Posted by: Debby Durkee | March 2, 2010

Health care fairy tale.

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Health Care fairy tale.

Dr. Thomas Sowell, a wise economist who makes the complex simple to understand, shows why health care costs too much and why the current legislation doesn’t address that main concern of the American people. This is from National Review Online.

One of the biggest reasons for higher medical costs is that somebody else is paying those costs, whether an insurance company or the government. What is the politicians’ answer? To have more costs paid by insurance companies and the government.

Back when the “single payer” was the patient, people were more selective in what they spent their money on. You went to a doctor when you had a broken leg but not necessarily every time you had the sniffles or a skin rash. But, when someone else is paying, that is when medical care gets overused — and bureaucratic rationing is then imposed, to replace self-rationing.  Snip –

One of the big costs that have actually forced some hospitals to close is the federal mandate that hospitals treat everyone who comes to an emergency room, whether they pay or not. But those who talk about “bringing down the cost of medical care” are not about to repeal that mandate. Many of them want to add more mandates.  Snip –

The most fundamental issue is not whether treating everyone who comes to an emergency room is a good policy or a bad policy in itself. If it is a good policy, then the federal government should pay for what it wants done, not force other institutions to pay for it. Then let the voters decide at the next election whether that is what they want their tax money spent for.

What is called lowering the costs is simply refusing to pay all the costs by having the government set lower prices, whether for doctors’ fees, hospital reimbursements, or other charges. Surely no one believes that there will be no repercussions from refusing to pay for what we want. Some doctors are already refusing to accept Medicare or Medicaid patients because the government’s reimbursement levels are so low.  Snip –

Virtually everything that is proposed by those who are talking about bringing down the costs of medical care will in fact raise those costs. Mandates on insurance companies? Why are insurance companies not already doing those things that new mandates would require? Because those things raise costs by an amount that people are unwilling to pay to get those benefits.

What politicians want to do is look good by imposing mandates, and then let the insurance companies look bad by raising the premiums to cover the additional costs.

Politicians who want a government monopoly on health insurance can easily get it, just by making it impossible for private insurance companies to charge enough to cover the costs mandated by politicians. The “public option” will then be the only option — which is to say, we will no longer have any real option.

If the Democrats in Congress and the president really wanted to address costs, they could. They could learn a lot from Indiana Governor Mitch Daniels (oh, he’s a Republican) – you can read about him below. Read all of Thomas Sowell here: http://article.nationalreview.com/426584/alice-in-health-care/thomas-sowell?page=1

Daniels: Indiana’s success with health savings accounts.

Many of the problems Thomas Sowell addresses in the above column, Governor Mitch Daniels of Indiana has addressed with his health saving accounts for public employees. This experiment in allowing employees the opportunity to do their own shopping around for health care has been a big success and should serve as a model for the country’s heath care plan. This is from the Wall Street Journal.

When I was elected governor of Indiana five years ago, I asked that a consumer-directed health insurance option, or Health Savings Account (HSA), be added to the conventional plans then available to state employees. I thought this additional choice might work well for at least a few of my co-workers, and in the first year some 4% of us signed up for it.

In Indiana’s HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana covers the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.

Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker’s permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely protected.

The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it, by far the highest in public-sector America. Due to the rejection of these plans by government unions, the average use of HSAs in the public sector across the country is just 2%.

What we, and independent health-care experts at Mercer Consulting, have found is that individually owned and directed health-care coverage has a startlingly positive effect on costs for both employees and the state…

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative…

The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state’s total costs are being reduced by 11% solely due to the HSA option.

Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care.  Snip –

He goes on to note that people on HASs often choose the cheaper generic drugs and the overall costs incurred are $65 compared to $100 on those on the other state plans. When people are in charge of their own money they aren’t so willing to spend on things they don’t really need and will shop around for the best price for things they do.

By contrast, the prevalent model of health plans in this country in effect signals individuals they can buy health care on someone else’s credit card…What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan’s immense savings.  Snip –

Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health-care costs would decelerate.

This seems like an excellent plan for Republicans to pick up and wave around in front of Obama and Pelosi, but, of course, Obama and company aren’t interested in saving money, they are interested in controlling 1/6 of the American economy and having control over you. Who cares if their plan will bankrupt the nation? Well, we care. There are rumblings that Daniels, who worked in the George W. Bush administration as director of the Office of Management and Budget, is being urged to run for president in 2012. Let’s see if that happens. Read it all here:

http://online.wsj.com/article/SB10001424052748704231304575091600470293066.html?mod=WSJ_Opinion_LEFTTopOpinion

You can read more about Daniels, and the interest he stirs in conservative circles, in of all places the New York Times here: http://www.nytimes.com/2010/03/01/opinion/01douthat.html?ref=opinion

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