Healthcare Reform: Knowing What to Change

With all the healthcare reform going on, I’ve been traveling quite a bit. During all this hectic back-and-forth, I found time to take a breather and visit some family. The town they live in is home to roughly 2,500 people. That is the polar opposite of New York City and Washington, DC., which made for a nice change of pace. Nothing ever seems to change in this town; it still has one stop light, most businesses still close on Sunday and you can even find some brick-lined streets. Entertainment tends to be sitting on a rocking chair listening to the crickets at night, or playing a game with family and friends. For all its quaintness and distance from mainstream society, there is one thing that I found it shared with all of America. Tough times. I noticed many more vacant buildings and homes for sale than last year. Homemade advertisements—boat for sale, plumber needs work, guitar lessons in your home—crowded each other on the bulletin board at the only grocery store in town. People all over are cutting back on their spending.

Which brings me to this week’s column. For all the competing proposals in the healthcare reform movement, there is one constant. A BIG pricetag. No doubt about it, our current system needs improvement. However, sometimes it makes more sense to repair something rather than buy (or make from scratch!) something new.

Take COBRA, for instance. Passed back in 1985, COBRA allowed those that left their employer to continue their healthcare coverage on their own. We all know that health insurance is really just healthcare financing. When COBRA was passed in 1985, the average hospital stay cost $1,210. In 2007, that figure jumped to $26,120 (or more than twenty times). Of course, this doesn’t take into account inflation, but for comparison, that would mean you earn twenty times more today than you did in 1985. A large part of the reason health insurance premiums have gone up so much is because the cost of the healthcare itself has gone up.

When COBRA was passed back in 1985, most people could afford it. With healthcare costs so high presently, most people cannot. That is why the Obama administration passed legislation earlier that made it more affordable for people to keep their COBRA. This is a classic example of taking something that works and adjusting it to the times. However, even this tiny adjustment to an existing program brought with it misunderstanding and red tape. Anything to do with government regulation and employers, insurance companies, hospitals and the medical profession take very seriously and don’t want to mess up. Mistakes still inevitably occur, with people who should qualify for the COBRA assistance being denied by their employer. The government has recently put up a website (www.ContinuationCoverage.net) and helpline (1-866-400-6689) where certain unemployed workers may request expedited review of a denial by their former employers of eligibility for COBRA premium assistance under the American Recovery and Reinvestment Act of 2009 (ARRA), the formal name of the legislation.

All of these changes came at a cost-lost productivity to be sure, but also amended forms, helplines, etc. But when our car breaks down, we fix it most times, rather than buying a brand new one. We certainly do that if we don’t have the money for a new car, because unlike the government, we can’t print our own money. So it is with healthcare. Rationing of care, healthcare innovation and freedom of choice aside, can you imagine the fiscal impact that a total reconstructing of our healthcare system from the ground up, via a government health plan (i.e. public plan) would entail? Not exactly the time to experiment with a system that provides 1/6th of the whole country’s GDP and provides millions of jobs.

Change, as they say is inevitable. In the healthcare arena, fixing the current system to cover everyone at affordable prices is not only the least disruptive, but the most cost-effective solution as well.

Until next time, stay healthy!