Ken Gordon: Nothing good just happens

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— We are about to see whether democracy works. In the debate about health care, watch what happens to the public option. Currently, the elderly (Medicare) and the poor (Medicaid) have public health insurance.

Some Democrats in Congress and President Barack Obama want to add a public option for everyone.

First, some background. Health insurance companies are huge and profitable. They exist to make money for shareholders. They do not exist to make their customers healthy. Their stock is traded on an exchange, and investors will invest in them when they make a good return and will abandon them the minute they can make more money elsewhere.

For most businesses, a good product is the way to make money. This isn't as true for health insurance. The market "fails" in at least two ways in this industry. First, people don't usually buy their own health insurance. It comes with their job. So the people who make the purchasing decision do not balance their own health against the cost. They balance someone else's health. In a competitive business climate, this results in the lowest bid having a huge advantage.

The second way the market "fails" is that people are not knowledgeable insurance consumers. The contracts are arcane and jargon-filled. You don't know that your surgery is "experimental" until your company tells you they won't pay for it. It is not in their interest to standardize contracts to make comparison shopping easier.

The companies that succeed are the ones that have the best advertising, the largest number of exclusions, the highest co-pays and are the most aggressive in denying claims.

Failure to standardize, advertising, staff to deny claims, and profit for shareholders create huge costs. The percentage of industry income that serves no useful health purpose is 20 percent to 30 percent.

So the industry is terrified of a public option - terrified. They know that insurance can be provided at a lower cost. They think that a public option will put them out of business.

Their response could be to compete - standardize coverage and forms, reduce bureaucracy and sell a better product. But, based on past form, they will try to sabotage the public option first.

They will lie.

They will say that you won't be able to pick your doctor. They will say that health care will be rationed. They will say that you won't be able to get the newest pharmaceuticals.

It all will be lies, and in any case, no one needs to take the public option. It is just an option. If you are happy, you can keep what you have.

The insurance companies won't oppose the public option because it's bad. They will oppose it because they fear it will be good.

Yet, they have a fortune to spend on advertising, campaign contributions and lobbyists. Before they are done, they will have you believing that the public option is suicide.

Don't expect your elected officials to help. We have a lot of elected officials, but very few leaders. Few that would stand up to a wealthy interest that can make campaign contributions or advertise in a misleading way to constituents.

You will, I fear, see dreadful positions taken by politicians. "Let's delay the public option for years until we see if the industry voluntarily reforms. Let's confine the public option to businesses with fewer than 10 employees. Let's start it as a pilot program in one district."

These dodges may sound reasonable. With television-generated support, they all will be attractive rationalizations to politicians who have no courage or desire to actually lead.

Most elected officials skip the leadership part of the job. That is the risky part. That is the part that takes work and courage. It is the only part, though, that makes change. Elected officials skip this part because it requires asking people either to learn something or to change a position. It requires making people uncomfortable, and most won't risk it.

There will be a few, though, who have the courage to lead, who have the ability to educate their constituents and make them see that we can have something better if we think for ourselves.

At the end of the day, if we can't recognize the leaders with courage and support them, we will have what we have now.

Nothing good just happens.

Ken Gordon is a lawyer who served in the Colorado General Assembly for 16 years. During his legislative career, Gordon served as House Minority Leader, House Majority Leader and chairman of the Senate Judiciary Committee.

Comments

Fred Duckels 5 years, 5 months ago

Ken, before we think about a government takeover let's consider harnessing the medical liability claims, rather hard for an administration thats is heavily financed by the trial lawyers. Doctors claim that the industry is overloaded with compliance personnel, that equally burdens the system. O's standard quip when cornered is, that it has been tried before and it does not work. Before badmouthing the private sector, the one that provides all wealth in our society, maybe the medical communities solutions should be tried first. This could let us celebrate a little heartier next year on the 4th.

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aichempty 5 years, 5 months ago

Civilian employees of the federal government are not covered by a federally-administered plan. The plan Obama and his buds in Congress have is nothing like the rest of the people who actually work for the government.

A federal civilian can buy family coverage for about $300-$400 per month, and the government kicks in twice that much on top.

So, are we all prepared to fund $1000 per family per month to give coverage to everyone? 100,000,000 families would cost $100,000,000,000 (one-hundred billion) per month, or 1.2 trillion dollars per year for only maybe 2/3 of the population.

Next idea?

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BoatNative 5 years, 5 months ago

aichempty,

Do you not understand that every time someone without insurance goes to the emergency room, which happens each and every day, that the American taxpayer has to pay for it? You see this cost in your increasing insurance premiums. If we have a public option for those who cannot afford private insurance to buy into, those external costs will disappear and you will get to keep your private insurance. Nothing will change for you.

Do you really enjoy paying for a local ski-bum who doesn't have insurance has to go to the YVMC emergency room when they blow out their knee up on the mountain? How about the millions of uninsured children in Colorado alone?

Health care reform is not an Obama issue. It is not a Democratic issue. People are DYING when they do not need to. Why are Republicans categorically opposed to this? Stop trying to ignore a crippling system and the people's lives who suffer from it to score political points.

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beverly lemons 5 years, 5 months ago

Thank you Ken, for weighing in on the debate. Our country is far from perfect, and one of the poorest things we do is health care. It desperately needs to serve all American's, not just the wealthy and those attached to jobs with good health care plans, and foremost the drug and insurance companies. We are smart enough, and just enough to make sure everyone has access and care. All of the free world provides for the basic health of it's citizens, except the U.S. Aich, I can not take what you have to say about this with any seriousness. You think women getting birth control is immoral, and that all black southern kids smoke pot and poison your food at restaurants. Your world view is so skewed and unreasonable, that anything you have to say on the topic is defacto nonsense.

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JLM 5 years, 5 months ago

It would be truly laughable if it were not so sad to listen to a lawyer/lawmaker criticizing an industry which is regulated by the Legislature and which has been a huge boon for the legal profession. Talk about the pot picking a fight with the kettle?

As someone who has been involved with buying corporate insurance products for private and public companies for over a quarter of a century, I can assure that in the real world there are some huge differences between what Ken reports and observes and the truth.

Many insurance companies are multi-line companies with property, life and auto products in addition to health insurance. There are a many good folks at work trying to solve the problems of coverage.

The demonization of companies which operate for profit and which have public shareholders who own their stock is as silly as observing that every lawyer is an ambulance chaser and every lawmaker is a corrupt buffoon. Sure there are lots of areas for improvement but the demonization of the industry is not an effective road to reform and the condemnation of capitalisim --- very much in vogue in this Administration --- is not the answer.

Don't forget that even with all the baloney flying around today there are still lots of companies and employees who are generally happy with their insurance coverage and service.

There is a very simple argument that we should tweak some of the issues which can command immediate action --- tort reform would be a good one and the relaxation of the AMA's control of the supply of doctors through the college accrediation process is another one --- while expanding the umbrella of coverage as far as possible. This is the "low hanging fruit" approach and should be the first stage.

There is a lot that government can do also along the lines of drug approval and regulation. Everybody can improve and do it fairly quickly.

The idea that we should abandon the existing system, burn the boats and start from scratch is tantamount to fixing a leaky boat by sinking it first. Let's work with what we've got.

At the heart of this discusson is the same logic which has resulted in only half of America paying income taxes while everybody gets to vote. The Democrats are understandably slanted toward providing even greater subsidy and dependence for their voting block.

If you don't pay any taxes, sure you want the top half to pay for your health insurance too. This Nanny State approach is a fatal flaw when it comes to solving this problem.

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ybul 5 years, 5 months ago

-- How about the millions of uninsured children in Colorado alone?--

There are only several million residents in Colorado, so millions of uninsured children seems far fetched.

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Matthew Stoddard 5 years, 5 months ago

ybul- Just for the record, the estimated population of Colorado for 2008 was just shy of 5 million, depending on what you meant as several. We'll probably know better after the 2010 Census.

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ybul 5 years, 5 months ago

I was not sure of the official number, knew it was upwards of 4. Did not want to make a mistake.

Much like the probable misrepresentation of 20-30% of insurance premiums that do not go to health care costs. Which probably go to administration, which I am guessing the government will have also. Just a matter of wether a private company could accomplish something with half of the labor that the government would.

It is nice to distort the truth to advance ones agenda. there might be a million uninsured in Colorado, some by choice others not. Those that are by choice, I am almost uninsured with a $10,000 deductible.

While I agree that some changes need made as I made an error last year which caused me to go out of network, which I did not know I had, for a minor surgery ($15,000). Though I sought out, what I thought was the least expensive option for my surgery. Though to give an individual two deductibles on the same policy does not seem right (and in my opinion the network is in violation of anti-trust legislation designed to eliminate tying contracts).

I do not agree that the government can manage anything properly. The only way to manage something properly is to have a vested interest in its success or failure. Personally individuals need to have a vested interest in their health. Get rid of the runny nose insurance plans and go to HSA plans only.

This coupled with some way of actually protecting people with an impact fee on activities which endanger public health, (harming the publics private property rights to clean air and water. (potentially to provide some assistance to those who can not afford it). Though you need a way to reward recipients who can live a healthy lifestyle and do not use the system.

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aichempty 5 years, 5 months ago

Boatnative,

Yes, I realize that I am paying taxes which provide medical benefits to the uninsured in addition to the premiums that I pay.

When you look at the cost of care, any "public" system that will allow people to buy in is going to have to be just as expensive as the private systems.

I was able to get coverage with Blue Cross/Blue Shield for a reasonable cost, but took a high deductible option to keep the cost down. When you do the analysis, you find that the difference between the plans with low deductibles and high deductibles is the amount the policy holder has to pay monthly. If you pay your premiums every month and also pay your maximum out-of-pocket for the year, you find that you've spent the same amount of money as if you took the low-deductible option. High deductible only pays off if you don't get sick. Low deductible means you can run down to the doctor's office every time you wake up with a hangover, and only pay a small copayment.

So, family coverage is going to cost around $1000 a month and individual will be around $500 a month for people who cannot afford to pay any of the cost of their own care.

A public option will cover more people, but it's not going to save any money on insurance costs. How many ski bums can ante-up $500 a month for public insurance?

No public plan will work without the redistribution of wealth that already occurs in the current system. This is the place where these plans always fall apart.

Right now my monthly income tax withholding and estimated quarterly tax payments are enough to pay the total cost of insuring a couple of families. You can't get around the fact that there are not enough people paying taxes to cover the cost, and low-income families won't be able to afford it even if it's made available. We'll be paying for health care costs out of the deficit forever.

Some deficit spending items are finite. Pay once, and you're done. Even the wars in Iraq and Afghanistan will end some day. Public health insurance will never end.

People in socialist countries in Europe pay 25% or more of their annual income to the government. That includes a person making "production worker" or blue-collar wages. Nobody in this country who's making blue-collar wages pays anywhere near 25%. But they're going to start if this thing goes through.

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Duke_bets 5 years, 5 months ago

What would Sarah Palin do?

..........Quit and avoid the issues, maybe?

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Tim Scannell 5 years, 5 months ago

The issue isn't competing against the U.S. Federal Government in fair competition. The issue is competing against the U.S. Government that sets the rules and can subsidize cost with tax dollars. If like Medicare, the Gov't Single Pay plan is 24% more expensive, they can increase our taxes to subside the difference. Medicare, Amtrack, US Post Office, US department of Education - all inefficient tax sinkholes. Are there any real-life examples of an efficient and effective US Federal Government program?

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aichempty 5 years, 5 months ago

Tim,

As one who has been a part of it, I can assure you that there are abso-#######-lutely NONE. It always costs more when the government gets involved. Every civilian salary is pure overhead, and the work is almost universally doled out to contractors.

The purpose of government is to fill needs that the private sector cannot. Making war is one of 'em. Police is another. Fire departments could be contracted out with no loss of government effectiveness except for arson cases and similar matters where government powers are required to separate soemone from their life, liberty and pursuit of happiness legally, as provided by the Constitution.

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seeuski 5 years, 5 months ago

Had a conversation with an MD. and discussed his experiences with the issue. He is a member of seven hospitals in S. Florida and they recently started the changeover to paperless systems in all of their locals. The cost so far is up to 200$million$ and climbing, that's just seven hospitals. He also pays $80,000 a year in medical malpractice insurance. He also said that most or all Doctors order an inordinate amount of tests before recommending any surgeries and that so much of it is overkill in order to cover their butts in case of a surgical failure so as to have a strong case against the lawyers when it goes to court. He said that all those costs are passed on to the insured along with costs associated with those who are treated for free, which I would guess are mostly illegals and poor. His feelings are that if frivolous lawsuits were regulated along with awards and something was done about the illegal immigrant issues that costs would regulate or abate. Just say no to Socialist health care.

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Tim Scannell 5 years, 5 months ago

July 7 (Bloomberg) -- House Ways and Means Committee members are likely to propose a surtax on high-income Americans to help pay for an overhaul of the health-care system, according to people familiar with the plan.

The tax would be similar to, yet much smaller than, a surtax proposed in 2007 by Ways and Means Committee Chairman Charles Rangel, a person familiar with the committee's talks said. That plan would have added at least a 4 percent levy on incomes exceeding $200,000, and was projected to reap as much as $832 billion over 10 years.

Two people familiar with closed-door talks by committee Democrats said a House bill probably will include a surtax on incomes exceeding $250,000, as Congress seeks ways to pay for changes to a health-care system that accounts for almost 18 percent of the U.S. economy. By targeting wealthier Americans, a surtax may hold more appeal for House Democrats than a Senate proposal to tax some employer-provided health benefits.

"The surtax is obviously more attractive to Democrats in the House because it's more progressive, which they find attractive in and of itself," said Paul Van de Water, a senior fellow at the Washington-based Center on Budget and Policy Priorities, a research group focused on policies affecting low- and moderate-income families.

I thought it the plan would lower cost for all?

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aichempty 5 years, 5 months ago

Major campaign promise busted at the seams.

November 2010 is just around the corner . . .

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Duke_bets 5 years, 5 months ago

seeuski - Doctors actually order a lot of tests before recommending surgical procedures? Are you kidding? I thought they just sharpened the scalpel and started cutting it up.

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JLM 5 years, 5 months ago

Our expectations for a government designed health care system should be tempered by what we know about how the government performs in reality. Particularly on large complex matters.

First, nobody is talking about giving you the same health care coverage that the Congress and the President are giving to themselves. No way, baby! They are not talking about participating directly in whatever health care system they design for you. No they know it will not be as good as what they provide for themselves.

Medicare had the benefit of the very best government thought when it was designed as did the VA health care system. How good are they? Good enough for you? Be fair in assessing this because this is as good as our government really can do.

BTW, our current administration actually thought about trying to get private health insurers to be responsible for health care for their insureds who had sustained battlefield injuries --- wow, that is a pretty raw deal. But it is a keen insight into how they really think.

The private sector when motivated by profit and imbued with capitalist zeal has brough us Costco and Sam's Club while the government has brought us the Post Office and the VA hospital system. Think we should put the government in charge of healthcare?

Do you really think there is any chance that they will not screw up health care? For the one half of Americans who do not pay any taxes, free health care will be very, very popular.

This all gets down to a matter of judgment. I cannot really trust the judgment of the current administration and I have no faith in their integrity.

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