The Push For Gvernment Run Health Care (part 2)
Tuesday, June 30th, 2009Here in the United States people believe that we have a privately run health care system. The fact is we do not. We have a third party payer system that is heavily regulated by the federal government. We also have government run health care. The majority of our health care system consists of numerous insurance companies. People pay an insurance company monthly premiums so that when they go to the doctor their insurance company will pay the cost. In the end, the individual still pays the cost of their medical needs. They just pay for it indirectly through an insurer.
One problem with paying for healthcare this way is the amount of paperwork that springs up in the billing department. Forms are filed with the insurance company concerning the visit to the doctor. The insurance investigates the claim. The hospital bills the insurance company and they decide how much they are willing to cover. Then a bill for the remaining amount is sent to the patient. All of this paper work between the doctor’s office and the insurance company adds up. Someone has fill out these insurance claims/billing forms, file it, send it, keep track of it, and be able to find it if there is an investigation concerning insurance fraud. The people who keep track of all this paperwork and the bureaucracy have to be paid.
Another problem with the third party payer system is that no one, not even doctors, know how much medical procedures, doctor’s visits, medical tests. or medications actually cost. Without that knowledge people end up paying for medical procedures, tests, and prescriptions they do not need. Since people do not pay for health care directly they end up paying for procedures and drugs they do not need. People will also take expensive drugs even when the generic is just as good, if not better.
The government is another third party payer when it comes to medical care. The government’s health insurance is accessible only to the elderly and the poor known as Medicare and Medicaid. Everyone pays for this health coverage through taxes including those who do not receive Medicare or Medicaid pay. Again, when a patient goes to the doctor they do not pay the cost of the visit up front. The doctor gives the bill to the billing department. They in turn bill the government, the government pays the hospital, which then pays the doctor. Again there are massive amounts of paper work for all of this and someone has to file it.
Let’s take a look at our first government run health care program: Medicare. Medicare is the government’s answer to providing health care to the elderly. It was first implemented in 1966. For over forty years anyone over 65 has been forced into this program. They have no choice. We are told that Medicare is essential for our elderly. That without it, they would not have access to health care. They would not be able to afford medical procedures and would end up on the streets in bankruptcy. The problem is, Medicare is bankrupt. The government keeps it limping along with their ventilator of taxpayer money.
There are two parts to Medicare. Part A is the mandatory program that everyone 65 and over must enroll in. It is the program that most are familiar with. Part A provides premium free coverage for old folks. It also covers hospital stays and limited follow up services. Mandatory payroll taxes finance Part A. This tax was implemented based on the government’s estimates of how much this program would cost. But the government couldn’t account for the exploding costs of Medicare. There are more people in the program than there are those able to pay taxes. The reasons for these mounting costs is the expansion of Medicare’s benefits, inflation, increased used of medical facilities, and a far bigger aging population than anticipated. With the baby boomers approaching retirement, the funding for Medicare will not be enough to cover the costs of their medical bills.
Part B is the other portion of Medicare and one few know about. It is voluntary for those over 65. This program provides supplemental insurance with a $100 deductible to Part A. Those enrolled pay a monthly premium. In 1995 their premium was $46.10. This premium only covered 29% of the cost, the rest is paid for by the taxpayer. Physician services, lab tests, outpatient hospital services, and other medical services are covered by the Part B program. But even with Part B, it is not enough to cover all the costs of the medical care provided for the elderly.[i]
Most of the costs for Medicare are wrapped up on the bureaucracy that constitutes it. These bureaucracies are minute in the private sector. Bureaucracies follow every government program and always increase the costs of these programs. There is a lot of paper work associated with Medicare as hospitals must file with agencies in the government, and those files are sent to other agencies, and so on.
Just like socialized medicine of other countries, Medicare relies on price controls. Controlling the costs of something does negate its actual cost. Price controls undermine the value of a doctor’s labor and the procedures used. It also forces the costs of medical procedures to be shifted. These price controls do not control the rate at which Medicare costs have grown. In 1995, medical inflation increased by 4.7%, but employer health premiums decreased by 1.1%. But Medicare had grown by about 10% and its costs are expected to continue to rise. This is not a healthy combination.[ii]
Because of rising costs, Medicare rations its benefits. There is no freedom in Medicare to choose your benefits. It is a one size fits all program, just like every other welfare program. Medicare decides whether a patient receives a medical procedure or not. If you need chemotherapy, but the government thinks you are too old, or that it will cost too much, Medicare simply denies payment for such procedures and you are left with the bill, or no chemo. The older you get, the less Medicare covers your medical costs. Medicare lacks catastrophic coverage. Something routinely found in private insurance plans. Other aspects of medicine denied by Medicare are: preventative screenings, routine physical exam, home nursing care, smoking cessation, and home physician visits.[iii]
Another fallacy of Medicare is its resistance to innovation. Government always stifles innovation. All of our greatest inventions were done by individuals who worked on their own time with their own money and refused government help. When has the government ever invented something that benefitted mankind? Medicare is run by the HCFA (Health Care Financing Administration). HCFA issues hundreds of pages of regulations and thousands of pages of guidelines to manage every aspect of Medicare. No one can breathe under all of these regulations. HCFA decides guidelines for every piece of medical equipment and whether each new device or procedure meets its criteria for coverage under Medicare. This makes it impossible to implement new equipment for medical procedures. Medicare also refuses to reimburse hospitals for using new medical practices or prescribing new drugs. Because of this, doctors do not prescribe drugs new on the market, nor do they conduct tests or medical practices that involve new equipment. The old folks in this country are denied access to innovations in medicine because Medicare will not pay for it and they can’t pay for it themselves.
Medicare is the second largest entitlement program in the United States. Social Security is the first. Like Social Security, Medicare has no money. Medicare is paid for through payroll taxes on employees, self-employed, and employers. But taxes alone do not provide enough money to pay for it, despite an increase in taxes. The government is left with diverting funds from other programs or areas of the federal budget to cover the remaining costs. But this only buys time for an already failed program.
Many believe that the revenue raised for Medicare go in a trust fund, just like Social Security. But there is no trust fund. There never was. (Social Security has no trust fund either.) All revenue generated for Medicare is immediately spent. Most of the benefits received by the elderly exceed what they paid in their payroll taxes. The cost of Medicare continues to grow faster than the economy. They will continue to rise even in this recession. The amount taken from you to pay for Medicare go to someone else or pays for the amount of paperwork that is processed. It will never be spent on you. By the time you are eligible for Medicare, it will not be able to cover your medical needs.
An interesting thing to note is that not everyone is forced into Medicare. Federal employees and members of Congress are exempt from Medicare. Instead they are allowed to receive better health insurance plan that is privately run. They are enrolled in the FEHBP (Federal Employees Health Benefits Plan). This is partly why Congress refuses to fix Medicare. They have no incentive to since they are exempted from their own government run health care program.
Medicaid is the other government run health insurance plan. It too is bankrupt. Medicaid is for the poor, those who are under 65 but cannot afford private insurance. Unlike Medicare, Medicaid is run on both the federal and the state level. Medicaid is also paid for by taxes. This is no surprise. Most of our taxes goes toward funding programs such as, Social Security, Medicare, Medicaid, unemployment benefits, and other welfare entitlement programs. These also make up the biggest spending areas of the federal budget. The cost of Medicaid is increasing at an exponential rate. The federal government cannot generate enough money from taxpayers to keep it running so they divert funds from other parts of the federal budget.
In 2003 13% of federal spending went to Medicaid. By 2015 it will consume 2% of the U.S. GDP.[iv] Between 1995 and 2005 Medicaid doubled in cost. Medicaid isn’t only expensive for the federal government but also for the states. By 2003 Medicaid surpassed education has the biggest expenditure of their spending. 22% of state budgets go toward Medicaid.[v]
Medicaid does vary from state to state in how it is run and in what is covered. The federal government requires certain mandatory coverage, but the states choose whether to go beyond that. Two thirds of Medicaid’s spending is on services that the federal government classifies as optional. Like Medicare, Medicaid is plagued by a bureaucracy that welcomes wasteful spending. Typical with most government programs, the people suffer.
Medicaid does not fully reimburse doctors for treating patients that are insured through it. It does not cover the entire cost of prescription drugs, nor can it. Medicaid is forced to cut its benefits in order to save on its expenses. Its reimbursements continue to decrease while its bureaucracy continues to grow. Because of this, many physicians refuse to treat people who are insured through Medicaid. A physician is more likely to be paid for their service by private insurers than by Medicaid. This forces them to stop accepting new Medicaid patients.
As with Medicare, many beneficiaries of Medicaid do not have access to prescription drugs. Doctors have to wait for permission to prescribe medication to those on Medicaid. This means that many wait for drugs they desperately need, if they ever get them in the first place. Even if a patient manages to be OK’ed for prescription drugs, limits are placed on the amount they can receive. Preventative medicine and procedures are denied to many Medicaid patients because Medicaid cannot afford to pay it.
Both Medicare and Medicaid reflect what happens with government run healthcare. The government cannot afford to keep these programs going, but they do so anyway at the risk of bankrupting the nation. Taxpayers can only pay so much to fund these two programs. Even if people paid 100% of their income in taxes, it still would not be enough to cover the costs. As a result, the government passes the expenses onto the private sector. This is why premiums of private insurance companies are increasing. Insurance companies are forced to pay for the government’s insurance plan.
Basically, there are three ways people pay for their medical needs. Below is a simplified diagram:
1. You-à pay doctor directly
2. Youà pay monthly premiums to insurance company-à pay billing department-à pay doctor
3. Youà pay taxes to government-à federal bureaucracy-à state bureaucracy-à county/local bureaucracy-à billing department-à pay doctor
The more people there are between you, the patient, and the doctor, the higher the medical costs. Prices always increase when there is a middleman. The U.S.’s current healthcare system can have up to whole groups, buildings, and offices of middlemen. All of whom want their cut of the profits.
[i] Stuart M. Butler, Ph.D, Robert E. Moffit, Ph.D, & John C. Liu, What to Do About Medicare, 26 June 1995, The Heritage Foundation, http://www.heritage.org/Research/HealthCare/bg1038.cfm
[ii] Ibid
[iii] Ibid
[iv] Owcharenko, Nina, A Road Map for Medicaid Reform, 21 June 2005, Heritage Foundation, http://www.heritage.org/Research/HealthCare/bg1863.cfm
[v] Ibid