The cost of an average family premium shot up 9.5% in 2011 — the highest rate in seven years and three times the rate of overall inflation, finds a major new survey of employer plans by Kaiser Family Foundation.
Just before Obama signed his health overhaul, he vowed it would “bring down the cost of health care for families, for businesses and for the federal government.” In December, he told CBS’ “60 Minutes” he was “putting in place a system that’s going to lower health care costs.”
In fact, there’s evidence ObamaCare is fanning medical inflation.
Kaiser attributes the premium spike to “changes from the new health reform law.” The 200-page study explains: “Significant percentages of firms made changes in their preventive care benefits and enrolled adult children in their benefits plans in response to provisions in the new health reform law.”
In fact, 31% of covered workers are in a plan where the employer reported adding preventive services to comply with ObamaCare. And some 2.3 million adult children “were enrolled in their parent’s employer-sponsored plan due to the Affordable Care Act,” Kaiser said.
Sen. Ron Johnson, R-Wis., notes that Obama, as a candidate, promised he’d slash family premiums by $2,500 a year by the end of his first term. That was in 2008, when health care coverage cost the average employer and American family $12,680 in annual premiums. Now it’s $15,073, nearly 20% higher. That means Obama has broken his promise by a whopping $4,893.
Costs are projected to simply rise as ObamaCare fully goes into effect. A recent McKinsey & Co. study found that 30% of employers will stop offering benefits after 2014, since “the penalty for not offering coverage is significantly below” the costs of the new mandates. This will make millions more individuals eligible for government subsidies under ObamaCare.
Not everything that Obama says while he is reading from a teleprompter is necessarily true.
From Kevin DeYoung, posted at the Gospel Coalition. This is a must-read. (H/T Mary)
He lays out the general case for why employers hire workers in four points.
Here is point #2:
(2)The employer must believe that spending his money on new employees will be good for his business. We may wish that employers hired people just cuz. But that’s not the way the world works. When employers want to be charitable they give to church or to their alma mater. But with their business they know they need to make money. Consequently, they hire new workers only when they believe that paying more people will eventually be offset by making more money.
Ah, this is nice. And it goes on and on like that. Click here and read this sweet, sweet post!
This is Mr. Moo. He is a capitalist business owner.
But I have to steal this story about a capitalist cow who starts a business:
Mr. Moo sells milk. He charges $5 a gallon. Everyone in town wants milk so everyone pays Mr. Moo $5 a gallon. But Mr. Moo wants to make even more money. Maybe he’s greedy. Maybe he wants to give more to his church. Maybe he wants to buy a new car. Maybe he just had a new baby that needs food and clothes. Maybe he wants to bet on horses. No matter the reason, Mr. Moo (like almost everyone) wants to make more money. What should he do?
He could charge more for his milk, but he realizes that at $6 a gallon some of his customers will drive to the next town where milk is only $4.75. So instead he tries to lower his costs. He needs $4 to make a gallon of milk, but he’d like to do better. So next month he replaces his milkmaids with new milking machines. This requires a substantial up front investment, but within a year the milking machines have paid for themselves. Without having to pay milkmaids, his milk only costs $3 to produce. Now he charges $4.25—a savings to his customers and more profit for him.
This simple example shows how productivity fuels profits. Mr. Moo found a way to make the same thing for less money.
But, you ask, how is this good for anyone but Mr. Moo? Well, as the other farmers purchased their milking machines their costs went down too. So they started to lower prices, hoping to attract more customers. Mr. Moo did the same. Even if he is now getting richer, his customers are too. They save 75 cents on every gallon of milk (paying $4.25 when they used to pay $5.00). Now they have the same milk as before but more money. The economy has expanded.
And that’s not all, with more money in his pocket Mr. Moo goes out to eat more, which helps the local burger joint hire one more cook. And all the new machines need servicing, so the local repairmen hires an apprentice. The grocer spends less on milk so he can add another bagger. The doctor, who is saving money on dairy, has more money to spend so he donates to the local art museum which can afford to purchase two new paintings from an aspiring artist. No one knew Mr. Moo’s machines would help so many people and create so many jobs. No one really notices either, but it happens.
But what about the poor milkmaids? True, they are out of work. Their lives, at least in the short run, are worse because of the new innovation. Those dreaded milking machines seemed to have ruined everything. In fact, the mayor almost outlawed them. Others wanted to institute a new milking machine tariff to discourage farmers from buying them and to help save milkmaid jobs. But none of this happened. Instead farmers kept buying milking machines and milkmaids kept losing their jobs. Which was really hard on the milkmaids and their families.
And yet, that’s not the end of the story. Some of the milkmaids went to work for Mr. Pump who manufactures milking machines. His business was booming. He needed more workers to help make more machines. So he hired a few milkmaids. And remember, as the price of milk dropped, so did the price of cheese and pizza and yogurt. Everyone’s grocery bill was less. The whole town had the same stuff but more money. So Mr. Wall and Mr Mart decided to open a new thrift store. Mrs. Lovejoy, who started watching busy Mr. Wall’s and Mr. Mart’s kids during the day, decided to open a daycare. She hired some former milkmaids to help, as did Mr. Wall and Mr. Mart. A few of the married milkmaids decided they didn’t have to work anymore because groceries were cheaper than they used to be and the family could get by on less. It was hard and humiliating to lose their jobs, but five years later the whole town is better off because Mr. Moo bought his milking machines. There are more jobs. Families are able to purchase more things. And there is more ice cream for everyone.
Yes, I know cows are girls. Shut up!
I love it when conservative pastors step into areas outside of theology and knit together a full Christian worldview spanning patches from all areas of life. It’s especially good when they use evidence from the sciences, economics and history.
I find it alarming that the best people who do this are all Calvinists, though. Mark Driscoll, Wayne Grudem and Kevin DeYoung. Grrrr. Oh well. The bottom line is that we need pastors like this to be encouraging us to know how the world works, so that we can think about how we can read our Bibles and achieve the results that were are supposed to be achieving intelligently, instead of being tossed to and fro by our emotions, intuitions and intentions. (For example, what do you think lowers unemployment for the poor, young, minority workers? Raising the minimum wage, or lowering it? Click here to see why it is important to understand economics in order to help the poor with real results, instead of just feeling good while you hurt the poor)
If people who read these practical theologians could send me practical posts that they write where they encounter evidence from the real world, I can post them. I don’t know of many famous non-Calvinist theologians who I respect on economics and politics. I like Jay Richards, but he’s Catholic.
A story about a recent survey on Canada’s universal health care system, from the National Post.
Excerpt:
A new survey on attitudes about the health-care system reveals some interesting responses, confirming that Canadians have widespread misgivings about the system, even while not fully understanding how it works. They also favour using tax incentives to encourage healthier living and eating.
The survey of 2,300 Canadians carried out in April by the consulting firm Deloitte was part of a larger poll covering 12 countries. It is considered accurate to within two percentage points, 95% of the time.
Some of the highlights include:
– Just 5% of respondents gave the system an A grade; 45% giving it a B, 36% a C, 10% a D, and 4% a failing F.
– 33% of Canadians said they understood how the system works, down from 39% in 2009 when Deloitte did a similar survey.
– 69% feel that the system has not improved in the last two years, while there were slightly more who thought it had deteriorated, as opposed to improved, in that period.
– 36% believe that half the money spent on health care is wasted; interestingly, half of those skeptics blame the waste on people failing to take responsibility for their own health.
– 13% reported that they are caring for another person, up from 10% in 2009, a possible sign of the increasing personal burden posed by the aging population. In a third of those cases, the individual is caring for a spouse.
– 55% rated their health as excellent or very good … even though 52% report having been diagnosed with one or more chronic diseases.
– 63% favour some kind of tax-based incentive to encourage more healthy diets and lifestyles.
– About 80% favour expanding medical-school enrollments to increase the supply of doctors.
You can find some more videos describing horror stories in the Canadian system in this previous post.
Everyone agrees that the American health care system is too expensive, but do we at least get better quality outcomes? Let’s see.
Medical care in the United States is derided as miserable compared to health care systems in the rest of the developed world. Economists, government officials, insurers, and academics beat the drum for a far larger government role in health care. Much of the public assumes that their arguments are sound because the calls for change are so ubiquitous and the topic so complex. Before we turn to government as the solution, however, we should consider some unheralded facts about America’s health care system.
1. Americans have better survival rates than Europeans for common cancers. Breast cancer mortality is 52 percent higher in Germany than in the United States and 88 percent higher in the United Kingdom. Prostate cancer mortality is 604 percent higher in the United Kingdom and 457 percent higher in Norway. The mortality rate for colorectal cancer among British men and women is about 40 percent higher.
2. Americans have lower cancer mortality rates than Canadians. Breast cancer mortality in Canada is 9 percent higher than in the United States, prostate cancer is 184 percent higher, and colon cancer among men is about 10 percent higher.
3. Americans have better access to treatment for chronic diseases than patients in other developed countries. Some 56 percent of Americans who could benefit from statin drugs, which reduce cholesterol and protect against heart disease, are taking them. By comparison, of those patients who could benefit from these drugs, only 36 percent of the Dutch, 29 percent of the Swiss, 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians receive them.
4. Americans have better access to preventive cancer screening than Canadians. Take the proportion of the appropriate-age population groups who have received recommended tests for breast, cervical, prostate, and colon cancer:
Nine out of ten middle-aged American women (89 percent) have had a mammogram, compared to fewer than three-fourths of Canadians (72 percent).
Nearly all American women (96 percent) have had a Pap smear, compared to fewer than 90 percent of Canadians.
More than half of American men (54 percent) have had a prostatespecific antigen (PSA) test, compared to fewer than one in six Canadians (16 percent).
Nearly one-third of Americans (30 percent) have had a colonoscopy, compared with fewer than one in twenty Canadians (5 percent).
5. Lower-income Americans are in better health than comparable Canadians. Twice as many American seniors with below-median incomes self-report “excellent” health (11.7 percent) compared to Canadian seniors (5.8 percent). Conversely, white, young Canadian adults with below-median incomes are 20 percent more likely than lower-income Americans to describe their health as “fair or poor.”
6. Americans spend less time waiting for care than patients in Canada and the United Kingdom. Canadian and British patients wait about twice as long—sometimes more than a year—to see a specialist, have elective surgery such as hip replacements, or get radiation treatment for cancer. All told, 827,429 people are waiting for some type of procedure in Canada. In Britain, nearly 1.8 million people are waiting for a hospital admission or outpatient treatment.
7. People in countries with more government control of health care are highly dissatisfied and believe reform is needed. More than 70 percent of German, Canadian, Australian, New Zealand, and British adults say their health system needs either “fundamental change” or “complete rebuilding.”
8. Americans are more satisfied with the care they receive than Canadians. When asked about their own health care instead of the “health care system,” more than half of Americans (51.3 percent) are very satisfied with their health care services, compared with only 41.5 percent of Canadians; a lower proportion of Americans are dissatisfied (6.8 percent) than Canadians (8.5 percent).
9. Americans have better access to important new technologies such as medical imaging than do patients in Canada or Britain. An overwhelming majority of leading American physicians identify computerized tomography (CT) and magnetic resonance imaging (MRI) as the most important medical innovations for improving patient care during the previous decade—even as economists and policy makers unfamiliar with actual medical practice decry these techniques as wasteful. The United States has thirty-four CT scanners per million Americans, compared to twelve in Canada and eight in Britain. The United States has almost twenty-seven MRI machines per million people compared to about six per million in Canada and Britain.
10. Americans are responsible for the vast majority of all health care innovations. The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other developed country. Since the mid- 1970s, the Nobel Prize in medicine or physiology has gone to U.S. residents more often than recipients from all other countries combined. In only five of the past thirty-four years did a scientist living in the United States not win or share in the prize. Most important recent medical innovations were developed in the United States.
Despite serious challenges, such as escalating costs and care for the uninsured, the U.S. health care system compares favorably to those in other developed countries.
The author of that article is a senior fellow at the Hoover Institution and a professor of radiology and chief of neuroradiology at Stanford University Medical School.
So, we saw that the quality of the U.S. health care system is good, but how can we lower the costs? Is government controlled rationing (like Canada) the answer, or is there another way?
Choice and competition in health care
The Center for Freedom and prosperity seems to have found another way: choice and competition.
Excerpt:
In many ways, America’s health care system is the best in the world. It has state-of-the-art technology and highly-skilled medical professionals. America is also home to most of the cutting-edge medical research in the world. However, there are also important problems, such as the “third-party payer” model where consumers rarely pay the full cost of their own health care. This creates an incentive for both excessive and expensive use of health care, a problem that would be exacerbated by current proposals for greater government control of the health care system.
But the third-party payer problem is not the only reason that health care costs are high. State governments impose health insurance coverage mandates, often for “gold-plated” coverage, that drive up the cost of insurance. These regulations, which are unique to each state, are imposed at the behest of interest groups seeking to increase demand for their services. Combined with protectionist barriers that prevent consumers from buying policies from providers in other states, these mandates have severe unintended consequences:
They limit competition in the health insurance market by preventing insurance buyers from shopping across state lines, creating monopolistic and oligopolistic situations in many states;
They impose coverage mandates that force health insurance buyers to purchase coverage that they either do not want or cannot afford;
They force insurers to use community rating instead of experience rating, which means healthy people are forced to subsidize unhealthy people – to the effect that insurance premiums rise for many buyers and healthy people are driven out of the market.
The symptoms of a dysfunctional health insurance market – foremost the significant number of uninsured, but also rising costs – are recognized by many legislators. But the problem cannot be solved, as some suggest, by means of increased government regulation. Indeed, government regulation is the cause of most problems in the health insurance market, not the solution.
Restoring a free market health care system would be a daunting task, one that would involve, 1) sweeping reforms to the 45 percent of health care directly financed by government programs, and 2) a complete rewrite of the tax code to remove the distortions that exist in employer-provided health insurance. This paper focuses on the so-called third leg of the stool – policies to remove government barriers and restore competition to the market for individual health insurance.
Reforming the government-financed programs is definitely necessary because there is so much fraud and waste, as there always is with government, when compared to the private sector. Private sector businesses have to turn a profit, so they actually try to prevent fraud and waste.
Here’s a documentary featuring John Stossel that explains the health insurance problem. (And featuring Regina Hertzlinger, too)
Part 1 of 5:
Part 2 of 5:
Part 3 of 5:
Part 4 of 5:
Part 5 of 5:
Choice and competition govern the way we buy things that we want normally, especially when we buy things online. I am pretty happy buying things from online retailers, because I have so many stores to choose from, with lots of product reviews and retailer ratings. I usually like what I buy, because I know that I am buying a good product from a good seller. And if I don’t get a good outcome, I can leave a review of the product, service or seller as a warning for the next person. That helps to encourage producers to make quality products and services Seller rating helps to make sellers care for customers, and to accept returns on items that don’t perform. Maybe we should do that with health care, and just leave health insurance for catastrophic care – like car insurance is for accidents, but not for oil changes.
WINTERY KNIGHT 