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Archive for Sunday, September 19, 2004

Candidates’ health care plans offer little relief

September 19, 2004

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The Bush administration looked on the bright side of a dismal report on health care costs, pointing out that the rate of increase has slowed for the first time in seven years.

But no sugar coating will disguise the fact that health costs are a nightmare that make many Americans wonder if they'll end their lives in penury and pain.

The Kaiser Family Foundation reported Sept. 9 that the cost of employer health plans had gone up 11.2 percent this year. A Bush spokesman proudly noted that's down from the 13.9 percent gain in 2003, crediting Bush's "consumer-driven" approach.

By my calculation, if the trend continued these costs would stop growing after 2008, when they'd be 20 percent above today's. That's wildly optimistic, yet still not much to cheer about. Sadly, neither presidential candidate has much to offer on this front.

Bush's proposals

Bush wants restrictions on medical malpractice awards to curb "frivolous lawsuits." Despite a lot of searching, I can't find any reliable data on how many frivolous suits there are. Is it 10 percent of all cases? Fifty percent? Eighty? No one seems to know for sure. Trial lawyers make great whipping boys, but there's no proof they're the cause of high medical costs.

The other Bush cornerstone is Health Savings Accounts, the IRA-like plans created last year. They give participants tax breaks on money put aside for medical expenses. But they have yet to attract many participants, as a typical family might have to earmark $8,000 a year to get good coverage, according to an example offered by an industry trade group, the HSA Coalition.

Kerry's offerings

Sen. John Kerry proposes a government funded "premium rebate pool" that would reimburse employers for certain high-cost cases. While the total cost is unclear, Kerry claims it would help reduce health insurance premiums by $1,000 per family.

That wouldn't go very far.

Other Kerry proposals would make it easier for uninsured people to get the same drug prices available to the insured, who benefit from bulk-purchase discounts.

He'd also have the federal government pick up the full tab for 20 million children enrolled in Medicaid, the state health program, on condition that states expand coverage to people who aren't currently insured.

All this sounds nice, but it smacks of expensive pie in the sky.

Possible solutions

No one says the health cost problem will be easily solved, but perhaps the market could be made more efficient with what Wall Streeters call better transparency.

If health care customers must live with higher out-of-pocket expenses -- through bigger deductibles in company plans or HSAs, for example -- they should be able to shop around for the lowest prices. Doctors should be required to post prices of all their procedures on the Internet.

Another problem: The medical profession has long been too slow to banish bad practitioners who drive up malpractice premiums and, hence, health costs. There should be thorough public disclosure of all malpractice awards, and a ban on confidentiality agreements that keep out-of-court settlements off the public record. Doctors, thus, would be subject to the judgment of the marketplace.

Doctors should have to post this on their Web sites, next to their prices.

Drugs should be traded on an international market, like just about everything else. The Bush administration has wrongly backed the pharmaceutical industry's opposition to cheap foreign imports.

There are lots of high-quality drugmakers overseas. They offer competition that could drive prices down, and it shouldn't be hard to certify them as safe. After all, we eat lots of food from abroad.

I don't claim to have all the answers. But it's a shame that when medical costs are one of our biggest problems, the two men who want to be president can't come up with anything more promising.

Odds are that four years from now, we'll be paying 20, 30 or 40 percent more for health care, fewer of us will be insured -- and our president will be bragging about the great job he's done.

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