Two articles in today'[s New York Times referenced health care costs on the reform bill. Stating that the reform bill focused on health care access, rather than cost-control. Jonathan Bush opined that health reform will be cost-expansionary. But Andrea Sisko, the main author of a government report predicted modest effects on the growth of health care cost to accompany a marked increase in access as more than 30 million people gain insurance coverage, although the article citing her report notes that growth in health care spending will increase from its 17.3 percent of the gross domestic product to 19.6 percent in 9 years.
Will our government be forced - by economic realities - to make new changes to health care coverage, limiting benefits for conditions now covered, imposing age barriers to obtaining palliative or even curative therapies, or barring individuals from health care coverage for conditions which they developed as a result of damage which they self-imposed, such as the use of drugs, high risk sexual behavior, abuse of alcohol, and perhaps even consuming types and quantities of foods known to increase the risk of diabetes, heart disease, hypertension, obesity related joint disease and other conditions? Will government move towards pragmatic limits which will reduce scientific research, impose restrictions which favor the young and healthy, and make individuals primarily responsible for the consequences of lifestyle decisions which end-up costing society money?
Who will judge and who will be judged? Who will live and who will die?
Who by Fire?
Showing posts with label Health Care Inflation. Show all posts
Showing posts with label Health Care Inflation. Show all posts
Thursday, September 9, 2010
Wednesday, July 15, 2009
Atul Gawande - "The Cost Conundrum"
Atul Gawande's observations in the New Yorker about McAllen, Texas which have influenced political figures and at least one health care economist with whom I recently met. Click the title above for the link.
Monday, April 13, 2009
The Shell Game
In New York, where I grew up, we knew that in a "shell game" a token was hidden by one of three shells, and no matter how good or confident you were when you put down your money, you never could guess which shell was hiding the token and you never beat the operator who was able, by sleight of hand, to divert your attention from what was really going on.
Today, while our primary focus is on our national depression, "health care reform" is dangled before us as a distraction. What is hiding under the shell is the likelihood of severe disruptive disabling inflation, as our nation's printing presses run overtime to compensate for the financial industry's greed-induced collapse of our economy. As painful as a depression may be over the next year, it will not be as destructive to our health care system and our citizenry, as the run-away inflation which looms ahead.
Persons now able to pay for their Medicare copayments and supplemental insurance, employers whose cash flows support employee insurance plans, and the self-insured, along with Medicaid programs, will be particularly vulnerable to inflationary pressures. Many of the Medicare-covered population, on fixed pension payments, will not have incomes which keep pace with health care cost inflation, copayments and Medigap insurance premiums: they will be wiped-out. Employers, facing escalating inflationary pressures, will be incentivized to retain (rather than spend) investible cash from business operations to survive, and will have to either borrow at crushing interest rates (causing a sharp contraction in profitability as premiums cut into profits) or forgo providing health insurance as an employee benefit. The self-insured will have to devote an increased share of their resources to health care costs and insurance premiums and, like the fixed-income Medicare population, run the risk of seeing their financial resources destroyed. States' revenues will not be able to keep pace with skyrocketing Medicaid costs.
Some credit card issuers have reduced the credit lines of many of their customers, which will wipe-out a resource which these customers have depended upon to finance health care services. Some credit card companies have sharply increased interest rates to levels worthy of organized crime syndicates, while their collaborators in Congress have protected the credit card industry by making bankruptcy discharge of credit cards debts for health care services unavailable. If you don't have insurance, or if you face a large co-payment, your credit is constricted, interest rates are exorbitant and you have big health care bills for serious illness, what will you do?
During the 1980s inflation (under Carter - 22% interest rates!), insurers held on to their cash and were slow to pay insured health care bills because they wanted to maximize the return from the float on their money, I predict that health care providers will be under significant financial pressure and those with significant bond obligations may not survive. General Motors may be the model for the health care industry.
You may not have entered this "shell game" voluntarily, but your life, savings and health care will be at risk. Pay attention and plan accordingly.
Today, while our primary focus is on our national depression, "health care reform" is dangled before us as a distraction. What is hiding under the shell is the likelihood of severe disruptive disabling inflation, as our nation's printing presses run overtime to compensate for the financial industry's greed-induced collapse of our economy. As painful as a depression may be over the next year, it will not be as destructive to our health care system and our citizenry, as the run-away inflation which looms ahead.
Persons now able to pay for their Medicare copayments and supplemental insurance, employers whose cash flows support employee insurance plans, and the self-insured, along with Medicaid programs, will be particularly vulnerable to inflationary pressures. Many of the Medicare-covered population, on fixed pension payments, will not have incomes which keep pace with health care cost inflation, copayments and Medigap insurance premiums: they will be wiped-out. Employers, facing escalating inflationary pressures, will be incentivized to retain (rather than spend) investible cash from business operations to survive, and will have to either borrow at crushing interest rates (causing a sharp contraction in profitability as premiums cut into profits) or forgo providing health insurance as an employee benefit. The self-insured will have to devote an increased share of their resources to health care costs and insurance premiums and, like the fixed-income Medicare population, run the risk of seeing their financial resources destroyed. States' revenues will not be able to keep pace with skyrocketing Medicaid costs.
Some credit card issuers have reduced the credit lines of many of their customers, which will wipe-out a resource which these customers have depended upon to finance health care services. Some credit card companies have sharply increased interest rates to levels worthy of organized crime syndicates, while their collaborators in Congress have protected the credit card industry by making bankruptcy discharge of credit cards debts for health care services unavailable. If you don't have insurance, or if you face a large co-payment, your credit is constricted, interest rates are exorbitant and you have big health care bills for serious illness, what will you do?
During the 1980s inflation (under Carter - 22% interest rates!), insurers held on to their cash and were slow to pay insured health care bills because they wanted to maximize the return from the float on their money, I predict that health care providers will be under significant financial pressure and those with significant bond obligations may not survive. General Motors may be the model for the health care industry.
You may not have entered this "shell game" voluntarily, but your life, savings and health care will be at risk. Pay attention and plan accordingly.
Saturday, February 7, 2009
An Avalanche Starts Quietly
Unemployment is up as full-time workers lose their jobs. Unreported unemployment involves workers who, a year ago, had full time jobs but now may be only working two-thirds or half time. And then there are the unemployed who used to make do by occasional agency or contract work but no longer can find any meaningful income. According to the Morningstar video I watched this morning, "Unpacking the Unemployment Numbers," we are not yet at the bottom of our national financial crisis. So what does all of this have to do with our health care system?
Those who are unemployed usually lose their health insurance (while they may have Cobra guarantees of the capacity to extend their former employment health insurance, without income they cannot afford expensive monthly payments). Minor illnesses don't require medical care. Major illnesses, injuries, and pregnancy require expensive professional services. State Medicaid programs are broke and dysfunctional. Lower employment means lower contributions to the Medicare fund which, a year ago, was predicted to be in precarious condition in 2019.
The only bright spot in the nation's employment picture is health care. However, not-for-profit institutions (many of which have no access to the financial market in this depression and if they did, would have to pay high rates of interest) do not have the capacity to subsidize health care for all of America. For-profit, investor-owned institutions are structured to generate profits, not losses. In short, we are in a period of diminishing gross domestic product coupled with stable or increasing demand for health services.
Expect your newspapers and television reports to headline health care inflation since the denominator (gross domestic product) will be smaller and the numerator (total health care costs) will be flat or increased. Listen for dire predictions of Medicare insolvency as the Medicare tax yields less revenue and the aging population requires increasing services. Watch and listen for politicians proclaiming doom and gloom for a national health care system based on erroneous analyses. It's quiet now, but it's coming.
Those who are unemployed usually lose their health insurance (while they may have Cobra guarantees of the capacity to extend their former employment health insurance, without income they cannot afford expensive monthly payments). Minor illnesses don't require medical care. Major illnesses, injuries, and pregnancy require expensive professional services. State Medicaid programs are broke and dysfunctional. Lower employment means lower contributions to the Medicare fund which, a year ago, was predicted to be in precarious condition in 2019.
The only bright spot in the nation's employment picture is health care. However, not-for-profit institutions (many of which have no access to the financial market in this depression and if they did, would have to pay high rates of interest) do not have the capacity to subsidize health care for all of America. For-profit, investor-owned institutions are structured to generate profits, not losses. In short, we are in a period of diminishing gross domestic product coupled with stable or increasing demand for health services.
Expect your newspapers and television reports to headline health care inflation since the denominator (gross domestic product) will be smaller and the numerator (total health care costs) will be flat or increased. Listen for dire predictions of Medicare insolvency as the Medicare tax yields less revenue and the aging population requires increasing services. Watch and listen for politicians proclaiming doom and gloom for a national health care system based on erroneous analyses. It's quiet now, but it's coming.
Wednesday, November 26, 2008
What's Threatening Our Healthcare System?
No, it's not an epidemic or an earthquake or another hurricane Katrina. It's health care cost inflation, which in 2007 (the year before the US government really started to run the Treasury's money printing presses overtime at full speed) was about twice the general inflation rate. The Medicare population is a prime inflation victim, as its members observed when their Federal Medicare premium and private (i.e., AARP) Medigap premiums increases wiped out their Social Security inflation adjustments robbing resources from food, clothing, shelter and donut hole prescriptions.
The health care inflation rate, at 6.9% was double the general inflation rate; employers paid an increase of 6.1% for health insurance benefits with typical insurance family insurance premiums of about $12,000 per. Our bill for all health care products and services is heading towards 3 trillion dollars.
As our citizens, in increasing numbers, age and become ill, the cost of their care will be reflected in health care inflation. As new technologies, pharmaceuticals and advanced biologic products are introduced, their costs will be reflected in health care inflation. And as the numbers of those needing expensive new services increase, insurers and other intermediaries will elbow their way up to the trough to demand their share of resources as a reward for their roles in "managing" health care.
When resources are devoured by wasteful programs and unnecessary bureaucracies, food, mortgages, education, defense, transportation will be shortchanged. That will not be sustainable.
This Thanksgiving, let us be grateful for our country's world leadership, the affirmative role it plays in our lives, our ability to meaningfully participate in government, prosperity (for many), and the opportunities Americans enjoy to enjoy freedom of thought, action and religion. And let us resolve to provide appropriate health care to all Americans in a kind, humane, efficient system which alleviates pain and suffering and extends valuable life.
The health care inflation rate, at 6.9% was double the general inflation rate; employers paid an increase of 6.1% for health insurance benefits with typical insurance family insurance premiums of about $12,000 per. Our bill for all health care products and services is heading towards 3 trillion dollars.
As our citizens, in increasing numbers, age and become ill, the cost of their care will be reflected in health care inflation. As new technologies, pharmaceuticals and advanced biologic products are introduced, their costs will be reflected in health care inflation. And as the numbers of those needing expensive new services increase, insurers and other intermediaries will elbow their way up to the trough to demand their share of resources as a reward for their roles in "managing" health care.
When resources are devoured by wasteful programs and unnecessary bureaucracies, food, mortgages, education, defense, transportation will be shortchanged. That will not be sustainable.
This Thanksgiving, let us be grateful for our country's world leadership, the affirmative role it plays in our lives, our ability to meaningfully participate in government, prosperity (for many), and the opportunities Americans enjoy to enjoy freedom of thought, action and religion. And let us resolve to provide appropriate health care to all Americans in a kind, humane, efficient system which alleviates pain and suffering and extends valuable life.
Sunday, October 12, 2008
Government Printing Presses Are Running
Historically, health care inflation is greater than general inflation. The availability of sophisticated diagnostic equipment and testing, use of new technology, and new expensive treatments have been responsible for this inflation. In those periods when government attempted to control health care inflation through price controls (Nixon) or limit access to new technology (Health Systems Agencies), these efforts postponed but did not limit inflation. Historically, attempts to control health care costs have delayed the introduction of new life-saving technology and treatment, which is not a sensible direction to pursue.
America's printing presses are running overtime printing dollar bills to correct for America's incompetency in regulating our financial industries in their obscene boom and bust activities. Inevitably, massive government spending of money it doesn't have is followed by another form of economic instability - severe inflation, a component of which is likely to be even more severe health care cost inflation. The elderly, in particular, who depend on fixed income and have no hedge against inflation, will be hard put to meet the inflated costs of health care, and particularly pharmaceuticals, if we continue our current system of financing and providing care. Those whose assets are depleted or destroyed during our current depression will be unable to create a financial cushion to protect themselves against health care inflation and may increasingly be unable to afford (or their employers may be unable to afford) health insurance. In short, our health care systems' troubles, while not attracting as much attention as the collapse of our banking, credit, insurance and financial systems, place us standing on a banana skin on the brink of a deep precipice. This is made all the more difficult because health care purchased with credit cards is essentially shielded from bankruptcy protection (another gift of our Congress to the credit card industry).
Neither Obama nor McCain is dealing seriously with these impending threats. The plan that I proposed in my last blog is a lifeboat which holds some chance of being able to provide appropriate health care in the time of economic turmoil which we have entered. We need real substantive change in our health system, not just words which are decoupled from action.
America's printing presses are running overtime printing dollar bills to correct for America's incompetency in regulating our financial industries in their obscene boom and bust activities. Inevitably, massive government spending of money it doesn't have is followed by another form of economic instability - severe inflation, a component of which is likely to be even more severe health care cost inflation. The elderly, in particular, who depend on fixed income and have no hedge against inflation, will be hard put to meet the inflated costs of health care, and particularly pharmaceuticals, if we continue our current system of financing and providing care. Those whose assets are depleted or destroyed during our current depression will be unable to create a financial cushion to protect themselves against health care inflation and may increasingly be unable to afford (or their employers may be unable to afford) health insurance. In short, our health care systems' troubles, while not attracting as much attention as the collapse of our banking, credit, insurance and financial systems, place us standing on a banana skin on the brink of a deep precipice. This is made all the more difficult because health care purchased with credit cards is essentially shielded from bankruptcy protection (another gift of our Congress to the credit card industry).
Neither Obama nor McCain is dealing seriously with these impending threats. The plan that I proposed in my last blog is a lifeboat which holds some chance of being able to provide appropriate health care in the time of economic turmoil which we have entered. We need real substantive change in our health system, not just words which are decoupled from action.
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