A detailed prescription for health care

Eric Hansen

Special to the Gateway

While most of the health care discussion revolves around coverage, the real issue is cost. And unless something is done soon, we’re going to get crushed.

Overly dramatic? This year’s health care expenses will reach nearly 18 percent of Gross Domestic Product. That’s $2.5 trillion — more than $8,000 for every U.S. resident.

These numbers have doubled in the past decade and, unless something radical is done, health care actuaries predict similar increases in the coming decade.

An annual expense of $16,000 for every U.S. resident? While health care coverage is important, from a broader perspective, carrying around this burden will seriously handicap our economy. We need to get the cost of health care under control.

And tinkering with the current system won’t do it. Have you seen what’s being discussed in Congress? Tax deductions, tax credits, coverage options, fines, taxes on services, taxes on the rich.

If anything, layering on this “comprehensive reform” will further institutionalize our already dysfunctional system.

A singe-payer system — national health care — is a simple, comprehensive solution. We need to strip away the complexity. A single-payer system that covers everyone. Basically, an expansion of Medicare.

How would it work? Instead of sending health care premiums to the insurance industry, we (or our employers) would send them to Medicare. Then, each of us would continue to see our health care practitioners of choice. Lastly, rather than bill the insurance industry, our health care practitioners would bill Medicare.

Those who oppose national health care do so for a number of reasons.

Among them, the potential cost, our lack of confidence in the federal bureaucracy, fear of deterioration in the quality of care and, as capitalists, we fear abandoning the free-market approach to health care.

Let’s take a closer look at these concerns.

A Cost. In a single-payer system, there is no need for a “middle man.” In other words, the need for insurance goes away. And so does all the overhead and expensive, time-consuming complexity associated with administering dozens of different plans. Look for immediate savings of 20 percent.

And what about the cost of providing health care to the 40 million Americans who currently have no insurance? These people already receive health care — in “free” clinics (which we pay for) and hospital emergency rooms, which are required to provide emergency care to any walk-in patient. By adopting national health care, we wouldn’t suddenly be providing health care to an additional 40 million people.

When was the last time you asked your doctor “how much is that going to cost?” or “are there other, more economical alternatives?”

Incorporating meaningful deductibles into plan design will provide us the incentives we need to be smart consumers. That’s right, meaningful deductibles to drive our consumption habits.

A Lack of confidence in federal bureaucracy. The good news? If we adopt national health care, the federal government isn’t going to rush in and start providing it. Rather, it will collect premiums and pay providers. And this is not an untested model.

Virtually all developed countries have adopted national health care and, according to the World Health Organization’s most recent report, all of their members spend less of their GDP on health care than the United States, which pays 54 percent more than countries such as Germany, the United Kingdom, France, Canada, Switzerland and Japan.

Yet the collective performance ranking of these countries is 10th, while the U.S. ranks 37th.

In short, the federal government isn’t going to screw this up. It will play a crucial — largely administrative — role in bringing the cost of health care under control.

A Potential deterioration in the quality of care. Tough issue. Over time, a more aggressive approach to managing reimbursement levels may impact care. That usually manifests itself in delays for non-emergency and elective types of services.

But this is a small price to pay to prevent the cost of health care from crushing our economy.

A Abandoning free-market health care. Like most of you, I’ve been educated to believe a free-market economy promotes efficiency and reduces costs.But it doesn’t work that way with health care.

Here’s the key difference: Unlike anything else we purchase, what we spend on health care is fueled by our primal instinct to survive.

We throw money at health care. It’s the way we’re wired. And as long as we keep doing so, the industry will absorb all we can throw its way.

I’m a hardcore capitalist and a huge proponent of free markets. But we need to get the cost of health care under control and rely on “the profit motive” won’t work.

I could go on to describe plan design. Potential coverage exclusions. Why each of us should have some skin in the game. But I’ll save that for another time.

Instead, you’re going to hear some serious howling from a couple of large, powerful special interest groups — the insurance and health care industries. They’ve become big, bloated and fully dependent on the status quo.

But the howling won’t change the facts. Before it crushes our economy, we need to get the cost of health care under control, and no amount of tinkering, including the “comprehensive reform” being discussed in Congress, will get the job done.

Eric Hansen spent 30 years practicing as a consulting actuary with Fortune 500 companies in the employee benefits field. He’s now retired in Gig Harbor. He can be reached by e-mail at eric_m_hansen@comcast.net.