Wednesday, September 09, 2009

Stupid Government Tricks - Health Care Reform

Health care reform is like the housing market. Everyone wants a bigger home for less money and they want it now.

Travel back in time a dozen years or so and Washington granted your wish. The folks in Congress, in conjunction with HUD, Fannie Mae and Freddie Mac decided anyone who wanted a home should have one.

Poof! It happened.

Anyone could get a loan, regardless of income or credit history. Demand for housing outstripped supply which fueled a rapid increase in the price of homes.

And then it all collapsed.

The government came in. Doled out money they didn't have. A lot of money. We, the taxpayers, have not yet begun to pay the tab for the housing market collapse.

Health care reform, at least the way Washington is going about it, could end up in the same place.

Roughly 85% of the population has health insurance and everyone has access to health care.

Compare that to 70% who own homes and most of the rest are renters. The homeless population is a moving target.

Most people pay something for health insurance and health care, but about 25% of the population is covered by Medicare and Medicaid and pay little or nothing for their coverage. The cost of health care to them is significantly discounted.

When Washington tried to expand the housing market by making mortgages available to almost everyone they interfered with free market forces and the result is the mess we have now.

The same thing will happen if they interfere with health care, but what they are attempting to do is even worse than what they did to the mortgage market.

They wanted to make mortgages available to 30% of the population but without unraveling what was working for the other 70%. Of course along the way some folks who already had a home mortgage decided to jump on the wagon and refinanced their homes up to and sometimes even exceeding the fair market value.

Washington wants to make health insurance available to everyone but in doing so, they want to completely unravel a system that is working for 85% of us and make health insurance more expensive for everyone.

It is like saying not only should everyone have a home but the home will be in an upscale neighborhood with the best schools. Everyone will have 5 bedrooms, whether they need them or not, a 3 car garage and a pool.

The health insurance plan Congress has designed allows everyone to have the best coverage starting at birth. Like the mortgage market, no one can be refused health insurance. Your health insurance plan must cover all preventive care services with no out of pocket to you. There will be no deductibles or coinsurance, only a copay for even the most expensive of services. If you earn less than $66,000 you will get money from the taxpayers to help you pay your premiums.

Sounds sweet, but just like the mortgage collapse, this plan will fail as well.

They say they want to make health insurance available and affordable for everyone but their plan will do just the opposite. Nothing proposed will lower the cost of health care, or health insurance. In fact, you could very well see the total cost of health care balloon out of sight and health insurance premiums double overnight.

And this.

There are not enough primary care physicians to handle the increased workload.

Once health care is "free" demand will outstrip supply, prices for health care will go up and the doctor shortage will result in queues.

If you want to see health insurance premiums drop two things have to happen.

Less demand for health care and more risk sharing by the insured.

Premiums for health insurance are inflated by 20 - 30% to comply with state and federal mandates.

Everyone who has health insurance now is paying for things whether they want them or not. Why? Because some politician decided there needed to be a law REQUIRING health insurance companies to cover the expense.

Mandates vary by state, so depending on where you live some of these things may be covered or not. But some of us at least are paying for services by chiropractors, podiatrists and social workers. I have never been to a chiropractor or podiatrist but I am paying an additional premium so others can use that benefit.

If not for the fact I am married to a social worker I would say I had never seen a social worker either.

I am also paying for mammograms and pap smears as well as well child care and wigs.

Don't need any of those either.

And these are just state mandates.

Because I live in Georgia I am paying an extra 1% to cover telemedicine and I don't even know what that is, but I have it.

Eliminate mandates and watch premiums drop by as much as 30%. Your $800 family insurance premium could become $560 overnight if you weren't paying for drug abuse counseling, dental anesthesia and all those other mandates. If you are single and paying $150 the premium could drop below $100 by eliminating mandated benefits.

Roughly 30% of the population is obese. Not just overweight, but obese.

Lifestyle choices, including overeating and lack of exercise consume roughly 40% of health care expenditures.

A healthier lifestyle plus eliminating mandates could reduce premiums by as much as 70%.

Now we are talking real savings, not some mumbo jumbo Washington-speak where health care reform will save or create affordable health care for everyone. Anyone who buys that line needs their head examined.

Since the politicians want to make bigger, more expensive health insurance, I am waging my own battle against high health insurance premiums for myself and my clients. Most of them understand there are things you need covered by health insurance and things that don't require health insurance.

They don't need health insurance for routine doctor visits but do need insurance to cover a surgeon or oncologist. They don't need insurance for a generic antibiotic but do need it for a $4,000 cancer drug. They don't need insurance for a minor emergency but do need insurance for a major hospital stay. They don't need insurance for maternity but do need insurance if complications arise. They don't pay an insurance company double premiums to cover a maintenance drug but choose a plan that excludes coverage and pockets the savings.

By purchasing insurance for only what they need, my clients are saving thousands of dollars each year. Instead of sending $8,000 or more to the health insurance company and never seeing it again, they are sending $4,000 and pocketing the savings in a tax sheltered account.

They don't need or want Washington to reform anything. In fact, they want less government interference in their lives and more freedom to choose.

I try to help them get their wish.

Smaller cars, bigger health insurance, Poppa Washington.
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