Stanley Feld M.D.,FACP,MACE
No one should be surprised that the cost of healthcare and medical prices are overrunning projections by the Obama administration. It was self-evident with the passage of Obamacare. Now it is official.
President Obama has done all the wrong things to lower costs and all the right things to raise costs.
The Health Care Cost Institute analyzes claims data from UnitedHealth Group Inc., Aetna Inc. and Humana Inc. The Institute said the cost for consumers with employer-sponsored healthcare insurance plans increased 4.6 percent in 2011. The government estimated a 3.9% increase for 2011.
A recently published study by the U.S. Centers for Disease Control and Prevention found the number of people without insurance climbed 1.7 percent in the first quarter of 2012.
Both numbers are the opposite of the numbers President Obama promised in 2009 when he was forcing congress to pass Obamacare.
Why is President Obama not bending the cost curve as he promised? I would say he either doesn’t know what he is doing or he knows precisely what he is doing.
My guess is he is trying to force consumers into a "Public Option" that will be created by the health insurance exchanges. He is also trying to stick the cost of this “Public Option” onto state governments. The state governments are required to balance their budget.
Even before states institute the health insurance exchanges most states are suffering from large budget deficits when they are supposed to have a balanced budget.
The health insurance exchanges will make it worse. The federal government will have to bail states out as the payer of last resort. This will increase the federal deficit even further. The federal government will have to print more money.
Printing more money will devalue savings, salaries and purchasing power. The result will be further inflation. Somewhere someone like a China will not continue to buy the United State's depth and it will default on payment.
America is currently suffering from inflation. It is being disguised because the government has eliminated fuel costs and food costs from inflation calculation.
I believe Americans understand this. Governor Romney must emphasize this in no uncertain terms.
“Affordable Care Act, which promises to expand coverage to 30 million Americans starting in 2014 and trim health costs.
“If you don’t bend the cost curve, ultimately insurance gets more expensive,” said Douglas Holtz-Eakin, the president of the American Action Forum, a Washington-based advocacy group that opposes the health law. “It’s a big problem for the Affordable Care Act.”
Obamacare tries to limit insurers’ administrative expenses and profits. The Healthcare insurance industry is supposed to pay at least 80% of premiums for direct patient care. (Medical Loss Ratio of 80%).
However, President Obama has permitted the healthcare insurance industry to continue to count expenses for administrative services into the direct medical services column. The result is a decrease in the amount of money available for direct patient care.
The Health Care Cost Institute published the direct cost per person under employer- sponsored plans increased from $4,349.00 in 2010 to $4,547.00 per person in 2011. United, Cigna and Humana cover 40 million people.
I have previously published that the cost per Medicare senior is $6,600 a year.
The obvious question is why should an employer pay $15,000 to $20,000 dollars a person a year when the cost is $4,547?
Why should I be paying a premium of over $15,000 a year in after tax dollars for my Medicare premium and supplements for my wife and me when it costs $6,600 per person? The $6,600 per year average includes the sickest seniors.
Each year the government increases the Medicare premiums on a means tested basis because it spends money above my premium cost.
Keep in mind I have been paying into the Medicare Trust since 1965. Now I am paying an additional $15,000 a year for direct services that cost $6,600 per year per person.
Any salary earned by a senior results in them paying into the Medicare trust.
Someone is ripping off the system. The likely candidates are the healthcare insurance industry and the ever-increasing government bureaucracy.
This statistic is a distraction from the real issue. The real issue is to explain the difference in direct cost compared to premium costs.
President Obama believes that hospitals owning and managing physicians practices will result in best practices using evidence- based medicine.
I believe a system can be built to teach independent physicians best practices combined with their use of clinical judgment.
Holtz-Eakin, former CBO head, believes that Obamacare encourages consolidation among hospitals and doctors. The consolidation of hospitals and physicians is leading to greater pricing power by the hospital system.
The problem with the consolidation of hospital systems and physician practices, is that physicians are not receiving an increase in reimbursement for their intellectual property or technical skills.
The hospital system owns physicians’ intellectual property and technical skills. Its staff does the collecting and financials. The hospital system enjoys the increase in revenues. The salaries for its administrators have skyrocketed into an average of 1 million to 5 million dollars a year.
It is clear that the price of adding 30 million people to the healthcare insurance rolls will increase costs. The increasing price spiral will not be to the advantage of patients and physicians.
The costs will become unsustainable and the government controlled healthcare system will collapse.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone
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