Brian: I think "Obamacare" and the future of health insurance coverage and rates are greatly misunderstood and miscommunicated. Kinda like calling the IRS and getting a different answer each time. Many Seniors in their 70's probably pay as much or more for health insurance than working families. Medicare Part A -enough credits n/c Medicare Part B. $99x2 Medicare Part D $25x2 Medicare Supplement $200-$500. With many companies ending retiree premiums and/or subsidies, and only government employees receiving retiree coverage, the future is bleak. With the cost being prohibitive for Obamacare to cover those making above 130% of poverty level, the cost curve will likely remain unbroken. New saying will be revised to say "Nothing is Certain Except Death, Taxes, and Insurance."
JB: You're correct about the system being misunderstood and miscommunicated. I've followed the debate since before it became widely public and here are a few items that muddy the discussion
.►"HEALTHCARE COSTS" ARE FOR MUCH MORE THAN ACTUAL CARE.
Starting with the bills -- whether from a doctor, clinic, hospital, lab, pharmacy, rehab center, durable equipment or other provider -- a large portion of said "costs" have little or nothing to do with healthcare. Those bills reflect overhead costs, advertising expenses, incentive bonuses for staff, sales commissions, capital costs, quantity discounts and of course professional compensation. And at every step of the way there must be profits, cuz that's the fuel that drives the private sector.
Already one can understand why the VA and medical corps of the military branches are less expensive. Facilities are paid for, owned by the government, professionals from housekeeping to therapists to surgeons are basically on salary, and in the case of the VA (but NOT with Medicare -- YET) they receive negotiated lower prices for drugs since they are one of the industry's biggest customers. (Look for this part of the Medicare savings arguments if and when it becomes more public. I have already heard passing references to negotiated Medicare drug prices from a few places but thus far it's like water on teflon.)
►INSURANCE AND HEALTH CARE ARE NOT THE SAME
"Health care" is about managing health, both good and bad. "Insurance" is about risk management of financial affairs secondary to the delivery (or in many cases NON-delivery) of health care. Those who think that the costs of insurance equal the costs of health care are simply not paying attention. But I'm sure you're not one of them. Insurance premiums obviously are the only revenue stream for those companies collecting them. Which means that every dime of their budget, from administrative expenses all the way to executive compensation and sales bonuses have but ONE SOURCE -- PREMIUMS. It is for that reason that an important part of ACA is the "medical cost ratio" which dictates that at least eighty percent of insurance premiums must be for actual health care costs. (Already you can see at least fifteen or twenty percent of insurance becoming something to consider when discussing overall expenses.) Where do you think the money comes from to buy all that expensive TV advertising in prime time for designer drugs, ED remedies and the like? There is a clear relationship between those direct-to-consumer ads and the price of drugs. (DTC ads were not allowed when I was growing up, mainly because prescription meds were not something that laymen were supposed to know anything about. When the medical community saw the profit potential the rest became history.)
►BENEFICIARIES DO NOT PAY THE COSTS
As long as insurance premiums are subsidized by employers their employees will never have any idea how expensive their health care really is. Those who lose their jobs know quick enough when the appropriately named COBRA premiums bite them, but fortunately most people never face that reality. And most employers are "self-insured" meaning that they employ a third party administrator (TPA) to manage employee medical bills, of which the company pays 100% plus a service charge from the TPA
But the employer has two reasons not to question those bills too closely. First of all, those expenses are tax-advantaged. Insurance premiums are excluded from taxes for their employees AND any matching costs paid by the employer are listed as a business expense on the balance sheet. In neither case is there much incentive to reduce any but the most egregious excess costs. So insurance beneficiaries have an all-you-can-eat mentality about their health care. Once a token "co-pay" and annual deductible are met, anything more becomes just another trip to the buffet.
This could go on and on, but that is enough to cover the main problems. Part of the inspiration for ACA came from a powerful article in the New Yorker by Atul Gawande which you may find interesting comparing Medicare costs of McAllen and El Paso, Texas
The Healthcare Conundrum
This article details how wide the "costs" gap can become between two places in the same system.
One of the objectives of ACA is to promote better healthcare at lower costs.
The Medicare payment data provided the most detail. Between 2001 and 2005, critically ill Medicare patients received almost fifty per cent more specialist visits in McAllen than in El Paso, and were two-thirds more likely to see ten or more specialists in a six-month period. In 2005 and 2006, patients in McAllen received twenty per cent more abdominal ultrasounds, thirty per cent more bone-density studies, sixty per cent more stress tests with echocardiography, two hundred per cent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and five hundred and fifty per cent more urine-flow studies to diagnose prostate troubles. They received one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for five times as many home-nurse visits. The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.
Brian: Doctors who are selling their practice to go to work for hospitals are feeling the same pressure and stress of having to produce at higher levels each year that employees in the corporate world have been enduring for years. Those who can spin the hamster wheel the fastest, get promoted and make lots of money, while most just get along and complain that it's not fun anymore. Meanwhile, hospital corporations are able to charge Medicare twice as much as an independent doctor. So much for bending the cost curve of healthcare downward. The Medical Industrial Complex, like other sectors, always sign on to the political winds blowing once the direction is certain, but always looks to change the dynamics and bend the parameters for their own continued benefit and growth.
JB: Depends on which doctors and which hospitals. Didn't you read the article? I do recall your other link about hospital doctors on hamster wheels and I'm sure that happens. But a growing number of systems will replicate the economy and performance of the Mayos, Geisingers, Clevelands, Kaisers and ElPasos in that medical-industrial complex. As for charging Medicare too much, as soon as local consolidations take place (which may take several years) you can just know that the Medicare tit is gonna start running dry. It won't matter how much they bill, the amount approved by Medicare will be way short. As you know a number of doctors are already shifting to concierge practices and its various permutations, and refusing to take Medicare patients in the process. More power to them. For patients with that level of financial resources that may be the best option in the future. I expect Medicare to start drying up as the money dries up, but hopefully with an improved level of care resulting from (lots of doctors hate this term...) CER, Comparative Effectiveness Research. http://www.nlm.nih.gov/hsrinfo/cer.html
The footprint of most health care systems in America is often as big as an industrial park. There are so many clinics, labs, private practices, specialty centers, agencies, imaging centers, retail outlets selling durable equipment and disposables, pharmacies, the list is endless... And that doesn't take in to account the ancillary non-medical businesses from window-cleaning, landscaping and waste removal to uniform sales, food service outlets and parking garages. It takes your breath away to think of it. And every dollar supporting this is in one way or another the cost of health care in America. This is madness. Totally crazy. Insanely inefficient. The footprint of healthcare systems should be not much bigger than that of a good-sized hospital. And they should be scattered far and wide, like grocery stores, in proximity to the places where health care is needed -- NOT in the most affluent parts of the metroplexes where they are now concentrated. A more robust system of community health centers will be part of that picture. And that, too, is part of the vision of ACA.
We are on the cusp of a healthcare revolution. And if those who cannot see the future don't succeed in killing it, the US can and will become a model of excellence for the rest of the world that it should already be. I don't expect to see it in my lifetime. But my vision of what it can be in the future is very positive. (But no, it will not be a spontaneous product of free enterprise. That has proved to be a spectacularly expensive, inequitable and unsustainable luxury. See "footprints" above.)
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