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Health care reform has costs, but it has returns as well

July 20, 2008|By TIM ROWLAND

Medicare, according to Morningstar financial analyst Debbie Wang, doesn't bid out for low-tech medical hardware, such as wheelchairs and aluminum walkers. And really, why would it? It's not Medicare's money, it's ours.

That's why Medicare happily pays $1,825 for a hospital bed that can be purchased online for $754.

A 10-city pilot program demonstrated that Medicare could save 26 percent if it put these items to bid, but this year Congress delayed a plan to do so.

Wang writes, "It is always helpful to ask: Whose pocket is the politician in? Invacare, the leading manufacturer of wheelchairs and hospital beds, is the second-largest contributor to Rep. John Boehner (R-Ohio), one of the cosponsors of this bill who inserted the bit about delaying competitive bidding. We don't believe this is just a coincidence."

Medicare is also supposed to abide by a sustainable growth rate formula that restricts spending when reimbursements come in over budget - much as you might cut back on your entertainment budget in August if you exceeded your budget in July.

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The last time that worked was in 2002. Since that time Congress has stepped in each year break the budget by raising reimbursements, thereby scuttling the fiscally responsible SGR formula.

Wang uses these examples to make a point: A government that has no stomach for doing even the little things right is probably never going to be able to handle the task of major health-care reform.

It doesn't matter how stupid we may think noncompetitive wheelchair purchases are, there will always be a corporate lobbyist waving cash under the nose of a greedy politician that carries more weight.

Back in 1990, policy analysts were horrified by the specter of health care costs approaching double digits as a percentage of our Gross Domestic Product. Today, health care is up to 16 percent of GDP.

Naturally, when there's that kind of cash at stake, no one wants to give it up. Managed care companies don't want to see their administrative fees going to physician reimbursements and vice versa, wheelchair companies don't want competition and no one who is getting fat from the excesses is going to give up without a fight.

Yet the debate is always couched in the money that must be taken out of the system - there's never much discussion about the money and advantages it would create.

As the baby boomers begin to retire, there are that many more who are reasonably close - age 55 and above - who have earned pretty good money through the years and would be in a position to retire early and live off their savings. The one thing stopping them is the cost of health care.

If they had access to a reasonably priced health-care plan, they would be more than happy to hit the links instead of the daily grind. This would do two things: Save companies money by allowing them to replace workers on the top of the wage scale with younger, cheaper labor, and open up jobs for those looking to enter or move up in the work force.

Reasonable health care would also be a boost to the entrepreneur. People, some with innovative ideas, would be able to go off on their own, either by way of a home-based business or a start-up company - enterprises that contribute to the tax base instead of subtracting from it. Historically, many of our top inventors and innovators started that way, in the days before insurance.

Conversely, plenty of people who run successful, home-based businesses have been forced back into the corporate world, solely as a hedge against high medical bills. That, on its face, seems wrong.

And finally, money that is not spent on health care will be spent on something else. That means that the difference between a $754 hospital bed and an $1,825 hospital bed will be spent on something more productive than padding a CEO bonus check.

Health care reform involves two different arguments. One is where universal coverage picks up the medical tab at taxpayers' expense without addressing the matters of $25 Band Aids. Here, the medical industry continues to suck as much money out of the system simply because it can.

Sensible reform, however, involves shrinking these ridiculous costs and dealing harshly with the medical-insurance-legal tail-chasing that produces nothing but exorbitant bills. As Wang notes, this would gore a number of oxen and probably isn't realistic as long as lawmakers listen to their wallets and not to us.

But whatever the price of reform, it needs to be considered that there is more to the issue than what it will "cost." Health care reform would not be without significant returns, to businesses, people and state and federal treasuries. At some point, someone should add up all these paybacks and recalculate the health-care equation.

Tim Rowland is a Herald-Mail columnist.

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