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By washcomp
October 1, 2009

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I'm not going to mark this as "OT" as the decisions made will have long lasting dramatic effects on our economy. This is borderline rant, but is the way I interpret the problem.

Firstly, this is not intended to create a political debate over the various national healthcare plans, but just to point out a couple of "obvious" facts. It was spurred by my receiving a random phone call from the Quinnipiac College poll asking yes/no questions which were difficult to answer because each answer should have been qualified with a discussion.

At the end, I asked the young interrogator a couple of questions of my own (based on some of the questions she had asked me):

I asked her if she thought nationalized health care was a good idea - she answered "yes". I asked if she thought about $1,500 for a good PPO family plan (about what I pay) was a reasonable price - she answered, that that "sounded about right". I said, "well, if hypothetically she made $25K per year, would she be able to afford the $18K per year cost? She answered "no". I asked if she thought her employer should pay for it and she answered that "of course she preferred that". I pointed out, that in context it really didn't matter. She was confused. I said "look, simplistically, there are two choices, first to increase her salary by 18 grand a year, or second to increase her cost to employer by a similar amount. In either case, in order to keep from going out of business, the cost would have to be added to the goods or services that the employer sold and she would be paying her prorated share when she (or others) purchased those goods.

Now, understand that philosophically I am in favor of national health care, but want to point out that while the costs may be asymmetrically distributed, there are no free lunches. While the government employee programs and the VA programs are presumably fully funded, our current public system, Medicare is notoriously underfunded and considerably broken from a long term standpoint. A universal system will have to be a "pay as you go" type of arrangement as doctors/hospitals will not accept IOU's.

We are well aware that, because of "waste" we are paying far more for health care than any other country on a per capita basis. We can define "waste" as somebody's profit (which they will not be willing to gratuitously donate to the cause). We know that the very high malpractice insurance costs could be addressed by tort reform. This will negatively impact attorneys. The question is whether doctors would then reduce their charges to compensate for their cost savings and I would think not voluntarily. We can increase competition by insurance companies across state lines. This would reduce margins for the insurance companies - something they are not happy about and will fight tooth and nail. Anecdotally our health insurance plan just had a 24% increase which I attribute more to our carrier trying to get a price structure that could be "grandfathered" than to an increase in their costs. About 20 years ago, during a trip to France, we lost a nut attaching the foot rest of my kid's Quickie brand wheel chair and dropped into a supplier. We got into a discussion and an equivalent chair to my kids (which IIRC cost close to a couple of grand) was about $350 dollars. The French guy scratched his head in wonder that we (our insurance company) could justify paying that much for the commodity. So, obviously, there is waste in the supply chain of medical "appliances" and supplies. The administrative costs of our medical system are also to blame, however many of those costs are currently mandated by law to protect patient's rights, satisfy medical insurance requirements, assure that the proper medicine is available and given in appropriate dosage, that the proper kidney is removed, etc. Unless procedures and regulations are consciously changed, these costs will remain.

How deeply we, as a nation, are willing to fight the "special interests" involved and completely revise our concept of what constitutes a "fair" cost structure to a national medical insurance program will determine the cost to our society. Unless this cost is funded asymmetrically through something like our progressive income tax system (in which case the wealthy would bear the brunt of the costs for the rest of the population), we will all be responsible for significant additional expense (either as direct payment or increased cost of goods/services). Depending on the timing of a plan's implementation as compared to our quest for economic recovery from our current situation, the increase in cost to society will potentially create a significant headwind to our recovery (whether by current cost or increase in debt).

There are no free lunches (except to the lowest economic strata) and in order for a health program to be supportable by our economy, Congress and the American people will have to aggressively look for cost savings (even at the expense of the legal, medical, insurance and medical supply business groups).

If we indeed have a desire (and apparently our government has decided that come hell or high water, we will have a plan of some sort) and a willingness to slash and burn, almost rebuilding our system from its roots to resemble a European or Canadian model, all we will be doing is reshuffling the deck and increasing the national cost structure during a time when every penny counts.

Jeff