Thursday, October 22, 2009
Supply Problem in Healthcare, is it a problem or a symptom? (preview)
I got a long and passionate speach over the last couple of days from a guy who believed that the real problem was a supply of doctors problem that was pushing up costs. This was a guy I respect very much so I knew there must be something to it but I did not have the evidence. What I did have was the evidence, shown in previous blogs, that two of the medical specialties that are fully free market based are low cost and don't have a supply problem. So I am researching the supply problem now, I do not have the research done but when I do I will update this post, expect it by the end of the weekend.
Tuesday, October 13, 2009
Ok does this seem at all rational, is it just me?
President Obama, in an Aug. 16 Times op ed, made such redistribution seem easy and painless: "We'll cut hundreds of billions of dollars in waste and inefficiency in federal health programs like Medicare and Medicaid," he said.
In the text of the speech to Congress on healthcare released by the White House on September 9th he said, "But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, it could provide a good deal for consumers".
How different is Medicare and Medicaid from a public health insurance option? If these similar government programs have, after years of calling for reform and waste management, billions of dollars of waste and inefficiency then what possible evidence is there that this new program will be any less efficient? Is this administration that much better a manager than any of the others? Is there evidence that it is so?
How can the two statements be reconciled? These huge programs have billions in waste but the new one will save money over the private sector because the private sector has profit and high administrative and executive costs? What possible motive would the executives in the private sector attempting to pay themselves more and make more profit have to allow waste that simply makes it harder to achieve those goals?
In the text of the speech to Congress on healthcare released by the White House on September 9th he said, "But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, it could provide a good deal for consumers".
How different is Medicare and Medicaid from a public health insurance option? If these similar government programs have, after years of calling for reform and waste management, billions of dollars of waste and inefficiency then what possible evidence is there that this new program will be any less efficient? Is this administration that much better a manager than any of the others? Is there evidence that it is so?
How can the two statements be reconciled? These huge programs have billions in waste but the new one will save money over the private sector because the private sector has profit and high administrative and executive costs? What possible motive would the executives in the private sector attempting to pay themselves more and make more profit have to allow waste that simply makes it harder to achieve those goals?
Monday, October 12, 2009
Employers doing The Right Thing (or should employee compensation be tied to lifestyle selection)
I was fairly incensed the other day when The President appeared to state that small business employers who did not pay a substantial part of both the employee and family health care were not doing The Right Thing and if the new system cost them then tough. Now I don't have the exact text of the statement so if I heard it wrong I apologize but it has rankled me greatly. Here is why I don't believe a solution where the employer pays for total healthcare costs is fair to the employee.
Let's take two employees both age 30. One is single and one has a wife and two kids. The single persons health care coverage is approximately $280 a month because of age and lifestyle choice. The married with kids person is around $1,100 a month. They do approximately the same job and provide the same value to the company. So let's say I paid full healthcare or a high percentage. The married person would get a compensation benefit of over $9,500 a year more than the single person simply because they made the choice to be married and have kids. Ok, so let's say I modify the pay rate between the two to compensate equally and fairly such that the overall compensation is the same, remember they are theoretically providing the same value to the company. Now the two are getting compensated fairly for the equal job they do, one in case and the other in cash and healthcare for wife and kids. But what happens when the single person marries the love of his life, who has 2 kids. Suddenly I either have to take away regular pay from that person or the company is now disadvantaged by an extra $9,500 a year because of this employees lifestyle change. For a small company with say 15 employees this penalizes every other employee in the business because now there is less money for bonus's raises etc.
Compensation, whether in benefits or actual compensation should be tied to job performance not lifestyle choices.
I solve this by putting a flat amount that any employee can use towards our healthcare plan and they pay the rest. Frankly I think that is, at the very least, one of several "Right Thing" to do.
Let's take two employees both age 30. One is single and one has a wife and two kids. The single persons health care coverage is approximately $280 a month because of age and lifestyle choice. The married with kids person is around $1,100 a month. They do approximately the same job and provide the same value to the company. So let's say I paid full healthcare or a high percentage. The married person would get a compensation benefit of over $9,500 a year more than the single person simply because they made the choice to be married and have kids. Ok, so let's say I modify the pay rate between the two to compensate equally and fairly such that the overall compensation is the same, remember they are theoretically providing the same value to the company. Now the two are getting compensated fairly for the equal job they do, one in case and the other in cash and healthcare for wife and kids. But what happens when the single person marries the love of his life, who has 2 kids. Suddenly I either have to take away regular pay from that person or the company is now disadvantaged by an extra $9,500 a year because of this employees lifestyle change. For a small company with say 15 employees this penalizes every other employee in the business because now there is less money for bonus's raises etc.
Compensation, whether in benefits or actual compensation should be tied to job performance not lifestyle choices.
I solve this by putting a flat amount that any employee can use towards our healthcare plan and they pay the rest. Frankly I think that is, at the very least, one of several "Right Thing" to do.
Sunday, October 11, 2009
Fundamental Basis for any Cost Solution to Healthcare
Ok, I was just watching someone on the healthcare debate and they were talking about how they could fix hospitals, and fix doctors etc. etc. I just have to say, nothing is going to get fixed till the people who are requesting healthcare have a stake in how much it costs every day. The very best evidence of this I heard was from Steve Forbes (wouldn't you know). Now I don't agree with Steve Forbes all the time but this is simply an observation he made. There are at least 2 healthcare items where people have to pay as they go, one is plastic surgery and one is Lasik. I did the research on Plastic Surgery and low and behold the average procedure inflation between 2001 and 2007 is around 2%. That's right 2%. I'll bet you'll find the same in Lasik because people vote every day with their dollars for better outcomes with less cost. And MOST of the outcomes of the 1000's of procedures done every day are just what the patient wanted. I'm not saying we should go to a fully personal pay healthcare system but somehow we have to have an individual stake in the cost so we CARE how much it costs when we make our decisions. Without that there will be NO FIX!!!
Here is the evidence:
From ineed2know.org\plastic surgery costs.htm 2002 costs
From www.boardcertifiedplasticsurgeon.com\cosmetic_surgery_costs.html for 2007 costs
I selected just a few of the very prolific items. By the way, there are far more of everything done in 2007 than in 2002. One of the issues that healthcare reform people say is the cause is much more demand stressing hospitals and doctors. Well, there’s lot’s more demand here and the average appears to be just about what the average has been for the normal economy. What is the OVERWHELMING difference….Simple PEOPLE pay for these things from their own pockets. And by the way we have Great results and lot’s of middle class Americans can afford it if they want it.
2002 Eyelid Surgery was $2,455 average cost for the Dr., 2007 $3,134, annual inflation 4.6%
2002 Breast Augmentation was $3,436 and 2007 it was $3,816, a mear 1.8% inflation rate
Botox in 2002, $422 in 2007 $501 an annual increase of 3.1%
Breast Implant Removal, $2,084 vs. $2,380 for 2.4%
Finally a Face Lift actually showed a negative 1% inflation, 2007 cost was more than 6% less
Again I’m not saying that we should completely go to a no insurance pay as you go but I am saying that if we all had a stake in the cost of our healthcare we would vote EVERY DAY for better outcomes and less money and low and behold we would get it.
Here is the evidence:
From ineed2know.org\plastic surgery costs.htm 2002 costs
From www.boardcertifiedplasticsurgeon.com\cosmetic_surgery_costs.html for 2007 costs
I selected just a few of the very prolific items. By the way, there are far more of everything done in 2007 than in 2002. One of the issues that healthcare reform people say is the cause is much more demand stressing hospitals and doctors. Well, there’s lot’s more demand here and the average appears to be just about what the average has been for the normal economy. What is the OVERWHELMING difference….Simple PEOPLE pay for these things from their own pockets. And by the way we have Great results and lot’s of middle class Americans can afford it if they want it.
2002 Eyelid Surgery was $2,455 average cost for the Dr., 2007 $3,134, annual inflation 4.6%
2002 Breast Augmentation was $3,436 and 2007 it was $3,816, a mear 1.8% inflation rate
Botox in 2002, $422 in 2007 $501 an annual increase of 3.1%
Breast Implant Removal, $2,084 vs. $2,380 for 2.4%
Finally a Face Lift actually showed a negative 1% inflation, 2007 cost was more than 6% less
Again I’m not saying that we should completely go to a no insurance pay as you go but I am saying that if we all had a stake in the cost of our healthcare we would vote EVERY DAY for better outcomes and less money and low and behold we would get it.
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