If you listen to some politicians, they will tell you that the healthcare system in the United States is fundamentally broken. These politicians point to the fact that 46 million Americans, approximately 15% of the population, do not have healthcare coverage as evidence of a "fundamentally broken" system.1 Let's look at this from another perspective. Our nation's population is approximately 305 million people. If 46 million people do not have healthcare coverage that must mean that 259 million or 85% of the total population do have healthcare coverage. If a large majority of the population is covered, and they like their coverage, how then can we say that the system is fundamentally broken?
The truth is the quality of care provided by the healthcare system in the United States with all its faults is arguably the best in the world. We should keep in mind that people and politicians from other countries seek out healthcare in the U.S. in spite of the fact that they have universal healthcare in their own countries. Therefore, we must be careful not to throw out the baby with the bath water when we talk about reforms. Do we need to provide increased access, and lower costs? Yes. I do not think anyone will argue that point. The real question is how do we accomplish this objective without creating hidden or direct tax increases to pay for it?
The current bill being debated in Congress is a mess. The bill includes a provision for the creation of a public health insurance option. It also includes provisions that restrict the actions of private insurance companies. These two actions taken together can only lead to one outcome. People will be pushed into the government's program, which will eventually lead to a demise of the private insurance industry. The government already controls 46% of all health care spending in the U.S. and if the proposed legislation is passed in its current form it will expand the government's influence and control.2 Fortunately, people have had enough experience with governmental agencies like the Internal Revenue Service (IRS), Department of Motor Vehicles (DMV), Federal Emergency Management Agency (FEMA), and the Army Corps of Engineers to realize that increasing governmental control over healthcare is not in our best interest. This is starting to become more evident in polls where more than half of Americans indicate that they are opposed to a government run healthcare program.3
As if expanded government control over healthcare were not enough, the current bill adds insult to injury with its estimated $1.5 trillion price tag.4 The Congressional Budget Office (CBO) has indicated that we are facing a budget deficit of over $9 trillion from 2010 to 2019 with our current revenue and spending estimates. (This means that we will add $9 trillion in new debt to our existing $11 trillion debt.) Adding another $1.5 trillion to this is more than irresponsible, it is in my opinion, malfeasance. We cannot allow our representatives to bankrupt our nation! We have to look at alternatives that accomplish the objective to improve healthcare access without adding to our national debt. I am certain that we can do this if we look for and embrace the best ideas regardless of whether they come from someone with a (D) an (R) or an (I) behind their name.
No matter what the politicians say I can't help but wonder, if a government run healthcare system is truly our best option to extend coverage, reduce costs, and improve quality why is it that the persons who are imposing this system on the citizens of the United States are unwilling to participate in the program? Once again, our representatives are creating one set of rules for the general population, but another set for themselves. If they are not willing to be a part of the program that they will create for the general population why should we believe them when they tell us that a government run option will not create shortages and a lower quality of care?
I believe the current proposed method for improving healthcare will increase cost, and decrease access by creating longer wait times to receive care when it is needed. It will also lead to a rationing of medicine and treatment. This has been shown to be the case where a public option dominates the marketplace in countries like Canada and the United Kingdom.5,6 What then can we do to improve our own system without making the same mistakes? Below are several ideas that I believe will make a significant positive impact, and I will support to improve healthcare as your representative.
Decreasing Premiums by Expanding Risk Pools of Individuals and Small Businesses
Health insurance like any other form of insurance is a gamble. The insurance company is betting that you will pay more in premiums than they will actually payout in benefits. Insurance companies minimize their risk by expanding their customer base. Large businesses get discounted health insurance rates for their employees in part because they have a large number of employees. As such, the risk is spread among a larger group of people. Individuals and persons working in small businesses do not have the same advantage. Therefore, we should create a process where it is easier for individuals and small businesses to come together to create larger risk pools so that they can also benefit from discounted insurance rates.
A good example of this is the movement towards private (not government funded) non-profit health insurance purchasing cooperatives. Several states currently have provisions which allow small employers to come together to purchase health care insurance which is intended to provide them with premiums lower than what they could obtain individually. They also have the potential to provide employees with more health plan choices than could otherwise be offered by a single employer.7,8 Not all states have yet provided this opportunity for businesses, however it is a practical solution since it adds no additional cost to state and federal budgets.
Changing the Tax Treatment of Health Benefits and Creating Health Savings Accounts
Companies, which offer health insurance as part of a benefits package for their employees, contribute funding for health insurance with pre-tax money. However, individuals who do not work at organizations, which offer health insurance benefits, must go out on their own and purchase insurance with after-tax money.9 This creates a tax disadvantage for individuals, and contributes in part to the total number of uninsured Americans. This occurs because without the tax break, health insurance is more expensive to individuals who must purchase it on their own.
Some politicians have proposed that one way we could make things fairer would be to change the current tax rules that allow companies to contribute to their employee's health insurance with pre-tax dollars. In other words, they would consider the contributions to health insurance as taxable income. This would mean that people working for employers who contribute to their health insurance would no longer receive favorable tax treatment. Since this is the equivalent of a new tax on existing employer contributions this would likely lead to employers not being able to offer the same, or any level of insurance to their employees.
If we want to extend coverage to more people, we should not look at increasing taxes to level the playing field. This will only cause more companies to stop offering health benefits. Instead, we should look for ways to encourage more companies to contribute towards health care plans for their employees. One way we can do this is through the use of health savings accounts. As opposed to taxing employer contributions, we should allow tax credits for employers and individuals who contribute money (up to an annual limit) into a health savings account. This would level the playing field for all citizens by providing an equitable tax treatment of income, which is set aside for health care needs. This is another logical solution since it would also not require any increases in tax revenue or additional spending by the federal government.
Improving Portability Through Health Savings Accounts
In addition to health savings accounts (HSA) providing tax relief for income set aside for immediate and future health care needs, I believe HSAs can also be useful in improving the portability of health insurance. Consider this, if you want to change your insurance carrier on your homeowners or your automobile insurance you can pick up the telephone, call several insurance companies to get quotes, and change your coverage in less than a week. However, you probably cannot change your health insurance without first switching jobs. Health savings accounts could change this.
Providing employers and individuals the ability to contribute to a health savings account would allow for more choices and freedom. Individuals could use the money in their health savings account to shop for, and select the coverage that best fits their individual needs from multiple health insurance providers as opposed to only being able to select a plan from the one insurance provider selected by their employer. This will increase competition among providers, which will help to keep cost down. In addition, giving the power back to the individual will encourage citizens to be informed consumers of health care insurance and services since they will be responsible for controlling the costs. Once again, we can move towards the objective of improving health care without imposing any new taxes or increasing any spending in the federal government. Using health savings accounts to make health insurance to be more portable is a logical and practical step that we should take.
Health Care Supply and Demand - Pharmacies got it. Why didn't Medical Schools?
Health care is no different than any other good or service where the price you pay is determined primarily by the forces of supply and demand. Every springtime in South Louisiana, we get a refresher course in these forces during crawfish season. Early in the season, when supply is low and demand is high the prices go up. When the supply of crawfish increases, the prices decline (slightly).
The same general principles apply for health care. Many pharmacy companies like CVS, and Rite Aid could see that an aging population would increase the demand for their products and services. They have responded by putting up new pharmacies on what seems like every major intersection in town. My question is this. Why didn't medical schools see the same trend and work to increase the supply of the most critical component of the health care system? Doctors. In 2002 there were 15,677 graduates from medical school. In 2008 there were 16,167 graduates from medical school. That is an increase of 3%.10 If we want to make sure that health care is not rationed and the costs do not continue to rise, one common sense solution would be to increase the supply of doctors. With an increasing demand by an aging population, I believe we should be increasing the number of medical school graduates by more than 3% per year over a six-year period.
Increasing the number of medical school graduates will not be free. We will have to invest in medical schools and provide them with the resources necessary to ensure they continue to graduate the best-trained doctors in the world. However, increasing the number of available doctors will enable us to expand primary care facilities across the nation. Having more physicians and clinics will provide alternatives for individuals who currently seek their primary care from hospital emergency rooms. Therefore, investing in medical schools and increasing the number of available doctors will, in the end cost significantly less than most of the other alternatives being discussed in Washington D.C. to improve health care.
Medical malpractice and Lawsuit reform
When doctors order unneeded tests out of a fear of being sued they are practicing defensive medicine. Some estimates indicate that the practice of defensive medicine accounts for between $100 billion and $178 billion per year in unnecessary health care expenses. On a personal level it means that the average American family is paying $1,700 to $2,000 in health care costs just to cover the costs associated with defensive medicine.11 Doctors should not view patients as the next potential law suit. In order to restore the doctor and patient relationship as well as minimize health care costs we must revise the current system of medical liability.
On September 1, 2003, the State of Texas addressed medical malpractice liability limits as a part of a broader tort reform law. This change in the law had several outcomes. First, the number of insurance companies offering medical malpractice insurance in the State of Texas increased from four to nineteen. With more companies offering insurance policies in Texas there is greater competition and better pricing on insurance premiums. Second, the rates for medical malpractice insurance offered by most companies decreased 10% to 15%. This is important to consumers because when doctors pay less for health insurance they can charge less for their services. Finally, the number of physicians increased in the state by 5% from May 2003 to September 2004.12 When more doctors are practicing medicine in the State there are shorter wait times to see a physician. We should learn from each of these outcomes as we think about what will and will not work to improve our health care system.
Medical Administration - Electronic Records
Using available technology to improve administrative efficiency sounds logical. Yet, many doctor's offices and hospitals still do not have access to the latest technology to create and share electronic medical records. It has been suggested that between 5% and 10% of all health care expenditures are for administrative costs. If the utilization of technology and electronic medical record could save 2% of the $2.2 trillion in annual expenses on healthcare, it could mean an annual savings of $44 billion. In order to see this savings in efficiency however, private doctors and hospitals will need to make the necessary investments in order to purchase and implement the technology required to maintain and secure electronic medical records. This will be a significant investment and is one key factor in why so many small doctor's offices and hospitals have not yet purchased the necessary software. How then can we encourage them to make this investment?
If the cash for clunkers program has taught our elected officials anything hopefully, they have a better understanding of the power of using incentives to influence behavior. We know we need to have a health care system that is efficient as possible. We know that using technology to maintain electronic medical records will help us to be more efficient. Therefore, I would suggest that we offer tax credits to doctors and hospitals that purchase computers and software systems that enable them to create, maintain and secure electronic medical records.
There is no single action that can be taken which will resolve the concerns of most Americans regarding health care. It is going to take several common sense actions which taken together will have a cumulative effect towards improving health care access, cost and quality. The items listed here are by no means a list of the only actions that should be taken to improve health care. Certainly there are other actions that will help, for example, working to eliminate the fraud and waste that exists in the current government-run health system. As your representative, I will be willing to listen to your ideas. I am certain that together we can generate and implement sensible solutions to improve health care in the U.S. without burdening our future generations with debt.
- Obringer, L., Jeffries, M. How health Insurance Works. Retrieved May 15, 2009 from http://health.howstuffworks.com/health-insurance.htm.
- Owcharenko, N., The Stimulus Bill: Why the Senate Must Fix the Health Care Provisions. The Heritage Foundation. Retrieved July 6, 2009 from http://www.heritage.org/Research/HealthCare/wm2267.cfm.
- Center for Health Transformation, Latest Poll Shows Most Americans Oppose Government-Run Healthcare Bill. Retrieved July 21, 2009 from http://www.healthtransformation.net/cs/insider_advantage_poll.
- Alonso-Zaldivar, R., Senate health committee clears insurance overhaul. Retrieved July 15, 2009 from http://news.yahoo.com/s/ap/us_health_care_overhaul/print.
- National Coalition on Health Care. Health Care in Canada. Retrieved July 17, 2009 from http://www.nchc.org/facts/world.shtml.
- National Coalition on Health Care. Health Care in the United Kingdom. Retrieved July 17, 2009 from http://www.nchc.org/facts/world.shtml.
- Kaminski, J. Health Insurance Purchasing Cooperatives. Office of Legislative Research. Retrieved July 29,2009 from http://www.cga.ct.gov/2006/rpt/2006-R-0005.htm
- Haislmaier, E., Smith, D., and Owcharenko, N. Health Care Co-Operatives: Doing It the Right Way. The Heritage Foundation. Retrieved July 29, 2009 from http://author.heritage.org/Research/HealthCare/wm2493.cfm
- Owcharenko, N., A Principled Path to Rational Health Care Reform. The Heritage Foundation. Retrieved June 22, 2009 from http://www.heritage.org/Research/HealthCare/wm2448.cfm.
- American Association of Medical Colleges. Table 29: Total U.S. Medical School Graduates by Race and Ethnicity within Sex, 2002-2008. Retrieved July 30, 2009 from http://www.aamc.org/data/facts/2008/gradraceeth0208.htm.
- Weinstein, S., The Cost of Defensive Medicine. American Association of Orthopedic Surgerons. Retrieved August 4, 2009 from http://www.aaos.org/news/aaosnow/nov08/managing7.asp.
- Kaminski, J. Medical Malpractice - Impact of Texas Liability Limits. Office of Legislative Research. Retrieved July 29,2009 from http://www.cga.ct.gov/2004/rpt/2004-r-0918.htm.