WHY ARE HEALTH CARE COSTS SO HIGH?


Why are health care costs increasing so fast?  Did you ever wonder about that?  We keep hearing about how health care costs, Medicare, Medicare, Obamacare are going to bankrupt us, but why is that?  Why are the cots going up so fast?  It is an important challenge for local officials and utilities who generally pay the health insurance costs for their workers.  There is more to the story that we are not being told.

One problem that get identified quickly is that only 80% of the population is included in the health care system.  Many who are not are “healthy” young people who don’t demand the services.  The concept of the health care bill was to solve this problem by spreading the costs of health care across the entire population using private and public providers.  First, I think there are way more unhealthy  people included in the 20% than we realize because the political dialogue keeps focusing on the few that want to live off the grid – I feel great so I don’t need insurance.  That guy is part of the problem.  That guy gets into a car accident, gets taken to a public hospital, gets treated, gets a bill for $26,000 to fix his broken leg, refuses to pay anything, and the taxpayers get stuck with the bill.  My solution to that guy is if you don’t want to pay for health insurance, bring cash.  Otherwise, “no soup for you!” to paraphrase a famous Seinfeld episode.  Of course my doctor, nurse and therapy friends think that’s a little cold hearted. 

The next argument is the cost of doctors, therapists and nurses.  Okay, I know a bunch of them, and that’s not where the money goes.  These people have lost money in the past 10 years.  Many are going form full-time to part-time employments as Medicare, Medicaid and health insurance bureaucrats decide services are no longer needed.  They will tell you the major change in their lives is paperwork….hold that thought for a moment.

The cost of drugs comes up.  Medicare and Medicare are the largest purchasers of pharmaceuticals in the world.  So in other works, they set the lowest price by supposedly bidding the “contracts” for services. Only there is often only one provider, so exactly how does that work?   Sounds like we don’t get a good deal there, which is why the arguments for importing Canadian drugs or drugs from Mexico keeps popping up.  They get a better deal than we do and most of these are supposedly AMERICAN companies.  No home town discount (I guess I know where free agent baseball players get the idea).   And my medical friends confirm this as an issue.  Check out the comments from Mr. Falloon at Life Extension (www.lef.org) for discussion. 

So let’s go back to the paperwork discussion.  Once upon a time doctors simply sent a little paperwork to the health insurance company or the federal government and said you needed some service.  And the insurance company processed the bill for the services.  The cost was paid by insurance premiums collected by the insurance company.  Everyone was happy.  But then someone at an insurance company said, “wait we could make more money if we asked more questions and paid less for these services.  It would help our bottom line.”  So you hear the complaint that the folks at the insurance companies are deciding whether you need that procedure or not.  And contractors decide if someone needs Medicare or Medicaid services, not the government, not your doctor, your nurse or your therapist.  Not any person that knows you, but some unseen, private sector bureaucrat who’s goal is to minimize the amount of your premium spent on services so they can enhance their bottom line.  And apparently they are very effective because the health insurance industry is very lucrative.  So maybe we have stumbled onto something here.  Maybe the cost of medical coverage is more related to drugs and bureaucracy (and it is not government bureaucracy!!) than the actual cost of services.  Maybe the old system, even if there was some fraud in it, wasn’t nearly as bad as it was made out to be.  It reminds me of one of the 4 laws of City management I developed years ago:  Never give elected officials a bad alternative – it becomes a magnet.  It always worked (hence a law).  I didn’t learn why until years later when I realized, that the worst option was the one all the lobbyists lobbied for even at the local level.  It was the option where they could make the most money “fixing

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1 comment
  1. angel610 said:

    I thought I’d place some comments on legacy leadership here as it deals with a systems that don’t trust the team members. Recently, I worked with a manufacturer with a very solid past performance of leadership and a very good FORMER reputation. While in the past the manufacturer has been on the cutting edge of creativity and development, they have since become more cumbersome. The manufacturer is now purchasing creativity instead of developing it and creating internal roadblocks to completion of work. For one project a simple order for missing parts that was less than $1,000 was required; however, the internal roadblocks would not allow the field installer from the company, the engineer in the office, or the project manager to purchase the items even though the msising parts were holding up a $3,000,000 project startup. This created frustration amid the staff and the client. The issue also presented a lack of connection with the staff who felt they weren’t trusted or allowed the freedom to do their work. The amount of cost in lost time for the field tech, project manager, and the engineer was substantial (well over $1,000) not to mention the loss of trust from the client. While the company has grown into one of the largest in the world, it’s not kept some of the key philosophies that made it great. I think the same thing can be said fo the paperwork and buracacy of many other things. They may have started with good intensions, but can end up with issues down the road. When designing systems they need to be flexible and include an element of trust. Granted, some may misuse the systems be it healthcare or purchasing, but if you don’t trust the majority that won’t misuse the system you loose support and create one cumbersome system.

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