Healthcare Costs – The FIX!

Ann Coulter recently wrote an article in which she claims that malpractice insurance and claims are the primary driver’s of our sky-rocketing healthcare costs… Really?  Because actually, the numbers bely this claim. Malpractice insurance rates typically run between $5000 and $30,000 depending on the medical practice, orthopedics on the high end, and GP’s on the low end which coincides with their revenue generation. Many states now have caps on economic hardship payouts, and the average claim is now about $190,000 with approximately 18,000 claims per year. The numbers don’t support the claim.

So what are the reasons? Why have we spiraled completely out of control?

Numerous factors enter. 1) Over treating is a significant culprit. Over treating and over – prescribing generate additional revenue for the physician, the hospital, the blood work, the radiologist, the nurse, the reader of scans, etc… until soon, a simple exam that should have been $35 is $3500 when everyone gets their fair share.

Moreover, these treatments can be controlled by you and I by just saying – no. It’s kind of like how many guys are needed to screw in a light bulb scenario? Because in the medical field, the answer might be three to ten – depending on how tight you want the bulb.

For example, even a simple blood work panel requires the clinic, the lab, and your physician to be paid in order to be told – everything looks normal. Or how about the ‘follow-up’ visit when you have no issues after a procedure?   Why am I required to have my eyes checked annually when they haven’t changed in twenty five years?

Why does the hospital or clinic charge $100 for a single pill that sells for $1 at Walgreens?   Why do children have to get a chicken pox vaccine when it’s not life threatening and most everyone over the age of 20 got through it just fine? My grandbaby just got two doses of the flu vaccine at seven months?   What??   One surgery can wrack up twenty different bills?

When comparing the cost of procedures in the US verses just about anywhere else, the US is considerably higher. A part of that account is due to a US phenomena; fee for service which encourages the multi- layering of services and the ten guys/gals to administer an injection. Other countries mitigate this through a ‘flat rate’ system, one fee, one bill, end of discussion. Much like a flat rate tax system – no pain.

By contrast, Rand Paul’s overhaul claims that if individuals are allowed to create associations, this would drive down healthcare costs and eliminate the pre-existing issue. Unfortunately, this is only half true.

There already are associations, Medi-Share is one of the largest that is accepted as a substitute for Obamacare, although it is not labeled ‘insurance’. While premiums are significantly lower, their pre-existing mandate is three years. Any medical issue within the past three years is not covered.

What this reveals is that sick people are the cause of increased rates. Medi-Share encourages health – not sickness and not unnecessary medications or procedures. Because they are Christian they also have in place caveats, they don’t cover abortions or related medical expenses, alcoholism, drug treatment, rehab, etc…   This particular association is only for Christians, any association can create their own mandates. But nobody else is even attempting this route despite the fact that it is available!

Medi-Share has proven that it works. Insurance premiums are roughly half and deductibles are roughly a fourth of traditional maximum out of pocket dollars charged by traditional insurance companies.

So, now you are left with the pre-existing population, training doctors to heal instead of medicate, and weaning patients off of unnecessary procedures could radically diminish these costs. For example diabetes, a growing epidemic, can be suppressed with health changes, dietary changes, exercise changes – all of which Medi-Share addresses. Going to the doctor for a simple cold or flu. Or the now 120+ vaccines that children under the age of 18 are required to get despite most of these diseases being non-existent for decades.

Diptheria. Infants in the US are routinely vaccinated for this despite the fact that the actual number of cases per year over the last 30 years is 2.   The number of tetanus cases is roughly 50 per year, mostly in old people – but we still vaccinate babies. We give infants Hep A vaccine routinely. Why? Who is at risk for Hep A? Gay men, drug users, people with hemophilia, people that work with primates, and people traveling to at risk countries…   Hep B? Who is at risk? People with chronic kidney disease, people with HIV, gay men, drug users sharing needles, sexually active people…

Infants? The CDC recommends that ALL children between 12 months and 23 months get Hep A vaccine and ALL infants get Hep B. Driving ever upward – Health Care Costs!

An ever smaller percent of the population would then make up this remaining category needing traditional health insurance; those with cancer, back, knee and hip surgeries, heart disease, etc…   Creating a flat rate fee could alleviate the costs associated with this group of people.

In the end, redesigning a hugely failed system with the Lindsey-Graham system, doesn’t really fix anything, it just sort of jumbles up the same mess and creates new labels that effectively do not change the core structure of what drives costs.

HEALTHCARE ADMIN – An absurd Cost

Senators are stumped as to how to lower healthcare costs. They seemingly have no idea why, what, how or when it all spiraled out of control. These elected officials just can’t seem to figure it out. Why? Because they are afraid. Mice of men.

Doctors are not reaping the benefits. Nurses are most definitely not reaping the benefits. So why are the costs so exponential? Administration.

As of 2012, it was estimated that the US spends $361 billion on Healthcare administration.   When Obamacare went into effect major health insurers scrambled to create hundreds of different plans, each unique in their billing, services, and costs. Each requiring substantially more administrative duties, billing, and modeling. The cost to implement these scramble plans created a spiraling market that was soon out of control.

Once upon a time, when a person bought a plan, there were two available – major medical catastrophic, and full coverage. Today we have Platinum, Gold, silver, bronze, copper and toilet water. And within each of those categories is a whole multitude of options designed to supposedly meet a plethora of needs. There was no “max-out-of-pocket”, a deductible was $500 or $0, and billing was pretty straight forward.

If you want to lower costs, standardize – again. It worked and we broke it.

Too often, analysts attempt to align administrative costs with a single payer system, utilizing Canada’s state run healthcare as an example. The obvious problem with such a notion is the fact that Canada’s healthcare system is now in such a shambles, their government pays for Canadians to come to the US for treatment.

The move to socialized medicine has been the go-to answer for years despite the overwhelming proof that it is an abject failure.

When comparing the medical costs of the 1960’s to today, Politifact asserts that the out of pocket costs for those who had no insurance was a whopping $938 or $7000 in today’s dollars. Which would compare to the average “out-of-pocket” deductible all plans have today. The difference is – everyone pays instead of just the minority uninsured.

It also does not factor in the increased cost of premiums which now can range upwards of $20,000 annually for a family. That represents about 38% of the average family income in the US. Tack on the max-out-of-pocket and the percentage climbs to 57%.

The entire point of Obamacare was to make Socialized medicine appear to be so cost effective by comparison, everyone would clamber onboard! And the US would be one step closer to a Socialized nation as a whole just like the success we see in such countries as Venezuela.   Or Poland in the 1980’s. Or Cuba. Or France where the burden of immigrants has completely unraveled the system.

Oddly, when supporting the new and improved healthcare system, the elderly are frequently cited as their health fails and they can’t afford to visit the doctor or buy medication.   But medicare is deducted from wages, we already pay for that! So why is that even an issue? Maybe it’s the mismanagement of those funds. Or maybe it’s the – administrative costs associated with those funds?

In either case, it doesn’t relate to the topic of healthcare insurance which is a completely separate entity. It’s like saying we need to revamp the auto insurance industry because of airplanes… they both use gas.

It should also be pointed out that standardized healthcare insurance does not mean ‘standardized healthcare’. Between 1970 and 2009, healthcare administrators rose by about 3200% whereas the number of doctors remained relatively constant, rising about 100%. That equates to a rise of 32 administrators for every doctor.

All those administrators need to be paid, and The People are left to carry the load.    

Quick math: if the increase in hospital administrators is 32 per doctor, and the average salary is roughly $65000, that would equate to an increase of $2,080,000 per doctor. Given there are about 1,050,000 doctors in the US, that would equate to an awfully big number that patients and health insurance payers have to absorb.   Over $2 trillion per year.

Before Admin’s get in a tizzy, this does not mean we don’t need you, it simply means an increase of 32 per doctor is – well – Absurd.

Healthcare Crisis – Staggering Increases!

Health Insurance premiums for individuals are about to literally skyrocket! Posted increases range from 9% to 50%… with regulators supposedly agreeing to the rate hikes because the insurance companies claim ‘huge losses’. Oklahoma, Arizona, Minnesota, and Tennessee will bear the largest brunt with less than a handful of states getting the 9% increase. Really?

Because that’s not what their posted financial statements indicate – at all.

United Healthcare: 2016 – Boasting an increase in revenues of 12% year over year, earnings growth of 19%, cash flow up 22%, stable medical trends, increased investment, and a 25% growth in dividends! Hardly a company in crisis mode needing to increase premiums upwards of 50%.

Aetna: While their results aren’t as spectacular as United, their year over year revenue increased 8%. They made the statement in the quarterly report that increases in membership thru their Government business accounted for the most growth. But their Balance Sheet showed an interesting change. Assets increased 32% including cash offset mainly by long term debt which is most likely connected to their takeover of Humana for $37 billion in cash and stock.

Does that mean that rate increases are actually designed to help insurance companies payoff debt due to merger and acquisitions? Or is it to relieve the burden that the Government has assumed under the Obamacare initiative to provide subsidies? In either case, the cost of health care is about to implode on people whose earnings have changed little to none to compensate for this enormous increase.

Blue Cross is characterized as a nonprofit and thus their financials reflect a relatively small year to year variance in accordance with their status per state law.

Kaiser also paints a rosy picture of their membership, revenues and future reporting year over year growth of a solid 15%.

United Healthcare’s CEO has a base salary, incentives, and stock options that has varied from $102 to $21 million depending on whether/or how much of his stock options he decides to exercise. So I would guess that he is hardly in ‘dire straits’ as a result of the ‘massive heathcare losses’…

Why doesn’t the Government care about the increases? Because it would seem to NOT apply to them. In a table that provides rates for government employees by state and by carrier, the rates for 2016 vs 2017 showed little to NO increase in premium cost – and in some cases showed a ‘reduction’ in premium cost. This would indicate that the individual coverage increases are now subsidizing government employees!

In Colorado, both Humana and United Healthcare are abandoning the individual marketplace next year and those having insurance will have to find a new carrier. In some counties across the US there are NO insurance companies offering healthcare under the exchange. For example – 400,000 individuals in southern Arizona will have no choice – no insurance. And entire states are reporting that only one healthcare carrier is now offering insurance creating a monopoly of pricing in which case by case costs can vary at the whim of the carrier.

It has become what it was designed to be – a complete, utter, failure so as to usher in a massive government one issuer plan nationwide as major carriers gobble up every smaller issuer. In the end – one will remain standing. And that one will become the government’s chosen program.

Given the government option has failed so miserably in the UK and Canada where mass exodus has people flying to India and Cuba to get treatments, it is preposterous to use those systems as an example for the US. France boasts healthcare for all, but a shortage of doctors is creating an implosion. Wait times for an MRI can be over a month and a CT scan 2 ½ months. They claim a shortage of equipment, and equipment failures have resulted in thousands of deaths. While the ‘public insurance’ services everyone, the wealthy tend to purchase private insurance which offers more comprehensive care, less wait times, and thus a chasm of ubers vs. everyone else is created.

Of course salaries vary widely in the medical field in the US vs UK and EU. Doctors and nurses in the UK earn less than half what their peers earn in the US, which translates into the cost for procedures as well. And while salaries are half, the cost of living in the UK is only about 13% lower than the US.

Does Socialized medicine work?

While the individuals have benefited from lower healthcare costs in France, whose system is ranked #1 in the world, it has come at a cost. Touting out of pocket healthcare costs as nearly nothing, the system has become over-burdened and operates at a deficit despite heavy revenue from taxes. As a result, France continues to cut jobs in their national hospitals which of course increases wait times, stress, quality and effectiveness.

And while the aging populations of Germany and France have been the main source of the burden, the idea that bringing in large swathes of young refugees to populate, procreate, and become an added source of revenue as they begin to fill jobs – was incredibly short sighted. Instead, they have brought in a host of diseases that were previously erradicated.

Mirroring that system in the US would require a massive overhaul of our tax system, massive income and sales tax increases, use tax increases, property tax increases, and a standard of living cut in half.

Middle class will become the new poverty as healthcare becomes the catalyst.