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Another Collection of Myths
Myth No 1: need more regulation of the HC industry
In fact the HC industry is the most regulated of any industry. With 1900 Federal and State mandates on coverage and policy, this industry is highly restricted and contained. Furthermore a 3 year study on the opportunity cost effects of current regulation has concluded for 2004 that the net cost (cost minus benefit) is $169B, $200B estimated for today. It is also estimated that 22K addition deaths are statistically probable due to this cost and these policies. This is more than the cost and body count of the Iraq war. In fact deregulating what is the minimum insurance service would make insurance more affordable to many.
Myth No 2: private companies are dominating the HC industry and are making huge profits
In fact this is not true overall. The government currently is responsible for 45% of the total $2.5Trillion HC annual cost in this country, and this % is growing each year. Insurance companies pay out 87% of their premiums in claims, with 3% profits in general. Much more data can be added to this pile which shows that the HC industry is more under the cost driving control of the government. Insurance companies and some large corporations have found a good way to work the system. Hospitals have for instance had Congress pass a bill that restricts specialty clinics from taking the more highly profitable portion of the hospitals’ business.
Myth no 3: doctors and hospitals are making too much money
In fact in nationwide salary surveys, the doctors’ salaries are not high by many standards. Some have to also pay for liability insurance as well. 70% of the hospital capacity is under non-profit status.
Myth No 4: 46M people in this country do not receive healthcare
In fact all people in this country receive some healthcare, due to an act by Congress in 1986 that required hospitals and ambulance services to provide emergency care. Of the so-called 46M people mentioned repeatedly in political speeches, only 8M are chronically uninsured, 10M are illegal immigrants, 17M make over $50K a year, 11M are eligible for Gov programs. Census bureau asks the question have you been uninsured in the past year. Most uninsured obtain insurance.
Myth no 5: the poor people in this country are without HC
In fact, the purpose of Medicaid is to provide HC coverage to the poor.
Myth No 6: the cost of HC is causing a lot of bankruptcies
In fact, 2 out of every 3 people who filed for bankruptcy in recent years, had health coverage.
Myth no 7: Canada’s HC is much better than ours
In fact, their cost is only 10% of their GDP, but when someone needs treatment for cancer they come to the States, for instance. The wait times are excessive in Canada, especially at emergency rooms. They ration HC there, for the demand is much large than 10% of the GDP. In fact in most countries that have socialized medicine, rationing is the basis of the plan. Doctors are in a union there in Canada. Of the 33M people in Canada, 3.2M were waiting for a primary care doctor. I do recommend viewing the Video for more details: The proposals coming from this Administration, following the construct put forth by Daschle, have rationing at the core.
Myth No 8: drugs costs are out of whack in this country
In fact that is partially true. It is estimated that in the future it will require $1.5B and 15 years to bring a major drug to market. The regulations by the FDA are based on minimum negative publicity rather than saving lives. It has been said that drugs in general come to Europe about 2 years after they appear in the States. Drug costs however are increasing at an alarming rate, well above the CPI index. The entire business model has to be changed in this area, as does that for HC in general. In a recent McKinsey report, it was determined that the least efficient drug companies could significantly improve their production costs by adopting practices of the more efficient companies.
Myth no 9: HC in America is not nearly as good as in other developed countries
In fact, this depends on the criteria. USA ranks first in responsiveness, but down the list in life expectancy and infant mortality. There is some question also about the statistics gathered in other OCED countries. We are at 2.2 doctors per 1000 citizens, much lower than most OCED countries that generally are at or above 3 per 1000. I attribute that to the AMA and the government licensing requirements. Of the past 25 Nobel Prize winners in Medicine, 14 are from the States, and 4 more reside and work in the States. The medical research expenditures are dominated by the States. The best place to receive care for a diagnosed chronic illness is in the States. Most of the HC R&D is being done in the States.
Myth no 10: the HC system in America is not capable of being cost effective and we have to follow the trend in OCED countries and have the government provide universal HC
In fact this is not true. If we combine the best practices in the US with deregulation, we can be on par with the costs in Canada and most other developed countries. If we also open the decision process up to the consumer, then competition will follow. If we use mandated premium coverage then we will see an explosion in HC costs, like has been seen in Massachusetts, which in turn will lead to rationed care completely controlled by the government.
Myth no 11: most of the cost of HC is taken by dying patients
In fact this is not true, which was a surprise to me. It is true that most of the HC expenditures are consumed by chronic care patients, whom are not near death. The elderly are consuming a lot of HC however.
Myth no 12: due to consumer decisions the costs are out of control
In fact this is not true. Only 13% of the HC expenditures are made directly by consumers. All others are made by third parties. This percentage has been said to be one of the lowest %’s in the list of OCED countries. One interpretation is that makes the US HC system act more socialistic than others.
Myth no 13: we need a panel approach to setting costs
In fact this is not the best strategy for us, as it will act the same as Wage and Price controls did under Nixon, and the results will be shortages and price inflation and in fact a lot of loss of life.
Myth no 14: we have a HC system that must be controlled or it will keep growing in cost
In fact, this is not true. What we need to do is to open the HC industry up to competitive forces by deregulating many aspects of the industry. We need transparency not control. We need to put the consumer back in control of the expense and quality decisions. Where this has been done, and there are very few due to regulations, such as Lasik surgery, the costs have been coming down and the competition developed. Unfortunately we have raised an entire generation on the current system. It will take some effort and time to fix.
Myth no 15: a sound IT solution is what we need to invest in first
In fact, this has never been true in any industry where the business practices and models are as broken as they are in HC. There are currently some very good examples of IT practice in HC in a number of areas and companies. What the government is interested in by having a greatly expanded IT solution is the outcome of centralized data. This will enable the single payer HC system that the current Administration is really interested in, by allowing centralized control.
Myth no 16: Medicare is a good model to follow for the country
In fact this is about the least true of any of these myths. Medicare is sky rocketing in costs, and is promising to bankrupt the country if it is not reformed. The present value estimate of all future deficits, costs minus taxes collected, has been estimated by the Fed Gov to be $63T, yes trillion dollars. The growing entitlement mentality been fueled by Medicare, which by the way does not just serve the poor, but also serves the disabled and some poor folks, is a large concern for the future.