Show Me the Money, Show me the Doc's

In a rare show of insight, physician's attending the recent AMA gathering in Obamaman's old stomping ground actually let loose a chorus of boo's. Admittedly, this was for a rather self-serving issue: "limits on jury damages in medical malpractice cases." Still, it shows a developing wedge between health care delivery folks and the gummint's efforts to nationalize their industry.

And it gets better (or worse, depending on whose ox is being gored): the Congressional Budget Office (itself not known for underestimating the cost of government-run programs) projects that the administration's health "reform" plans will cost a cool $1 trillion over the next ten years. Of course, it will ostensibly cut the ranks of the uninsured; the problem is that, as usual, that number is grossly inflated. Based on our own and other's research, we estimate the actual number of those eligible Americans who are chronically uninsured at about 25 million. That comes to some $40,000 per person (or $160,000 for a family of four). Of course, that also presumes that the $1 trillion is truly the ceiling, instead of the (more likely) floor.

But even if we take the Obamaman at his word [ed: quick, call Ripley's!], the $1+ trillion price tag does nothing to decrease the number of uninsureds.

How's that, you may ask?

Well, let's go back to the CBO, whose head honcho had this to say about "The Plan:"

"According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits ... When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million."

No matter how you spin this, it means that more people will lose employer coverage than gain gummint-sponsored health insurance. It's essentially rearranging deck chairs, shuffling folks from one type of plan to another, dropping many altogether, with the net result being a net loss. Somehow, I don't think this is the change folks were hoping for.

We've also heard how the adminsitration is going to cut Medicare and Medicaid expenses (i.e. reimbursements) to help offset the cost of this new initiative. Again, it'll be interesting to see how (or, perhaps, if ) that actually plays out.

Unfortunately, none of these proposals tackle the underlying problem: increasing health care costs. These are driven by a number of factors, the most critical of which is "skin in the game." As long as someone else is paying the lions' share of health care costs (be that the government or your insurance carrier), there's little incentive to not consume care. That, in turn, leaves us free to indulge our whims, often to our own detriment. As Bob has pointed out numerous times, many (most?) health care expenses could be reduced, or even eliminated, if we made healthy lifestyle choices.

Perhaps we could take a page from our P&C colleagues: auto insurance, for example, is based almost exclusively on behavior: get a lot of tickets, or wreck a lot of cars, or drink and drive, and you'll pay more. I've never heard of anyone seriously protesting this (well, except those who get dinged for their own misbehavior), and it seems to work out just fine. So why can't health insurance be more like that?

Well, it can:

Safeway, the grocery behemoth, put in place a health insurance plan that's priced directly relative to risk. That is, it's based on the actual behaviors of its participants. They observed several facts:

"The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable."

Participating employees agree to be screened for such things as tobacco, weight, blood pressure and cholesterol levels, and their premiums are then adjusted to reflect the increase or decrease in risk. Seems simple enough, and fair, too. After all, shouldn't folks be rewarded for keeping health costs (and hence, insurance premiums) down? Why couldn't these principles be applied in the broader marketplace? If the goal is to reduce costs, and thus premiums, wouldn't that ultimately lead to a reduction in the number of folks who find health insurance unaffordable? And of course, there's the added bonus of quality of life, as well.

Now that seems like a win-win to me.