Common Sense
Health Care Reform
“We the People”

By Carla Adams

Proverbs 24:11

Have you noticed all of the contentious debate over health care reform over the past few months? It’s all over television news, mainstream newspapers, and the Internet. Most democrats contend that reforming health care must include a public, government-run option. Republicans oppose. What happened to what “We the People” want or what we believe is best for us?

Regardless of your political affiliation, most Americans believe we need health care reform. There are major problems with our current health care system that need to be changed. But, is H.R. 3200 the answer or should we consider other options on the table?

Get a copy of H.R. 3200 and take a quick look. It’s a legal document filled with legislative jargon, fragmented sentences and assorted “gibberish” that modify laws already on the books (somewhere). To understand the bill (H.R. 3200), you need to understand and know how to find the existing laws it references. If you do read the bill, you will find it is very vague - by design - because the actual details will be added as policy, directives and regulations later.

What’s more disconcerting about H.R. 3200 is that President Obama, his administration and Congress can’t easily explain what is in the bill. Each communicates conflicting statements and sound bites don’t tell the whole story. Is there any wonder why we can’t be sure WHAT is in it or what is going to come out of it all?

Many American’s see this health care plan as just too big. Additionally, there isn’t any convincing evidence that it will not put American’s further in the debt than we are already. Tackling smaller pieces of the problem a little at a time, might make mistakes easier to correct as we get fix our already broken economy.

Those who support the plan would better serve “We the People” by offering facts and evidence to counter the Congressional Budget Office’s figures that show H.R. 3200 will most likely cost another $1 trillion or more over the next 10 years. Instead, they offer their belief, versus facts, that savings will come from government competition and the fact that insurance companies will have to cut out the unwarranted salaries they give their executives and their ability to continue making profits for their companies and shareholders.

So, read the bill if you have time. It’s your civic duty to be informed about the laws passed by your elected officials. Be aware, however, it will lead to more questions than answers. For the purpose of this article, though, let’s take a look at the facts and a few common sense approaches we can take to benefit “We the People” that will improve health care for everyone and save the taxpayer money.

Facts about Health Care Costs

Fact 1: Health care costs are rising fast.
Health spending has grown four times faster than inflation and if something isn't done now, health care programs for the elderly and poor — Medicare and Medicaid, respectively — could end up bankrupting our country within another 50 years.1 Right now, our country spends over $2 trillion a year for health care, yet an estimated 46 million people (this number includes individuals who are not United States citizens, who are already covered by Medicaid, or who simply choose not to purchase health care even though they can afford it) don’t have health coverage.2

Fact 2: Employer/employee health insurance costs are growing.
The fastest growing cost for employers is health care insurance. The average employer-sponsored premium for a family of four costs an average of $13,000 a year, and the employee pays about 30 percent of this cost – an increase of about 119 percent in the past 10 years. This increase makes it much more difficult for businesses to afford health care coverage for employees and for workers.3 Worse yet, the Congressional Budget Office has estimated that job-based health insurance could increase 100 percent over the next decade.4

Fact 3: There is an impact to rising health care costs.
The rising cost of health care inversely correlates with significant drop in health insurance coverage. National surveys show the primary reason people are uninsured is because of the high and escalating cost of health insurance coverage.5 A recent study shows 62 percent of all bankruptcies filed in 2007 were linked to medical expenses and of those filing for bankruptcy, almost 80 percent already had health insurance.6

Fact 4: The public option is controversial.
Many conservatives (and moderates) dislike the public option because arguably, employers, motivated by cost, may drop coverage on their employees forcing them to the government-run public option. Others believe it's simply unfair competition for private providers and may lead to what Congress wants, a single-payer system. Congress is negotiating now to put safeguards in place so the public option competes with private insurers by ensuring the public option finances itself through customer premiums (i.e., no taxpayer subsidies) and requiring negotiated rates it pays doctors and health-care providers like any other insurance company. Proponents of the public option say the public option will rein in insurance company profiteering.7

Other Countries with Universal Health care Programs

Most people believe everyone should have health care and it should be affordable. That’s not the debate. The real questions should be, “Why should universal health care be government-run when there is no evidence that the government can do it better or cheaper. Many studies have been conducted in almost every area of the health care industry. No doubt, there are inefficiencies in the system, but we haven’t explored or done anything about those areas that can be fixed where there is empirical evidence that money can be saved without compromising the quality of health care.

Overwhelming Fact: Health care Systems Worldwide are Wrestling with Access to Care and Rising Costs.

Michael Moore is a proponent of a government-run, single-payer health care system in the United States. In his movie SiCKO, he talks about the problems with the U.S. health care system. He negatively compares the United States system with those in Canada, Great Britain, and France, and points out that the United States is the “only industrialized country without national health care.”8 Many people agree with him (Moore) and contend the United States should follow the lead of these countries and adopt the same system.

With that said, it is important to find the answer to the question of how the United States health care system rates when compared to the rest of the industrialized world. Asking this question and accurately measuring the comparisons will help us decide the types of health care policies we need to implement in America.

Michael Tanner, director of health and welfare studies at the Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It (second edition, 2007), provides a close look at the countries that provide universal health care. In his analysis dated March 18, 2008, entitled, “The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World,” he says that there “is no single international model for national health care.” Each of these countries have a varying degree of “central control, regulation, and cost sharing they impose, and in the role of private insurance.”

The national health care systems around the world have specific trends. Although these countries spend less on health care as a percentage of GDP and per capita than America, their universal health care programs ration care and long waiting lists. Even with these factors, the costs continue to rise in most every country – “leading to budget deficits, tax increases and benefit reductions.”

Most notably, countries with more government control “are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles of care.” The countries with more effective national health care systems are those that incorporate market mechanisms “such as competition, cost sharing, market prices, and consumer choice, and eschew centralized government control.”

Countries with national health care systems are not contemplating abandoning universal coverage, but the growing trend is to lean less on “centralized government control” and more on open market competition.

Common-Sense Solutions to Health care Reform

Fact 1: Where the United States Can Lower Costs.
PricewaterhouseCoopers' Health Research Institute in their 2009 report identifies 16 different areas in which health care dollars are squandered. In speaking to doctors, nurses, hospital groups and patient advocacy groups, eight of the areas totaling $667 billion stood out as issues to be dealt with in the health care reform debate. The top three alone would save $520 billion, or over 25% of the $2 trillion cost per year.

No. Major Health Care Costs Potential Savings
1. Too many medically unnecessary tests $210 Billion
2. Inefficient claims processing $210 Billion
3. Patients ignoring the doctor's orders $100 Billion
4. Ineffective use of technology $88 Billion
5. Hospital re-admissions $25 Billion
6. Medical errors $17 Billion
7. Using the Emergency Room as a clinic $14 Billion
8. Hospital acquired infections $3 Billion
TOTAL $667 Billion

Fact 1: Too many medically unnecessary tests are run.
“Defensive medicine,” tests that don’t improve the treatment outcome, accounts for over $210 billion annually. Dr. Arthur Garson, provost of the University of Virginia and former dean of its medical school says, “sometimes the motivation (for more tests) is to avoid malpractice suits, or to make more money because they are compensated more for doing more.” Some doctors are even convinced that doing more tests is the right thing to do. However, there is more than sufficient data to indicate the types of medically needed tests for a particular set of symptoms. Medically unnecessary tests do not improve the outcome of a patient’s treatment. While there is always the exception to the rule, medically unnecessary tests main purpose is to totally rule out everything versus following by the numbers procedures so the doctor doesn’t get sued or have to settle out of court, thus raising the cost of their medical liability insurance.

Depending on the doctor’s specialty and the state in which they live, the cost of medical liability insurance can range from $10,000 to well over $250,000 annually. Dr. Arthur Feldman, Clinical Associate of Medicine, Penn Presbyterian Medical Center, Philadelphia, PA, says malpractice costs and the number of frivolous lawsuits rise annually. According to Towers Perrin, a global professional services firm, malpractice litigation costs $30 billion a year and has grown at more than 10% annually since 1975. While Dr. Feldman admits doctors make mistakes and patients deserve fair compensation for their injuries and lost wages, he also believes that in this area of the law, physicians and hospitals are too often at the mercy of unpredictable juries. And he adds another driver for the malpractice insurance costs is the insurance companies themselves. They crank up the cost of premiums during hard economic times to maintain their profits.

A Common Sense Solution:
Limit insurance company malpractice costs and regulate frivolous lawsuits. People who sue and lose should pay the court costs. Lawyers who encourage these lawsuits should be fined and assessed points. After an established number of points, revoke the lawyer’s license. Court and jury systems could be set-up similar to that of tax and bankruptcy disputes. The jury would be a panel of the defendant’s peers, a panel of trained professionals who better understand the issues. They could help the judge render fairer verdicts. Eliminating frivolous claims and setting limits on the cost of malpractice insurance would decrease the system’s compensation and administrative costs between13% to 16%.

Fact 2: Claims processing is Inefficient.
Claim’s processing and nonstandard forms are the second-biggest area of wasteful expenditure, costing about $210 billion annually. A doctor and/or their staff spend a lot of time and money trying to get paid. Each insurance company has its own forms and rules. Most practices spend 40% of their revenue just filling out paperwork that has nothing to do with patient care.

A Common Sense Solution:
Standardize claim’s forms and the billing process for all insurance companies nationwide. This will speed up payments and reduce denial of claims for insufficient information. Many of the costs of health care are generated because each state has different standards for health care. Maybe this is where the federal government could help regulate those states that don’t use common sense.

Fact 3: Patient’s ignore the doctor’s orders.
Some patient’s help drive up health care costs because they don't follow the doctor’s instructions. Often, this leads to re-accomplishment of procedures and even patient re-admissions after discharge. When this happens, the insurance company gets billed twice.

A Common Sense Solution:
Use a carrot and stick approach. If a patient is found negligent in following the doctor’s directions and a procedure needs to be re-accomplished, or if the patient is readmitted to the hospital for not following directions, the patient could be billed for a portion of the cost. Or, the insurer might raise the cost of the patient’s premium. Similarly, good patients, those who follow the doctor’s orders, should be rewarded by having their premiums reduced or receiving a premium rebate on an annual basis. This is called patient incentivization (also patient choice rationing).

In conclusion, there are many ways to decrease health care costs.
This article could become a book on common sense ways to contain health care costs, but it’s doubtful anyone’s attention span is that long. Instead, take a look at the following which are easy to achieve:

  1. Develop more health care provider skill levels and specialties.
    Deregulate (a dirty word), or better said, write new guidelines to identify which procedures must be performed by a licensed doctor only. Medicine is probably one of the most complex subjects in existence; still, the vast majority of medical tasks don't require everyone to have 12 to 16 years of medical school training. Why have a resident or intern perform medical tasks that a nurse with 30 years of experience can do in their sleep? Doctors get higher pay for the same tasks a nurse or a technician performs. Not because they are better at doing it, but because they have higher certifications. Having more skill levels and specialties would reduce costs in four ways:
    1. Routine tasks can be billed at the much cheaper rate for non-doctors.
    2. Doctors could devote more time to the complicated cases.
    3. Medical schools would draw more students to medicine since they'd be able to do specific and more meaningful work without having to devote the time and money of becoming a physician.
    4. It would also create more jobs for advanced skill levels, thus helping the economy.

  2. Allow Insurance Companies to Sell and Compete Nationally.
    If competition is a key issue in the debate between the public plan and the insurance companies, then it’s time to consider nationally competitive private health insurance. It would take a modest change in state laws that set the requirements for minimum health care insurance for their residents and prevent health insurers from selling across state lines. Of course, this again, would require the federal government to step in and help those states that don’t have common sense laws conform to federal laws. It’s better to have individual choice than states or even the federal government making the choices for us.

  3. Do away with employer-sponsored insurance plans.
    Incentivize individual/family purchased insurance plans by offering a tax credit to individuals who purchase plans. Instead of heavily taxing employers (mostly small-businesses) who can’t afford the plans, based on the size of the business, have them use the savings for employee IRA funds or wages. This promotes choice and competition, and allows people to keep their plans when they change jobs. It also eliminates a ton of paperwork and the need for the Consolidated Omnibus Budget Reconciliation Act (COBRA) - the government health care insurance which gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

  4. Develop new no-patent, not-for-profit, pharmaceutical research and development facilities.
    These could be government-run or out-sourced. With the government involved directly with this process, maybe we could streamline the approval process for new drugs and possibly eliminate FDA intervention.

  5. Publicize insurance company price list for all medical services.
    Publication of prices leads to more-informed consumers and price shopping. Wow, that’s a new concept! Bet you never saw a medical services price list publicized.

  6. Centralized provider network certification/credentialing - maybe it could be government-run.
    Currently, each insurer develops their own provider networks to negotiate payment rates. In doing this, insurers are required to ensure the doctor is properly certified/credentialed. The doctor must complete a stack of credentialing paperwork ad nausium for each insurer network, which could mean hundreds of insurers. Centralizing the credentialing requirements and standardizing the process among states and insurers would reduce the paperwork process, administrative costs, and allow doctors and their staff more time for their patients. Again, the average administrative cost is 40% of the health care cost.

Admittedly, some of these suggestions may be difficult to implement and should be studied for actual cost savings. But the fact is that any real change is going to have advantages and disadvantages. Health care reform, no matter the outcome, will take a period of adjustment for everyone. There are no easy solutions. But one thing is for sure, we should not pass reform for the sake of reform only to find that we are not providing quality health care at a lower cost. Or worse yet, it is costing us, the taxpayer, trillions of dollars more! We need to slow down, analyze ALL the options, provide qualified and quantifiable evidence that the option will actually reduce cost, promote choice, and result in a quality health care outcome. Above all, the outcome should ensure we “Grannies” get to stick around a few more years to spoil the grandchildren (or travel the world) instead of worrying about when we have to attend our end-of-life consultations

It’s your America. Let’s take control of its destiny!

1Siska, A, et al, Health Spending Projections Through 2018: Recession Effects Add Uncertainty to The Outlook Health Affairs, March/April 2009; 28(2): w346-w357.(back to text)

2A Summary of the 2009 Annual Reports, Social Security and Medicare Boards of Trustees, 2009.(back to text)

3Congressional Budget Office, “Taxes and Health Insurance,” February 29, 2008.(back to text)

4The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2008 Annual Survey. September 2008.(back to text)

5The Henry J. Kaiser Family Foundation. The Uninsured: A Primer, Key Facts About Americans without Health Insurance 2009. April 2009.(back to text)

6Himmelstein, D, E., et al, “Medical Bankruptcy in the United States, 2007: Results of a National Study, American Journal of Medicine, May 2009.(back to text)

7The Economic Impact of Healthcare Reform on Small Business, Small Business Majority, June 2009.(back to text)

8The Impact of Health Insurance Coverage on Health Disparities in the United States, Human Development Report, UNDP, 2005; Universal Health Insurance in the United States: Reflections on the Past, the Present, and the Future. American Journal of Public Health.(back to text)

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