My summer vacation in Maine was interrupted by the birth of our granddaughter in New York on Aug. 19th. The exhilarating event left me thinking about what kind of a world our little Clio Bogart will be living in over her next 90 years or more. It's interesting to consider what her life will be like if Mitt Romney is elected and begins a Republican dynasty stretching far into the future, as envisioned by supporters.
Focusing just on health insurance alone, Clio is obviously younger than 55, so her Medicare under the Romney/Paul Ryan proposal will be paid through a voucher program when she reaches some future era's retirement age. It's a given that Republicans will repeal the Affordable Care Act, so if she develops the slightest health problem making her individually uninsurable and fails to land a conventional job with guaranteed benefits, she may go for several years with no insurance at all.
When she reaches age 65, she'll be given enough money, theoretically, to pay for her insurance premiums, and she'll have the freedom to turn to private insurance carriers to select what she feels will work the best for her. There's no guarantee that the amount of the voucher will be enough to pay for whatever premiums the insurance industry decides to charge.
The shortest and most elegant condemnation of the dysfunctional medical/insurance industry was an Aug. 19 letter to the editor of The New York Times in response to the Times editorial
Brown points out that the government might save money (that's the whole point) but the system overall will cost a lot more and that's what we're struggling to correct. Individual underwriting (who's insurable and without pre-existing conditions) and marketing (sales commissions and advertising) along with administration and dividends to stockholders will all represent excessive costs borne by the elderly. These are the reasons why today's Medicare advantage plans have never been cost-effective.
It doesn't take a genius to figure out why the idea of offering vouchers isn't going to be foisted on citizens who are currently age 55 or older. They are voters who recognize the value of a current system that pays 95 percent of its money in benefits. To think that an arbitrary cutoff for people 54 and younger will somehow represent an even better deal for Baby Clio's generation is an insult to our intelligence.
Meanwhile, President Barack Obama's recess appointment to head Medicare, Dr. Donald Berwick, said that one third of what Medicare costs today is the result of fraud. That estimate turned out to be right on the money based upon an experience I had with my father last year.
After a slight stroke, Dad was hospitalized for two weeks at a rehabilitation facility owned and operated by a national public hospital company. When I stopped in to visit, arriving on a Saturday, I wanted to see what exercises the therapists were performing. I was told that there was no therapy on weekends. Of course, Medicare was being billed seven days a week for Dad's hospital stay. With no service for two days out of seven, there's the one-third fraud statistic right there. The managers and stockholders of that company should be pleased. The rest of us should be enraged.
For my granddaughter's sake, I want to see this broken system fixed rather than bogged down in ideology. We only have to look as far as our fellow industrialized nations, our own veterans administration or even Kaiser to see how much better these systems work than the status quo's cost-plus treatment-based approach. Better results for less money shouldn't be that hard to achieve when the leadership by example is all around us.
Steve Butler is CEO of Pension Dynamics. Contact him at email@example.com or 925-956-0505, ext. 228.