Wednesday, August 12, 2009

Healthcare Reform: Competition

In his town hall meeting Tuesday in Portsmouth, NH, the president said,
"I mean, if you think about it, UPS and FedEx are doing just fine, right? No, they are. It's the post office that's always having problems."
How this remark helps his cause is unknown to me. If anything, he is acknowledging that a government run "business" in competition with private sector businesses, including the health care industry, will fail to be competitive.

'Nuf said.... almost.

Competition is the engine of self sufficiency and wealth in America. It is what created the most advanced living conditions in the history of man. Competition is responsible for the rapid advance of every aspect of American life. This includes the state of modern health care. Some Americans who do not believe that they are "competitive" will always end up in unions, on assembly lines or on welfare, and being dependent on those who are competitive enough to win them any income and benefits they may have. Competition lowers prices and costs as evidenced by the impetus to institute anti-monopoly laws in this country.

The same holds true for healthcare insurance. Competition, fair competition, will lower the cost of healthcare insurance and the cost of healthcare in general. There are some anti-competitive policies in place in this country right now that are causing the costs to skyrocket. Government healthcare programs and state restrictions on out of state insurers.

I found it interesting that some push the "public option" for healthcare insurance, claiming it will be "competitive". If you believe private sector insurers can compete with the federal government, then, answer these questions...

Do private sector companies print their own money?
Do private sector companies use their power to forcibly extract money from others?
Do private sector companies make their own laws and regulations?

Of course not, which makes the argument for a public option irrational. Heck, the government doesn't even have to pay for advertising.

The question to ask is, "Do government programs, such as Medicare and Medicaid cause healthcare costs to go up?"

The answer to that is a firm "yes".

There are at least two reasons for this.

- One is that when the government pays the medical bills, those millions are removed from the customer base of insurance companies. According to Health Harbor, "Medicare covers between 42 million and 45 million Americans, making it the largest single payer of healthcare in the nation." That is 42-45 million people who are not buying private sector healthcare coverage, which causes insurance providers to raise fees on others to stay in business.

We all know that the insurance company model is to "spread the wealth" (to steal a phrase), or risk, among their policy holders. More policy holders means the risk is spread thinner and the cost to each would be lower.

- Another is that people using Medicare and Medicaid cannot see how much it is costing everyone. Sure, they see their own charges. But to most, those figures are meaningless. Why? Because the payment isn't coming out of their checkbook. They have no need to be concerned and if they were concerned, they have no way to tell if Medicare or Medicaid are being over or under charged. There is nothing for them to compare it with.

Many believe that Medicare Part B is paid for with payroll taxes, monthly premiums, copays and deductibles.

Not true. In fact about 75% of the payouts to Part B claims comes from general revenue, with payroll taxes, etc., covering the remainder (2007 numbers).

- Medicare and Medicaid limit prices. Logic would say that limiting prices would limit costs and make it less expensive. But Doctors, hospitals and big pharma cannot put an equal limit on their costs. They must earn enough to allow them to pay their bills and stay operational. Remember, no matter who pays for for goods and services, someone must get paid to make that product or provide that service. The government price fixing forces them to look elsewhere to make up the difference between what they need to pay their staffs, office space, utilities, medical equipment, etc. They end up charging more to those patients who use private sector insurance and those who pay cash. For proof, just look at any bill that is paid by Medicare/Medicaid. It will show how much their fee is for the service and how much Medicare/Medicaid allowed.

The bottom line is there is no way possible that a government public option would be competitive with private sector insurance providers and that the federal government's meddling in what should be private sector businesses is what has caused healthcare and healthcare insurance to skyrocket for almost four decades since Medicare and Medicaid stated.

Real competition is the road to lower healthcare and healthcare insurance costs.

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