Sure, it would be much better if we were all insured at a fair price. Believe me, I know how difficult that is. When I left Corporate America to start this company, and tried to get insurance, I was flatly turned down by three major carriers because of pre-existing conditions. Through months of perseverance, I was able to find some high-risk pools (even though my issues are not terminal nor do they involve hospitalization). For my family of four, we would have to pay $1800/month with a $12,000 deductible. That's $32,000 a year before any insurance kicks in. Its a pretty clear example of why many people are uninsured, or can't afford to give their employees health insurance.
And yes, our ability to take care of ourselves and the ones we love will improve dramatically with access to our own health information, and improved communication with providers. That's why we started Axial.
So fair insurance and health connectivity are important issues, but they are the tip of the iceberg. Here is the real problem.
A picture's worth a thousand words, so here it is:
This is the cost of our health care year by year, according to the Department of Health and Human Services in their 2007 report.
This data, is two years old, so now our costs are well over $2 trillion dollars per annum. The slope of the curve is pretty scary, isn't it? Especially when you consider that we rank 37th in Health Care effectiveness in the world, according to the World Health Organization.
And while having all people insured is important, it won't significantly drive the costs down. It is true the Emergency Room Visits are the most expensive types of visits, and what uninsured tend to use, but sending not emergency cases to Urgent Care facilities will still not dent this curve.
So what needs to be done?
First, we need to recognize the mathematical facts. Medicare in its current form for everyone over age 65 cannot be supported by our tax base. On average, a Medicare patient has 3.3 times as many medical expenses as a non-Medicare patient. Why? Simply because they are older, and more things go wrong as you age. 80% of your lifetime health care expenses happen the last two years of your life, and in this country on average, that means around 80 years old. So for fifteen years for each citizen, the tax base is paying for more of a patient's likely health care costs than that person had in the whole first 65 years of their life. Unless our working tax base grows at a rate we've never seen in all of US history, we will add to the deficit at an ever increasing rate.
We live longer, but with more disease, but have never changed the age at which people are eligible for Medicare. We need to increase the eligibility age to the point where there is a reasonable divide between benefits start and life expectancy. When Social Security started under FDR, benefits kicked in at age 65. Guess what the average life expectancy was? 64.
Secondly, while Medicare should provide a good floor for basic health care, it cannot possibly cover all expenses. If a 91 year old man or woman wants a hip replacement instead of a walker or wheelchair, should the taxpayers pay for it? Of course not, you may say--until its your parents and you see their misery. Multiply that scenario millions of times, and then you see the problem.
We need to start a system much like 401-Ks for Health Care savings. Medicare should provide the safety net, not full service care. We should all expect, as we do for retirement, that our medical costs should go up, and we can choose to receive baseline care or that for which we have saved.
The current cost controls squeeze the doctors--the ones providing the care. The reimbursement rates for Medicaid are so low that most doctors will not accept Medicaid. The same is starting to be true for Medicare. Well, you might ask, why can't the doctor take their Medicare, and bill them for the difference of their charges? Great question! But by law, the doctors cannot bill any additional amount. Why not?
Price transparency coupled with the doctors being able to set their own rates and collect the differences between insurance reimbursement and their bills would go a long way to settling supply and demand. Let's take two doctors. One is John Hopkins trained and has an impeccable surgical record as a neurosurgeon, with high survival rates, short hospital stays, and low post-care costs. The other doctor is a mediocre surgeon, with longer hospital stays, and an uneven recovery rate. Would you pay more for one of these surgeons than the other? You bet! But Medicare would pay the same.
Lest you think doctors are getting rich, you should know that most doctors are on a downwardly mobile path, unless they do cosmetic surgery or some other process not covered by insurance. The general reimbursement rate for a primary care physician or pediatrician is $30 a visit in the Research Triangle, and pretty similar in other major metropolitan areas. That's before they pay their staff, rent, or medical malpractice. Pediatricians have to see 30 patients a day to break even! 40 patients a day will earn them about $100,000, not exactly the bonuses in question at Citicorp.
Think its better for surgeons? Well, it depends on whether the see Medicare and Medicaid patients. At the time of this writing, a highly skilled neurosurgeon, gets reimbursed $600 to remove a brain tumor by Medicaid-- a 4-6 hour process for which he had to train 14 years post college. I just paid more than that to get new brake rotors and pads in my car. That will not even cover his cost of renting the operating room. For Medicare, that number is closer to $1000, but still slightly above break-even.
We need to empower our primary care system, which is decimated, by reimbursing more, not less. Right now, at best they are a triage team, because in eight minutes, the average time they can spend with a patient, what can you really find out about a patient? Unless you've got the flu or measles, they will need to send you to a specialist. Make time for the doctors to discuss all the issues, so less specialist care is needed. Make time to establish the fundamentals of good health, including diet and exercise. Reimburse Physicians assistants and nurses to discuss these preventative issues with patients.
People do get sick, very sick, and deserve compassionate and appropriate medical attention. But right now, we citizens get penalized very little if we lead an unhealthy lifestyle-overweight and lack of exercise. Your insurance premiums go up if you smoke, but that's it.
The slope of this curve will never change unless we take some drastic actions. Start benefits at a later age. Medicare should provide a floor, not total coverage for patients health. Citizens should have incentives to save, like 401-Ks to supplement Health Savings. Let free pricing prevail--along with price transparency and doctor's records. Focus on good health, not treating symptoms.
If I were a politician, I would be electrocuted by now; but if things are going to change, we all need to know the facts and be brutally honest about what needs to change.
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