My Piece of the Pie

Seems everyone has their hand out these days for a bigger piece of the health care pie. How will this affect the cost of health care, and will it make Georgia health insurance more affordable ?

Patients, medical providers, business individuals and more are giving their input on how health care needs to change. Let’s look at what the AP reported and how each group views health care.

Labor unions want to require employers to help pay for coverage for their employees.

Unions also believe the path to affordable care runs through a new public insurance plan that would compete with private plans. Middle-class workers, for the first time, would have the option of government insurance. Proponents of this approach, already embraced by President Barack Obama and many Democrats, believe it would drive down costs for all.

When employers are required to pay for coverage it has the effect of reducing wages and/or increasing the price of goods or services produced by that employer. In other words, adding a new cost to production generates a hidden tax in the form of increased prices.

Adding a government plan does nothing to reduce the cost of health care but it does rearrange the deck chairs.

A common complaint about insurers is that they won’t cover people with existing health conditions or that they charge them too much. Patients’ advocacy groups want to require insurers to cover all comers, not just the healthy, and limit what they can charge the sick. They contend that would spread risk and costs throughout the population.

This is not a problem and already exists in several states where carriers are prohibited from charging extra for existing medical conditions. The additional risk created by taking on all individuals regardless of health is spread among the entire insured population. Health insurance premiums in NY, MA, ME & VT are easily double the cost of comparable coverage in neighboring states where carriers are allowed to medically underwrite everyone.

See? Not a problem.

Among the top goals for AARP is ensuring health coverage for people age 50-64 (at 65 they can get Medicare). That could be done by allowing middle-aged people to buy into Medicare.

Simple fix. Just put folks 50 – 64 into Medicare.

In a way, it could help some, as long as you get all the population in that age band, not just those who are looking for a free ride. The 50 – 64 age group are generally more healthy than those in the Medicare population so that is a plus. But there is a downside as well.

Doctors limit the number of Medicare patients they are willing to see due to the low reimbursement from Medicare. Most will keep their patient load to less than 15% and some try to keep it in single digits. We already have a PCP shortage. What will happen if you swell the ranks by moving a significant portion of the population from private pay to Medicare?

Hospitals worry that a new government insurance plan would reduce the fees they can collect.

This is a bit of a mixed bag.

Government run (taxpayer funded) plans like Medicaid & Medicare pay the least of any third party pay system when it comes to health care. Medicare is the “standard” by which other programs set reimbursement levels. Medicare does not bargain, they state this is what they will pay for and this is how much they are willing to pay. It is a take it or leave offer most hospitals cannot refuse.

Medicaid generally reimburses about 10% less than Medicare and private insurance plans pay about 12 – 14% more than Medicare. So if the answer is to put more people on Medicare or Medicaid, hospitals lose.

But if more people are covered, hospitals win because they are getting something for care vs. almost nothing when they are forced to provide uncompensated care for the uninsured.

Everyone has their perspective and the answer depends on whose ox is being gored. The one true thing is this. Any plan that fails to address the underlying cost of health care will fail. Mandates result in increased costs for everyone regardless of their bank account. It is nice to talk about taxing the rich and  businesses but everything we buy comes from a business.

The top 1% of earners already pay 46% of the income taxes and one has to wonder how much more blood is available from those turnips. Businesses don’t pay taxes, or health insurance premiums, they simply add those costs to the price of their goods and services and move on.

This idea that exists in Washington that they can somehow make health care free for everyone is crazy. There is no free lunch and never will be.

Fortunately we have a way for folks to find affordable health insurance in Georgia. All you have to do is ask.

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