How to Reduce Health Care Costs
Health care costs have increased dramatically over the past few decades due to the existence of proxies in the flow of funds. The following steps will reduce the cost of health care by eliminating the proxies and create transparency in the health care delivery process.
1. Health Insurance provided by Employers – itemize and tax
This category includes the largest number of people receiving medical care in the United States. When an employee receives his or her health care benefit, there exists a proxy between the employee and the final benefit. The employee does not know how much the health care costs and is rarely given options for lesser or no coverage. The employee must be given a statement itemizing the cost of his or her health benefits and these benefits must be taxable. If a top producing salesman wins a trip to Europe or a lucky employee wins free printer in the employee drawing, such employee will receive a 1099 for the value of the trip or the printer. Healthcare benefits should be treated accordingly. These steps will produce an immediate response from the employee who will review the benefit and determine if the taxable benefit is worth the cost. The employee may prefer an emergency only policy or may want no benefits because his wife’s policy at another company covers him. The blind proxy between the employee and the benefit creates an opaque condition about the costs of the health care benefit. Pressure from the employee will press the HR manager to press the insurance companies to create more options for the employees who will have started to balk at the high costs on which they are paying taxes. The reaction will be swift and certain. Insurance companies know this, so they have obfuscated the discussion about taxing health care benefits for years. Taxing health care benefits is the first step in reducing costs.
2. Health Care Invoices – think frequent flyer miles
When a person receives treatment for a condition and this person is covered by insurance, he or she rarely sees an itemized statement for treatment, thus creating another blind proxy condition. The patient perceives the treatment as if it were free because the bill is passed on to the insurance. The person providing the medical procedure has no incentive to contain his costs because the patient is blind to the costs. The medical bill should be itemized. The total should be compared to the patient’s yearly benefits coverage allotment. The person paying the bill should be given three options: 1) consume his benefits for this treatment, 2) pay partially with benefits and part with cash or 3) pay all with cash. This is just how frequent flyer miles work. I can manage my miles and determine when I want to use them. When I pay part in cash, the miles last longer. Ideally in creative insurance policies, the benefits would accrue from year to year. These changes will have immediate and positive effects. Patients will think twice before having unnecessary treatments, providers will be less prone to raise prices because the consumer is monitoring them and patients will monitor the consumption of their health care benefits.
3. Drug Commercials – what happened to those Marlboro men?
In one hour of television, there are numerous and often repeated commercials for prescription drugs. Good looking people are shown in these commercials who have taken the drugs and are living happily ever after, unless of course one of the known side affects occurs, which are enumerated rapidly at the end of the commercial. We eliminated the Marlboro men from television. Let’s eliminate prescription drug commercials from television. Doctors should study prescription drugs and prescribe them as needed. Television viewers cannot make medical decisions from a commercial. Advertising for prescription drugs creates a false sense of security and a profligate demand for drugs. Demand drives prices.
The health care debate of 2009 has included raising taxes on the rich, mandating coverage, portable coverage and other topics. None of these has anything to do with reducing the costs of health care insurance or health care products. Until we eliminate the blind proxies in the health care system and make the costs transparent to the consumer, prices will keep escalating and Uncle Sam will keep picking up the tab as long as he is still solvent. With the money Uncle Sam saves by enacting the above three steps, he will be able to tackle the chronically uninsured or the uninsurable.