The primary factors in the rising costs of our health care are as follows –
- Increased cost of high tech treatments / frequency of use – Contrary to what you might have heard, modern, high tech treatments, diagnosis, and bleeding edge drug treatments are more readily available here in the United States than in any other health care system, and we like to make use of all of these options on a regular basis. We are the “consumer nation”, and that attitude extends into our use of our health care.
- Drug development / treatment development cost – The cost of developing all these high tech treatments we love to use in copious amounts has become more expensive.
- Throwing the book at patients to protect against law suits – doctors, faced with the threat of lawsuits throw every possible treatment at patients, even those who are elderly or have a miniscule chance of survival.
Combining these factors with the all-you-can-eat nature of our insurance coverage – and you get rising costs. There are other factors of course, but a lot of what I’ve read indicates these factors have a very profound effect.
What does the Clinton system do to address the points above? According to her web site, she will start cutting costs through “modernization” – to the tune of 50% of the overall estimated cost of the plan – 53 billion of the 110 billion price tag will come from savings through the “modernization of our system.” This level of savings is unrealistic, especially right out of the gate. If I’m right about that, somebody is going to have to foot the final bill when the numbers don’t add up. Which isn’t to say our system doesn’t need modernizing – it does. But I’d question whether 50 billion in annual saving can be squeezed out of our current system through reforms and the removal of “hidden taxes”.
The second cost cutting measure in the Clinton plan is a bit more hazy, but her site suggests the use of price controls. Essentially, governmentally mandated lower prices on treatment or premiums, with low income government premium subisides. Her site suggests two sets of price controls – one is the actual cost of treatment through premium caps, the other may involve regulating what percentage of a health insurance / drug company’s income intake can be directed toward profit. The drug price regulation is a foregone conclusion based on her overview. How will health insurance companies compensate for this?
- They will mandate to providers what they will pay for treatments regardless of cost.
- They will become much more heavy handed in regulating what treatments we can have under their plans – in effect, they will ration health care.
- They will cut general costs by decreasing their overall level of service.
One of the side effects of price controls is obvious – If price mandates are lower than the costs of development and operation of treatment, those treatments will no longer be available, and rationing will decrease the overall availability of treatments we seek.
The third cost cutting measure takes into account that 47 million uninsured figure Democrats like to throw around, which includes about 20 million people who don’t want health insurance. (Side note – another 12 million in that figure aren’t even citizens of the U.S..) The argument goes – force these people into the insurance pool and you decrease costs overall. This argument is accurate – forcing a lot of healthy people into a pool system will lower costs overall. However the system also brings a lot of sick people (and ignores a number of illegal immigrants) into the system, which will raise costs. So the net-net of it is we don’t know how much this part of the Clinton plan will actually save the system.
As far as tort reform goes, there doesn’t appear to be anything in the Clinton plan at this point to address it. Klein suggests Clinton will create a new “Best Practices Institute”, which might play a part in this which would be a good thing – the best way to solve the tort issue is to set treatment standards that can be relied on in court by providers when they get sued. So far though that hasn’t been spelled out in any candidates plan as of yet from what I’ve read.
So what does this amount to in terms of what the plan ask of the American people?
- If you’re one of the 250 million Americans enjoying all-you-can-eat coverage, the plan asks you to make a sacrifice – since the plan will negatively affect the level of care you currently enjoy.
- If you’re one of the millions of Americans that are healthy and aren’t paying for health care, the plan will force you to get insurance you don’t feel you need.
- If you’re one of the millions of Americans that can’t afford insurance or have been refused coverage by the health insurance industry, the plans tells you that the government will come to your rescue, it will force insurance companies to cover you and in cases where you have low income, the government will cover your overall costs through tax credits.
- If you’re an illegal immigrant living in the U.S., this plan doesn’t take you into account. It’s been suggested that the I.R.S. might be responsible for insuring everyone has coverage, so illegal immigrant will continue to do what they are doing now – showing up at the emergency room seeking care.
This makes the Clinton plan a classic wealth redistribution system – realign the costs on those that can afford it, to pay for those that can’t. Within this context Democrats argue forcing health insurance on everyone is a collective good, a “shared responsibility” – that the actions of the few hurt those of the many, and therefore this justifies the added costs and government oversight into our personal lives.
Personally I’d much prefer a system of reform that doesn’t affect the types treatments available and doesn’t give the government an excuse to invade my personal life. But that’s just me, the rest of America will have to make up their own minds on the subject come November 2008.
Link – Hillary’s Shared Responsibility Plan
Update – For a different take – Paul Star’s “Hillary’s Own Plan” –
That’s why Senator Clinton’s proposals to regulate the private insurance market are so crucial to the success of her approach. Whether they offer their plans through FEHBP or directly to firms and individuals, all insurers would have to follow new federal rules, including “guaranteed issue” (that is, they would have to offer coverage to anyone who applies), “automatic renewal” (they couldn’t drop someone because they get sick), and “strong rating protections” (they wouldn’t be able to charge “large differences” in rates based on age, gender, or occupation).
If the auto insurance industry worked this way when I was a kid, I could have saved a few dollars. My premiums where high because my driving record was horrible. Under a Hillary’esk auto insurance plan, my parents would have been burdened with the costs associated with insuring a high risk character like myself. Get it?