Monday, August 24, 2009

ILLUSIONS ABOUT HEALTHCARE COSTS

From a cyber friend.
Illusions about healthcare costs --

For many years the government has acted to increase the cost of healthcare; to punish people who pay for their own healthcare; and to additionally punish people who pay a fee for a specific service (known as a fee-for-service patient, hereafter "FFS patient").

1) The government mandated that hospitals GIVE AWAY a substantial percentage (ten percent) of their bed space to the poor, but the government did not pay for it. This forced hospitals to "cost shift" the burden onto everyone else. This was an invisible taxation system. (Note: Politicians then cynically bragged to voters that they had "given" healthcare and "not raised taxes.")

2) The government mandated that emergency rooms GIVE AWAY healthcare to anyone who came through the door, regardless of inability (or unwillingness) to pay (even millionaires could get free healthcare). But the government did not pay for it. This forced emergency rooms to "cost shift" the burden onto everyone else. This was an invisible taxation system. (Note: Once again, politicians cynically bragged to voters that they had "given" healthcare and "not raised taxes.")

3) The government mandated that doctors be reimbursed for Medicare and Medicaid patients at a fraction of the usual cost. But the government did not pay for it. This forced doctors to "cost shift" the burden onto everyone else. This was an invisible taxation system. (Note: Yet again, politicians cynically bragged to voters that they had "given" healthcare and "not raised taxes.")

4) The government mandated that insurance companies cover additional services (such as treatment for alcoholism, drug addiction, psychiatry, marital counseling, and much, much more) -- additional insurance coverage that most people do not want. Given a free choice, most people would not want coverage for all these things. If insurance costs too much, a reasonable person would choose somewhat less insurance -- but this is precisely the choice the government punishes or forbids. (Note: Again, politicians cynically bragged that they had "given" additional coverage and "not raised taxes". For most people, the cost was hidden because employers paid it, so it was effectively invisible to the public.)

5) The government mandated the IRS that personal healthcare costs would NOT be tax deductible. This punished people who directly paid for their own healthcare, because they had to pay with AFTER-tax dollars. Whereas, when people purchase their healthcare through their employer, it is paid with BEFORE-tax dollars. [Note: This schism in the tax system caused most people to "willingly" (wink, wink) turn-over control of their healthcare to their employer and the insurance company. People had lost nearly all say in how their own healthcare dollars are spent.]

6) Bureaucrats will tell you that everyone is "charged the same price for the same service" -- however, in most cases the insurance companies actually pay 25% to 35% of what the FFS patient must pay. This unfairness is due to the way the government has written the laws, and again, it punishes people who directly pay for their own healthcare.

(7) "Insurance" is an inherently expensive way to purchase healthcare. An analogy will help: Suppose there is a Dining Club, where everyone eats wherever they want (at different locations, say), and splits the cost. Would you join the Dining Club? Nearly everyone would answer "No!", because the other participants would soon be ordering the most expensive meals, so you would soon be pleading that "gatekeepers" be hired (at extra cost!) "in order to keep the cost down." The gatekeepers would then be deciding what food you could and couldn't receive. Health insurance operates like that, except with healthcare, people never "get full". When someone else pays, the demand for healthcare is infinite. People generally do not care about costs when a third-party pays the bill. For example: How long to stay in the hospital? Call an ambulance versus have a friend drive? Countless decisions are answered more cost-effectively when you personally save money by making the decision yourself. Health insurance disconnects people from effectively reducing their costs. In this way, health insurance inherently increases costs due to: (a) the increasing demand for service when a third-party pays, and (b) the added cost of bureaucracy. Ironically, "the increased spending on healthcare" is largely due to the government pressing more people into health "insurance."

8) Another major reason for the rising cost is medical malpractice insurance, which for many doctors dwarfs their own salary. The extra cost is like paying for a second doctor (a 'second doctor' who does nothing). However, when people directly pay a fee-for-service, they have limited rights to sue. For example, if the FFS patient does not choose some tests, then the doctor cannot be sued for not "giving" the tests. The doctor need only say, "The patientchose not to take the test," and the legal case is finished. Under the circumstances, the patient is taking-on the risk, and therefore ought not have to pay a substantial portion of the medical malpractice insurance. The FFS patient ought be given a substantial discount on the price, since the FFS patient (not the doctor or the insurance company) is assuming the risk. Once again, the government has acted to prevent any such discount for the FFS patient. The FFS patient must pay an extravagant fee, much of which goes to medical malpractice insurance that she legally cannot benefit from. [NOTE: Democrats have consistently prevented reasonable medical malpractice tort reform. They have cynically used it to increase the cost of healthcare and bankrupt what is left of the free-market healthcare system. After Democrats have installed single-payer socialized medicine -- and destroyed the quality of healthcare (and locked us in) -- then, and only then, they will change medical malpractice law to prevent us from suing the government for the many instances of government-caused medical malpractice. That happens in all countries with single-payer medicine.]

9) The government mandated that health insurance companies cannot operate across state lines (unlike other industries!). This needlessly raises the business costs for health insurance companies (and those costs are passed on to you), and it prevents you from having more choices in your health insurance.

10) Ordinarily, a patient would price shop for a lower-price doctor, but the government puts obstacles in the way: (a) The government mandated thatdoctors could not advertise their prices, even on the walls of their own offices. In addition, (b) the government has acted to ensure that doctors will generally all tend to receive the same fee for the same service (see below) -- so there is little reason to shop for a lower price.

11) A few years ago, the government lifted the anti-trust laws against the health insurance companies -- thereby allowing them to collude in secret to set the prices paid to doctors, hospitals, etc. In effect, the various insurance companies began to behave like a single-payer system. This substantially reduced competition between different insurance plans, so these now look more and more alike. Such secret price-fixing collusion between companies is ordinarily illegal. [Note: This is how Democrats will eventually "reduce" the cost of healthcare. They will say to doctors, hospitals, drug companies, and medical researchers, "WE, the single-payer system, have decided to give you, say, a fourth of what you could earn in a free-market with fair competition, and if you don't like it, Get Out!!!" This will cause destruction to the healthcare industry. But unfortunately, much of the public will not object, so long as they believe they are getting healthcare at other people's expense. That is what happens in countries with single-payer systems.]

12) The problem of "pre-existing conditions" would have been largely solved if you owned your own healthcare policy, which would then travel with you from job-to-job, like your home or car insurance. This solution was punished by the government because (as stated above) you would have to pay with AFTER-tax dollars. (Note: Democrat politicians steadfastly refused to eliminate this punishment. Once again, your choosing and owning an individual health insurance policy was punished.)

13) When insurance is purchased through an employer the person is obviously sufficiently good health to be employed. However, under the current system, the very same employed personwho purchases insurance individually is put into an insurance risk pool with people who are un-employed (many of whom are unemployed precisely because they are unhealthy), and therefore this self-same person must pay higher insurance premiums. This peculiar disparity is yet another way the government has acted to especially punish people who do not purchase their insurance through an employer.

Those are verifiable facts; not opinions.
The Democrat party has routinely acted: (A) to INCREASE the cost of healthcare; (B) to ensure that more people could NOT AFFORD healthcare (without having to be subsidized); (C) to substantially reduce or eliminate personal choice in how our own healthcare dollars are spent on our own healthcare; (D) to punish people who directly pay for their own healthcare (especially the FFS patient, the lower-middle-class, and people who do not get health insurance through their employer); and (E) to obscure the causes from public view. Then they blamed "doctors and insurance companies" for these problems. It is deeply dishonest.

Democrats are now attempting a rapid-fire jam-down, before the public has time to see through the illusions. This systematic process -- of punishingpeople who seek to control how their own money is spent on their own healthcare -- is the central issue in the healthcare debate. (Note: If the poor werethe issue, then the government would need only raise our taxes to pay for the poor.)

The solutions will become clearer, if we simply eliminate the illusions.

-- Walter ReMine

1 comment:

maggi haglund said...

Thanks for this explanation. And for an eminent blog. You so right about Obamas health scare. I know , I'm from Sweden. We pay 65% tax here and get a terrible medical care. Fight it with your life and win. You are far away from stupid. This is a threat to all of us. Obama is a communist for sure and if he succeed in his mission,to destroy USA, we all have to suffer. I'm with you USA and I trust and love you. Never give up, this is to serious to loos. With the highest respect, Maggi from Sweden