Here is the bill:
http://edlabor.house.gov/documents/111/pdf/publications/AAHCA-BillText-071409.pdf
And here is a diagram of how it will work:
The current healthcare/insurance industry is already a take from the healthy/wealthy and give to the sick/poor. This bill will take this concept to the next level as well as introduce additional spending and waste. This is a bad idea. We should seek to reduce waste and spending on overhead.
“U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.” (taken from NCHC)
With that, let me talk about where I see the issues.
Overhead
Where do we attribute this spending? In the stat above $4.3T equates to about $14K annually per person in the US. While some of the growth can be attributed to the increase in the aging population, where does the rest of the growth come from and where does this money go? Let’s look at the revenue of some of the larger insurance companies:
Conventry: $12B annually.
CIGNA: $20B annually.
Humana: $30B annually.
United Health: $80B annually.
At this rate, it should be obvious where we spend $2.4T today or see where how we will get to the $4.3T by 2017. So do we need healthcare reform or insurance reform?
Where does the spending go? Much of it is waste in the form of overhead. Obviously insurance companies take a big chunk, doctors, hospitals, drug companies, long-term health care facilities, etc. Think about all the paperwork you fill out, the plastic card you carry, the systems used to keep your records, the bills sent to you and your insurance company, etc. It takes a lot of people to support this system. I don’t claim to have the answers here but I keep coming back to Lean Systems and thinking if we could eliminate waste here it could dramatically decrease costs in this area.
Personal Responsibility
Atul Gawande wrote an interesting article for the New Yorker on where some of the money goes. This article highlights some of the reasons for the increase in spending over the coming years. Lack of accountability. Why should people who take care of themselves, eat right and exercise be penalized (pay) for those that do not? Jordan Shlain, MD suggests, “You either get with the health program or you don't get the benefits.” A Practicing Doctor's Prescription for Health Care Reform.
Higher Expectations
As our understanding of the human body, disease and aging continues to increase so does the quality and efficacy of modern medicine and treatments. We find ourselves in a culture that has zero tolerance for discomfort or inconvenience. Have you ever gone to the doctor because you were tired and dealing with your common cold? We are spending more, because we demand more.
Lack of a True Health Care Market
Have you ever comparison shopped for your health care? Do you even know where to get this information? Try calling your doctor’s office and asking how much it will cost for a test for strep throat test, an arm cast, CBC or CHEM-7. How do you find the best orthopedic surgeon in your area? It’s easier for me to find a good plumber that a good doctor. We need a better system to comparison shop and determine those providers that have the highest value (price vs. level of service).
Conclusion
ObamaCare seeks to solve a perceived problem through an increase in spending. This is NOT the answer! We should look at addressing the issues above in small test markets and empirically evaluate the outcome. As always your comments are welcome!
Additional reading:
Long Term Outlook for Health Care Spending
Canadian and American health care systems compared
Does Health Cost Too Much? If you think so, stop buying so much
Ann C. Engle’s Summary of Bast, J. L., R. C. Rue and S. A. Wesbury Jr. 1993
Ask the Editors: Why Does Health Care Cost So Much?