Reducing the Cost of Health Care

The new administration in Washinton seems to think they have a magic wand and can just waive it around and everything will be fixed. Or perhaps they have a Benny Hinn complex and believe they can cure what ails you.

The truth is, they have no clue.

The WSJ is reporting right now that President Obama’s budget will set aside $634 billion over 10 years for health reform, through a combination of tax increases on the wealthy and cuts in health spending.

How do tax increases on the wealthy control the cost of health care?

Truth is, it does nothing.

And just what are “cuts in health spending”?

Good question, but I am not the only one asking. It seems the impartial CBO (Congressional Budget Office) also believes the proposed “change” will do little or nothing to stem health care inflation.

Look at what CBO Director Douglas Elmendorf told the Senate Finance Committee.

Disease management programs, in which nurses or other coordinators work with patients to better manage and treat their chronic illnesses, “can improve health and may well be cost-effective,” Elmendorf said. But the programs still might not result in overall spending reductions within 10 years because number of the patients who participate is far larger than those who avoid expensive care as a result.

Requiring hospitals to adopt electronic medical records would reduce their own costs for treating Medicare patients. But for the government to capture the savings, it would in turn have to reduce what it pays the hospitals.

Cutting payments to hospitals who readmit patients because of avoidable complications could mean savings for Medicare. But programs like that can be slow to show tangible savings: Readmission information would have to be gathered and hospitals would have to be notified before cuts took place.

In other words, the “big ideas” coming from Washington include disease management programs which are already part and parcel of insured health plans. Carriers invest a lot of money in finding ways to provide the most effective care at the lowest cost, without sacrificing patient safety. How much experience does Washington have in disease management and controlling costs?

Well let’s see. Washington is run by lawyers, not doctors. Washington is currently spending $1 trillion more than they take in each year.

And how about those EMR/EHR suggestions? The health care industry as well as carriers have been trying to implement such programs for at least 15 years with no success. The biggest challenge is standardization of the information which is virtually impossible given all the different software programs currently in use to manage the system. To effectively institute EMR/EHR would require a single system that would have to, at the very least, run parallel to existing systems until all the bugs are worked out.

The behemoth Microsoft can’t get their software to run smoothly. What expectations should we have from Washington?

The last one is a real doozie. Again, while it seems good in principle, punishing hospitals who have “avoidable” errors in treatment sounds great but the truth is, they are already held accountable and punished by the threat of civil litigation. So what’s another layer of accountability going to do?


Big ideas. False bravado. SSDD.

Additional commentary and perspective on this is available through my good friend and co-blogger at InsureBlog.

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