George S. May Business Blog

Obama-Biden’s Healthcare Strategy – Perfect Plan or Outrageously Optimistic

“ Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2500 per year. If you don’t have health insurance, you will have a choice of new, affordable health insurance options.” http://www.barackobama.com

With tough economic times upon us, does the above goal sound a bit too good to be true?

Here are some of the key steps Obama-Biden say they will take in order to obtain the funding to make this possible.

1. Get digital. It may be hard to believe that the majority of hospitals in America are still keeping their records on paper, but it is absolutely true. By going completely electronic, it will become much easier to coordinate care, measure quality and reduce medical errors. And while it will take an investment of nearly $10 billion a year over the next 5 or so, a study by the Rand Corporation has found that if the majority of hospitals and doctors adopted this policy “up to $77 billion of savings would be realized each year”.

2. Require health care plans to disclose their records. As of now, patients have limited access to information on costs and quality when it comes to their hospitals and providers. Under the plan, they will be required to “disclose a percentage of premiums that actually goes to paying for patient care as opposed to administrative costs”.

3. Encourage “excellence” through incentives. Rather than having insurers pay the providers based on the volume of services provided, why not pay them based on their quality/effectiveness? Providers who have patients enrolled in the new public plan, along with the National Health Insurance Exchange, Medicare and FHHB, will be “rewarded for achieving performance thresholds on physician-validated outcome measures”.

4. Maximize effectiveness through research. Eliminate waste and missed opportunities through research. Obama-Biden will establish an independent institute which will “guide reviews and research on comparative effectiveness”. This way Americans, and doctors alike, will have the most accurate information when making decisions for their health.

Now, although the aforementioned steps seem lucrative down the road, at this point in time, the last thing the American people will want to endorse is a plan that requires more/higher taxes. What will Obama-Biden do in order to increase funding for a program like this right away?

1. Lower costs by taking on anticompetitive actions. As Obama put it: “It is not right that American families are paying skyrocketing premiums while drug and insurance industries are enjoying record profits”. While mergers and consolidation of health care companies over the last 10 years were supposed to make the industry more efficient, instead premiums have sky rocketed and just two companies own a full third of the market. Obama-Biden have said that in markets where insurance business is not competitive, those insurers will be forced to pay out a reasonable share of their premiums for patient care instead of keeping exorbitant amounts for profits and administration (i.e. million dollar Christmas bonuses or private jets to Tahitian spas).

2. Eliminate Medicare’s insurance waste/abuse. While Medicare’s private plan (Medicare Advantage) was established to reduce costs, independent reports show that on average the government pays 12 percent more than it costs to treat people through traditional Medicare. Obama-Biden plan to eliminate these excessive subsidies thereby saving the government billions of dollars yearly.

3. Let the people get the drugs they need for better prices. Many drug companies are exploiting Americans by dramatically overcharging U.S. consumers. Therefore, if a consumer can get their medicine (assuming the U.S. has deemed that drug safe) for a lesser price overseas, why not let them. Maybe them we’ll see that extra “67 percent premium for Americans” start to drop. (Ottawa, Ontario PMPRB, 2002), pg 23. Also, per reports from Marc Kaufman of the Washington Post, certain drug manufacturers have been paying generic drug makers not to enter the market. This way they can keep control of their near monopolies and continue to charge ridiculous prices. The Obama-Biden plan will work to increase the production/use of generic drugs and prohibit these large companies from keeping generics out of the market, thereby bringing down the cost of medicine for consumers.

Will these plans work?

Please feel free to comment on whether you think these techniques will prove to be cost-effective. Furthermore, please add any other ways that you feel the American government/people will be able to save/redistribute money in an attempt to nationalize healthcare.

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