From all I have read and seen there does not appear to be any doubt that reform is needed. However, reform takes many shapes and can be achieved in many ways. For example, we need to look at the level of care provided and ask the question, based on the perspective that we each deserve 100% of the care available to us under whatever plan (either private or public) is available: Are there groups among us who get more than their fair share of coverage? The answer invariably is yes. Two prime examples of this are our Congressman and women and some (not all) labor unions. I think we need to examine the health plans that are out there and look towards establishing some equilibrium with accompanying cost control measures in place.
Reform should also look at the price mechanisms in place for pharmaceuticals. From what I have read, the Pharmaceutical lobby has offered $80 billion in price cuts on medications used by pensioners over the next ten years. This will be a good thing if they do not seek to make up the price cut through purchases by those not retired. It also goes to show that there is leeway in the pricing of these medications.
In addition to the price cuts in pharmaceuticals the Hospital lobby also added a $150 billion price cuts in the rates charged the government over the next ten years. Between the two, that totals $230 billion dollars or $23 billion per year.
But is that enough? No. One of the reasons these price cuts were offered up in the first place was that these industries feared that they would be asked / required to offer up more. The one thing capitalists fear the most, in an environment where demand exists, is price controls. Right now, the government pays just over half of the revenue stream at an average hospital. Some would say that the government underpays while some would say that the rates charged are too high. However, when you factor in the tax status of most of the hospitals, you will find that a majority of them are tax exempt, non-profit entities – no property tax, no income tax. Therefore, I do not necessarily buy the argument that these hospitals will be squeezed too hard and should be able to reduce their rates further. They need to question everything up to and including the pay scales (I know that will inflame some folks). Some will say that these non-profit hospitals perform charitable services to the poor and they I would agree. However, I would also look at it from the perspective of a recent IRS study that suggested that these non-profits provide very little charitable services while paying enormous salaries or going on acquisition sprees.
Aside from Price Controls, hospitals fear competition. There was a consolidations phase that occurred in the late 90’s after managed healthcare failed. The resultant lack of competition has done little to reduce prices because the choices are few. This opens the door for innovation and that could take the form, as it is now, of retail clinics. Healthcare facilities operated out Wal-Marts (or Walgreen’s, CVS’s or even large chained supermarkets) and staffed by Physicians Assistants and/or Nurse Practitioners – both of which are far less expensive than doctors and hospitals. Imagine “Everyday Pricing” for healthcare at your local Wal-Mart healthcare clinic. So long as realistic boundaries are established in terms of what can be performed without the presence of a doctor then that alone will reduce healthcare costs (as well as increase ancillary spending).
Subscribe to:
Post Comments (Atom)
I liked this. I learned a lot from this post that I had no idea about. My own comment is simple but extremely powerful. In large companies, health care is cheaper because the risk is spread over a larger group of people. So in essence...small company = expensive health care, large company = cheap health care.
ReplyDeleteImagine if we spread that risk over the entire population - how cheap would health care become then?