Healthcare Reform 2009

OK I try to refrain from subject matter that violates the tenants of polite conversation, no sex, no religion and no politics, so I'm breaking into new territory here. I have been following with great interest the debate in the United States about health care reform. I own a small business with 2 employees and I'm also a user of the American health system, so I have been following it from both perspectives.

As I see the debate it goes something like this, the president and his advisers want to provide a government option to cover the estimated 30-40 million uninsured people in the US. This government option would be essentially free to these people and include some baseline of guaranteed coverage. It would be paid for by a tax on the wealthy. This option could also be made available to businesses.

Business Viewpoint

So here's what I see from a business standpoint. I have 2 employees and I don't make anywhere near what it would take to be taxed for this plan so I could save my self at least some of if not all of the cost of covering my employees with health care if I shifted them over to the government plan. That would be great from a dollars and cents standpoint, but you also have to look at benefits from the employee stand point as well. I know from an employee standpoint, if you are not competitive with benefits, they will go elsewhere. (Maybe not now because of the economy but at some point the economy will get better...)

So the question is, does this plan provide my employees with good enough care to keep my employees satisfied? Well that is complex. It depends on what my competition does. If the Government plan is cheap enough and enough businesses opt for it, then there is no real difference between my benefits and others. That would neutralized the whole health benefits debate for employees and employers.

My suspicion is that big businesses and small would do anything to save on health costs no matter what the coverage so sooner or later everyone will have the government coverage because it is cheaper than private coverage. This is good for my business because I won't have to compete with them on a health benefits basis. So from a business and dollars and cents stand point, this plan makes a lot of sense!

User Standpoint

Of course since my business is using the plan, I'd also be using the plan so I have to look at it from a user standpoint. It is pretty clear to me that there is little downside for my business to switch my employees to the Government plan. Saves money and probably my competition will do the same. But how about for me and my family?

This is a bit more difficult to decipher because the details are still sketchy. From what I can tell there are 2 sides to the debate. On side says business needs this and we have an obligation to make sure everyone has health care. The savings gained by having managed care from the government would be tremendous and make coverage affordable. I've seen estimates that say medical care could cost as much as 17% of our GDP. Compare that with other countries where the cost is in the range of 10% to 12% of the GDP.

The other side of the debate is we have the most advanced and best care available in the world. The only way to pay for this is to ration care and control costs. They argue the reasons it costs so much is the US is paying the burden of innovation and advancements in Medical care and other countries who have single payer plans restrict the ability of companies to pay for innovation with regulated costs and that cost is passed on to the American market.

Both sides have their points. So I have to rely on my life experience to decide what is best for my family and myself. So here goes;

Learning From a 6 Year Old

I have a 6 year old. Whenever we go to the store, it is always can I have this or can we get that. It got tiring until one day her Papa gave her $20 to go spend. He had a great day at the track. We went to the store introduced the concept of price to her. She could have 1 big toy or 2-3 smaller ones or she could save the money and buy more things or bigger things when she had more money.

Funny thing happened. The process went from a I want this because it looks fun to this also looks fun and it costs a lot less. I could do other things with the money left over. Funny thing is she spent very little money and she plays with the toy a lot more than many of the others we gave her. I think the lesson her is if you don't own it and pay for it you tend to value it less.

My sense is health and health care is much the same. Too many people get a plan where their costs are subsidized or non existent and they don't value the benefit they receive because the cost is contained. My 6 year old made better choices when she had to pay for it. I wonder if we wouldn't make better choices if we had to pay for it ourselves.

Shopping for Care

Same kid but this is a few years back. Our coverage for her when she was a baby did not include preventative care. That meant all the shots kids get from infancy were not covered. Every time we went in for shots it cost me $350 to $400 because they were not covered. I asked about a cash discount but they said no such luck.

My wife as the good shopper she was started asking around for other doctor's. We found someone who would do the shots for $200 to $225 almost 1/2 the cost. That doctor is still her doctor 6 years later.

The lesson here is we don't shop for care or doctors. Doctor's are not rewarded for good service at fair prices. I'm not sure how they are rewarded actually but it was clear the first place we went did not care about us the consumer. Too bad. They lost a customer.

Definition of Insurance.

This one hit me one day when I was struggling with the balance between cost and care. Traditionally insurance protected us from disaster. Think about life/auto/homeowners. If you die, have an accident or your house burns down, most people would have difficulty or could not recover. It only pays when there is an emergency.

Health insurance tries to pay for everything. Why? Because it is a basic right and everyone should have it. I think that might be where it fails. Insurance relies on people paying in who don't need the benefits. With health, to some extent everyone needs the benefits at some point. It is like getting food insurance or water insurance. Everybody needs food and water. Why not buy coverage to meet your food and water needs? Because it doesn't work. There are not people who pay in who don't need food and water.

Conclusion

I wish I were a doctor, then I would have a more complete picture of reform but I do not so I need to rely on what I know.  So while I get the financial benefit from a business standpoint, I am more than a little worried about the ideas of 'managed' care by some government bureaucracy. My intuition tells me this is a bad thing. My experience tells me there are some real symptoms of problems with the system we have that could be worked on without throwing out the whole thing. I think overall, we need to stand back take a deep breath and not rush to a solution which may be worse than the problem.

Some will like what I have to say, some will not, so let the debate begin!