Tuesday, June 23, 2009

Obama's Strategy and Health Care

TARP; Stimulus; Auto Bailout; Energy Cap & Trade; Health Care; Financial Regulations......

Since the innauguration, Obama & Co. have been pursuing a Fast Break strategy on the American public and the Republican Party, never stopping their relentless drive to score.  They've never even let the Republicans take the ball out after they've scored, so they've never even had to take the ball away from them since January. That play book has worked fine till now; however, that strategy, and the Democrats, may be running out of steam.

The usual defense against a fast-break offense is a Full Court Press, where the defense is paired up man-to-man with an opposing player. But that takes teamwork, coordination, practice and most of all a coach calling the game strategy.  Unfortunately, the Republicans have no one in the front office, let alone a coach, or even an apparent captain.  It's difficult to get a bunch of 'stars' to agree to play subservient and teamwork roles absent some strong discipline and head banging.

But sometimes teams effective at using a fast break offense can get tired out, or even get over-confident in their own perceived invincibility, and sometimes, stuff just happens.

The Obama Fast-Break offense may be running into the wall, and "stuff" may have just happened to derail them on the path to their most significant objective.  The CBO report on the Democrat's health care plans have been released and they paint a dire cost picture for implementing a plan that would only cover a portion of uninsured people, while a the same time cost over $1Trillion. 

Like the Democrats objective to initiate tremendous economic strangulation under the guise of a highly, and hotly, debated issue of CO2 and the Global Warming that's freezing everybody now, the issue of health care reform has been characterized by the Democrats as a Gordian Knot problem of such proportions that it can only be solved by the Alexander the Great style solution that they've had waiting for over a hundred years - a Public Health Insurance Plan.  In reality, the nation's current problem with health care is not a crisis, and it is solvable without turning our country inside out and destroying our children's future. The problem is really a combination of separate issues that can be, and should be, addressed separately.

There's no denying that Health Care reform is necessary, but not in a way that puts the government in charge of managing it. We've seen how that would work under Medicaid, Medicare, and the V.A., and it’s not acceptable. The Democrats all seem want to address every issue in a “comprehensive” plan, and that usually results in the most inefficient and non-effective approach to solving the real problems. The Health Care problem we have isn’t one simple issue that can be fixed with a new government program. It’s a problem situation that been developing since the mid-60’s that consists of government induced problems via Medicaid and Medicare, outrageous lawsuits, tax issues, insurance regulations, and a corruption of the view of government’s responsibility vs. personal responsibility, and I’m sure a bunch of other issues not named here.

This may be simplistic, but I think that from what I’ve been able to glean from all the articles being written, the following approach would be more effective than what’s generally being proposed by the Democrats (as well as some Republicans):

Address the high costs: Although Obama and the Democrats tend to lump it all together, there are really significantly different issues in play. Medicare and Medicaid cost are running huge expenses and government budget deficits, and because they are underpaying providers, causing higher costs for all other health care system participants who have to pick up the shortfall; Medicaid and Medicare pay providers based on a basis of doing something to a patient – so they do more things; separately, inefficiencies in the way that insurance companies operate on a state by state basis cause higher rates; State mandates cause higher rates; and people who have Medicare or employee health insurance think that their care is “free”, so many tend to abuse their coverage:

-Medical malpractice suits cause a significant amount of doctor "CYA" non-needed tests
-Medicaid and Medicare payments are 20-30% lower than market rates and as a result cause providers to raise the rates for other customers in order to make up that lost differential. Somebody has to pay the freight.
-Medicaid and Medicare expenditures are estimated to be 30% higher than they should be due to claimant fraud that the gov’t doesn’t address
-Providers costs are higher due to Medicaid and Medicare required administrative overhead
-Health Insurance is loaded with a significant number of individual State mandates that drive costs up unnecessarily.
-Health Insurance is set on a state by state basis, preventing real competitive cost savings that could be accomplished by allowing national plans to compete

Address tort reform: Dramatically ratchet down the awards given to plaintiffs and lawyers in both class action and individual malpractice cases. This will directly lower provider's costs, and reduce the addituional costs induced into the system as a result of providers practicing 'CYA' medicine

Restructure the basis of Health Insurance: The concept of insurance should be understood to be about evaluating and paying for offsetting various levels of risk, with the attendant costs associated with the levels of risk you want to insure against, as opposed to paying for all costs associated with Health Care
-Focus on covering against extraordinary procedures, not the basic preventive expenditures that we all should be responsible for paying for ourselves
-Emulate an approach similar to Auto Insurance models in order to get individuals to have more skin in the game and be more judicious about expenditures
-Lifestyle effect risk and should be factored into cost. People who smoke, are obese, use drugs, or demonstrate a risky life styel should pay more based on increased risk factors

Currently, employer provided health care is a tax deductable expense to the corporation and tax free to the individual. It should be kept that way. But in addition, there should be tax deductions for privately paid for health insurance, which should be relatively low cost if the other actions listed above were put into effect. Using a similar basis of risk assessment, Safeway has managed to keep cost of health insurance down, and employee satisfaction up, it’s a good model.

The issue of covering the non-insured now appears to be blown way out of scope, so that instead of being the commonly tossed around figure of 45 million, it’s really only about 15 million, and of that a good number are people who could pay for insurance, but choose not to.

If the Democrats are successful in instituting any form of a Government managed public health plan, it will eventually eliminate any private health insurance options.  And along the way, with it's relentless and mind-numbing drive to lower all costs and standardize all treatments, the Public Plan will manage to eliminate the profit attraction that has been attracting the most talented people, and been the enabling ingredient in creating the worlds best health care.

Let's not accept the Gordian Knot argument.  If we step back and not come at this with the pre-conceived solution of a Government-run Public Health Care Plan, we can unravel the problem and develop a much more effective private approach that will provide us significantly better health care at lower cost 


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