Sunday, July 9, 2017

Healthcare Cost Shifting

Costs Shifted to Employers


Healthcare cost shifting first appeared when dangerous industries began to hire doctors to take care of injured employees.  In the 1930s, individual health insurance policies were also offered to individuals.  In the 1940s, federal government rules froze wages, but allowed employers to provide health insurance to employees on a tax-free basis. Most employers did this to remain competitive in the full labor market.


Counties assumed responsibility for healthcare for the poor from the 1930s to 1965. There were local tax subsidized County Hospitals and Clinics for the poor. Physicians were cultural heroes during this period. The development of Anti-biotics in 1945 and Polio vaccine in 1955. The use of anti-biotics was huge and saved millions of lives.


These medical advances encouraged US citizens to assume that cures for cancer and heart disease and all other life-threatening illness were about to be conquered. This didn’t turn out to be the case.


Costs Shifted to Taxpayers


In 1965, Lyndon Johnson passed Medicare for retirees and Medicaid for the poor.  This encouraged corporations to develop more medical equipment and physicians to specialize. The entry of the federal tax dollars into healthcare sent a signal that “price was no object”. Healthcare officially left the laws of supply and demand in the dust. They didn’t have to keep their prices within the reach of consumers. This was the beginning of a serious rise in healthcare costs. Healthcare cost inflation quadrupled as other prices doubled.


Costs Shifted back to Providers


As healthcare costs rose, counties pulled back on funding healthcare. In the 1986, congress passed the Emergency Medical Treatment and Labor Act (EMTALA) a federal law that requires anyone coming to an emergency department to be stabilized and treated, regardless of their insurance status or ability to pay, but since its enactment in 1986 has remained an unfunded mandate.


Cost Shifted back to Consumers


Hospitals and providers immediately shifted this cost to all paying customers. This has been happening since 1986 and included illegal migrants.


Obamacare shifted costs to the healthy to pay for the sick and poor. Millions of these healthy refused to buy Obamacare and preferred to pay the penalty.


The GOP Healthcare Bill allows insurance companies to shift costs to older customers between age 40 and 65. But this Bill is hung up in the Senate and still needs to be worked out in conference. 


I prefer Trump’s suggestion to just Repeal Obamacare. 


The only thing that will make healthcare costs go down is to relegate healthcare back to the free market where consumers pay for their own healthcare. Providers have had no incentive to reduce their costs because of excessive tax subsidies.  If these subsidies were planned to be reduced over time, the healthcare industry would respond.


If government wants to fund catastrophic coverage for the really sick 5%, who spend 50% of our healthcare dollars, they can do this one year at a time or publish a 5% reduction per year schedule over the next 20 years.


Providers need to know that this scam will end.


Norb Leahy, Dunwoody GA Tea Party Leader

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