How to slow the growth of health care costs.

Thanks to Susan Voss for her thoughtful essay about the complexities of our health care system, and how difficult it is to reduce costs. (See link to Register essay below.)   I don’t claim to have “the answer”, but I do suggest that the following cost saving ideas be given serious consideration.

  • Medicare, Medicaid and private insurance should not be required to cover every new drug, product, or procedure that is approved by the FDA. Some are very high cost but provide only marginal improvement over alternatives that cost much less.  Also, at least some covered products and procedures would likely be considered not medically necessary by most people.
  • Consider shortening the amount of time that government grants a monopoly for patents.  Patents are not natural property: humans have copied one another since the beginning of time.  Our U.S. Constitution allows patents to be granted to encourage inventiveness, but there is no objective reason why a patent must be granted for 20 years. Why won’t five or ten years work?  Maybe the length of the patent should be based on the cost to develop the patented item and whether or not government funds were used to help develop the item.
  • Don’t require limits on out-of-pocket payments such as co-payments, especially for very high cost items.  A person should have “skin-in-the-game” if they expect their insurance to cover very high cost items.  Today, we see the opposite: drug companies offer to help pay people’s out-of-pocket costs so there won’t be so much political pressure on them to lower their prices.
  • Allow both pharmacies and individuals to purchase drugs from sellers in other countries that are “deemed” to have sufficient safety procedures in place.  If drug companies are free to charge lower prices in other countries, then pharmacies and individuals should be free to purchase the drugs from those other countries.
  • Allow Medicare and Medicaid to negotiate with drug companies on prices they pay for the drugs that are covered by the programs.  Right along with that, Medicare and Medicaid should be allowed to develop formularies (lists of drugs that are preferred over other therapeutically similar drugs), that give beneficiaries a financial incentive to use the preferred drugs and a penalty for using higher cost drugs.

Our health care wants are unlimited.  Our ability to pay is not.  We, as citizens, should not expect private insurance or our government health care programs to cover everything, regardless of cost.  We should expect our government to NOT do things that increase costs, or reduce our choices.

Link to Register essay:  https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2018/09/19/dont-fooled-when-someone-claims-have-answer-soaring-health-care-costs/1355890002/

 

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Medicare fraud and over-utilization

The Register recently criticized our fee-for-service health care payment system for causing over-utilization and for driving up health care costs.  (2/12/2015 – “Florida, home of medical scans — and scams” – see link below)  They gave examples of doctors ordering unnecessary test because they get paid more for every additional service that they provide.  They advocated paying physicians a salary like Mayo Clinic does, so that doctors, “…have no personal, financial incentive to provide unneeded care.”  They urged the Obama administration to, “…continue to work toward reimbursing providers based on quality instead of quantity while fairly reimbursing them.”  I agree with the Register that, “Ultimately, reducing the overuse and misuse of health care falls to patients.”  They urge patients to not rush to the doctor for every ache, ask questions when doctors order tests, resist clinic staff who want to schedule tests and procedures.

One thing the Register failed to mention is the importance of patients being required to pay out-of-pocket for some portion of their health care costs.   To the extent that patients are not required to pay for some portion of their costs, they will not question the recommendations of doctors and other providers and they will tend to over-utilize health care.  Requiring patients to make some out-of-pocket payment will also help reduce fraud, since patients won’t want to pay part of any fraudulent charges that billed to their insurance.  Many insurance policies under Obamacare do seem to have significant deductibles and co-payments.  That will go a long way to help keep down health care costs.

Link to Register article: http://www.desmoinesregister.com/story/opinion/2015/02/12/florida-home-medical-scans-scams/23278965/

Obama needs to lead on budget cuts.

Thanks to the Des Moines Register for printing the editorial by Peter Morici on 2/16/2013.  (Obama blackmailing taxpayers to stick blame on Republicans – see link below.)  President Obama and other politicians and pundits who say the sky will fall if the sequestration cuts are allowed to go into effect are using misleading fear tactics.  Politicians at all levels of government who don’t want to see spending cuts always say that the services that will be cut are those that are the most needed and the most visible.  Examples include President Obama’s statement in his State Of The Union address: “These sudden, harsh, arbitrary cuts would jeopardize our military readiness. They’d devastate priorities like education, energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs.”  Agriculture Secretary Vilsack has warned us that layoffs of food inspector will result in food shortages.    A top general stated that troops in Afghanistan will have their stay extended because there won’t be enough money to train replacement troops.  Homeland Security Secretary Napolitano said the we should expect increased wait times in airports due to mandatory furloughs of security staff.

 As Morici wrote:, “It puzzles me how $85 billion in a $16 trillion economy could make such a difference, especially when tax increases of similar size, implemented on Jan. 1 at the President’s behest, had no such similar effect in his mind.”  Why can’t President Obama prioritize the cuts so that less needed services are cut?  President Obama got his tax increases on the wealthy as part of the negotiations to extend our borrowing limit.  Now is the time for him to take the lead and implement meaningful cuts based on priorities.  Everything is not a top priority.  Even entitlement changes, such as continuing to raise the normal retirement age for both Social Security and Medicare, should be on the table.  The debt that we are piling onto future generations is immoral and unsustainable.  It must stop.
Link to Register article: http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2013302160059

Will Iowans do their fair share?

As we work to avoid the fiscal cliff and solve our federal budget deficit problem, we need to ask what we Iowans are willing to give up.  We cannot solve our deficit problem by only increasing taxes on other people or by only cutting other people’s benefits.  Here is a partial list of federal expenditures that benefit Iowans: crop insurance subsidies, ethanol subsidies, wind power subsidies, biodiesel subsidies, Medicare, Medicaid, Social Security, National Guard installations, Silos and Smokestacks national park funding, Harkin grants, student loan subsidies, mortgage interest deductions.
Will you do your part?  What cut to your current or future benefits are you willing to accept?  If we don’t solve our deficit spending problem, sooner or later we will end up with a crisis like Greece. Contact your Senators and Representative and tell him which of your benefits you are will to have cut.

Tax increase on the rich – already done.

Beginning on 1/1/2013, individuals with income over $200,000 and married couples with incomes over $250,000 will pay a new 3.8% Medicare tax on interest, dividends and capital gains.  This increase will happen whether or not the Bush Tax Cuts are allowed to expire.  Currently, the Medicare tax is 2.9% of all earned income, without limit.  So, the wealthy pay the Medicare payroll tax on everything they earn.  Beginning in 2013, they will contribute even more based on unearned income.  This tax was included he Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare.  The tax had nothing to do with protecting patients or making care more affordable.  It was simply a tax increase on the rich to help reduce the tremendous Medicare funding deficit.  So, Obama has already increased taxes on the rich.

Iowans prefer Medicare voucher plan!

The Des Moines Register’s report on the Iowa Poll on Sunday, 9/30/2012, reported that 45% of Iowans prefer to, “Change the way Medicare works to provide seniors with the option of a subsidy to help pay for regular health insurance in the private market” as the most popular way to prevent Medicare from running out of money.  Less popular were the options of increasing taxes (26%) or cutting benefits (9%).  20% were not sure.  It’s pretty clear that a voucher program is the way most Iowans prefer to fix our Medicare funding problem.  Of course, if the Iowa Poll had given Iowans the choice, “Do nothing – don’t touch my Medicare”, the results might have been different.

We do need to solve this problem, so thanks to the Iowa Poll for not giving people the “Do nothing” choice.  A voucher system would contain costs, give freedom to people to choose the kind of coverage they want, and still provide a substantial safety net to meet people’s health care needs.

Register letter regarding Medicare taxes paid in is wrong.

The letter to the editor in the Des Moines Register from John Hyde on 8/31/2011 (Medicare problem is mismanagement) contained a math error. If a person earned $45,000 every year beginning 1969 through 2011 and paid the maximum Medicare tax, including the employer match, and compounded it annually, using the 10-year treasury interest rate each year, assuming each annual amount was paid in at the beginning of the year, the ending compounded total would be $128,124 – still far below the average lifetime benefit payout of $188,000 . Note: Before 1988 the Maximum taxable wages subject to Medicare was less than $45,000, and before 1986, the tax rates were also lower.

Medicare is not sustainable in its current form. Currently, Medicare is a Ponzi scheme. The early beneficiaries’ benefits are paid for using the taxes collected from future beneficiaries. Soon, there will not be enough money to pay the full benefits that are promised today. If a private business did this, the people responsible would go to jail.

We need to continue to raise the retirement age for Social Security and Medicare, and require Medicare beneficiaries to pay some significant amount out of their own pocket each time they incur a cost. That way, individuals would decide whether or not the cost of any given product or service is worth the benefits. It would also encourage people to be aware of costs and to try to reduce costs. Today, there really is no financial incentive for beneficiaries to reduce costs.

Here is the link to the original letter in the Register:

http://www.desmoinesregister.com/article/20120901/OPINION04/309010025/Letter-editor-Medicare-problem-mismanagement