Monday, May 11, 2009

$2 trillion over 10 years 

An industry group of hospitals, doctors, insurance companies and pharmaceutical companies has made a proposal to the White House, offering to cut costs an average of $200 billion per year over the next 10 years, as part of the effort to expand health care coverage to the estimated 50 million Americans who are currently uninsured.

President Obama described the plan as "a watershed event," and I believe he is correct -- it is definitely not the same environment as 1993 and the failed efforts of Hillary Care (where have you gone, Ira Magaziner?).

A quick and dirty division tells us that $4,000 per year per estimated uninsured individual is what $2 trillion of savings over 10 years would yield. That would actually pay for a low-end to moderate private health insurance policy in most places for most people. I do not know whether the uninsured tend to skew younger, healthier, or any other relevant demographic characteristic, as that would have an impact on how expensive it would actually be to cover the uncovered. The aggregate savings numbers are obviously big, and big enough to be meaningful, to the extent the savings can be realized.

The political ground has been prepared for some kind of significant legislation in the area of health insurance and health care delivery, and it will have an direct impact on a the businesses in that segment and an indirect impact on everything else. My guess is that we won't see a Canadian-style Single-payer system -- President Obama likely understands that Americans would not tolerate the kind of queueing that Canadians go through, and that it might even cost him re-election in 2012 if such queues started to appear in a significant way before then -- and that private insurance will play and important role at the start. Whether private insurers can co-exist in the long run within the structure of a form of quasi-nationalized health care (something at least one House Representative doesn't care about) is another matter, but even in Canada, private insurance supplements national coverage, and accounts for about 12% of national health care spending.

I haven't read anything yet on the attitude of the Plaintiffs' bar regarding the various proposals. ATLA is a long-time supporter of the Democratic Party, and at least part of the reason that health care cost increases always outpace inflation. To say that doctors despise ATLA would be understating it. (It is worth mentioning that newly-minted Democrat Arlen Specter has a son who is a prominent and very successful member of the Plaintiffs' bar in Philadelphia). Will liability caps be part of any legislation, and if so, will there be any ambulances left to chase?


By Blogger Georg Felis, at Mon May 11, 04:56:00 PM:

Your quick and dirty division is both quick and dirty. Dividing $200B into 300M people gives a not unreasonable approximation of $650 per capita savings in national health care costs (uninsured people *do* use health care, and pay for it too, with cash and payment plans) A quick Conservative look at health care cost reductions would include strong malpractice reform including mandatory arbitration before any lawsuit goes to court, professional witnesses paid by the specialty court, not the plaintiff, a more sensible drug approval policy procedure along with stronger/longer patent protection for drug companies, elimination of the Canadian style extortion racket their government uses to squeeze down Canadian prices in exchange for squeezing our up, Federalizing class-action cases to focus on the best welfare of the patients, not the lawyers, reducing the artificial shortage of doctors that is caused by medical college admittance restrictions, allowing more procedures to be done by Nurse-Practitioners, and a private-run not for profit medical records company.

My opinion of what will come out of the Obama administration looks nothing like this.

We will be facing a frightening demographic speedbump in the next few years. Doctors will be retiring in large numbers just as the baby boomers hit the time of life where they will need more medical care. We need some ability to bring even more new doctors/nurses into the market, while at the same time allowing older doctors to practice part-time, reduce the Start-Stop-Start interruptions of new drugs coming onto the market while maintaining safety, and apply a great amount of innovation into a segment of the economy who’s product is truly life and death. Turning that over to the Government right now is abjectly stupid.  

By Blogger Escort81, at Mon May 11, 05:42:00 PM:

This comment has been removed by the author.  

By Blogger Escort81, at Mon May 11, 05:53:00 PM:

Georgfelis -

Obviously, I used 50 million as my denominator. I understand your point, but since the savings figures quoted today are specifically targeted at covering the uninsured, it seemed to make sense to somehow compare the two numbers in a back-of-the-envelope kind of way.

I agree with your point re: malpractice reform, which is why I mentioned ATLA.

My sister is an ER nurse and is in her early 50s, and your demographic point is an excellent one.  

By Blogger JPMcT, at Mon May 11, 07:51:00 PM:

Well, I see that the apochryphal 40 million uninsured has miraculously expanded to 50 million. I wonder how many of these are young people with no current intention of seeking medial care, illegal aliens, homeless, felons (other than congress...they have wonderful insurance), etc. etc.

Beware of "industry spokespersons" offering 1.5% rate reducions. The dollar amount usually comes out of physician reimbursement...and, in actuality, represents a pittance of the 20-25% revenue expansion that private insurance companies enjoy on a yearly basis.

Most of this garbage...including the garbage spewed by Obama, is smoke and mirrors to deflect attention from the true intention of Nationalized health care...which is the same intention of nationalized banks and nationalized automobile manufacturing....control, money and power transferred from private citizens to the Federal Government.

In other words...FASCISM!  

By Blogger Christopher Chambers, at Mon May 11, 09:11:00 PM:

They're running scared from Obama. This is the early 20thcentury. They're Standard Oil and US Sugar, Morgan...and Obama's Theodore Roosevelt.

As for Canadian "ques" it's good you got the drop on the talking points and directives--the Swift Boat people are, after all, taking charge of the commercials. So much for being a part of the solution, rather than the problem.

The system as is will change. It will be a hybrid of Canada and one of the government voucher nations. Accept it.  

By Blogger Kinuachdrach, at Mon May 11, 10:17:00 PM:

Mr. Chambers - even by your standards, that was really, really lame.  

By Blogger Dawnfire82, at Mon May 11, 10:48:00 PM:

"It will be a hybrid of Canada and one of the government voucher nations. Accept it."

And here I thought the Liberal Fascism thing was a joke.  

By Blogger Escort81, at Mon May 11, 10:49:00 PM:

Christopher -

I'm not sure that you need to be allocating space on Mt. Rushmore next to TR for President Obama quite yet -- let's agree to wait until at least the end of his first term, ok?

If you don't think that every aspect of the health care delivery value chain isn't brutally competitive, you need to go into the office for a few days with your old TI buddy TH. Such was not the case when TR came onto the scene and dealt with Standard Oil and the other Trusts as a "trustbuster." Standard Oil was nearly completely vertically intergrated and also controlled a great deal of the oil production at the time. If there ever was a monopoly in U.S. business history, that was it. Drug and device companies invest billions of dollars to gain a fleeting technological advantage in a particular treatment modality, and have historically had to deal with a moving target in terms of reimbursement issues -- how much insurers would be willing to pay for a treatment for their insured. Nobody "controls" any specific niche for very long, if at all -- certainly not at the level of John D. and Standard Oil.

I think we do agree that the system will change, and the end result will not be purely like Canada. (By the way, talk to some Canadians who can afford to come into the border states up north for medical care or tests on their own nickel, or vacation in S. Florida and do it there, and ask them what they think the U.S. system should look like).

"Accept it" -- how's this: (mimics Borg voice) I've been assimilated. I'm still interested in being able to maintain my private insurance, and as long as that's permitted, I promise not to take up arms!  

By Blogger Georg Felis, at Mon May 11, 11:57:00 PM:

Think I'll stick with the 300 million people denominator. (despite my poor history in Math class). Any savings that will be produced by the Health Care Industry will be distributed across the whole client base, not concentrated onto the people who use the services the *least*. As a matter of fact, I expect the Obama administration to attack this offer by the Industry as a benefit that only goes to the "rich" insured, and attempt to milk the cow even harder.  

By Anonymous checkers, at Tue May 12, 04:11:00 PM:

As a physician I do not recall authorizing anyone to offer a reduction in my income to the government. So, just who is doing the negotiating here? It is the insurance industry, and they will keep their profit and pass the bill for their negotiated "savings" down the line to doctors and hospitals. And we will retire in droves! Mark my word.  

By Blogger JPMcT, at Tue May 12, 07:49:00 PM:

Checkers you are right on the mark. Most classically trained American physicians have a VERY< VERY short list of people from whom they take crap.

For me, it's basically my wife.

Any doc over age 50 who doesn't seriously consider a career change or retirement in the face of nationalized medicine is NOT....and I mean REALLY NOT....a person I would want to take care of me in a pinch.

Mr. Chambers..are we really "running scared" of Obama?

I don't think so.

Obama is a train wreck. IF we are running, it is to stay clear of the tracks.  

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