GM’s health care costs are over $1500 per car. Chrysler’s are $1400, Ford $1100. Honda, Toyota, et al are a fraction of these figures. That disparity crystalizes the economic problem facing US industry (subscription required) competing in a world economy.
There are ample posts and many sources describing how GM got to this point, and all of them are interesting and serve as an excellent object lesson for executives and public policy folk. But the real question is what do we do about this now?
First, let’s stop the health care problem from getting any worse. To do that, we have to address the current health care delivery system, pricing, access, and eligibility.
Here’s a start, with parts borrowed from the National Coalition for Healthcare Reform.
1. Universal access and coverage is the foundation. Without universal coverage, there will be continued cost-shifting, poor quality of care for the uninsured, and increased morbidity and mortality.
2. Cost management – unlike the Mass, CoverTennessee, and other plans, we have to bite the proverbial bullet and accept price and utilization constraints. And, yes, if it comes to that, we need to not cover certain procedures and drugs that are not proven to be effective.
3. Change physician reimbursement so they are rewarded not for doing procedures but for keeping people healthy and returning injured/ill people to the highest possible level of functionality. Let’s pay them for results, not process.
4. Limit medical technology. Put in place a CON system in every state.
5. Force adoption of administrative technology. Require electronic bill, medical record, and document transmission from all providers by a date certain.
6. Eliminate medical underwriting and other risk selection techniques. Force payers to compete on the basis of service, efficiency, and outcomes. Risk-balance individual insurer portfolios with risk-transfer payments based on demographics.
As for the “legacy” costs, the decision we have to make is painful. Do we allow GM et al to go bankrupt under the burden of their retiree health care costs, a situation caused by their management failings? Or does the taxpayer take on GM’s liability (one that may fall to the taxpayer anyway if/when GM et al go belly up)? Or do we just tell the retirees that what they thought they had they really don’t?
And, by the way, we are not just talking public companies here; almost all states and many other governmental entities have generous retiree health care plans, with low retirement age requirements.
So here’s a plan. Rough, nasty, and downright unworkable, but a start.
1. Require all health plans have some minimal level of cost-sharing by the insureds (and a maximal level as well). No, I haven’t started drinking the CDHP Kool-Aid, this is not a panacea, but some skin in the game is better than none at all.
2. Transfer the responsibility for all retiree health care plans to CMS, and consolidate all under an identiical health care plan design.
3. Require the original employers to fund the plans up to some maximum amount based on their “ability to pay”; if they can’t pay, then force the company to issue new “debt” based on their liability that will be held by CMS and have first rights to earnings, and be superior to other debt holders and creditors.
So that’s what will happen when I’m named King.
Another example of the kind of rational outcome we might get if we had policymakers who agreed that there was a healthcare crisis in the first place!
But, of course, we are going to end up being reactive and not proactive. As you noted Joe, the time to be proactive is almost up, GM, Ford and others may be going belly up at any moment.
While most of us wouldn’t mind a system where government acted as an insurer of last resort, one that preserved market competition for the provision of healthcare, the attitudes of certain parts of the insurance corporate elite and the politicos they support haven’t allowed sane discussion and so we will be dragged in to government sponsored healthcare and an environment that will likely see the demise of healthcare insurance companies.
There are so many issues to discuss if we could just get past the “socialzed medicine sucks” negativity to the point where we can sit down and say, “Something has to change, what’s the best way to do this?”
There IS a fair, rational and competent plan out there, an American way to do this, but we have to be willing to find it!
If the goal is universal access while holding overall healthcare spending to the current level of about 16% of GDP, I think there needs to be more focus on reduced utilization. I think there is plenty of “low hanging fruit” to be harvested by looking hard at expensive and often futile care at the end of life. The UK uses QALY metrics to ration care for which the costs are deemed to outweigh the benefits in increased life expectancy. We should probably move in this direction as well. In addition, my understanding is that only 30% of Americans have executed living wills. We should be able to drive this number up a lot with some effort. Perhaps executing a living will or advance directive could be made part of the process of applying for Medicare or Medicaid or entering a skilled nursing or assisted living facility.
Additional savings might be possible if we replaced the current system of litigating malpractice claims with health courts that could render fairer and more objective and consistent judgements across the system. Electronic Medical Records would also be helpful by reducing errors and saving administrative costs.
In the case of GM and other old line companies with high legacy costs for retiree healthcare, a useful interim step might be to change the law to allow companies to offer less generous benefits to those over 65 and eligible for Medicare. This would allow companies to concentrate their limited resources on helping retirees who are under 65 and not yet eligible for Medicare. These are the people who are most vulnerable to financial ruin as a result of high medical expenses.
State and local government employees and retirees should be required to pay for 25% of the cost of their health insurance just as federal employees and retirees already do. New employees should receive a less generous set of benefits more in line with what private sector workers receive. It is neither right nor fair for the net tax eaters to enjoy more generous benefits than the net tax payers.
The goal should be the ultimate transfer of responsibility for health to the individual from the insurer or plan. Until the mindset changes from having virtually unlimited access to multiple and many costly services to rewarding patients for achieving and maintaining good health nothing much will change. Medical technology provides such awesome and costly interventions that it’s hard to deny or defer its use. Yet the answer must not reside in technology but rather in using HMOs for health maintenance and reserving technology for those who truly need it when they need it. We must find a way to reward good health.
How do you propose for primary care docs to “keep people healthy” when they spend most of their days putting out fires?Even if they had the time what evidence is there that docs know how to keep people healthy?
How much is paid in and how much is paid out?
Add it all up Surplus or shortage?
Who is profiting under the current system?
What is the actual cost of providing health care, minus profit?
Should all health care be Non-Profit?
Is it ethical to profit from someone’s pain and suffering?
Following is not anticipated to be all-inclusive.
Total paid into Health Care by American public. (Employee, employer and unemployed)
For example;
Medicare Medicaid Taxes
Social Security (Assuming old age is long-term disability)
All forms of health or disability insurance: (dental, health, eye, supplemental, etc)
Premiums
Co-Pays
Deductibles
Non-covered expenses
VA Co-Pays
Medicare, Medicaid Co-Pays
Cost to for unpaid bills, fees, penalties, and interest on credit accounts.
Minus
Total paid out by
Insurance companies
Medicare, Medicaid
VA
Military
Charity healthcare
Social Security.
Surplus or shortage???
Quoting
http://www.nchc.org/facts/cost.shtml
The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.