Insurance exchange, subsidies could cost $1 trillion

As both parties pitch plans on how to remodel the healthcare industry the price tag keeps getting higher.

The pharmaceutical industry is making profits… well yes, it is a ‘for profit’ type of business. The question is, if they are making too much? Should they give some back and lower the cost of medication? With every tenth pill a counterfeit the pharmaceutical companies need to recoup their huge R&D investments some how. This places the burden on the 9/10 pills that are not fake. Fix drug counterfeit and the cost of medicine can come down.

Is the health insurance industry making too much… again they are for profit. If you don’t want companies to make profit, then nationalize the sector. Build a self sustaining system of national healthcare by running it the same way that private companies do… Freddie Mack and Fannie May of health insurance. Pass on all margin to the consumer and at the same time mandate universal healthcare. If the cost of health insurance is cut down, then employers can afford to insure more workers. The private sector can make their money by building premium packages on top of the base national package. Now the private sector can always compete with government base package if they are mor efficient… typically the private sector is.

And what about hospitals.The base care package should have a mandated base fee structure. The government is buying services from private companies in massive volumes… they should get a volume discount and a fixed fee frame agreement. Hospitals that can provide the base care package more efficiently can keep the margin. With an electronic patient records system we can monitor for anomalies like in the credit card industry and do quality checks. If a hospital doesn’t meet base guidelines they will loose their license.

And what about doctors? Are they being paid too much? The hours they work and the investment they have made into their education has earned them the right to a big pay check. At the end of the day would you o to $100k doctor versus a $300k doctor if you had the choice?

In summary…

Most countries with universal healthcare have a national network of hospitals. However, is this the only way to achieve the same goal? Can’t we have universal healthcare by having the goverment pool all their citizens basic health care needs into a massive group policy and going to the private sector to bid on the best deal? Now that is negotiating power! I beleive that for those who want more there needs to be options. There needs to be the option to ‘super size’ a meal, as they say, but I can imagine that life really sucks if you don’t have a meal at all.

The big question is well who will pay for this? With national debt mounting I dont think that answer is the government. After all if the government pays, then it needs to be borrowed and/or taxed. Neither of these options sound good. If the government can negoatiate the fees down for basic healthcare, which shooting off the hip is probably 80% of the pie, we can dramatically cut the cost of health insurance that will enable more people to be insured under the current framework without increasing the overall cost.

And finally the cost of premium packages will soar. Well, not necessarily. We are now focusing on the 20% that isn’t covered by basic health care. The equation becomes different. Also with legistlation we can enable individuals to join groups and give groups the power to negotiate better rates.


Insurance exchange, subsidies could cost $1 trillion – Jun. 15, 2009


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