HOW TO PAY FOR HEALTHCARE AND LOWER EMPLOYER AND EMPLOYEE COSTS
Controlling health care costs has been an increasing issue for the last 50 years. The original control was by way of the individuals’ ability to pay for medical treatment. A few individuals bought private insurance, but they were selective. Group plans began with some companies when risk and experience were thought to be controlling. In 1965 Medicare became law and, like Social Security, all companies and employees paid into a fund to pay for medical treatment after age 65; the control was 30+ years of funding to pay 10-15 years of benefits, (mortality was around age 70).
Increasingly, the responsibility for paying for medical treatment shifted from individuals to someone else – Federal/State government, Insurance Companies, or a variety of “group” arrangements. As the actual cost of treatment was no longer known to the person receiving it, providers had few restrictions on what, how often, or how long they provided care or what they charged. As these costs were loaded into the expense of the programs paying for treatment, taxes and premiums increased to their current levels. They now impact our economy on both national and international stages as well as individuals’ disposable incomes. They now influence our lifestyles…how long we work, where we work and live, and how we value our assets.
Data accumulated and examined for over 40 years continues to reveal that attempts to control costs have not addressed the most significant contributor to those costs – medical technology – our ability to provide medical treatment never before imagined. Organ transplants, successful deliverance of premature babies, treatment of heretofore killing diseases, and other medical successes that, while advancing our quality of life, have come at a cost to a medical reimbursement system that is not designed to handle it.
Universally, for employers, medical reimbursement programs pay 80% of their benefits to 10% of those covered. These costs are attributed to conditions we were not able to treat 40 years ago, as we did not have the medical technology.
Our current system of “insurance”, private and public, has struggled with paying for this technology by increasing costs to tax payers. Employers have responded by reducing or dropping coverage, shifting costs to employees, and raising prices for products and services. Providers “cost shift” unreimbursed care to the prices charged for medical services, inflating the true cost of those services, and are rolled into the premiums of those with insurance or tax payer funded programs.
We have attempted to control these costs through “managed care”, “co-pays”, “deductibles”, “limits”, and a variety of other plan designs. They have had marginal success in addressing the 20% of total cost, while upsetting 90% of those covered, but have done little to address the main contributor to these costs – medical technology.
We talk about the uninsured and underinsured, however, no one is denied access to medical care. A funding mechanism, spread over everyone, should be established to pay for treatment of those extreme cases that consume 80%of the costs. The remaining 20% can remain the responsibility of individual programs without altering or restricting the method by which we now deliver care. An assessment on all individuals could provide the funds for those “catastrophic” cases, much like “excess or stop loss” insurance coverage now does. This would allow the medical community to continue their advances in treatment toward a better quality of life without placing that tremendous cost burden on businesses and employees. This could lower their costs, increase wages, and lower prices we all pay for products and services, allowing U.S. business to compete on a more even playing field globally.