Wednesday, August 10, 2011

Healthcare Costs

In his post entitled "Health Care and Deficit Drivers," David Holmes shows that we must deal with healthcare costs if we hope to contain and eliminate deficits. Here are suggestions that would substantially reduce government healthcare costs.

1. Tort Reform – I will do a short Post on tort reform in the next few weeks.

2. Comprehensive tax reform including termination of the income exemption for employer-medical contributions.

3. Need-based Medicare co-pays and Social Security benefits, including for present recipients. Many plans exempt present recipients – present recipients (my generation) should participate in the solution for our country and the generations following us because we benefited from job opportunities that are no longer as broadly available. The post-WWII economy benefited us because of the coincidence of when we were born.

4. By law Medicare must cover a treatment that has some benefit regardless of cost and extent of the benefit. For example Medicare pays $93,000 for prostate cancer patients to receive Provenge, a treatment that prolongs patients' lives for 4 months. In deciding what Medicare should cover, we should take into account the cost of a medical treatment and the extent of a treatment's benefit.

5. Medicare has a co-pay. Seniors can insure against the co-pay with Medigap policies. Medicare should require some minimum amount that cannot be insured against so that we have to pay something for each medical visit. Cost should be part of the patient's decisions regarding care.

6. Provide uniform claim forms for Medicare and all insurers to simplify hospital and doctor office work.

What additional suggestions do readers have?

1 comment:

  1. Andy raises some very interesting points, and I'll be looking forward to his expansion on these ideas as we move forward.

    Pending further from Andy, here are my preliminary thoughts and questions:

    1. Tort Reform: Not only will it be interesting to see what Andy's suggestions might be, some cross-cultural information will be fascinating.

    For example, do other states or countries have a different tort system (the legal process for determining if a wrong has been committed and what compensation is to be paid), as applied to health care or otherwise, and is that historically demonstrated to correlate with lower medical costs?

    2. and 3. Tax reform and Medicare Co-Pays: Again, what lessons can we learn from the experiences of states like Massachusetts, as well as other countries?

    Do their approaches in the areas of Tax Reform and Co-Pays actually generate lower costs, are there any unintended consequences, or are we being asked to adopt new policies without information on how they may have played out in other jurisdictions?

    4. Costs vs. Benefits: This is a very important area and the issue will be a political one:

    How do we convince Bobby Jones, a taxpayer and voter, that the government should not do whatever is necessary to keep his 83-year old mother alive for two more months, at a cost of $117,000, so that she can see the birth of her first great-grandchild?

    5. Co-Pays. Same as above - What's been tried elsewhere, what seems to work, have all of the consequences of adopting the proposed change been benign and what hasn't played out as expected?