Congress is moving quickly to enact healthcare reform to eliminate the increasing number of uninsured. Legislation is likely to be considered this summer and all participants of the healthcare system, including insurers, are coming together to ensure healthcare reform is effective and sustainable for all Americans.
Driving this is a moral, social and fiscal imperative to ensure that all Americans have access to a sustainable healthcare system that exhibits quality, timely and affordable care. And, this comes with an implicit understanding that all of us must share in the cost of creating it and the commitment to sustaining it. The question before us is no longer “should healthcare be reformed,” the question is, “how do we get it right?”
One option under consideration is that the government develop, market and sell its own insurance plan – competing head-to-head with the private sector. But if government is going to get involved in a big way in the delivery of healthcare, we all must work together to ensure that such reforms work towards a sustainable healthcare system that is accessible to all.
We must, for example, learn from government experiences on Medicare and Medicaid. A report released recently from the Medicare trustees shows that the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017 — two years earlier than the date projected in last year’s report. It’s as dire for Medicaid, which threatens the stability of state government budgets as it continues to rabidly consume more and more of the pie.
Peter Orszag, director of the Government Office of Management and Budget, says, “the only way to solve the fiscal problems of the big entitlement programs is to slow the relentless rise in the underlying healthcare costs.” He’s absolutely correct, considering that 87 percent of the cost of coverage is driven by medical care. Until you tackle the real issue – cost of physician, hospital and pharmaceutical care — a government program isn’t going to be able to offer better products at lower costs without creating long wait times for care.
Proponents say that by making the government the sole administrator of healthcare, the U.S. could save billions of dollars on reduced administrative costs. This argument is based on the purportedly lower administrative cost for government programs than administrative costs for private health insurers. The comparisons don’t hold up.
According to the Council for Affordable Health Insurance, many of Medicare’s administrative costs are “hidden” and not included in their cost reporting. For example, the Centers for Medicare and Medicaid Services’ (CMS) estimates of administrative costs don’t include the salaries of Medicare employees, the cost to collect premiums, the cost to collect taxes which fund the program, the provision of care and disease management programs, and investments in information technology — all components that are included in the administrative costs for private insurance companies. And, if the government does get into the business of selling healthcare, their administrative load – and costs — will increase along with the new need to market, process claims, juggle risk and manage disease.
We support efforts to reform the healthcare system. We believe the current system is technologically inefficient, mired in wasteful expenditures and that medical costs must be contained so that products are affordable.
But we also believe that we should fix the problems in the system without threatening those who already have quality medical benefits — and that is the employer-based, private sector model that right now covers 170 million Americans.
