Healthcare is a monthly premium bet with an insurance company that you will need little or no help for your medical needs. Most Americans can deal with minor healthcare problems and costs.  The costs that scare everyone are the catastrophic costs for cancer treatments and chemotherapy, heart disease, organ transplants, persistent long term disease treatment, expensive medications and major accident injuries to name just a few.  In the past, the insurance companies have covered this bet using a combination of policy limitations, monthly premium, deductibles and previous conditions.  With Obamacare, many of the previous conditions restrictions have been eliminated and even if Obamacare is repealed, it is doubtful that the public will accept any healthcare system with few to any preconditions and policy limitations.

This leaves the monthly premium and deductible costs as ways to control costs. But more importantly, the cost of healthcare is not just about insurance, it must include all those elements that together comprise the cost to deliver health care.  Why can it cost so much to deliver basic health care and why can it vary so much?   Two reasons are government and insurance company intervention into the healthcare system.  Let us also recognize that there is no such thing as free healthcare.

Our doctors spend a lot of time and money taking premed university courses, going to medical school followed by a hospital residency and if they want to earn more money as a specialist, more time learning a specialty. Unfortunately this could leave the general practice (GP) physician near the bottom of the pay scale when they are more important than many specialists.  If you don’t see a GP physician, how do you know what specialist to see?  These are the people who help us with our day-to-day problems and they are critically important to your health and wellbeing.  The emergency room is not the place where any patient should be trying to address everyday health issues.  Based on all this education and training, don’t start with the doctors as a way to save money unless you drastically reduce their insurance/government administrative costs.  One way is to have no patient visit costs reported to anyone until the deductible limit has been reached, then the doctor can send a patient treatment summary to the government and insurance company (GIC).  If the GIC wants to have detailed reports, then the doctors need to charge GIC for their administrative costs. Alternately, no reports are made to anyone when the patient pays for all treatment costs.  The doctor keeps his own records as he or she always has, but the GIC reporting and costs are eliminated.

Hospital costs can really increase when an operating room and its costs are needed. These operating rooms must be designed and operated to accommodate many kinds of different emergencies and we are lucky to have them available to help save us, but it is very expensive to be able to do so many things.  To help keep costs down, some doctors use operating rooms designed for non emergency patients.  For instance, while cataract operations and colonoscopy examinations must be done in an operating room, there are some companies that provide the less elaborate operating rooms that meet the patient’s and doctor’s needs at lower costs.  In recent years some hospitals have issued price schedules for certain types of operations.  Innovation in health care can help control costs as long as the government and insurance companies get out of the way.  Bureaucrats have no place in dictating any patient care because they are not doctors.  When the hospital administrators start collecting salaries higher than the doctors, then it is time to start looking for corruption.

Then there are the insurance company networks which negotiate prices with a hospital in order to have that hospital included in their insurance network. Insurance in-network costs are always lower than out-of-network costs and these differences are reflected in what the patient billing will be.  If the insurance companies can prove that these networks lower patient costs, they are good.  If the networks do not lower patient premiums and costs but only increase insurance company profits, they are a restraint of trade and must be investigated and changed.  State insurance agencies–do your job or get fired.  Protect the public.

Why state government insurance agencies and Obamacare are causing insurance premiums to keep increasing. As a former health insurance agent, one explanation for why pre-Obamacare premiums kept increasing was that the state insurance agency kept increasing policy mandatory coverage.  In other words, to justify their existence, government insurance agency personnel keep adding mandatory insurance coverage and this increases premium cost.  The way to handle this is to make the additional coverage optional and advise the insured that this extra coverage is available for additional cost.  When the insured declines this additional coverage, they must sign a waiver acknowledging that coverage was offered and was declined.

Now we have drug costs. There are many to blame for this.  The Food and Drug Administration has the drug companies spend hundreds of millions of dollars testing drugs before approval and release to the public—and even with this there are numerous TV commercials with lawyers selling their services to sue a drug company because one of its drugs causes side effects that obviously were not detected during the testing phase.  Does this expose defects in the FDA testing procedure or does it show that possibly no amount of testing can  detect all the potential side effects?  It would seem wise for the health industry experts to spend some time trying to make the system more efficient and less costly.   What we do know is that the monies spent during years of testing cause the cost of an approved drug to increase.  What is the answer?

Prior to Obamacare implementation, my cardiologist prescribed a heart medication for me. It was a generic for which with Blue Cross Blue Shield of Texas (BCBS) insurance in 2008 I paid $10 for 90 tablets.  In 2010, BCBS reduced my allowable prescription to 60 tablets for $8 and in October 2010 increased the cost for 60 tablets to $30.  In January 2011, the cost for 60 tablets had risen to $58.75. The BCBS explanation for these price increases was that this particular generic was special and that caused the increase.  After retiring and losing insurance coverage, this drug which initially cost me $0.11 apiece began to cost me $195.46 for 180 tablets or $1.09 apiece at the same pharmacy.  Remember that these costs were for a generic drug which had been produced for many years.  Who got paid off?

Healthcare history and options are discussed in some detail in my book[1].  Adverse selection is a term used by the insurance industry to identify those patients whose treatment costs are much higher than the average and if an insurance company has too many of this type of member, their delivery costs will be much higher than their competition and make them less competitive.  With no precondition exemptions, adverse selection can significantly affect the cost to provide insurance, so it is suggested that all insurance companies must have a predetermined minimum percentage of adverse selection members and no insurance company can do business without abiding by that minimum.  Single payer gives the individual the most control over his insurance costs, but a single individual applying for insurance will be charged the highest rates.  To avoid this, it is recommended that nonprofit cooperatives be created for the sole purpose of having a large enough membership pool that the cooperatives will have leverage to seek lower insurance rates for their members in insurance company contract negotiations.  The health care system must be available to and fair for everyone.

During the Republican debates different ways to reduce health costs have been discussed and proposed, so their recommendations will not be repeated here. The Democrats do not worry about costs and want to provide free healthcare for everyone including illegal aliens.  The only thing the Democrats do not discuss is when the country will become bankrupt because we cannot pay our bills.

Let us be clear. The Affordable Health Care Act (Obamacare) was never about providing affordable healthcare.  It has always been about using government force to control about 1/6^th of the American economy.  The whole Obama administration is about the political control of the United States.  It is very probable that the big government communist wannabe Democrats and some like thinking Republicans will disagree, but that is to be expected.  That being said, how is Obamacare working out?

Please note that my book costs $5 for an electronic copy and it takes about 4 hours to read. If you read it, you might learn something and be able to improve on my recommendations.

[1] Ernest Kanak Jr., The Way I See It, Outskirts Press (2014), p. 39-43