How to Fix the Health Insurance Problem

Our Congress is concentrating on how to create a huge bureaucracy in order to reduce costs on health insurance and provide health insurance to those without it. Unfortunately, they are not looking at the major problems with the existing health insurance and trying to work a practical solution that does not involve major spending by the Government.

Here is my list of problems as I see them:
(1) Escalating cost of health insurance;
(2) Escalating cost of hospital services;
(3) Escalating cost of doctors, specialists, tests, etc;
(4) Portability of health insurance (keeping the same coverage when you move or change jobs);
(5) Increased cost of prescription drugs; and
(6) Persons unable to afford health insurance.

Let's take a deeper look at these problems.
(1) Escalating cost of health insurance - Why are health insurance costs going up. The primary answer is that insurance companies have to negotiate costs of services with health care providers (doctors, specialists, hospitals, and pharmaceuticals), and these costs continue to go up. However, individual policies go up faster than group policies, since in group policies, you have some people that don't get sick or injured and they help offset the costs for those who do. This is an important point, which I will discuss later.
(2) Escalating costs of hospital services - The main reason that hospital service costs continue to climb is that hospitals must absorb the cost of treating uninsured persons, many of which utilize the emergency rooms as primary care facilities. The other reason is the cost of malpractice insurance policies and other insurance policies required to lower their risk of law suits.
(3) Escalating cost of doctors, specialists, tests, etc. - The main reason for increased cost of doctors, specialists, tests, etc is malpractice insurance policies.
(4) Portability of health insurance - Since each State regulates Insurance companies, when you cross a State line, that particular insurance company may or may not be allowed to do business in that State. In addition, the company you are moving to may be utilizing a different insurance company than your previous company.
(5) Increased cost of prescription drugs - This actually is not true. When a prescription drug becomes "generic", the cost goes down considerably and many pharmacies now have $4/month prescriptions on most generic drugs. New drugs however do cost considerably more and there is good reason for it. Pharmaceutical companies must develop these new drugs and each must go through rigorous testing before the FDA (Federal Drug Administration) will allow them to be sold. It can take upwards of 5-10 years (or longer) to formulate these new drugs, costing many millions of dollars to develop and manufacture. In order to recover these costs, they must charge an amount that will recover these R&D (research and development) costs in a reasonable amount of time.
(6) Persons unable to afford health insurance - There are approximately 50 million uninsured persons in the United States. There are also approximately 250 million persons who are insured (I rounded off the numbers to make later computations easier).

So, how do we get all these costs down?

First, Congress needs to pass a bill to limit liability of Doctors, hospitals, specialists, and pharmaceutical companies for malpractice suits (Tort Reform). By capping (limiting) the amount an individual (or group) can get for malpractice, the cost of malpractice insurance will go down and will lower the overall cost of health care.
Second, as I pointed out earlier, Group Insurance is cheaper than Individual Insurance. Congress needs to establish an entity to act as a Group and allow those persons who cannot get health insurance to join. However, they also need to make sure that persons that have health insurance available to them (through their employer, Medicare, Medicaid, Military, VA, etc.) are not allowed to drop coverage to enter this Group. As a Group, they can negotiate (or ask existing Insurance Companies to bid) for Group rates or they could require existing Insurance Companies to cover this Group as a percentage of their existing policies.
What type of Health Insurance should this Group have? Catastrophic Health Insurance costs, on average, about $20 per month per person and this should be the minimum. This could be covered in the same manner as the State's Uninsured Motorist Funds - that is, existing policy holders would have a monthly surcharge of $4 added to their monthly premium (the ratio is 5 to 1 - insured to uninsured), which covers the $20 per month per uninsured person. With the reduction of malpractice insurance, this should actually not increase the premium, since likely the premium would drop more than that amount due to Tort Reform. The Group should also have an option of picking up additional PPO, HMO, etc. insurance if the individual wants it and can pay for it.

Next, portability is a real problem that probably cannot be solved in its' entirety. Employer's have the right to select any insurance company that offers them the best rates and I wouldn't want to see that changed. However, Governor's of all States should get together and come up with a common set of criteria for registering insurance companies and regulating them so that all insurance companies could operate in all states. This is not a Federal Government problem but rather an issue from State to State.

Last, let's discuss costs of medicine. As I mentioned before, most pharmacies offer generic drugs at an affordable price for everyone, but what about these new drugs (if they are an only option)? Most pharmaceutical companies have programs to provide these drugs at reduced or no cost to persons who cannot afford them and would not survive without them. There is no reason to get the Government involved except perhaps to provide a central website listing how to contact each pharmaceutical company.

Now, what has this option cost the taxpayer - basically ZERO! Congress is about to go on it's summer recess and will be listening to their constituents. Present this idea to them or one of your own. Let's not complicate things by getting the Government involved too much. They have a role to play but not in subsidizing health care - Tort Reform, establishing a Group entity, and providing information is all we citizens need!