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Ben Arnon

Ben Arnon

Posted: March 30, 2010 03:04 PM

On Measuring the Cost of Health Care Reform

What's Your Reaction:

Several months ago, completely by chance, I found myself seated on a plane ride from Washington, DC to Atlanta directly next to a very staunch conservative Congressman from Georgia. We had a fascinating conversation. Though I have strong left-leaning opinions, I decided mainly to ask him questions and to listen to his ideas and solutions.

He explained that his two greatest concerns as a Congressman have always been tax reform and health care reform. Health care resonates deep within his core due to the fact that he is also a physician. I asked him what he views as the fundamental problem facing the nation's health care system and what his solutions were.

The previous day, President Obama had given a speech outlining his key imperatives for health care reform. As I listened to this Congressman, his ideas rang very familiar to me. They sounded exactly like the key points President Obama had outlined: reducing health care costs for families and small businesses; insuring as close to 100% of Americans as possible, particularly all children; creating more opportunity for choice; investing in prevention.

I mentioned to the Congressman that his ideas sounded very similar to what I had heard from President Obama so I couldn't figure out why Republicans were so opposed to the bills being floated in the House and Senate. His response was merely that President Obama was lying and that the President wanted government to control the lives of Americans. The Congressman then proceeded to rant about how expensive the bill was and about how much money it would cost future generations.

Last week I was thrilled to witness health care reform become a reality. It amuses me that we continue to hear the same exact talking points from Republican after Republican: the cost of this bill will be trillions of dollars; our kids and grandkids will pay for it, etc., etc., etc.

First of all, the cost of the wars we were duped into post-9/11 have and will continue to cost trillions of dollars and our kids and grandkids will certainly pay for those costs for decades to come. The Republican response I often hear is "Well, that's different, that protects our country."

The reason we fear a terrorist threat or war is that people die from these acts. And because it leads to death, there is a willingness on the part of Republicans to spend oodles of money on defense.

Our health care system in its current state has led to countless deaths that could have been saved and that should have been avoided. I suspect that every American knows of at least one person who has died sooner than they should have as a result of inadequate health care coverage leading to a lack of quality preventative care.

So how do we measure the cost of health care reform? The cost of health care reform cannot be measured solely based on absolute monetary cost. Opportunity cost must be factored into the equation. The opportunity cost of remaining with the status quo and avoiding health care reform involved significant costs both in terms of monetary value as well as emotional costs that tear at the human psyche and that ultimately affect macroeconomic factors such as overall work output and productivity.

For instance, if someone's mother dies at 55 years old because she lacks adequate health care and, therefore, has not received simple, preventative care that would have caught cancer early enough for her to have survived, there are substantial costs involved. First of all, there is the emotional burden cast upon that woman's entire family who has to deal with the loss of a loved one. Let's assume this woman could have lived to 85 years old had her cancer been detected early, that would be 30 more years (or at least a solid portion of that time) when she would be contributing tax dollars to the government. And, of course, that would be 30 more years that her family could spend with her, which is positive on many levels (unless her family can't stand her. . . then the status quo probably works in their favor!).

From my perspective, Republicans in the House and Senate are holding so fast to ideology that they fail to offer any solid solutions. The opportunity cost of sitting on their hands and not pushing forth a change to the broken health care system was massive and they should've understood that. Republican ideology has morphed into fictional mythology, and I believe it will cost them dearly this November.

My grandfather once said "If you can pay with money, you're doing well in life." What he meant was don't ever pay with your body or with your soul. When analyzing and measuring the true cost of health care reform, we must take into account the opportunity cost on bodies and souls as well as the monetary cost incurred by both action and non-action.

 

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11:58 AM on 04/26/2010
I think Dems and Repubs fundamentally see healthcare differently so I would start there. Dems see it as a moral responsibility to cover everyone, Repubs seem to see it as a big welfare program.

I actually don't think the bill went far enough in terms of a strong public option but I think Obama was smart to get what he could now and set a foundation that will hopefully be built on over time.
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DavidShort
12:08 PM on 03/31/2010
This is a false choice. The choice is not between nationalization or the status quo, as has been parroted by every single media outlet, save talk radio.

A lot of the problems in the medical field today were caused by the introduction of the government. By preventing sales across state lines, for example, resulted in near monopolies inside each state. This reduced the necessary competition that would lower costs.

The answer is reform that lowers cost by reducing the footprint of regulation, or nationalization by the very people that created most of the problems in the first place.
12:15 AM on 03/31/2010
• The study that ranked us 37th in health care is not a measure of quality or outcomes. Do you even know what the survey measured and how much weight each criteria counted towards the total score. Feel free to look it up but suffice it to say that the criteria are absolutely worthless in truly determining 'quality of care.

http://www.healthandsharing.com/21/articledet...


• Lastly, there are not 47 million Americans who can’t afford insurance-there are 47 million people in the US without insurance, a number which includes illegal immigrants. You are also confusing the phrase without with can't afford. studies have shown that many young people intentionally go without coverage thinking they are young and healthy and don’t want to spend the extra money even though they can afford it. The 47 million also includes people who are between jobs or recently employed but not within the coverage window as well as several million who actually do qualify for like Medicare and Medicaid. The true number of people who can’t afford it is about 12-15 million. Data available on Kaiser Permanente website
12:14 AM on 03/31/2010
• Obama says the public option is about creating competition but a single payer plan has NO competition- will be about as efficient as the post office. Funny how he is against vouchers and charter schools, which would increase competition with public schools and force greater accountability and expectations of the teachers unions

• Medicare denies a higher percentage of claims than those evil private insurance companies. From the American Medical Associations (AMA)2008 Health Insurer Report Card:

Payer - % claims denied

Aetna - 6.80%
Anthem - 4.62%
CIGNA - 3.44%
Coventry - 2.88%
Health Net - 3.88%
Humana - 2.90%
Medicare - 6.85%
UHC - 2.68%

Overall, the average combined claim denial rate of the private insurance companies was 4.05%. Medicare is at 6.85%. Full report here: www.ama-assn.org...
12:14 AM on 03/31/2010
• Stop claiming x thousands of people die every year from lack of insurance. Why do the libs try to imply that you can’t get treatment w/out insurance. I defy ANYONE to find a signed death certificate or obituary with lack of insurance as the cause of death.

• Lack of insurance does not cause bankruptcy-too much debt and too little income causes bankruptcy and the study you refer to is highly misleading and biased. The people who did the study are outspoken proponents of single payer and their definition of a medical condition stretches boundaries. Addiction was included as a medical condition so that if you lost your job due to drug or alcohol abuse or gambled away your savings, your bankruptcy would be due to a medical condition.

• The United States counts all births as live if they show any sign of life, regardless of prematurity or size. This includes what many other countries report as stillbirths. In Belgium and France, births at less than 26 weeks of pregnancy are registered as lifeless. And some countries don't reliably register babies who die within the first 24 hours of birth. Thus, the United States is sure to report higher infant mortality rates. For this very reason, the Organization for Economic Cooperation and Development, which collects the European numbers, warns of head-to-head comparisons by country.
12:13 AM on 03/31/2010
Medicare beneficiaries are by definition elderly, disabled, or patients with end-stage renal disease. Private insurance beneficiaries consist primarily of people are who under age 65 and not disabled. Expressing administrative costs as a percentage of total costs makes Medicare's administrative costs appear lower not because Medicare is necessarily more efficient but merely because its administrative costs are spread over a larger base of actual health care costs. In 2005, Medicare's administrative costs were $509 per primary beneficiary, compared to private-sector administrative costs of $453. In the years from 2000 to 2005, Medicare's administrative costs per beneficiary were consistently higher than that for private insurance, ranging from 5 to 48 percent higher, depending on the year

• The CBO stated the potential cost savingsfrom tort reforms would save the government-- we the taxpayers--$54 billion over 10 years. CBO also concluded, that these reforms would generate improved access to health care as well.

A survey by the Journal of the American Medical Association found that 93 percent of physicians practice defensive medicine: that is, ordering tests, procedures, and referrals that are not medically necessary for the sole purpose of protecting the doctor or the hospital against medical malpractice claims. These higher costs are passed on in the form of higher health care insurance premiums, and that in turn squeezes an estimated 3.4 million people out of the ability to purchase health insurance. Another study by PricewaterhouseCoopers put the annual cost of defensive medicine at $230 billion a year.
12:08 AM on 03/31/2010
My grandfather once said "If you can pay with money, you're doing well in life." What he meant was don't ever pay with your body or with your soul

Do political parties have souls? They certainly can't can't claim to be angels in this debate by any stretch of the imagination. Both major parties accepted millions of dollars in "campaign contributions" from the insurance industry, from big pharma, from the for profit hospitals, etc. Those contributors got the bill they paid for.

The hue and cry is about how much this bill will cost, yet no one is willing to acknowledge that based on an 80% payout ratio, the insurance companies gross profit will be more than double what the entire HCR bill costs. The devil is in the details, and this process is in it's infancy. By the time the "details" have all surfaced, the devil will have his due.

We had, and still have, the "best form of government money can buy". The only problem is, the American people have been outbid.
12:07 AM on 03/31/2010
• What supporters seem to ignore is that premiums have doubled because the cost of care has doubled due to the expense of developing new drugs, treatments, equipment, etc. How many cancer drugs existed 30 years ago, how many more people survive a heart attack than 40m years ago. How many more people have stents, defibrillators, artificial knees, etc than 25 years ago. Premiums have doubled yet the insurance companies still earn the same 5-6 cents in profits per dollar of revenue because their costs have gone up proportionately. Insurance companies are merely a conduit. , why stop there and demand the right to gov't funded shelter and food. Aren't they more important than healthcare?

• The CBO estimates are not completely independent- they can ONLY use the parameters given by congress. Of course it is deficit neutral since the data assumes 10 years of taxes but only 7 years of costs. READ THE FINE PRINT


12:06 AM on 03/31/2010
• Just because everyone has coverage does NOT mean that the cost of service will be cheaper. And since it will be far cheaper for healthy young people to opt out and pay the fine rather than buy insurance until they need it, you will end up with a plan with skewed toward older and less healthy participants. If I can never be turned down at any time even with a pre-existing condition, why not wait until I get sick. The gov't is letting you buy insurance on your house AFTER it has already burned down-how stupid is that. Therefore, the goal of adding more young and healthy people to the pool to lower costs is flawed if they can opt out for a small penalty.


• Obama says the public option is about creating competition but a single payer plan has NO competition- will be about as efficient as the post office. Funny how he is against vouchers and charter schools, which would increase competition with public schools and force greater accountability and expectations of the teachers unions
12:06 AM on 03/31/2010
HEALTHCARE IS A SERVICE, NOT A RIGHT Listing rights generally involves enumerating things you may do without interference (the right to free speech) or may not be done to you without your permission (illegal search and seizure,. They are protections, not gifts of material goods. Material goods and services must be taken from others, or provided by their labor,

NOBODY IN THIS COUNTRY IS DENIED ACCESS TO HEALTHCARE.

• What exactly in the current proposals will REDUCE costs. Everyone has insurance but that does not mean that rates won't keep rising double digits because it reflects the cost of healthcare, not the cost of coverage. Simply paying the docs and hospitals less just means that the insurance companies will need to charge everyone else NOT on the public plan even higher rates to cover the shortfall. WANT PROOF? Just look at the fiasco in Massachusetts, which has a mandatory coverage plan and is way over budget, still does not cover 100% of the citizens, and MA residents not on the plan paying the HIGHEST PREMIUMS in the country.

• Guaranteed acceptance does not mean guaranteed coverage for any and all treatments. Many of you seem to believe that simply having coverage means you can’t be denied treatment that is deemed experimental, high risk and low probability or simply not logical (a pacemaker for a 90 year old Alzheimer patient).
11:37 AM on 03/31/2010
You lie!
04:31 PM on 03/30/2010
I hope you realize that you have now accepted the fact that Obama's health care reform is indeed a republican plan and not a progressive one at all.
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LogicalMathMan
Math, Finance, English, Business Instructor
04:22 PM on 03/30/2010
I agree with the writer and know that most of the provisions in the HC Bill were a result of partisan input, as much as the Repubs like to claim that this was purely a Democratic vote.

However, while our government provides all of us with HC, we should also shoulder part of the burden of responsibility. For this to happen, we will have to foster a behavior of eating healthier foods along with exercise and home cooking. Preservatives used in fast foods have not been looked at in much detail as it relates to overall health or carcinogenic content.
04:05 PM on 03/30/2010
"When I feed the poor, they call me a saint, but when I ask why the poor are hungry, they call me a communist."
Dom Helder Camara
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kleighhoff
Relief is the order of business...
03:44 PM on 03/30/2010
Very interesting. So once again, we have a republican that is for the same ideas as Mr. Obama, yet, when framed that way, well then, Obama must be lying. How sad. You are so right, let us not forget of the impact that the years an individual's early departure from this reality has on family/friends. Let us also remember the huge cost of health care in your 30year example not realized, not to mention inflation on those costs. Thank you for writing this article. I enjoyed it!