Why are healthcare costs around the world rising so dramatically? The costs of innovation, lawsuits, and an aging population are among the “claimed” reasons. Of course they have an effect, but are they the only reason?
If you have an expense account or your parents’ credit card, your “generosity” with their money is much greater than with your own money. You’ll buy more expensive things and be more careless with them - after all - you aren't paying for it.
Health insurance = other people’s money.
If it's your own hard-earned money, you’re more likely to think before you spend; put more effort into preventing expenditures (live healthily), be diligent with your medicines, etc.
American health care was regulated [fascinating read] in the early 1900s; it resulted in better hospitals, but initially very few licensed physicians; this scarcity increased costs, and health insurance was created to ensure that patients could pay their bills. Insurance became pervasive through the 1960-‘70s, and when Medicare and Medicaid were introduced, we were off to the races. By distancing the cost from the consumer, people progressively became more cavalier.
The very existence of health insurance assures excess.
Any issue/injury/ailment/ingrown toenail is worthy of a doctor/hospital visit. We aren’t paying so what the hell! As coverage became based on procedures, doctors "found themselves" doing more tests, but since we aren’t paying, test away!
Costs escalated, insurance companies panicked. Rates increased, employers panicked. Lobbying increased, politicians panicked. Laws were written, and now citizens are panicked.
But then the economy began to slow, unemployment rose, and more people were without coverage.
This increased the use of Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP), which allow individuals (and employers) to set aside before-tax monies in a savings account for routine medical care, and purchase lower premium disaster coverage with high deductibles as a backstop.
Now it's your money, from your account, and you're more careful. The effect? Health care spending growth slowed!
We not only think twice about going to the hospital, we even pay more attention to diet and behavior to keep our costs down. Doctors, knowing it’s the patient’s money, are ordering less tests and expensive or frivolous extras. When GE implemented an HDHP-type plan for its employees, there was a noticeable decline in the use of their own expensive imaging (MRI, CT) products! Not good for GE, but absolutely indicative of better overall behavior. :-)
If you’ve read this blog for a while, you know I’m a proponent of universal health care. But it is subject to abuse and mismanagement. I believe all Americans should have healthcare, but let's learn from previous mistakes. Our implementation should be universal, prioritize patient health, and save money by mandating a minimum of HSA/HDHP for everyone:
- Government pays HSA + HDHP for those earning up to 1.5 times the poverty level.
- Government pays HSA only for those earning up to 2.5 times the poverty level.
- All government employees (including ALL elected officials) receive HSA + HDHP.
- All others are self/employer insured.
- All insurance providers must offer HDHP for anyone without descrimination.
- HSA is tax-free/pre-tax; any unspent $ can roll into an IRA or next year’s HSA.
- This supplants Medicare/Medicaid and any prescription drug benefits.
- High school graduates qualify for lower rates, as do those with a post-high school certification (see below).
Potential upside:
- Doctors say they can’t assure health because patients don’t take care of themselves or take their medicines properly. This doesn’t solve that, but people
might pay more attention if it’s their money, and spend a little today (preventative) to avoid spending a lot tomorrow.
- Less excess = lower costs.
- More self-care = healthier people.
- Direct payment by the patient via HSA (debit card) reduces administrative costs.
- The elimination of Medicare/Medicaid in favor of subsidized HSA/HDHP for those that need it most.
Education mandate - it seems obvious that the more educated you are, the healthier your are, and the longer you live. Now there’s data. So why not tie universal health care to universal education? It only makes sense.
Health insurance costs in the developed world are rising much faster than GDP, and the US is in the worst shape. This approach blends universal access with the very American idea that that we should all have a vested stake.
If we see success (lower costs, improved well being) with this approach, maybe we should also try it for public education?
America is a unique country - it's approach to social services (health, education, etc.) should also be unique.
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