$1.2 Trillion Wasted on Health Care

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money_down_the_toilet.jpgCNNMoney.com just put out a revealing article on waste in our health care system. The accounting firm of PricewaterhouseCoopers' Health Research Institute latest research states about half of our annual spending on health care in America is wasted dollars. They found 1.2 trillion dollars in unnecessary and wasteful spending. Over testing and claims processing account for $420 billion dollars of wasted dollars each year.

Over testing, often cited as 'defensive medicine' to reduce the potential of being sued, was a part of the cost, but, PriceWaterhouseCooper also includes in this category of wasted dollars, the health care industry jacking up their profits by over testing.

The article cites Susan Pisano, spokeswoman for America's Health Insurance Plans, who said "hundreds of billions" of dollars can be saved by standardizing procedures and using technology. However, the incentive to convert to standardized reporting and accounting procedures to eliminate over testing profitability is currently absent. Which means the incentive would have to come from outside the industry, which is why Pres. Obama has made information technology and billing standards a leg supporting their health care reform proposal.

PWC's Health Research Institute, in other research and reports cites the increase in health care costs for 2010 will be 9%, greatly exceeding wage increases and inflation for most Americans. Their research indicates this rate of increase has been dropping the last few years, however, they also indicate 2009 will see an end to such rate declines, according to employers and health insurers.

With real wages falling for middle class America, and health costs rising at 9% today, and more in the future without health care reform, the outcome will necessarily be 10's of millions more Americans learning to live without health insurance in the future. The high cost of using Emergency Rooms for doctor's visits will continue to pressure increases in health care costs and out of pocket expenses for those who are insured and their employers, as these costs are passed on to paying customers. This research demonstrates why government health care costs for Medicare and Medicaid will also continue to increase, pressuring hikes for tax payers and budget deficits, well into the future, if reform is not forthcoming.

Those who would argue we don't need health care reform in this country, are either ignorant of the data and research above, too uneducated to understand it and its logical implications, or, are profiting from the system as it is. Of those who do appreciate the current research information and need for health care reform, there is the debate over whether for-profit business and corporations should continue to deprive increasing numbers of Americans of health care insurance, throwing the uninsured into the Medicare/Medicaid system or the emergency rooms on the private insurer's dollar. Or, for those who cannot afford the private system or, have been excluded from it, whether the government, (the American people) should provide them lower cost available insurance other than the Medicare/Medicaid public assistance now provided for those who qualify.

As a purely humanitarian argument, there is no question the current system is bankrupting American families, and excluding 10's of millions from having affordable health insurance. If America is to be as compassionate toward fellow Americans as they were toward the oppressed Iraqi people, they will provide the tax dollars to insure the uninsured, as they provided the tax dollars to rescue the Iraqi people from their oppressor and the ravages of a bankrupt economy after our invasion.

As an economic and financial matter, the data clearly indicates health care costs will bankrupt American government, and as many as 50 to 100 million Americans in coming decades. Though Medicare/Medicaid costs are not rising as fast as in the private health insurance industry, even a 7% increase each year becomes unsustainable for the taxpayers as these programs begin running deficits in the coming decade. There is an enormous number of retirees coming over the next 50 years whose end of life care costs will dramatically increase the need for health care spending going forward. Lowering those costs per procedure and patient is mandatory in any reform legislation.

These retirees will be our parents, grandparents, and ourselves. Without reforms which significantly lower the costs of health care delivery, taxes will rise as worker's health insurance premiums also rise. And that will result in unprecedented numbers of Americans no longer able to afford a middle class standard of living in America. As Americans are squeezed out of the middle class, tax revenues for the federal government will drop, and the demand for federal government assistance will increase. As premiums rise, more and more employers will be forced to be less competitive by the increased costs of providing health insurance, or, they will have to reduce, or eliminate, health care coverage for their employees entirely. It is a losing scenario for America and Americans, both economically and financially.

Lastly, there is one fact entirely ignored in this debate over health care reform. It does not matter what form such policy takes, or when it is proposed, there will be those who will oppose it with all the energy and resources they can muster. One does not alter policy on one of the largest contributors to the economy without having lobbyists and special interests coming out of the woodwork to prevent the nation from implementing such changes. So, whether America reforms health care today under Democrats, or in 10 years under Republicans, or in 20 years under Independents, the battle to prevent such changes will be as loud, expensive, and discordant as we are witnessing today.

Therefore, the simple fact that there is opposition today, is not a valid argument for preventing health care reform. Just as secession from the union by the confederate states was not a valid argument for permitting slavery to continue in America. Poverty and bankruptcy are no less enslaving, and that is what 100 million or more Americans face in their future if health care reform is not implemented which lowers the long term cost of health care, provides protection from bankruptcy as a result of medical care, and insures continuous health insurance coverage for those who comply with the rules and laws governing such a system.

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This page contains a single entry by David R. Remer published on August 10, 2009 3:06 PM.

The Politics of Health Care Reform In A NutShell was the previous entry in this blog.

Bernanke & Kennedy: American Strength is the next entry in this blog.

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