The FAA Follies

Healthcare. Have you priced it lately? It’s ludicrous what stuff costs.

Healthcare costs continue to zoom upwards. In fact, over the past several years, healthcare costs (both in terms of insurance premiums, and in terms of overall spending on healthcare treatment) have gone up considerably more than the rate of inflation. Healthcare costs have gone up 3.7 times as much as wages have over the past 8 years.

In the USA, we spend roughly 15% of the GDP (gross domestic product) on healthcare. That’s 50% more than Canada, Great Britain, Switzerland, or France.

In fact, think of this. Which issue is more important, national defense, or healthcare? Financially, at least, it’s healthcare; we spend 4.3 times as much there than we do on defense.

In this election, both candidates have proposed healthcare plans that would change what we’ve been doing. Which plan makes more sense?

Obama’s plan has several main points. The thrust of the plan is that it’s trying to keep things that work in the present system, and improve upon what we’re doing now, while addressing the spots that are falling through the cracks.

The Obama healthcare proposal has three main areas of interest, with sub-points in each area.

The first strategy is to help lower costs. There are a lot of inefficiencies in the present system, so by addressing those and improving care, we should save a lot of money. How to do it?

• INVEST IN ELECTRONIC HEALTH INFORMATION TECHNOLOGY SYSTEMS.

Right now, there’s really no incentive for any single entitity to develop a national standard for paperless, computerized systems for both health care records and insurance claims/paperwork. While the individual insurance companies try to reduce their costs of doing business by automating, their systems do not necessarily join up with those at your doctor’s office, or with those that the government uses, or with those that the other insurance companies use.

Likewise, your local doctor’s office doesn’t have any incentive to make their systems compatible with EVERY insurance company and every other provider out there.

Since nobody really has an incentive to spend the money needed to make the whole system work together, seamlessly, by having the government step up and do it, we’ll all wind up saving money in the long run.

• IMPROVE ACCESS TO PREVENTION AND PROVEN DISEASE MANAGEMENT PROGRAMS.

Prevention is almost always cheaper than emergency care- yet the ER is the one place in the current healthcare system where everyone is guaranteed treatment.

Another aspect of this part of the plan is that healthcare providers would be given incentives to better coordinate and integrate care. By doing so, we can slow the progression of many of the chronic diseases- and greatly reduce our spending on them while improving the care people get.

The Obama plan would require healthcare providers to fully disclose reports detailing measures of their costs and their quality.

Additionally, insurance plans would be required to publicly disclose what percentage of their premiums go towards actual patient care, and what percentages go to things like marketing, administrative overhead, and the biggie- PROFITS.

The plan would require public reporting of errors by hospitals, start creating incentives for excellence in care (giving people a profit motive for better care), and create an independent institute that studies and reports on various treatment options. This last item will allow people to make more informed choices about their own care.

The Obama plan would also start addressing disparities in care quality, so everyone could be more assured of getting higher quality care. Finally, the plan calls for better regulation of malpractice insurance companies, who presently are killing healthcare providers with skyrocketing insurance premiums.

• LOWER COSTS BY TAKING ON ANTICOMPETITIVE ACTIONS IN THE DRUG AND INSURANCE COMPANIES.

Right now, insurance companies are buying each other out like crazy. This results in near-monopoly conditions at times, and the lack of competition limits personal choice. What’s more, for-profit companies have been squeezing out nonprofits, so there’s more and more people who are in the business only for a buck (instead of to provide good quality care to people).

By creating a national healthcare plan that’s open to all citizens, people in any state could get the same healthcare options as anyone else in the nation. Right now, if you live in some communities, you can only get one or two insurance companies; many states don’t regulate premiums or profits.

The Obama plan would penalize companies that are jacking their customers for ridiculous premiums and require those companies to spend a certain percentage (or more) on actual patient care, not profits for the fatcats.

Large numbers of people presently buy their prescription drugs from other nations due to much lower costs. The Obama plan would allow safe, controlled importation of prescription drugs from other countries- where those drugs often cost considerably less than what they do here. Yet this plan would NOT allow unregulated, unsafe drugs in; we’d only be importing known, safe drugs from other developed nations.

Finally, in 2003 the government created a Medicare prescription drug benefit- but they are not allowed to negotiate with the drug companies on prices! This is madness and will be fixed in the Obama plan.

• REDUCE COSTS OF CATASTROPHIC ILLNESSES FOR EMPLOYERS AND THEIR EMPLOYEES.

Right now, something like 5% of the population uses up right around 50% of the actual money spent on healthcare. If you’re a small business, having a single employee come down with some super-expensive condition can drive your healthcare premiums through the roof in later years, so the Obama plan would help out those small businesses by reimbursing employers as long as that money goes directly to reducing the premiums paid by their employees.

Additionally, creating a larger pool of people for health plans overall will help keep costs down.

The second strategy is to get much more universal coverage. One of the big raps on some other nations’ healthcare plans is that they “ration” care; but the reality is that we ration care here in the United States, too.

We have somewhere between 45 and 50 million people who don’t have healthcare insurance in this country, including millions of children. Not only is this a tragedy for those families when someone does get sick, but it’s also draining all of the rest of us- because sooner or later we pay to provide those folks with care, usually when they hit the ER in the midst of a health crisis (which is more expensive than the preventative care, remember?)

Either we pay through taxes and government programs, or the hospital has to “write off” the costs of their care… and charges everyone else (that might HAVE insurance) more money to make up the difference. The reality is that people without insurance wind up costing EVERYONE more money in the long run- so getting them covered actually reduces our own costs.

• GUARANTEED ELIGIBILITY.

This one is simple- everyone’s eligible for every plan. No more can companies keep you out for pre-existing conditions. (This is extremely important when you compare it to McCain’s plan.)

• NEW AFFORDABLE, ACCESSIBLE HEALTH INSURANCE OPTIONS.

The new National Heath Insurance Exchange would be open to everyone- and they can enroll in any plan in the exchange. It’s basically like the FEHB plan, where no company can refuse to cover you for a pre-existing condition. Additionally, income-based tax credits will help keep it affordable for all, and all plans in the Exchange will have to meet certain standards for coverage, deductibles, copays, and so forth (again, like the FEHB, which sets minimum standards for all participating companies).

The Exchange will also have some neat features, like full portability of coverage (if you change jobs or move), simplified paperwork, easy enrollment, and quality/efficiency controls.

• TAX CREDITS FOR FAMILIES AND SMALL BUSINESSES.

Right now, many small businesses get caught in a Catch-22 and can’t afford to offer healthcare to their employees. The Obama plan would help them out with tax credits to encourage them to offer plans to all their employees- and the same thing would help out families with affording healthcare.

• EMPLOYER CONTRIBUTION.

This part of the plan would stop the giant multinational corporations like Wal-Mart from screwing over their employees. If they don’t offer affordable healthcare coverage to their employees, they would have to pay taxes to help support those employees getting healthcare from the Exchange. Small businesses would be exempt from this plan, but the large employers don’t get to skate by anymore.

• REQUIRE COVERAGE OF CHILDREN.

All kids deserve healthcare coverage, plain and simple. Right now, it depends on whether or not their parents can afford it; this isn’t fair to kids who have the bad luck to be saddled with parents who can’t come up with the premiums.

• EXPANSION OF MEDICAID AND SCHIP.

These plans help provide a safety net for everyone. SCHIP, in particular, ensures that every child can get healthcare.

• FLEXIBILITY FOR STATE PLANS.

Some states have gotten tired of waiting for the federal government to work on healthcare, and they’ve implemented their own plans. The Obama plan would allow those states’ plans to continue.

The final strategy in the Obama proposal is to improve and promote prevention, and strengthen public healthcare. Right now, we spend a lot of money fixing problems after they come forward. It makes a lot more sense to spend money upfront to prevent things from getting bad (and expensive) later on.

By taking the approach that having a happy, healthy nation is up to everyone, the plan would help encourage and support entities that work for public health. This will have a positive effect on healthcare costs down the road, as we won’t see as many big problems as we do today.

• EMPLOYERS.

Smart employers recognize that people who are home sick are not productive. Healthy employees help the company’s bottom line. By encouraging and rewarding things like health promotion programs, onsite clinical preventive services such as flu vaccinations, nutritious foods in company cafeterias, and exercise facilities, the plan would give employers more reasons to improve everyone’s health.

• SCHOOL SYSTEMS.

Believe it or not, but one of the biggest problems America is faced with is childhood obesity. By working with and supporting schools, we can reduce this type of problem and reduce our costs in the future.

• WORKFORCE.

This refers to the healthcare workforce, which is experiencing a crisis in some sectors. Hospitals are short of nurses, some rural communities don’t have doctors, and the Obama plan addreses these kinds of issues.

• INDIVIDUALS AND FAMILIES.

Everyone needs to step up and take responsibility for their own healthcare. The plan would aid in that by increasing public health services that can teach folks better living, and also improve funding for things like walking or biking paths. Additionally, by increasing the information available to all families and individuals, they will be able to make better choices for themselves- which saves the rest of us money in the long run.

• FEDERAL, STATE, AND LOCAL GOVERNMENTS.

All levels of government have to deal with healthcare issues. By increasing and improving coordination and integration for governments, redundancies in the system can be reduced or eliminated while overall care is improved.

If you have stuck with this whole post, you can see that the Obama plan is very well crafted and thought out- yet despite the Republicans’ claims, it’s not some giant single-payer socialist type of plan. It encourages the parts of our healthcare that work well- for example, it keeps and encourages employer-provided health insurance.

What’s more, many parts of the plan work together. The computer and infrastructure improvements make data collection and comparison much easier, which leads to the individual being able to make much better informed decisions about which plan is the best.

Eliminating redundancies amongst various levels of government also requires integrated computer systems and standardization of paperwork (or its electronic replacement).

Simply creating the National Health Insurance Exchange doesn’t do people good without also increasing pressure on large employers to pay for health insurance.

Creating larger pools of people helps to spread the costs around, and it also helps to enable those with pre-existing conditions to get into a good health plan.

All of these things work together to provide a wide-area improvement in healthcare.

McCain’s proposal, on the other hand, relies pretty much on the free market. We’ve seen how THAT worked out with the financial sector, haven’t we?

(It’s also worth noting the way each plan is written up. McCain’s web pages are all negative on Obama’s plan and the “liberal media”, but Obama’s plan is just that- his plan. Obama’s plan on his web site runs seven pages, with details; McCain’s plan is about a page and a half, and a third of it is just slams on Obama.)

McCain’s plan has, as its main thrust, the idea that everyone will get a $5,000 tax credit- that’s 5 grand back against your total income tax- but your employer-paid healthcare plan (if you have one) will be subject to income taxes.

McCain’s plan claims that this will actually wind up saving most people money (thanks to that tax credit) but the reality is that since his plan doesn’t have any incentives to get employers to provide health insurance, and since many employers will simply say “hey, you’ve got 5 grand coming to you now, go buy your own health insurance with it”, the reality is that FEWER people will wind up with coverage from their jobs under his plan.

Employers are far more likely to drop coverage altogether and tell you to go get coverage on your own, on the open market. Since the average cost of a regular comprehensive healthcare insurance plan is around $12,000, the 5 grand that McCain’s plan isn’t going to cover it- so everyone will need (or be hoping for) a 7 thousand dollar RAISE from their employer to help buy insurance.

Instead, they’ll be trying to buy insurance on the open market- and you know full well that the insurance companies will be taking advantage of that.

Worse, there’s no “must cover” provision. This means if you’re young and healthy, sure, you’ll be able to find a healthcare plan. If you’re sick, or have any kind of pre-existing condition, though, your insurance will be much more expensive. Unlike Obama’s plan, McCain’s plan calls for each state to set up its own plan for those people who are denied coverage due to pre-existing (ie, expensive) conditions.

This means that what you’ll have is one plan where all of the old, sick, expensive folks wind up, and all the rest of the plans are for young, healthy people. That’s fine- as long as you’re young and healthy. Once you’re not, you’re out of luck.

It also doesn’t have the global, widescale reach that Obama’s plan has. There’s no call for widespread integration of computer systems, no call for improving public healthcare on all levels of government, no plans to require public reporting on costs and quality by healthcare providers, no plan to require insurance companies to report how much of their premiums are winding up in the pockets of the rich dudes as profits.

Even McCain’s own advisors know that his plan will push employers to quit getting people healthcare plans and thrust them out onto the market on their own. This kind of deregulation is exactly what he wants. Here’s a great quote from an analysis of both plans:

Experts, however, fear that eliminating the tax advantage of employer-based coverage would prompt younger, healthier workers to leave their office plans. If that happened, costs for the remaining workers could skyrocket. Companies may drop coverage altogether.

“If companies know their employees have the tax credit, it relieves them of the burden of providing coverage,” said Sara Collins, who directs a health insurance program at the Commonwealth Fund. McCain’s plan “moves people out of the employer system and to the individual market.”

Some 74% of companies said that eliminating the tax exclusion would have a “strong negative impact on their workforce,” according to a September survey by the American Benefits Council.

Estimates vary, but the Tax Policy Center estimates that 20 million people would lose their employer-based coverage by 2018. Roughly the same number would gain insurance through other means. But, overall, McCain’s plan would do little to reduce the number of uninsured.

So McCain’s plan won’t get more people covered; it’s no help there. But it WILL likely thrust 20 million people out to where they’re trying to buy coverage on their own- and it’s more expensive and harder to get that way.

But wait, there’s more:

Younger, healthier workers likely wouldn’t abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain’s senior economic policy adviser.

“Why would they leave?” said Holtz-Eakin. “What they are getting from their employer is way better than what they could get with the credit.”

Now, this gets a bit complicated, but here’s why this matters… well, I’m going to let a guy named Jason Rosenbuam explain it, because he did a much better job of it than I can:

The entire premise of McCain’s health care plan is that people can do better on the free market. That’s why you get a tax credit. That’s why you would be able to buy insurance across state lines. The market supposedly makes health insurance cheaper, makes your health insurance company offer better coverage, and makes buying the insurance you need easier. And things like tying health insurance to employment are anti-free market, which is why the McCain plan taxes employer health benefits to encourage people to get insurance on the individual, free-er market.

Of course, tying health care to employment is the way we’ve done things in America for generations, and it turns out it’s also pretty popular. (Not to mention that insurance companies have to cover you through an employer health care plan, while they can deny you for pre-existing conditions on the individual market.) And so, in the face of political pressure, you have Douglas Holtz-Eakin admitting the truth.

Faced with the fact that destroying our employer-based health care system isn’t exactly a priority for most Americans, he argues that the McCain plan wouldn’t actually destroy the employer-based system. Why? Because the tax credit McCain is offering wouldn’t buy a decent health care plan, even for the young and healthy!

Let’s unpack this a little bit more. According to Holtz-Eakin, John McCain doesn’t actually want to dismantle the employer-based health care system. But, McCain’s plan would tax any health benefits you’d get through work. So, if Holtz-Eakin is right in saying you’d get better coverage through work than you’d get with the tax credit on the individual market (and he probably is), and if he’s right in saying most workers won’t drop their employer-based insurance for the individual market because they’re getting a better deal at work, then John McCain is simply proposing a tax on your current health care benefits without giving you anything in return. That’s the worst kind of tax increase.

Shorter Douglas Holtz-Eakin: John McCain’s health care plan won’t destroy the employer-based insurance system because McCain’s plan doesn’t work.

Remember John McCain: Less jobs, more war? Well now it’s John McCain: More tax, less benefits.

About the only sign of encouragement I see in the entire healthcare issue is this: At least now both parties are actively talking about and trying to propose a plan. Compare this to the past 8 years, under George W Bush, when healthcare costs were zooming up and the Republicans did… nothing. (And for those who’re going to say “what about the Democrats”, don’t forget that they tried to increase coverage for children through SCHIP, but the Republicans killed it- and that Bush would veto anything he got anyway.)

I believe that when you really look at the Obama plan, you can see that it’s comprehensive and well-coordinated. It’s time for a change. Obama’s plan is’nt some giant, government-run single-payer deal, but it does try and get more people covered and has extensive provisions to spend some money upfront to reduce the costs for everyone later down the road.

That’s a plan we need. That’s Change We Can Believe In.