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Small Business Employee Benefits and HR Blog

The Real Reason We Need U.S. Health Benefits Reform - Cost

health care reform overview (1)Every U.S. entrepreneur is challenged getting affordable health insurance for themselves and their families.

Congress and The White House seem completely out of touch with the real issue since most elected officials receive free lifetime care for themselves and their families. 

Note: If and when Congress passes a major health care reform bill, I will be posting an article on what entrepreneurs and small businesses should do to maintain affordable health care for themselves and their employees. 

The single most important problem with U.S. health care is that it costs too much.

The U.S. spends much more per person than any developed nation and our population is the sickest of any developed nation. 

There are hundreds of reasons U.S. health care costs so much relative to how little we get for our money. Some of these reasons include: 

  1. We pay medical providers for each procedure (even if the procedure is fatal) rather than pay medical providers based on the outcome of each procedure. 
  2. We have no caps on legal liability for medical mistakes--this causes medical providers to waste billions on tests and procedures of dubious value, some of them dangerous, just to limit court settlements. 
  3. We have very limited competition--incredibly, it is still illegal for a health insurance company to sell coverage across a state line. 
  4. We pay virtually anything for sickness industry costs once a person is ill, but virtually nothing for wellness industry costs to keep patients healthy in the first place. 
  5. Medical providers immorally charge different patients wildly different rates--from $10 to $100 for the exact same procedure or treatment, based on the network in which the patient is a member. These rates are hidden from the public and, generally, the poorer you are the more you pay. 
Yet, incredibly, almost all the proposals now being considered in Washington do nothing to reduce or even slow the growth in health care costs. 

The reason is pork--more pork than we may have ever seen in our lifetimes. 

When the debate began earlier this year on how to reform U.S. health care, each medical provider special interest group lined up their favorite legislators to buy their support. Quiet backroom deals were made one-by-one. 

  1. The AMA (doctors) was promised that nothing would be done to cut payments to physicians or tie doctor payments to performance. 
  2. Trial lawyers were promised that no caps would be put on legal liability for medical mistakes. 
  3. Big Pharma was promised that nothing would be done to their net revenues--even obvious fixes like giving Medicaid patients generic vs brand-name drugs were taken off the table. 
  4. Inefficient, bloated local insurance companies were promised that they would not have to compete with larger, more efficient national insurers over state lines. 
  5. Medical network providers were promised that there would not be "transparency"--the wildly-varying charges medical providers immorally charge each patient would never be disclosed. 

U.S health care reform started out with a noble goal--get health insurance coverage for the millions of Americans who want coverage and are currently slipping through the cracks for two primary reasons: (1) They have a pre-existing medical condition and reside in a state with poor state-guaranteed coverage; or (2) They cannot afford coverage but are either not poor enough to join the 45 million Americans receiving Medicaid or not old enough to join the 47 million Americans receiving Medicare. 

Unfortunately, at the time of this writing, just after the House has passed its version of health care reform. we have been sold out. 

We, the American people, deserve better. 

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