The #1 Problem with Health Care- Obama and Drug Companies
I can’t find the words to describe my emotions listening to the prolonged debate on health care. The miss-information campaigns from multiple interest groups have reached a point where the real issues are lost in the noise. There is something about the “Land of the Free” or belief in the second amendment where people think anything goes. Every sport, every business have rules and ethics driven by some form of fairness. With all the confusion how do Americans get to the point where health care is NOT an issue? I can’t be alone in my confusion. I can only believe by the protests at the town hall meetings validate that I am not alone. But sometimes the stupidity makes me think no one has taken the time to define the problem and no problem can be solved without defining the root cause.
As our leader, President Obama should focus on the problems then define a solution and explain both in clear terms to Americans. The problem is not the complicated and the solution is much easier to implement that all the different programs Congress and the Senate are trying to develop.
The problem is the cost of drugs and the fact that American’s are subsidizing the cost of the drugs in poor countries. Obama may have reached an agreement with the drug companies to reduce the cost of some drugs (and somehow thinks this will pay for his new health care programs), but that doesn’t solve the problem. American’s have to decide if they want affordable health care or to provide charity to citizens of other nations.
Here is how I derived to this solution:
The #1 problem with American health care is the cost which continues to rise. So if this is the problem how is it solved? Single payer, public options, etc. don’t address the problem they just adjust the responsibility of who is creating the problem to someone else. If the problems are Americans without health care, pre-existing conditions and the cancellation of insurance policies (at least according to the political party in power), then we have to take the problems and identify the cause. To identify the cause we have to break health care into smaller parts and indentify is one or all of the parts are broken.
The primary factors that affect the cost of health care in America are:
1 – Insurance Company’s – Insurance companies have two obligations- support their clients and their stock holders. Their clients pay the monthly premiums and expect to be covered. But insurance company’s set rules about pre-existing conditions and may not cover expensive procedures because this affects the stockholder. If the stockholder isn’t making a return on their investment, they stop their financial support of the insurance company.
2 – Pharmaceutical Company’s – The manufacturers of drug companies also have two parties they have to answer too – the sick and their stockholders. It costs a lot of money and decades of research creating new drug to make our lives pain free and solve expensive life threatening illnesses. The people who invest in the process (stockholders) expect a profit on their investment.
3 – Health Care Providers; doctors, clinics, and hospitals – The health care provides have 3 groups they must satisfy – the patient, the stockholder and themselves. The most important is the health care providers. Would you pay $200,000 to get educated to deal with the worst of American’s lives if you didn’t get paid for your efforts? When CEO’s are making millions every year, health care providers are seeing a reduction in their income. In nearly every situation, including Medicare and Medicaid, the insurance company sets the price for medical services limiting the provider’s income.
From this over simplified demonstration, health care providers are the least of the problem. Insurance companies are also dealing with problems they don’t control. All insurance (home, auto, health, life, etc.) have to create income from insurance payments (premiums) to cover the projected expenses when their clients make claims for payments. If you crash your car and it is totaled and needs to be replaced, add up the amount of premiums you have paid and look at how much the insurance company pays. Say you have paid $1,000 per year for 10 years and totaled your car. If the car is worth $20,000, the insurance company pays out $20,000 and you have only paid $10,000 – the insurance company loses $10,000. The same is true for health insurance. The insurance companies have to play a game trying to figure out how many people will make a claim and for how much and weigh that against how much the claims will be then figure out how much to charge for the premiums.
Since most states mandate everyone have auto insurance, it is easier to calculate the results because “everyone” is covered and paying monthly premiums forever. Health care is not the same. The majority of health care programs are covered by employers and a person changes health care insurance programs with every new job. When unemployment increases, the number of Americans without insurance increases. The only problem with insurance providers is the rates are not distributed fairly. A family of 10 costs the same as a family of 3. Even if insurance companies were to charge for “per person” it is likely large families could not afford insurance so this doesn’t solve the problem either.
Which brings us to pharmaceutical companies. America is the #1 creator and provider of drugs worldwide. We all have heard the stories that drugs are cheaper in our 2 closest neighbors – Mexico and Canada- but drugs are even cheaper in third world companies. The drug manufacturers are following simply supply and demand economics – sell your products based on what the consumer can afford. Supply and demand economics are critical to free markets but in this case, they may be the root cause of American’s health care problem. Every dollar we spend on drugs is subsidizing research on new drugs AND providing lower cost health care to citizens of other countries. The fastest way to reduce the cost of health care in America is to charge everyone worldwide the same price. What we have now can be called socialized drug industry and American’s should feel proud they are helping the poor throughout the world.