- Can the health care system handle 47 million new customers? The following story says no: http://news.yahoo.com/s/hsn/20090807/hl_hsn/expandinghealthcoveragemaynotimproveaccess The story says that our health care infrastructure - the number of doctors and hospitals - would be swamped if 47 million new customers entered the market. The experience in Massachusetts, where the state made health care universal confirms this to be true. You cannot just walk into an office and see a doctor in Massachusetts, you have to schedule a visit far in advance.
- Traditional means by which Government controls costs will make this worse - Okay, Massachusetts has a shortage of physicians and rising costs. So what does Massachusetts do? They talk about lowering how much they will pay doctors. So if you are a doctor graduating medical school with massive debt do you want to open a practice in Massachusetts where the state is going to pay you less or do you want to go to a state that pays you more. Or let's say you are in Medical School and you are deciding what branch of medicine to study - do you choose Radiology, which pays $400,000 per year? Or do you choose Primary Care, where there is a shortage of physicians, true, but amount of time you can spend with a patient is less and less because your reimbursement is lower and you have to make it up with volume, and you face increasing competition from non-doctors (e.g. Physician Assistants, Chiropractors, etc.). So you see, the traditional method by which Government programs save health care dollars - cutting payments to doctors - will not alleviate the shortage of physicians. An offshoot of this is that adding a government plan to the individual market, expands the number of government programs underpaying doctors, which will exacerbate not alleviate the shortage of physicians.
- Well intentioned government policies have skewed the health care market by prohibiting measures that have saved money in other industries - Specifically, I am referring to the so-called Stark bills that prohibit providers from "self-dealing." Another way of saying that is that it prohibits consolidation of activities in the health care industry to provide the most efficient delivery of medical care. Oil companies can own oil wells, oil tankers, refineries, and gas stations. Microsoft can sell the Windows operating system, the Office productivity suite, and bundle Internet Explorer for free. But a medical provider cannot own a radiology unit. Why not? Well once upon a time there were bad practices by some doctors. But wait -weren't there once bad practices by oil companies (the Standard Oil antitrust case) and by Microsoft (the Microsoft antitrust case)? The truth of the matter is that the Stark laws are obsolete dinosaurs that might have been useful for a few years but now they both drive up costs (the medical community spends a A LOT of money each year on compliance) and prohibits proven cost saving techniques. The Stark laws are dinosaurs that need to be repealed.
- Are insurers to blame? The President, Speaker Pelosi, and Senator Reid have all castigated insurance companies in recent weeks. However, lets look at how insurance really works. "Insurance" comes in two flavors - individual coverage and group coverage. Individual coverage involves private carriers serving a relatively small national market and government programs serving quite a large population of that consists of people who are poor (Medicaid), seniors (Medicare), veterans (VA), families of Military Personnel, and a variety of others. Group coverage on the other hand involves three categories - Government programs (Local, State, and Federal Employees), Insured groups, and self-funded groups. I hate to tell you this but less than half of the group market is "insured." The majority of the group market falls in either government employee programs - where benefits are mostly dictated by government bureaucrats, or self-funded groups - where benefits are mostly dictated by employers. True insurance companies (actually third party administrators) do service these government programs and self-funded groups. Nevertheless, it is not accurate to say the insurers are always to blame when someone with group coverage is denied benefits for something. There are times when the insurer is just applying benefit restrictions dictated to them by the purchaser of insurance.
- Federal vs. State Regulation of insurers - Unclear in the debate over health care reform is whether States will continue to regulate insurers in the health insurance exchange. Will the Federal Government, which does not have a lot of experience fully regulating carriers, be responsible? Will the Federal Government defer all responsibility to the states? Or will the worst case happen - private insurers will be regulated by both the Federal Government and the States, with little clear guidance as to where the responsibility of one ends and the other begins? The problem is that complying with any regulation costs money. Obviously some regulation is good, but too much regulation can choke an industry. See the related issue below
- Will regulation be directed where it needs to be? Consider Medicare Advantage - a curious event happened when the program was active for little over a year which indicated that the Federal Government completely missed the boat when it came to directing regulatory activities.
When the program started, the Federal Government maintained a stranglehold on products, advertisements, and rates - no product can be sold without every word of every document being reviewed and approved by the federal government. The same is true of every advertisement. Even if you take an approved form or ad from print to the internet, you have to get it re-approved. The same is true of the rates charged by insurers. Insurers typically allow themselves 3 to 6 months to get government approval. That means a good idea waits 3 to 6 months before getting to market and the delay and the process add costs.
Government regulators followed the time honored principal that sitting behind a desk reviewing papers is the way to prevent bad things from happening.
18 months into the program the Government had to step in and order many insurance companies to stop selling certain products. Now these products were all reviewed and approved. What the regulators did not anticipate was that the real issue is not what the forms say it is how they are sold. Some insurance agents were acting badly - misrepresenting information and following bad practices when selling to seniors.
Still one might say that the Federal Government did step in to do something to stop this, right? Well, what the Federal Government did was to act against the insurance companies, not the insurance agents. And the Federal Government - as usual - required the companies to file papers, specifically training programs that the companies would use to train their agents (there may have been monitoring programs as well). When the training programs were approved, the companies could begin selling again. Part of the problem is that the Federal Government has no authority over insurance agents, that is the purview of the states, but states may not be able to regulate sales practices related to federal programs (See the earlier point about Federal vs. State Regulation)
That said, state insurance departments are little better - they typically lash out at carriers first and agents second. It is like beating a parent because her grown child is a crimimal.
I am concerned that in any government reform program that affects the delivery of care, if the Federal Government is the regulator, then they will not direct regulation to where it needs to be directed - which would be are companies and agents selling properly and are companies delivering the benefits and services they promise to deliver.
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