WHY WE NEED HEALTHCARE REFORM

The general fear of those that oppose healthcare reform is that a gov’t option will eventually force everyone into an inefficient gov’t-controlled system. This is interpreted to mean long waiting lists for essential care, delays in seeing a specialist and necessary surgery, rationing of care because of the millions of new patients dumped into the already overloaded and bankrupt system, rationing compensation for healthcare providers, and essentially the elimination of the free market healthcare system which will consequently chase away our competent physicians.

This fear is the mantra for those that oppose healthcare reform or as President Obama states “Health Insurance Reform”. It was actually clever for the President to rename his reform push to reflect the needed changes in the delivery of our current health insurance system and to not confuse the issue with actual provider care. For the most part, everyone is happy with the healthcare they receive. The concern for reform supporters is for the unsustainable delivery of health insurance.

Our health insurance system is primarily employer-based and the system is drowning due in part to losses sustained by medical providers treating the uninsured. Whether the appreciable number of uninsured is 15 million or 46 million, these numbers stumble into the health insurance system causing a staggering inflationary dragon medical providers and insurance companies either are unwilling or unable to tame. Unfortunately, small businesses are the ones absorbing the bite as inflationary costs are simply passed down the chain to employers that buy group insurance policies for their employees.

As a result, employers are forced to take fiscal measures such as lay-off employees, eliminate employer contributions to employee premiums, cutback raises and bonuses, reduce suppliers, or simply go out of business. This inflationary rise in healthcare is dangerously impacting the economy and the need for change does rise to the level of government intervention.

Most people that are happy with their healthcare obviously are not paying the bill for the rising cost of delivering that care. When someone is faced with coming out of pocket to cover the share of the premium their employer is no longer paying, it can be the beginning of a downward financial spiral for that family. Many families decide to go uninsured and manage their own healthcare risks because their employer based health insurance premium is simply unaffordable.

I admit that the opposition's fear to the reform plan are not necessarily outrageous. The thought of a universal gov’t controlled system of healthcare is sobering. However many of those fears seem to take root in those opposing reform because of popular right-wing commentators that are not exactly motivated by truthful facts. There is a marketing component of much of the talk disseminating from right-wing commentators and that is that fear sells.

Despite all, President Obama could have done a better job over the course of this public debate to explain the need for reform. His August 15th town hall meeting in Colorado is an exception. That was the first time he made a compelling pitch for his reform plan. In his silence, much of the talk from conservatives selling their “Obama-hate” platform became increasingly popular alongside the fear for his reform policy.

As a result, there has been a reported drop in President Obama’s popularity from above a 60% approval rating to a below 50% according to some polls. He has seemingly lost the confidence of Independents that he scored during the November election, many Republicans that also voted for him, and much of the elderly, which by some accounts made up 17% of his November 2008 voting base. However, it does seem that those opposing health insurance reform, do not have a grasp on the severity of the current problem. Those opposed to reform seemingly feel incubated from the economic repercussion that the status quo will inevitably bring.

Within 10 years Medicaid will be defunct. This will not be due to gov’t inefficiency but due to Medicaid’s inability to pass on the inflationary costs of health insurance to their customers…the taxpayers. What would be the financial consequences to Blue Cross Blue Shield, Cigna or Aetna, if they did not have employers upon who to pass on the rising costs of health insurance? They too would be defunct even much sooner than Medicaid because the inflationary costs of health insurance for private insurance is said to be double the inflationary costs of Medicaid.

Now, in fairness to health insurance companies, there are fundamental problems with our healthcare system that is not necessarily the fault of insurance companies, so let’s not totally demonize them. Remember, a medical provider is the one who submits the medical bill to the insurance company for payment. How much cost is factored into medical billing for medical malpractice related insurance costs? How much of healthcare cost is actually the normal increase in the market value of healthcare? How much of the billing cushions losses sustained by the medical provider from patients that don’t have insurance and can’t pay?

Medical malpractice claims is a factor of healthcare inflation and perhaps tort reform should also be a part of the President’s reform plan. Malpractice tort reform will limit the amount of money a patient would receive in a malpractice lawsuit. This would potentially bring down malpractice premiums, which would mean lower healthcare costs.

Lastly, in response to the fear that a gov’t option will eradicate competition, we shouldn’t assume that there currently is a true sense of competition amongst health insurance providers. Health insurance companies are pretty well leveraged in the market. Pricing for employer-based group policies is pretty much comparable to one another so there isn’t a robust sense of choice. The small circle of health insurance companies purchase each one another’s publicly offered shares as to balance themselves in the open market. So is there really a true sense competition?

If we provide a public option for people with no coverage, the influx of uninsured draining the healthcare system will eventually reverse itself. Under the public option, the legitimate cost to insure the uninsured will be based upon true market value of healthcare services and not based on marked-up pricing due to medically related financial losses.

A public option, whether it have the structure of a cooperative health exchange or not, will compel healthcare providers to mark their pricing for professional services more accurately which would not reflect ballooning inflationary costs. The public option will also compel insurance companies to absorb their fair share of healthcare inflation and not pass it onto employers. The economy may simply not recover unless we have this reform act.