurance or pay their medical bills if they get laid off. It is the middle class who will be afraid to strike out on their own due to lack of affordable healthcare. It is the middle class who won’t qualify for existing programs that only serve the very poor.

Finally, does anyone know if the reform addresses rescission (i.e. the practice of insurers going to elaborate lengths to pay benefits, usually by citing pre-existing condition clause)? I have battled various insurers throughout my life in order to get them to pay legimate claims (sometimes for something as routine as a specialist visit). In every case, I won my battles by citing the company’s own insurance handbook. The various denied tests or visits were covered; they were just hoping that I get tired of the process and pay up. Unfortunately, this is a common practice among insurers and they often win since you need to know how to fight back and take the time to write a lot of letters.

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avatar Honey

I think that going to a single-payer system would enable lots more preventative things to be covered. Dieticians, gym memberships, and even personal training should all fall under the things covered by health insurance, IMO. Expensive in the short term? Yes, in the initial stages of implementation. But so, SO much cheaper in the long run…

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