The cost of health insurance continues to climb unabated. As the number of uninsured in America swells to 45 million people, many look to our political leaders for answers and relief.
Presidential campaign rhetoric about how to control skyrocketing health care costs provides only short-term solutions focused on the sticker price. But the administration should address long-term solutions to the spiraling crisis.
In 2002, the United States spent $1.6 trillion, or nearly 15 percent of GDP, on health expenditures. Medicare, the government's single payer model for seniors, spent $267
billion.
Analysts project national health care expenditures to reach $3.1 trillion by 2012 — nearly twice the amount spent in 2002.
The dramatic numbers have a tendency to overstate the obvious — for many, the cost of insurance can be as much, if not more,
than rent or a mortgage. Until the administration places its focus on the rising cost of health care, those costs will continue to escalate far exceeding the rates of earnings. Whether you subscribe to a higher monthly premium charged by an HMO or a payroll tax collected by Uncle Sam, someone has to pay
the bill. Shifting the burden from our premium bill to our tax bill is not an acceptable solution.
There are basic initiatives that policymakers need to address in an effort to streamline the delivery system and minimize
the soaring cost of health care.
First, encourage investments in technology improvements across all levels of the health care delivery system, including insurers, hospitals and physicians. For a $1.6 trillion industry in the 21st century, the technology employed is comparable to
driving a Model T on a highway full of modern cars.
Consider the banking industry. A simple piece of plastic, from any bank, allows you to purchase anything from antiques on eBay to milk at the local grocery store. In health care, the piece of plastic serving as an ID card serves little purpose other than
to inform the physician where to send the bill. Physicians and their staffs then spend an inordinate amount of time completing
the proper paperwork to get paid.
Inefficiencies are expensive. Administrative expenses are the fastest-rising component of health expenditures. In 2002, public and private insurance spent $105 billion on administrative expenses, almost 13 percent more than in 2001. Support for developing common standards and technology improvements is necessary to eliminate the costly inefficiencies that
contribute to rising health costs.
Next, support the release of cost and quality information. Most of us know where we can find the best deal on a car, mortgage or even shoes. But how many people can afford to buy something without ever knowing the price?
Do you know the average cost of a physician office visit? We have grown accustomed to the minimal office co-payment as
the benchmark for the cost of delivering care. Yet who would seriously consider a $10 co-payment a sufficient amount for
physician treatment?
As consumers, we are asked to bear a greater share of health care costs. In return, we should demand more information
about price and quality. Disclosure of such information has the potential to have a profound effect on consumer behavior and the cost and quality of health care. Such transparency should reform inequities and deficiencies in the cost of
health services.
There is no single magic bullet to solving the issues facing the American health care system. Our system is an immense and
complex web of interdependencies. Expanded public financing and subsidies will provide only short-term relief unless the
drivers of health care expenditures are resolved. Solely addressing the problem by throwing more money at it, public or private, while ignoring the elephant in the living room serves little to alleviate the large financial burden the health care system has become.
We must accept the fact that health care in the United States is expensive and get to work on long-term solutions that will effectively control costs. We have the ability to control health care costs in this country; what we lack are the commitment and
stamina to get it done.
JOHN R. CANTILLO is vice president of underwriting at VISTA.
An industry expert with more than 10 years of experience in
health insurance, he received his MBA from the University of Florida. Cantillo is a member of the Health Underwriting
Study Group, a national think tank and information source for health insurance executives. Reach him at (954)
965-3420.
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