Blog: One Trillion Dollars: Where will it come from?
Meghan McCartan
Health insurance reform, the big issue of the day, is slated to cost over one trillion dollars (to provide coverage for more Americans and address many of the problems inherent in the current system). Where is that money coming from—are we setting ourselves up for higher taxes merely to save pennies on health insurance?
Right now, one of the biggest issues in health care is the amount of money spent on insurance company subsidies. One of the plans being discussed presently would save $177 billion in these subsidies over the next decade. The argument being advanced is that by cutting and reducing these subsidies, money could be better spent on actual care for patients.
Money will also be help on improving preventative care, increasing technology within the health care system (ie, computerizing more records to better track patient care and monitor test resuts, previous procedures, etc), and working to reduce waste within the system (hospitals and outpatient procedures, first and foremost).
The difficulty is in the initial outlay of $100 billion being spoken of to provide the initial reforms…which will supposedly be offset by the savings in subsidies, for example. But there is no guarantee that over ten years those insurance subsidies will be effectively cut there is a history of planning for these types of cash inflows only to see the money go out, while the expenses remain the same. The insurance lobby (extremely powerful and in control of a great amount of money, by definition) will obviously fight strenuously to keep these subsidies, or at least a portion of them, and will have valid reasons for some of the subsidies to remain. Will Congress really be able to take them on and shut down the subsidies to reclaim that $100 billion?
Also, planning to recoup millions by eliminating waste in the system is a good goal (and certainly, improving technology will lead to an advance in patient care)—but assigning dollar figures to an elimination of “waste” is a tricky concept.
Overall, there is not doubt that the health care system needs to be fixed; it’s just important to think through both sides of the argument. Relying on future savings and promised cuts to subsidies is a fairly optimistic way to pay for a trillion dollar bill.
Health Insurance Reform
I disagree with the $1 trillion price tag. We already cover the uninsured, and its very expensive, as your entry below on the financial troubles of the hospital shows. When the uninsured show up at the emergency room, they are treated. Even the undocumented are treated at our hospitals. We don’t turn people away.
Our corporations and small businesses struggle with the costs of health care for employees. The savings realized by a public option type plan would enable growth and make our businesses more competitive. More healthy people can produce more products, increasing our tax base. We aren’t going to build more hospitals or clinics. We already take care of everyone, we just do in in a very expensive way.
There are proposals for funding, for instance, expanding the Medicare tax to capital gains, or increasing it for incomes about $250,000. The insurance companies are going to have to give up some of their high profits and high executive salaries.
If you are really serious about taking care of people, health reform is essential, and this is the time to get it done.
I totally agree Bill, I am the editor of this blog and a contributor but didn’t write this particular piece. However there are two significant issues one being of course the fact that I am not certain the insurance companies share as much fault as the actual health profession. I am not certain that the insurance companies who operate on a defined margin and only increase profits through member expansion are actually the main factors in these rocket ship costs that I have seen. I am as a health insurance broker quite aware of these companies and can tell you it looks nothing like Wall Street in these companies and most of the executive do not even clear $100,000 in salary and bonus. The hospital executives, lawyers, and certain medical professionals though live like rock stars!
I would like to know how these costs continue to go up 15% a year and if they continue to even a universal plan will not help us alleviate the bigger picture which of course is the US dollar and economy going kaput. I hope that we are able to contain medical costs and would like to see reform and appreciate very much your organization and am very much into contributing to these types of efforts. I don’t mind selling life insurance if it will allow more Americans access to medical care!
I found some info on health insurance executive pay at Amednews.com Here’s what they say:
“For the top brass at the big health plans, there also was a wide range in pay changes between 2007 and 2008. Three executives — Jay Gellert, president and CEO of Health Net; Angela Braly, president and CEO of WellPoint; and Aetna Chair and CEO Ronald Williams — saw boosts in total compensation. Williams’ went up by 5%, from $23 million to $24.3 million; Braly’s by 8%, from $9 million to $9.8 million; and Gellert’s by 20%, from $3.6 million to $4.4 million.
On the other end of the spectrum, the pay package for UnitedHealth Group President and CEO Stephen Hemsley dropped 75%, from $13.1 million in 2007 to $3.2 million in 2008.
CEOs at the 7 largest publicly-traded health plans saw a 12% drop in total compensation in 2008.
Total compensation also dropped for three of his counterparts at the largest health plans: Cigna Chair and CEO H. Edward Hanway’s total pay dropped 53% from $25.8 million in 2007 to $12.2 in 2008. Coventry Health Care’s President and CEO Dale Wolf, who was replaced in January 2009, made $9 million in 2008 compared with $14.8 million in 2007 (-39%). Humana’s President and CEO Mike McCallister made $10.3 million in 2007 and $4.7 million in 2008 (-54%).”
These are obscene pay rates when so many people are facing bankruptcy because of medical debt or struggling with medical bills. Its hard to understand what someone would do with an annual salary of $24.3 million — Aetna’s CEO. Sure they lost some money because of the recession, but I don’t feel sorry for any of these guys.
I believe that health care reform is essential to getting the economy going again. We are spending too much money in this sector and can’t compete internationally. We can’t afford to be wasteful. Our health care system is inefficient compared to most modern western countries, and that’s why we rank 37th according to the World Health Organization. It is time to change.