Of the many good things I enjoy about being your Representative is the opportunity I get to keep abreast of the current issues by attending many educational seminars. One such opportunity was conducted at the Wichita Campus of KU Med School on Tuesday the 10th of July.
The forum consisted of noted specialists, physicians and economists familiar with insurance in the medical field and provided suggestions as to how to make health care more affordable to a greater number of people. Some interesting facts and opinions were presented; the audience consisted of area legislators, insurance agents, government employees and KU Med School faculty. The meeting was conducted so as to allow free flow of ideas and questions between the presenters and the attendees.
In 1954 IRS rulings as related to insurance premium gave huge incentives to employer provisions of health insurance, gave big incentives to those with high incomes, and discriminated against low income and the self-employed.
This led to “cost plus” indemnity plans, fee for service, few prepaid programs, community rating of risk groups, little risk-adjustment, very high deductibles. Those deductible prices in today’s dollars would be $15,000. Health care dollars were 5% of the GDP as compared to 16%-17% today.
What happened when Medicare hit the streets? Initially Medicare/Medicaid was fee for service on a “cost plus” basis. There was little or no cost sharing and this produced an enormous demand. With free health care there was little incentive for healthy lifestyle choices. Which meant the cost of health care is of little concern as long as someone else is paying for it.
The advances in diagnostic and treatment technology have drastically reduced those conditions that use to cause death or limited our lifestyle choices. This further contributed to the “deep pocket” plan. Those large corporations had their insurance plans as part of their employee compensation plans and could negotiate with health care providers for favorable rates. Small groups and individuals were left out.
What do we do about the uninsured in our state? First identify who is uninsured and why. The number of uninsured in our State of Kansas is 10.5%, which places us below the national average. 39% are at or below the Federal Poverty Level (FPL). 97% of employees participate if they are in a large group vs. 41% in small or individual programs. This says reduced costs brings in more people, so reduced premiums increase coverage to more people.
We have some groups of people who decide to not participate because the costs are so high or they may be younger and think they are “bullet proof” typically those 18-44 years of age. Besides they are raising families buying houses, paying off debt and just think that they have better uses for their money. Some are between jobs and are without insurance for less than a year.
Some of the cost drivers include that 1/3 of the insured pass away in a given year, 1/3 revert to lower spending plans, and 1/3 have chronic issues such as heart and lung issues, diabetes or a number of issues simultaneously. Often times these are treated by specialists at specialty facilities, which are the most costly and restrictive, and the treatment is often not integrated between the treating physicians. Treatment by specialists in a coordinated effort will prove to be the most cost effective treatment and this is best offered by integrated health plans.
Our group learned that some of the reasons health care is so inefficient is there is no real market place in the private and public sector. There is too much government intrusion such as price controls, no effective competition, and little observation of actual costs of care. You hear of some patients paying more to see their barber than they do the doctor. The taxpayer is the one who makes up the difference.
Some options to reducing costs and getting more people involved with their health care insurance include:
1.Lower the premiums.
2. Subsidies to purchase health care.
3. Promote competition.
4. Allow consumer choices.
5. Transparency in costs, show consumer the care is not free.
6. Concentrate on small group and individual market.
7. Transportability between employers.
We should let the free market be the driving force and create a small group/individual insurance exchange (SGIX) where small firms and individuals can purchase insurance. This SGIX would establish minimal benefit packages along with the “gold-plated” packages. The government would be involved to make sure the providers were solvent.
This could encourage more providers to come to the State of Kansas and we would have no special plan consideration, no guaranteed issue, remove the community rating which charges the same price for healthy individuals as well as the chronically ill. We would not mandate enrollment yet provide “use it or lose it” tax credits. We may have to provide special tax credits for the sick or the low income to purchase health plans. We would reduce mandated benefits for plans. Let the markets decide what benefits will work.
I offer this update as a vehicle to generate your comments on the health care issue that will certainly be a topic of discussion during the upcoming interim committee meetings and the next session in 2008. Not many of us are in favor of government-imposed mandates, especially if they cause an increase in our taxes and shift the cost burden unfairly.
I consider it an honor and privilege to be your State Representative and I want to know what you think on this and other issues. Contact me at my home 1115 Rim Rock Road, El Dorado 67042, 321-2087 or johng@carlisleinc.net. Or www.johngrange.net.
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