I was having a phone conversation with my brother the other evening, and the topic turned to health care, as it sometimes does.
My brother spent 40 years as a hospital administrator, the last 16 of which were as the CEO of an 800-bed hospital
in Ohio. The hospital had major competition, but my brother always said that competition created better health care for the patients because the patients had options.
I once served on the board of a small southern Minnesota hospital, and had the audacity to fight for the best deal possible for my community when the Mayo Clinic decided to buy the city-owned operation. Most of my fellow board members were just grateful that Mayo was interested.
I don’t claim to know as much about health care as my brother, but I understand the finances well enough to know why, while in recovery from a minor operation 10 years ago, I was charged $150 for “Other Services,” the sum total of which was a TV dinner.
Uncompensated care remains a huge challenge for health care providers; that little hospital gave back through insurance contracts or unpaid bills about a third of its billings. Medicaid and Medicare are a part of that, since their reimbursements are often below costs.
So as my brother and I chatted about the difficulty of replacing or reforming Obamacare, he joked, “If only Trump would have asked me, I could have told him it was complicated.”
I was an opponent of the Unaffordable Care Act (UCA) from the start, not because of any partisan preference, but because I’ve always seen the health care industry for what it is: a closed, tightly restricted economic system.
If a person wants to practice medicine, he or she needs to go to college for eight to 10 years, and most graduate with enormous debts. Nurses, lab techs and the like also need extensive training.
That’s all understandable, but then so is the need for health insurance, which adds even more to the cost. Without insurance, most of us unlucky enough to suffer a debilitating illness or injury would soon be bankrupt.
I was opposed to the UCA because it was clear that the Congress had bought off all the providers and insurers, at least for a few years.
Generally, a free market is best for consumers, so it should have been obvious that it was patients who were going to bear the brunt of this governmental boondoggle.
Economics is fairly simple in that if supply is controlled or limited, prices go up. Nowhere is supply more limited than in health care.
Normally, demand goes down as prices rise, but in health care that doesn’t work so well. When we need it, we really need it. If you have a brain tumor, and it can be operated on, is price really an object? What is it worth to see your children married and grandchildren born?
In 1850, the average American life span was only 38 years, although much of that was due to death in infancy. Twenty-year-olds lived to be 60 on average and 60-year-olds lived to be almost 76.
By 1935, when Social Security began, the average American lived to be almost 62. A 20-year-old could expect to live to 67, and a 60-year-old could expect to live to 75, a year less than in 1850.
By 1965, when Medicare began, the average American lived to age 68. A 20-year-old could expect to live on average to age 70, and a 60-year-old could expect to live to 80.
Today, the average American can expect to live to 77, the average 20-year-old will live to 78 and the average 60-year-old will live to 82.
Lives are being extended by the advance of technology, but only two more years over the past half century on average since Medicare began for those who make it to age 60. A study of health care spending found that in 1960 the U.S. spent 5.0 percent of its gross national product (GNP) on health care. In 2013, the amount spent had risen to 14.7 percent.
As I see it, the Democrats tried to squeeze the profit out of health insurance under Obamacare, with the result being that insurers left the field because they could no longer make money. Consumers were then left holding the bag through enormous increases in the cost of now mandatory insurance.
Today, the Republicans are reshuffling the deck, with the Democrats crowing that 24 million will lose their insurance. But the problem is the GOP is still trying to leave the providers and insurers whole. Until we decide to increase supply or reduce demand, the problem will remain, as my brother says, “complicated.”
I think we need to recognize three things: First, sticking families with a $2,000 monthly insurance bill makes taking their chances with no insurance seem attractive. Second, to hold down insurance rates, all of us through general taxation need to pay for the most expensive patients — those whose costs are the highest. Minnesota used to do this before the UCA and MNsure, and is trying to do so again. A very narrow slice of the populace cared for in this manner will have an enormous downward impact on rates.
And third, a century ago when health care was still in its infancy, we chalked up many of our maladies to God’s will. Today, our increased knowledge is accompanied by an attitude that we should sue whomever tried to save our sorry hides when things don’t work out. It’s time to remember that allowing for unlimited demand ends up pitting one group of Americans against another in a life-and-death struggle over who pays. The only other alternative is to increase supply and competition.