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The Cost of Universal Coverage: Can We Afford It?

I don’t subscribe to many newsletters, but the Galen Institute’s Health Policy Matters is always a provocative read. Here’s an excerpt from this week’s newsletter:

Incoming White House Chief of Staff Rahm Emanuel said this week that universal coverage will be an early, top priority of the Obama administration.

But where is the money going to come from to pay for these massive reform agendas, which were developed before the meltdown of Wall Street, the $700 billion rescue package, and a projected $1 trillion deficit?

The Obama plan is estimated to cost an additional $100 to $160 billion in the first year alone, yet the president-elect made fiscal responsibility a big part of his campaign platform. If the White House is going to extend the plan to mean universal coverage, the bill will be even more expensive.

Mr. Obama also will be facing the huge flood of red ink in Medicare, with the program starting to run out of money in 2017, about the time a second Obama term would end.

It’s impossible to make predictions in the current topsy-turvy political and economic climate, but these power political power centers, fiscal realities, and the urgency of other issues, including Detroit’s looming bankruptcy and an unstable geo-political climate, make these dreams of sweeping health reform a major challenge.

Mr. Obama will likely use the pending expiration on March 31 of the State Children’s Health Insurance Program (which will be renamed) as a vehicle to expand health coverage to all children and possibly even enact his mandate for children’s coverage. That probably means funneling more money to the states through Medicaid since they must pay part of the costs.

After SCHIP, Congress will take the lead on major health reform legislation from there.

We need to remember that 82% of the American people are happy with their own health care and only a minority is willing to pay higher taxes to get to universal coverage. Also, the employer mandate is a new tax, and it is going to be especially difficult to impose during the economic crisis. And can we really tell people who have lost their jobs that now, in addition to everything else, they are going to be forced to buy health insurance?

Hawaii Learns Tough Lession: Free Childrens Health Insurance Program Abused By Wealthy Parents

Fascinating commentary on human nature. Thanks to Grace-Marie Turner at the Galen Institute (this excerpt is part of an article published in the NY Post today):

HAWAII just had a vivid les son in health-care economics, learning that if you offer people insurance for free – surprise, surprise – they’ll quickly drop other coverage to enroll.

As a result, Hawaii is ending the only state universal child health-care program in the country after just seven months.

The program, called the Keiki (Child) Care Plan, was designed to provide coverage to children whose parents can’t afford private insurance but who make too much to qualify for other public programs (such as Medicaid and Hawaii’s State Children’s Health Insurance Program). Keiki Care was free for these gap kids, except for a $7 office-visit fee.

But then state officials found that families were dropping private coverage to enroll their children in the plan. “People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink of Hawaii’s Department of Human Services.

In fact, 85 percent of the children in Keiki Care previously had been covered under a private, nonprofit plan that costs $55 a month.

When Gov. Linda Lingle saw the data, she pulled the plug on funding. With Hawaii facing budget shortfalls, she realized it was unwise to spend public money to replace private coverage that children already had.

Yet Lingle is facing a political firestorm in the state from critics who say that she’s denying children health insurance – notwithstanding the fact that children in Hawaiian families earning up to $73,000 a year are eligible for Medicaid…

The Hawaiian debacle should also be a caution to Barack Obama, who wants to mandate that all children have health insurance. This would plainly not only require penalties for those who didn’t comply but also new programs to help parents get their children covered. The risk of crowd-out will be great.

Improved Mental Health Coverage: Finally!

Photo of group of people

I wrote a “reader take” for KevinMD a few weeks ago – basically arguing that disparities in mental health coverage are driving patients to seek help from unqualified (or inappropriate) providers, thus increasing healthcare costs without improving outcomes. Little did I know (at the time of writing my article) that mental health advocates would be successful in introducing a new law to address exactly this issue. The New York Times reported that some were hailing this legislation as:

A milestone in the quest for civil rights, an effort to end insurance discrimination and to reduce the stigma of mental illness.

And guess how this legislation was passed? It was the “pork” in the Wall Street bailout bill.

Now that’s some of the best pork I’ve heard of in recent memory.

To read my explanation of why improved mental health benefits are desperately needed, please check out my reader take at KevinMD. It’s called: How Not To Revolutionize Healthcare.

P.S. The delay in publication of my reader take was not Kevin’s fault. It was due to circumstances beyond our control. 🙂

Guest Post At InsureBlog: The Cost Of Patient Non-Compliance

While I was “homeless” my blogging friends kindly invited me to guest post at their websites. Henry Stern at InsureBlog posted this for me:
Are Health Insurance Dollars Being Wasted Due To Medication Non-Compliance?
In case the answer to that question isn’t obvious, it is a resounding “yes.” Non-compliance costs the health insurance industry a staggering 177 billion dollars a year. It is estimated that fifty percent of patients forget to take their meds and over 30 percent don’t refill their prescriptions. Twenty percent say they don’t take the full course of treatment and fifty percent of patients don’t take drugs as directed. So much for preventing that heart attack, stroke, or limb amputation.

The health insurance industry (as well as pharmaceutical companies) have invested heavily in patient compliance initiatives, most of which have failed to produce substantially improved outcomes. The reason?…

To read the rest of the post, please click here.

Fixing American Healthcare: The Primary Cause of Rising Costs

In Fixing American Healthcare, Dr. Rich explains that the major cause of rising costs in healthcare is an aging population that requires more resources. Though some have proposed that fraud and waste/inefficiencies are the primary sources of costs spiraling out of control, the truth is that they likely play a minor role compared to the tremendous costs of providing cutting edge treatments to an older and sicker US population. Dr. Rich argues that we don’t hear that much about the escalating cost of caring for older Americans because it makes us squeamish, so we instead focus on curbing costs due to fraud and waste. However, when fraud and waste are not the primary cause of increasing costs, enhanced attempts to quash them do not actually move the savings needle. Since certain groups are tasked with reducing escalating costs due to fraud (in particular), and their work does not result in savings, they must strive harder to find and punish those accused of fraud, perhaps even seeing fraud where it doesn’t exist.

Dr. Rich argues that true fraud is fairly rare, and that the majority of “fraud” cases involve people not complying with rules they had no knowledge of (in many cases even after asking about the rules from the people who made them). Other cases of “fraud” involve retroactive application of rules and then fining hospitals for not being in compliance before the rules were made. His assessment of the PATH audit debacle is quite interesting.

Now, obviously we want to decrease fraud and waste as much as possible – but in the midst of our desperate attempts to curb healthcare spending, we’ll need to have some honest and frank discussions about the elephant in the room: America is sicker than ever before, and we have developed expensive ways to cure/treat those sicknesses – ways that we can’t afford to offer everyone.

What should we do? Dr. Rich suggests that we come together as a nation and decide on some rationing rules. He argues that we’re already rationing our healthcare dollars in covert ways – let’s bring it out into the open so that it’s fair to everyone. Now, I doubt that this will sit well with Americans – but our current “system” is so dysfunctional that maybe the time for a rationing discussion has come?

In this climate of unlimited treatments and limited resources, the best option is to stay healthy as long as possible. That’s why I believe in preventive medicine, healthy lifestyle changes, and doing all that we can to avoid getting sick. In many cases (but certainly not all) eating healthy foods, exercising regularly, controlling our weight, getting our vaccines, and sleeping well each night can go a long way to keeping us out of the hospital. It’s not easy to get Americans to take care of themselves in this way, but I’d rather spend my efforts trying to get us fit than to have to debate rationing rules. In the end, however, we may need to do both. What do you think?This post originally appeared on Dr. Val’s blog at

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