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Health Care Reform

I really want to find a good solution to better take care of Americans – ALL Americans. Our current system needs help. While we have some of the best health care services in the world, we need to dramatically improve access, while finding the right balance where we are not sacrificing quality or choice.

During their campaigns, Obama and McCain both had good intentions, but some of their ideas would prove to be unsustainable in the real world. McCain’s tax breaks for people that buy their own insurance are a good immediate fix and Obama should employ those. We do need better solutions for people with difficult to insure pre-existing conditions and plan portability must be addressed. Those are whole blog posts on their own that I plan to address. T

he health insurance industry is an easy target, as they are perceived as the gatekeepers to the health care system and they are who we write the monthly premium checks to. However, when you see your premiums go up 20%, do you really think that the health insurance carrier is increasing their gross profit by 20%? Of course not.

Health insurance carrier profit margins are relatively stable (although some may argue too high) at about 3% on average and the premium increases we all experience are largely a result of increased costs, principally for health services and prescription medications. Thus, rising premiums are a symptom of the core problem.

To “fix” the health care system we must address the core issues first and foremost. The drug industry needs to be much more closely regulated. I am thankful for the drug industry and the life saving medications they have produced and I know R & D must be funded. But, they have gone too far and will suffer a backlash unless they start policing themselves.

The way the drug industry successfully lobbied Congress is shameful and the Medicare Part D prescription drug benefit was one of the biggest boondoggles put forth on the American tax payer in recent history. The fact that prescription drug companies advertise their products to create demand is unethical. Doctors should be advising us what medications we need, not Madison Avenue advertising companies.

For health care services, the huge issue is the lack of any type of sensible pricing structure and a general lack of pricing visibility. I had a client call up one doctor to ask what it would cost to get a physical and they refused to even give him an estimate of what it would cost. Isn’t that is absurd? I referred him to my doctor and thankfully his office staff was perfectly willing to give him an estimate.

To be fair, doctor’s and hospital’s typically have a multitude of contracts with insurance companies and private networks where they agree to charge a specific contracted rate for services. That is why an identical procedure from a single provider may be billed differently depending upon what insurance company the client has or if the client has insurance at all. Some doc’s and hospitals will charge higher or lower rates for cash payers or the uninsured. Walking into a hospital should not be like walking into a casino with your life savings, wondering if you’ll be taken to the cleaners or be a lucky winner that gets a square deal.

I am not demonizing providers or insurance companies, as the system just grew and grew over time. I do not believe they set out to make the system what it has evolved into, but something has to change and all the major players need to come to the table ready to help fix it – or else we may end up with socialized medicine, something that few people want if given a better alternative.

Not only is it inefficient, but the complexity of the pricing models and general lack of visibility prevents free market dynamics from keeping prices competitive. The relative failure of consumer driven health plans is not the fault of the plan design, but in that they assume that consumers will be empowered with the information to make informed health care purchases. How can you make a good purchase if it is so darned hard to figure out how much something costs and then compare that to the seriousness of the procedure and reputation for quality for the given health care provider?

If we can get this right, then free market forces will keep costs at a reasonable level keeping pace with general inflation, but not outpacing inflation and wage growth.

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