Stinkin' Thinkin' Part 2 Health Costs: More Cost Burden on the Employee
Posted Sep 24 2008 12:25pm
Stanley Feld M.D., FACP, MACE
Sound Bytes are deceiving. The Republican Party's Presidential candidate, Republican Party politicians, and Republican policy wonks have often quoted reports that health care costs are expected to ease slightly for employers in 2009. There is deception in this fact. The overall decrease in healthcare costs for businesses is the result of its shifting the burden of costs to their employees. The result is a decrease in cost for the employers nationally. Therefore the sound byte is inaccurate. The cost of healthcare actually will rise 5.7% for the employers. This represents a decrease from last years rise of 6.1%. The direct costs to the consumer increases 29% next year. Once again, the devil is in the details. We can not rely on sound bytes. The healthcare insurance industry triumphs again. The result will be an increase in healthcare insurance industry net profits.
Businesses also say they intend to improve their health and wellness programs so that their employees don’t stay sick as long and — in the best-case situation — don’t become sick in the first place.
"Mercer survey of 1317 employer sponsors. If they make no changes to their healthcare plans the cost would grow nearly 8% on average in 2009.Small employers (those with 10–499 employees) would see an even higher increase, of about 10 percent. However, the majority of respondents say they will take action to lower their actual cost. Well over half (59 percent) of employers taking action to reduce their 2009 cost increase will raise deductibles, co-payments, coinsurance or employee out-of-pocket spending limits. Employee cost-sharing has risen sharply over the past five years: Between 2003 and 2007, the median family deductible for in-network services in a PPO (the type of plan offered by the most employers) rose from $1,000 to $1,500. "
What does all this mean in the present Presidential campaign? Why are healthcare insurance premiums increasing when the provider reimbursement is decreasing? Why is the burden of the cost of healthcare insurance shifting to patients away from the government and the employers? President Bush and a McCain presidency's goal is to shift the burden of healthcare costs to the employee. Is this going to improve the uninsured problem? No! It will make it worse.
Dick Swersy's comment on my blog about the Nobel Prize winning technique to repair the healthcare system is noteworthy. Mechanism Design to Repair the Healthcare is the art and science of designing rules of a game to achieve a specific outcome, even though each participant may be self-interested. This is done by setting up a structure in which each player has an incentive to behave as the designer intends. The game will then implement the desired outcome. The strength of such a result depends on the solution concepts used in the game.
Mechanism designers commonly try to achieve the following basic outcomes: truthfulness, individual rationality, budget balance, and social welfare. However, it is impossible to guarantee optimal results for all four outcomes simultaneously in many situations, particularly in markets where buyers can also be sellers. Significant research in mechanism design must decide on making trade-offs between these qualities and vested interests. The most desirable outcome in the healthcare system should be sustaining patients' welfare and physicians' incentives for innovations in care. These goals will strengthen our healthcare system not weaken it.
Our Presidential candidates are not thinking of these goal as they formulate programs to sustain the goals of the secondary stakeholders. How can you create affordable insurance when coverage decreases, deductibles increase, and the price decreases are defined by increasing the price 5.7% vs. 6.1% a year. It is a charade designed to fool Americans. The charade works because Americans are not paying attention to what is going on. We will complain when it is too late.