HomePoliticsMass Health Will Never Add Up Black & Right July 29, 2008 Politics 3 Comments IF I were to ever become Governor of Massachusetts with a Republican majority (like that will happen in my lifetime), I would spend the first 100 days repealing destructive, math-challenged legislation and policies. Personally, I’d start with the Healthcare Reform Act of 2006… We are already well into the new fiscal year, and negotiations with the federal government continue over whether it will renew the waiver that facilitated the Commonwealth’s healthcare experiment in the first place. It might be useful to remember that no matter how conceptually interesting, even idea-based reforms face the logic of mathematics. They have to be affordable. The problem is that we got universal healthcare (that people and businesses are forced to participate in), and the same kind of government hacks who forecast the Big Dig’s costs, told us we could afford to cover everyone. I find it sad we had to implement it statewide before they took the time to add up the figures. I thought they were the smarts ones. To remain cost-neutral to the federal government, we have to address this year’s shortfall of $153 million and a minimum shortfall of $184 million next year. In the long term, there are several things we can do to contain healthcare costs, including perhaps a hard look at certain benefits mandated in the law and increasing the transparency of cost and quality data useful to consumers. Do you know what would happen to a corporation that was $153 million in the red this year and would be down an additional $31 million next? The CEO would be fired and the business would either be restructured or liquidated. But as we’re dealing with government (and they’re playing with our money), they can continue to play games on a sinking ship. Healthcare reform isn’t the only thing bleeding Massachusetts dry, but it’s a significant piece of the puzzle. For all those who turned a blind eye when the dysfunctional Canadian system was revealed, and in their brilliance assumed they could do it better in Massachusetts (thank you Mitt Romney), all they have done is proven again that socialized medicine doesn’t work. There have to be minds out there that can come up with some way to address the rising medicine/insurance peripheral costs. They just happen to not live and work in Massachusetts. Blaine Tort reform would be a start so doctors didn’t have to pay so much for insurance. Meanwhile, in the real world: Despite the claims about ridiculous malpractice suits and awards, total costs from this source represent only 5% of the increases in health care cost in the U.S. and have remained so for many years. Of that 5%, one half of the amount is devoted to risk management consultation and training to reduce liability. There should be a calculated and estimated savings accrued by this focus that is then subtracted from actual malpractice settlement contribution to total health care costs. A law allowing Texas practitioners to sue managed care firms for interfering with medical decisions was violently opposed by the industry on the grounds that it would surely lead to all kinds of suits that would drive up costs. There were only two suits. The predicted deluge never happened— nor did the sky fall. It is asserted by tort reformers that states with few regulations have the highest premiums. However, passage of such reforms do not lead to the promised premium reductions. Nevada, which saw premiums increase by 30% in one year, passed an award cap. Within weeks of the law’s enactment, the two major carriers in the state announced that they would not reduce rates for at least another year or two, and doctors are still waiting. Mississippi doctors had similar experiences. When Ohio’s cap on compensation awards for patients injured by malpractice was passed in January of 2003, all five major medical insurance companies immediately announced that they would not reduce their rates and one company even predicted that it would seek a 20 percent rate increase! Industry observers have consistently failed to find support for the assertion that malpractice drives up health care costs. Americans for Insurance Reform presents data showing that medical malpractice paid losses as a percentage of health care costs have remained constant at less than one half of one percent since 1985! Further, malpractice premiums have remained between a half of one percent and one percent of total health care costs during that same period. In 2002, payouts from malpractice comprised .38% of U.S. health care costs. HCFA data show that while health care costs have risen by 74.7% in constant dollars since 1988, malpractice costs have increased only 5.7% over the same period. The conclusion is straightforward and simple: Medical malpractice premiums are not the cause of skyrocketing medical costs, period. The real driver of malpractice premium increases is declining profits from insurance company investments. Insurers make the bulk of their profits not from premiums but from investments. When interest rates, stock returns, etc. are high, insurance companies aggressively seek premium dollars to invest. During such periods, insurers severely under-price policies and insure poor risks. This is the so-called “soft” insurance market. Brandon I forgot to include my point: The point is, get some of the actual costs under control and the bottom, and work your way up and it’ll be a long way towards making healthcare more fiscally viable. Brandon Tort reform would be a start so doctors didn’t have to pay so much for insurance. Also lowering costs at medical centers, such as all these so-called not-for-profit hospitals that buy tons of land and buildings just to get rid of any “profit” by the end of the year. A major one in Des Moines comes to mind…. Some charges during a hospital stay are just ridiculous. My father had bypass surgery some years ago and our co-pay was over $50k that insurance didn’t cover. I remember an itemized bill that had regular old aspirin at $100 per pill. I understand pharmaceutical companies needing to regain costs for R&D, but there’s a LOT of reform to be made on simple things.