Reforming
the health care system isn’t new. Many presidents and Congresses
have tried and failed, most recently Bill Clinton. Why, then, did
health care reform pass under this administration?
According
to Jamie Orlikoff, of Orlikoff and Associates, who addressed a
gathering of community leaders in Rapid City, South Dakota, in
December and whose consulting firm specializes in health care issues,
past attempts may have failed simply because the status quo was still
acceptable. This time around, the broad view was that the status quo
was unacceptable and the American economy would eventually collapse
if nothing were done.
However,
the health care bill Congress passed in March 2010 didn’t
completely address the unacceptable elements of the status quo. In
particular, says Orlikoff, the issue of cost is still largely
unaddressed.
The
December 2010 report of the bipartisan National Commission on Fiscal
Responsibility and Reform, tasked with finding ways to reduce the
deficit, said the health care bill didn't go far enough in cutting
costs. The single largest category in the commission's recommended
cuts, four hundred billion dollars, was health care.
Health
care, notes Orlikoff, is the largest expenditure of government and of
the Pentagon. If we are serious about cutting the debt, we must turn
our attention to health care costs.
Health
care also represents a large segment of private sector spending. It’s
the largest component cost of an American car or tractor, while the
largest component cost of a Chinese or Japanese vehicle is steel. No
wonder: China spends 4% on health care, India spends 2%, and the U.S.
spends 17.5%. Orlikoff suggests this is one reason American retailers
can sell imported products so cheaply.
According
to the Institute of Medicine, 30% of what we spend on health care
adds no clinical value. That’s a whopping 5% of GDP. The Agency for
Healthcare Research and Quality, part of the Department of Health and
Human Services, reports that 4.4 million hospital admissions, costing
thirty billion dollars a year, could be prevented.
Exacerbating
the inefficiency of health care is that there are huge geographic
disparities, with pockets of efficiency. One commonly cited example
is the contrast between two Texas towns. Despite similar
demographics, McCallen has one of the country's highest health care
spending rates and El Paso one of the lowest.
When
it comes to end-of-life care for patients with terminal illnesses,
Orlikoff notes that UCLA/Hopkins spends an average of $90,000 per
person and Cleveland Clinic/Mayo an average of $55,000. The
difference in spending results in no difference in patient experience
or outcome.
Orlikoff
is also concerned that our burgeoning health care expenses will
eventually spell the end of the US economy. “The dust bin of
history is littered with economies that fell apart because one sector
consumed the economy.” He cites the USSR and its over-concentration
on defense spending.
One
of the problems with the bill, says Orlikoff, is that 25-year-old,
sleep-deprived kids on Red Bull wrote most of it. Some parts were
written by people who could write and understood health care, some by
those who couldn’t write. For example, one three-page section of
the bill has no verb.
Still,
if the bill is repealed, which is highly unlikely prior to 2012, we
are left with market reform instead of legislative reform. Orlikoff
points out that market reform is much more random; however, my belief
is that it’s much more effective.
As
experts like Jamie Orlikoff continue to tell us, health care reform
is nowhere close to achieving a satisfactory status quo. Clearly, we
need to continue discussing what we want and need to make our health
care system one of the best in the world.
Rick Kahler, Certified Financial Planner(r), MS, ChFC, CCIM, founded Kahler Financial Group, and became South Dakota’s first fee-only financial planner in 1983. In 2009, Wealth Manager named Kahler Financial Group as the largest financial planning firm in a seven-state area. A pioneer in the evolution of integrating financial psychology with traditional financial planning profession, Rick is co-founder and co-facilitator of the five-day intensive Healing Money Issues Workshop offered by Onsite Workshops of Nashville, Tennessee. He is one of only a handful of planners nationwide who partner with professional coaches and financial therapists to deliver financial coaching and therapy to his clients. Visit KahlerFinancial.com today!
