Expert Perspective by Grahall’s Robert Cirkiel
Activity abounds in Washington regarding health care reform. This is an ambitious undertaking as there is much to do and the target completion date for a formulated plan is less than four months away. Most agree that the overall system is “broken” yet at the same time that there is much about it that is world class. Also, while most agree that if started from scratch the system would probably be much different, there seems to be little interest in re-enacting the “clean sheet of paper” exercise of the Clinton era.
So where are we today? Apparently there is agreement, or at least resignation, that reform will happen this year, which will lead to universal, mandatory coverage. The attached provided by Investor’s Business Daily “Public Plan Might Not Be The Best Cure For U.S. Health Care Woes, Critics Say” by reporter David Hogberg gives us a clue into the ensuing battle, which will over how, not when or if. Obama envisions a public/private hybrid that keeps private insurance in place but creates a government plan that competes. The private health insurers like the idea of 47 million new customers as you’d imagine, but will go to great lengths to defeat the creation of the government plan. As stated in the article, the government plan is expected to be lower priced, perhaps to the tune of 30%. And if so, over time it would be the plan of choice.
Why would it be cheaper? Well that’s a short question with a long answer and I’ll cover it in subsequent blogs but basically, it would cut out overhead and sales costs, piggy back on an existing platform (Medicare, which spends over 90 cents on the dollar on claims compared to 80 cents or less in private plans) and take advantage of its buying power to keep medical costs down. Also, by including the currently uninsured, they may get the advantage of covering a healthier population (i.e. those who did not heretofore buy insurance), which would lower premiums even more.
Read between the lines. The battle is going to be about M-O-N-E-Y. The government plan has the potential to gain market share at the expense of the carriers AND to lower payments to medical providers and prescription drug industry. In fact, the two would feed off each other and over time the government plan could become the prevalent plan. It’s happened in other countries that have the government/private model. The insurers and the medical community will not allow this without a fight.
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