The US system of healthcare is fundamentally broken. Nearly 50 million people have no coverage at all. Add to that the 13 million undocumented immigrants who are unable to buy healthcare or qualify for government programs, and we have over 60 million inhabitants of the US with zero access to affordable healthcare. Every single uninsured inhabitant of the US pushes costs up, as the system has to absorb unpayable emergency healthcare costs for those individuals. So, for practical reasons as well as moral, we need to take seriouly that every person has a right to medical treatment.
20% of the population of the wealthiest nation on the planet is unable to access regular medical treatment or preventive care. Emergency health situations, such as heart attack, cancer or accident, are leading to rising numbers of bankruptcies. Each year, it is estimated that tens of thousands of Americans die specifically from lack of coverage.
It is also widely thought that ineffective insurance coverage and a punitive system that targets doctors and hospitals for providing care that is too costly grossly expand the risks for medical mistakes. Medical error is estimated to cause between 44,000 and 299,000 preventable deaths per year in the United States (estimates vary widely depending on weather only serious negligence is counted or whether additional cases of obscure human error, and potentially unforseen adverse drug interactions are included).
In 2008, 54.5% of all personal bankruptcies in the US “involved unpayable medical expenses or loss of income or insurance due to health-related causes”. In a working healthcare system, none of those bankruptcies would need to occur, and the economy broadly could escape the peripheral costs that emerge from the failure of individuals, businesses or communities to maintain good health in an affordable way.
In March, Pres. Obama hosted a forum designed to bring together all political and economic stakeholders in the healthcare policy debate, to initiate the discussions that would lead to new legislation to reform the healthcare system this year. Obama framed the event within the comment that “It’s time”.
Melody Barnes, a senior Obama policy adviser, told the gathering “Our healthcare costs are exploding our economy,” adding that as the president aims to address rapidly escalating spending costs, “one of the primary things he is focusing on is bringing our healthcare costs under control.” Doing that will require reforming the manner in which individuals are insured and in which insurers’ plan their own profit-forecasts.
At present, the private insurance industry covers less than two-thirds of the population, and devotes billions of dollars per year to fighting the right of their own clients to get coverage, despite paying for it. They also fight to keep from paying full price to doctors and hospitals, dictating to medical service providers what % of non-payment they must accept from the insurers.
The goal of reducing the pool of insured and the amount individual contributors can access is to maximize company profit margins: those legal bills, the higher profits extracted, money not paid for care given, and the reduced pool of insured, all contribute to rising costs. Part of comprehensive reform is making sure that everyone is covered: it will mean a different calculus in terms of profits, but it will also mean the insurers will have to find better ways to compete in the marketplace.
Today, Pres. Obama announced that comprehensive healthcare reform is “not a luxury that can wait” and that “out of control costs” are too “dangerous” not to be addressed. His plan aims to use the private insurance markets to extent “quality, affordable healthcare” coverage to all Americans. The expansion of coverage would be incentivized, with private businesses possibly receiving matching funds to buy mandatory policies.
Some argue that the most cost-effective system would be to re-orient the consumer insurance market to individual policy-holders, creating bulk policies much larger than those based in specific employers’ needs or means. This would require a dramatic increase in cost-competitiveness, as individual consumers are not accustomed to managing the costs of employer-based healthcare, and the larger insuree pools could help insurers spread the burden of risk.
One month ago, we published an article called “How to Solve Healthcare: Focus on Coverage, Cost and Cure”, listing the 8 top priorities that would allow for comprehensive healthcare reform to work and take root:
1. If we get everyone covered, costs will come down. Why? Because risk is spread over a broader population.
2. Getting everyone covered requires mandates. Someone has to be forced to follow a new regulation.
3. There will have to be government assistance, because the laws of the marketplace dictate that what people cannot afford, they will avoid, like paying exorbitant insurance costs, “reset” adjustable rate mortgages or high-interest credit cards.
4. Healthcare spending is an investment. Spending now to fix the system prevents massive entitlement programs from spinning out of control and bankrupting our economy, in the medium to long-term.
5. We cannot strip citizens of their existing right to sue (The First Amendment states that “Congress shall make no law … abridging … the right of the people … to petition the Government for a redress of grievances.”) If there is an abundance of grievance claims, then perhaps the system is in grave disarray. Burying the claims does not fix the problem.
6. One way to reduce medical malpractice claims is to reduce the insurers’ ability to deny treatment, a practice which can lead to complications, mistakes, chronic inefficiencies in the system that invite further lawsuits.
7. Drug costs must be reasonable. This may have to be legislated, with or without consent from the drug companies.
8. Incentives for those providers who do the best job getting quality treatment for their contributors; this will help market dynamics to yield a cost-competitive system.
The reason this has not been done until now is because it is exceedingly complicated to bring all of these factors into line. To get everyone at the bargaining table to agree to the same best way to deal with each problem. Over the long term, a viable, affordable system will be more sustainable and more profitable for all players, but in the short term, insurers and pharmaceutical companies may have to see their profit-margins scaled back in the interest of market-wide sustainability.