Healthcare focus should be on cost reduction.

 SUBSIDIES AND THIRD PARTY PAYERS 

NO INCENTIVE FOR COST REDUCTION

It seems there may be some sort of short term agreement on the budget. The big obstacle has been the elimination of subsides for policies based on income for those who purchase a plan on the Obama exchange. Extending subsides and other ideas that help to pay for plans do not address the outrageous cost of so called, "healthcare" in the United States.

The Cost of healthcare in this country is not balanced in relation to peoples ability to pay. It has exploded way over what it should be as a proportion of peoples income. The cost is now 18% of the GDP, near double of the cost in other countries, the cost in 1960 in the U.S. was 5%. Many of these countries have government provided healthcare and it seems it inevitably lead to a decline in service. The per person cost in this country is now near $14,000 a year. 

In is no secret that the cost of healthcare rise is directly associated with the introduction of Medicare and Medicaid. When Medicare was first started, it paid the prevailing rate for service, but as the use of Medicare quickly increased, due to the fact that the cost was paid for by someone else, it quickly led to efforts of the government to cut costs by reducing payments for service. This instigated the practice of cost shifting, where insurance and self payers costs were increased to offset the cutting of payments for Medicare. This practice by government and the reaction by providers has been incrementally continued and increased  for many yeas. This created another problem with increased insurance costs that made many unable to afford insurance at all. Of course the answer is again, more government intervention and the pressure to go to government funded healthcare which will not fix this problem.

Most people get insurance coverage through their employer, the rise in cost has contributed to the non competitiveness of U.S. based companies. It has also raised the cost of education and government through very generous benefits. The co-pays have also increased dramatically. When people have third party payers they will show up for service for the most minor issues,. if they had to pay, they would do a cost analysis for many of these issues. 

The focus of government needs to be shifted from attempting to find ways to pay more to finding ways to cut costs. Only real market forces can do that. It is interesting that non insured elective surgeries have remained much more reasonable were individuals have to pay for the procedure, breast implants and laser eye surgeries are good examples.

There needs to be some new thinking, like employers giving employees a lump sum to purchase insurance. Really create market incentives in the market. Require up front estimates for surgeries and other services, patients could then make some choice based on the charges. It is the only thing we do with no up front revelation, just a massive bill at the end and negotiations either by self payers or insurance companies. Realize, that insurance companies often do not pay the bill that you see, it is often negotiated.

So, the best idea would to gather representatives of all interested parties and look for ways to cut the costs. Providers are saddled with massive amounts of red tape and efforts to get paid. I suspect there is much we don't understand about why these cost have exploded, find solutions to cut costs.

I think Kennedy is correct about focusing on prevention, starting at an early age through diet and exercise. I suspect we will reanalyze the heavy incentives for drug therapy that is costly and often leads to other problems created by the drugs. We need far more education about the dangers of the use of prescription drugs. With 20% of GDP spent on healthcare, we must be the most unhealthy people on the planet, not only physically but economically.