Healthcare Reform

Steven Ward, Senior Economic Writer for the Wall Street Journal had some interesting points regarding Healthcare Reform. I have paraphrased his thoughts below and added some of my own experiences with the employers I work with. This past year has been a tough one for increases. My recommendation is to always look at other carriers and shop the market. That is one of the beauties of a free marketplace. We have choices – we just need to find the right ones that serve employers and the public with quality and economical healthcare.

Reforming the Healthcare System

Under the Patient Protection and Affordable Care Act (PPACA) signed into law by the Obama administration in March 2010, we will be putting 30 million more people under the Medicaid system that will accelerate the demise of the healthcare system.

Whether we continue down the path of Obamacare or choose another path, either way we still have a massive problem with the cost of the healthcare system. Healthcare accounts for more than 17% of the nation’s GDP. Over the last 20 years the fastest growing areas have been government and healthcare. And those go hand-in-hand. In the next 20 years we could virtually spend all of our GDP on healthcare.

We have to have cost containment and new ways of paying for healthcare. If we don’t, we won’t have any industry. All we’ll have is healthcare and hospitals.

One of the big issues is how we pay for healthcare. We have increased pre-payment systems through hospitals. Basically giving a carte blanche array of services available to all. This is really the source of rising costs. We have the best hospital system in the world and the amount of progress that has been made with heart, stroke, cancer and other diseases has been phenomenal over the last 20 years. We obtain high quality of care. But we pay for it in a dysfunctional way. We all pay in advance for healthcare and it’s like going into an all you can eat smorgasbord, so it’s either paid for by the government or by you through the insurance plans you have chosen.

We need a whole new way to pay for insurance. Hospitals are merging and becoming large conglomerates again. Also insurers are buying healthcare providers. This means more consolidation in the healthcare industry. This becomes a double edge sword. On one hand it can mean lower costs when you have both a vertical and horizontal integration in a healthcare system but another implication can mean less competition and less competition can mean higher prices so could mean a real double edge sword.

We can’t afford to have health insurance growing 2-3 times higher than the rate of inflation on the cost of everything else we buy, because then you’re going to have more people uninsured because not as many people will be able to afford the insurance. Already most employers find the cost of health insurance is third in line to their bottom line cost. For many employers the cost of the product they are purchasing comes first, the payroll comes second and third comes the cost of insurance. What happens when the cost of insurance is first in line?

Obamacare has some good aspects such as kids staying on the program longer and no exclusions for pre-ex for younger people and eventually for all, plus no caps on life time benefits. But government’s involvement on the federal level has and will continue to be overbearing. If PPACA is repealed then the first act of the new congress and new president will be to have a new healthcare reform plan. The current one is driving costs up not down.