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Consumer-Driven Healthcare: Why It Will Fail

With the creation of consumer-driven health plans and health insurance policies with high deductibles linked to a savings option, more financial responsibility shouldered by patients and employees and less by employers was completely inevitable. The American public likes to have everything, whether consumer electronics or other services, as cheap as possible. With escalating healthcare expenses rising far more rapidly than wages or inflation, it’s not surprising employers needed a way to manage this increasingly-costly business expense.

In the past, companies faced a similar dilemma. It wasn’t about medical costs, but managing increasingly expensive retirement and pension plan obligations. Years ago, companies moved from these defined benefit plans to defined contribution plans like 401(k)s. After all, much like healthcare, the reasoning by many was that employees were best able to manage retirement planning because they would have far more financial incentive, responsibility, and self-motivation to make the right choices to ensure a successful outcome.   

How did that assumption turn out anyway? Disastrous, according to a recent Wall Street Journal article entitled “Retiring Boomers Find 401(k) Plans Fall Short.” An excerpt:

The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse.

In others words, a lot of people don’t have enough money to retire. The options they have are simply “postponing retirement, moving to cheaper housing, buying less-expensive food, cutting back on travel, taking bigger risks with their investments, and making other sacrifices they never imagined…In general, people facing problems today got too little advice, or bad advice.” Read more »

*This blog post was originally published at Saving Money and Surviving the Healthcare Crisis*

2011: The New Year Begins With A (Baby) Boom

On January 1, Kathleen Casey-Kirschling became the first of the baby-boom generation to qualify for Medicare. She’s hardly alone: The baby-boom generation will cause enrollment in Medicare to soar. According to the Kaiser Family Foundation, Medicare enrollment will increase from 47 million today to 64 million in 2020 to 80 million people by 2030. At the same time, the ratio of workers paying into the program to support each Medicare enrollee will drop from 3.4 (2010) to 2.8 (2020) and then to 2.3 workers per beneficiary in 2030, denying the program the tax revenue needed to sustain it.

What happens then? Well, the President and Congress would have a dismal menu of political and policy choices. They could impose huge tax increases, inflicting great harm on working families and the economy, and they probably couldn’t raise enough money anyway from taxes without other changes in the program.

They could slash benefits for everyone enrolled in Medicare, impose means-testing so only low-income elderly would qualify, increase beneficiaries’ out-of-pocket contributions, limit access to beneficial services (rationing, anyone?), cut how much Medicare pays doctors and hospitals, and/or privatize the program (but if you are over 65 and have chronic health conditions, good luck finding affordable private health insurance). Read more »

*This blog post was originally published at The ACP Advocate Blog by Bob Doherty*

Latest Interviews

IDEA Labs: Medical Students Take The Lead In Healthcare Innovation

It’s no secret that doctors are disappointed with the way that the U.S. healthcare system is evolving. Most feel helpless about improving their work conditions or solving technical problems in patient care. Fortunately one young medical student was undeterred by the mountain of disappointment carried by his senior clinician mentors…

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How To Be A Successful Patient: Young Doctors Offer Some Advice

I am proud to be a part of the American Resident Project an initiative that promotes the writing of medical students residents and new physicians as they explore ideas for transforming American health care delivery. I recently had the opportunity to interview three of the writing fellows about how to…

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Latest Book Reviews

Book Review: Is Empathy Learned By Faking It Till It’s Real?

I m often asked to do book reviews on my blog and I rarely agree to them. This is because it takes me a long time to read a book and then if I don t enjoy it I figure the author would rather me remain silent than publish my…

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The Spirit Of The Place: Samuel Shem’s New Book May Depress You

When I was in medical school I read Samuel Shem s House Of God as a right of passage. At the time I found it to be a cynical yet eerily accurate portrayal of the underbelly of academic medicine. I gained comfort from its gallows humor and it made me…

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Eat To Save Your Life: Another Half-True Diet Book

I am hesitant to review diet books because they are so often a tangled mess of fact and fiction. Teasing out their truth from falsehood is about as exhausting as delousing a long-haired elementary school student. However after being approached by the authors’ PR agency with the promise of a…

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