Macroeconomics

Sue Christensen

Health Care Research Paper

Socialized or national health care is a hot topic in the news, on social media, and at
many kitchen tables. Should the government run the health care system in the
United States? Could it? And if so, what would it look like? Is health care for all a
need, a right, an entitlement? Other countries seem to have it all figured out, why
doesnt the U.S?
In The Bottom Line: Healthcare video, Gerald Freidman, UMass, Amherst, states
Health insurance profits by restricting your access, by driving you away. The
insurance companies try to make it difficult to get access to health care and hope
that you will give up rather than wade through all the paperwork, appeals, denials,
etc. Many people do give up, and end up paying for services themselves that
should be covered by their health insurance.
Michael Maiello of Forbes Magazine wrote an article in August of 2009 entitled
ObamaCare Is No Big Deal in which he states, ObamaCare isnt worth all the
shouting. Its not an ambitious proposal. It doesnt change health care as we know
it. Not even the industries that will be most affected are that worked up about it.
The health insurers won. UnitedHealth, Aetna and Cigna will maintain hegemony.
Most people will still get the health insurance that their human resources managers
pick for them. Pharmaceutical companies like Merck and Pfizer will not have to
contend with re-imported drugs from Canada. For that, the pharma lobby might
accept slightly shorter parent protection so that generic drugs can be manufactured
more quickly-a minor concession for which the industry won two major victories.

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ObamaCare will end the practice of rescission where insurers drop ill customers to
avoid their mounting bills. This actually fits right in with the conservative critique of
health insurance and with the policies enacted by George w. bush. In the
conservative analysis, theres two kinds of health care-routine stuff that people
should pay for and catastrophic stuff that its just too hard to reliably save for and is
more appropriately insured against. So Bush started the Health Savings Account as
a tax-free way to save for health care expenses that can be tapped to pay for
routine care by people who have high-deductible catastrophic health insurance. If
you agree with Bushs HSA idea, then you kind of have to agree with Obamas effort
to end rescission because theres simply no point in paying for catastrophic health
insurance if the insurer can drop you at the first sign of catastrophe.
In the ideal world this is how universal health care would work. Everyone would
save for those routine medical costs and the catastrophic costs would be covered by
government run health insurance. Dennis Restauro stated, Most Americans will
always assume that the private sector is more efficient than government when it
comes to performing a task or providing services to people. In many cases this is
true. However, that doesnt mean its always true. There are things that
governments do quite well. Most would agree that the government is great at
collecting and spending money.
This is essentially the primary function of health insurance. Yes, insurance
companies in the private sector also have to do risk modeling to determine
eligibility. Public insurance like Medicare is only concerned with eligibility
requirements which eliminates much of the risk modeling.
Insurance companies dont actually perform any healthcare delivery. They only pay
for it. So when comparing private vs public healthcare insurance, a good measure

Macroeconomics Research Paper

is administrative cost. Administrative cost makes up any funds that arent paid out
to the healthcare system. Its essentially the cost to run the business of health
insurance.
These administrative costs could be decreased with a national health care system,
according to Gerald Freidman government run insurance could save $500-600
billion a year on administrative costs. We pay far more than other countries for a
less efficient system.
Anita Raghaven of Forbes Magazine wrote an article titled An American Checks Up
On German Health Care in September of 2009 about an American couple that was
in Germany for a conference when the wife was injured. She had three surgeries to
repair the damage to her hand and then looked into having the fourth surgery at
home in the U.S. They eventually opted to have the last surgery in Germany. She
had stayed in the hospital for two weeks and had four surgeries for a little more
than $10,000, he had one outpatient surgery in the U.S. that cost $14,521 which did
not include the surgeon or anesthesiologist costs.
Anita Raghavan of Forbes Magazine wrote another article in September of 2009,
titled Beyond Hysterics: The Health care Model That Works, More than any model
in the world, the German system offers a glimpse of what health care could look like
in the U.S. Thats assuming any bill survives the popular revolt. Unlike many
countries with national health-Canada, say, or the U.K.-where private insurance
generally supplements public coverage, Germany has two separate systems that
coexist, with private plans indirectly benefiting from the cost controls of the public
system.

Macroeconomics Research Paper

How does Germany do it? By doing what Medicare does and more. It sets fixed
reimbursement rates for hospitals and wields a stick Medicare lacks: extracting
price concessions from drug companies.
Again this would be the ideal, a public and private system that works together to
give everyone access to the best healthcare coverage possible. Unfortunately we
have not yet been able to achieve this ideal. In a New York Times article Is The
Affordable Care Act Working? it states, At its most basic level, the Affordable Care
Act was intended to reduce the number of Americans without health insurance.
Measured against that goal, it has made considerable progress. A perfect
measurement of the numbers of people affected by the law is still difficult, but a
series of private sector surveys and a government report reach the same basic
estimates: The number of Americans without health insurance has been reduced by
about 25 percent this year or eight million to 11 million people. Gallup has
recorded a drop in the percentage of American adults without insurance from 18
percent in mid-2013 to 13.4 percent by the end of May This is a positive effect that
was reached in the first year after ObamaCare began, but problems have arisen.
We are taking steps in the right direction but there is much more that can and
should be done to make sure that everyone has access to affordable health care.
There are models we can look to in order to find that ideal mix of public and private
healthcare. Costs can be controlled by using the Medicare model of fixed
reimbursement amounts, and a government run health insurance which will reduce
administrative costs. Lowering costs and raising the quality of care and the access
to it should be the goal for all those that have the power to make these changes.

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Bibliography
Forbes Magazine, 8/17/2009, Michael Maiello, ObamaCare Is No Big Deal
Grounded Reason, 9/13/2014, Dennis Restauro, Private vs Public Healthcare: Which
is More Efficient?
Forbes Magazine, 9/02/2009, Anita Raghavan, An American Checks Up On German
Health Care
Forbes Magazine, 9/21/2009, Anita Raghavan, Beyond Hysterics: The Health Care
Model That Works
New York Times, 10/26/2014, Margot Sanger-Katz, Is The Affordable Care Act
Working?

Macroeconomics Research Paper

Macroeconomics Research Paper