Taming Healthcare Costs

In my last post, I mentioned that the most contentious aspect of the health care debate is costs.  For instance, media groups leaning right as well as the architects of the Republican proposal known as the Better Care Reconciliation Act (BCRA) will tell you in response to the statement that it cuts Medicaid payments, that it in fact increases them, which is true.  Unfortunately, it is also true that this increase is much less than those under the Affordable Care Act (ACA) which is why media groups which lean left are emphasizing this reduction, and why many Governors from both parties are nervous about their ability to make up the difference.

My own Senator, Pat Toomey from Pennsylvania, from whom I receive a weekly update, makes the former case by emphasizing that it "puts Medicaid on a sustainable path, averting a future fiscal crisis".  In other words, less payments from the federal level, so that we can still afford the program at all.  How Toomey expects states like Pennsylvania to make up the difference is not part of his defense.

And, that is the rub.  Regardless of which side you lean to, costs have been rising, and will continue to rise if we don't examine the facts behind the problem.

America is aging, its population increasing on average by two years every decade, and will continue to do so as a result of the plethora of baby boomers (those born from 1946 to 1964).  For those 19 years, just about 4 million live births occurred in America every year; that is over 75 million people! In addition to this burst of births, we are living longer as life expectancy for Americans has increased on the average by 9 years (from just under 70 to just under 79) since 1960.

In other words, more people are living longer which produces higher health care costs. But that is just the beginning of the story.  It is not just that there are and will continue to be more older people, but our expectations of the quality of our health have also increased dramatically.  New knees, new hips, new faces, new organs, all extend our lives, but cost much more money. And the incredible boom in the pharmaceutical industry which now provides easy relief for so many real and imagined ailments, adds even more to the rising costs.

We experience pain, no one's favorite feeling, and rush to the local health care provider or upstairs medicine cabinet to ease our suffering.  Not necessarily a bad thing, but not cheap in comparison to understanding and accepting that a little pain is a signal from our body that we are doing something wrong.  Indigestion?  Take a purple pill and eat whatever you like.

It is a bit ironic that we turn to pharmaceuticals for what ails us in record numbers, yet we bemoan the outrageous profits and salaries in the pharma industry, and are aghast at the spreading opioid epidemic.  When the common answer to life's ups and downs is a little yellow pill, then we must expect to pay for all that medication, one way or the other.  But, solving the increasing federal funding morass for health care costs by passing along the responsibility to the next level is less an answer, more a case of passing the buck.

So, what is the answer?

First, we need to admit that we have a spending problem.  The United States spends significantly more money per capita than any other country.  In one of the tables I found, in 2015 we spent two times as much per person, or more, than all but 9 other countries in the world, including Canada, Australia, France, Japan, and the United Kingdom, among others, while attaining only limited benefits from these extra expenditures.  Most rankings of healthcare outcomes by country lists the United States in the middle of the pack  (or lower) in life expectancy, infant mortality, cancer survival rates ,etc.  All which means that we are not getting good value for the money we are spending. Or put another way, too much of the money is being diverted from addressing health problems to maintaining profits, excessive executive salaries, political campaign donations, advertising which convinces consumers that they are sicker than they are, and, most of all, to maintain the medical/pharmaceutical complex at the cost of actually improving wellness.  

https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita,

Second, if we are going to continue to be apoplectic in thinking that a single payer/universal health care system is "socialized medicine", then we need to come up with another method of creating the biggest pools possible so as to spread out the higher costs for the elderly and sick among the young and healthy, while maintaining reasonable premiums.  There is not doubt that costs are lower in countries with single payer systems, but perhaps those models don't automatically apply to a country with a higher population and more diverse economic and cultural demographics.

One aspect of the recent GOP proposal isolates the sick into pools outside the mainstream, thereby lowering costs for the majority but forcing those with chronic or fatal diseases to choose between life and money.  Yikes!

Perhaps a better answer lies somewhere in between.  I have often proposed a single payer system run by the states.  The federal requirement of a minimum level of insurance coverage for all would still be law, but each state would be charged with establishing exchanges which feature a variety of health insurance plan options, but still offered by the current health insurance industry.  Remove employers from the equation to eliminate the disadvantage that the self employed currently faces, and include all elected officials who serve that state, regardless if they work in a state capital or Washington thereby making them consumers of the same system they help develop.  (Removing the employer participation may also free up some money, perhaps to invest in more livable wages, and, of course, capital improvements for the business itself).

Certainly, the federal government would still need to provide some funds for this system but the states would be tasked with negotiating the costs and details of the various insurance plans to be offered to its citizens.  Those that qualify for assistance, based on that state's particular demographics, would be eligible, as opposed to making it a federal demographic.

The goals would be to redirect responsibility for health care insurance back to the individual family or person, provide affordable options that balance low premiums with high deductibles for those with few health issues, higher premiums but lower deductibles for those with chronic health issues, caps on yearly and lifetime expenditures regardless of health, and no preexisting conditions clauses. Health care insurance becomes a right but a right that requires individual responsibility to manage.

The good news in all this is that the baby boomer peak will occur and we will reach a point where costs may somewhat flatten on their own.  But that is still 20 years away, if we assume the majority of people born in the baby boomer generation, will be dead by 2037.  

In the meantime, we might also want to remind our elected officials and those we see in the mirror each day, that there is plenty of money in these great United States to pay for better outcomes and provide health insurance for all American citizens.  Considering the $200 million contracts being signed by various athletes, the eight figure salaries being paid to CEO's, the billions of dollars being spent by the American public on entertainment, and the literally, trillions of dollars that are safely tucked offshore by the 1% who value their wealth more than their country's future, it is hard to fathom why we agonize over the costs of providing health insurance and improving health outcomes.

Perhaps a reevaluation of our priorities is the true path to finding a solution.