Obama’s Gambit on Healthcare – Will The Real Healthcare Bill Please Stand Up

Many of us who are older will remember the famous TV show called “To Tell The Truth”. This show challenged a number of celebrities to discover which person out of three contestants was telling the truth about an interesting profession or experience by asking a number of questions. The actual person had to tell the truth, and the impostors were permitted to fabricate their answers. Unfortunately, the healthcare debate reminds me of this famous game show and the public is supposed to find out who is telling the truth.

As the healthcare debate continues to rage on, it has become more apparent to me that President Obama is purposely avoiding many of the details of the bill he will support. He does not want a repeat of the Clinton failure on healthcare. Therefore, he has avoided presenting his own bill in order to prevent the opposition from picking it apart, which occurred during the Clinton administration. Leaving the details to Congress is reminiscent of the old adage that if you leave a committee in charge of building a horse, the final result will be a camel.

The President’s major thrust on healthcare reform is that we must contain the growth of healthcare spending or face severe economic consequences in the future. However, it seems oxymoronic to postulate that we will be able to somehow limit the growth of healthcare spending and at the same time increase the insurance rolls by millions of people who are currently uninsured and also maintain our basic framework of insurance coverage.

One of the major drawbacks of our current system is that we have removed the individual from being responsible for monitoring his or her healthcare expenses. This is provided by third parties like the government and insurance companies. Most people are not carefully scrutinizing their medical bills since someone else is directly responsible to pay these bills. In fact, Senator Tom Coburn of Oklahoma has stated that Medicare experiences about $80 billion worth of fraud a year. This represents about 20% of the annual Medicare budget. One way we could reduce fraud is to require the patient to sign off on a bill before it is sent to the government or insurance companies for payment.

In addition, since most insurance coverage is provided by corporations, many people are not directly choosing their heath insurance companies. We need to level the playing field and give the individual, not the corporation, the tax break for buying insurance. This will empower the individual to financially compete in order to choose an appropriate health plan. If the individual owns the insurance plan, it will remove a major problem associated with portability. Consumers shop for car and homeowners insurance, why couldn’t they shop for health insurance? Today, we are constantly bombarded with advertisements from auto insurance companies trying to solicit our business by maintaining that they could reduce our current rates. Therefore, what is needed is an educated consumer as Sy Syms used to state in his commercials for his Syms’ clothing stores. The internet is a good source of information that can help people evaluate health plans and determine appropriate coverage.

I am not going to be so presumptuous to try to formulate an entire healthcare plan. However, at the very least, we need an insurance plan that encourages personal responsibility and prohibits insurance companies from not insuring people that have a preexisting condition. I do not know anyone over 60 years old that does not have some preexisting health condition. In addition, I see no reason why the government cannot provide some kind of financial assistance to people who are in need other than Medicaid or Medicare to help defray the cost of health insurance. This could be based on some limits on income or financial assets. However, I do not believe that an appropriate role for the government is to provide an alternative to private insurance, which is called the “government option”. According to an October 20th editorial in the Wall Street Journal, “Uncle Sam’s” cost overruns pertaining to healthcare were dramatic. In 1965, Medicare was projected to cost $12 billion in 1990. However its actual cost that year was $90 billion. Furthermore, the Journal reported that the rate of increase in Medicare spending has exceeded the overall rate of inflation in nearly every year. Based on the Governments track record it is difficult to believe that costs will be kept under control. Therefore, under the proper structure, we need the discipline of the marketplace to keep costs down.

Another important obstacle to overcome is that each state currently imposes its own limits on the number of insurance companies that can underwrite health insurance. This is perplexing since we do not hear any complaints from the insurance industry, which leads me to believe that some of the larger companies are benefiting by limiting competition in the more populous areas. This needs to be changed to promote competition, which will ultimately lower the cost to the consumer.

One way we can promote more individual responsibility is to reward consumers for good behavior. According to the Centers for Disease Control and Prevention (CDC), a handful of diseases such as obesity, heart disease, and diabetes are responsible for a substantial amount of healthcare costs. Appropriate behavior modification can have a meaningful, positive impact on these diseases. The CEO of Safeway has demonstrated the success of rewarding good behavior in its insurance plans that have kept per capital costs basically flat during a period of four years compared to an increase of 38% for the American corporation for the same period. In fact, according to the Safeway CEO, if the nation adopted their approach to healthcare in 2005, a savings of $550 billion could have been achieved today.

Unfortunately, both the House and Senate health bills do not empower the individual or remove the restrictions that limit the number of insurance companies that can underwrite health insurance in any state. Moreover, these bills prohibit insurance companies from using any health-related factors to determine premiums. That means a life-long smoker and/or drug user will pay the same premium as someone in excellent health.

Finally, we need some tort reform to lower the costs of medical malpractice which increases the cost of insurance for doctors and may also encourage doctors to order too many unnecessary tests to protect themselves against being sued. So far, tort reform is conspicuously absent from any of the proposed bills going through Congress.

The sad commentary is that we do need changes to our current healthcare system but not the ones that are currently being proposed. Without instituting fundamental changes to reduce costs and stimulate competition, we are never going to get healthcare costs under control.