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Health Care Reform 2009 Part 4: The Crisis!

emergency room wait

All right- I know that last week we said we would dive right into the health care reform bill that’s in Congress.  And we will soon.  But first, we thought it might be helpful to give a brief overview of what’s wrong with the current system before we talk about how the bills try to fix it.  If you’ve been reading the What If Post for a while, a lot of this will sound familiar.  But if you’re new to the discussion about health care reform, this should help bring you up to speed.

The Health Care Crisis!

When people talk about the health care crisis, they’re actually talking about two crises, which are interconnected:

Crisis 1: There are 45 million people without health insurance in the United States

That’s equal to the combined populations of Oklahoma, Connecticut, Iowa, Mississippi, Kansas, Arkansas, Utah, Nevada, New Mexico, Oregon, West Virginia, Nebraska, Idaho, Maine , Rhodes Island, Deleware, Alaska, Vermont, Wyoming, New Hampshire, Montana, North Dakota, South Dakota, and Hawaii.

Imagine if no one in any of those states had health insurance- that’s how many people we’re talking about.

What happens when those 45 million people get sick?  They go to the emergency room, because emergency rooms have to treat anyone that comes in– regardless of their ability to pay.  They’re probably way sicker than they would if they had been treated earlier, so for many it might be too late, but they will get treated eventually.

That doesn’t mean emergency rooms treat them for free though.  Those people get charged, and if they can’t pay they have to declare bankruptcy.  But hospitals know that many people without health insurance won’t be able to pay, and they make up for that lost income by charging the people that do have insurance higher rates.  Which brings us to the second crisis…

Crisis 2: Health care costs are out of control

The US spends nearly $7500 per person on health care– that’s almost twice as much as most other industrialized nations spend, and most of them get better results.  Spending on health care is growing so fast– 6.7% per year, three times the rate of inflation— that by 2017 the amount we spend on health care will have doubled to over $4 trillion (in 2006 we spent “only” $2.1 trillion).

As the costs skyrocket, fewer and fewer employers will be able to provide health insurance to their employees, and will do one of the following:

  • Drop insurance coverage altogether.  That means more people uninsured (see Crisis 1).
  • Shift more and more of the costs onto their employees, in the form of high deductibles and co-payments. Which leads to many people being what is called underinsured— they have insurance, but are still spending a ton of money (probably more than they can afford) on health care.  If an individual spends 10% or more of their income on out of pocket medical expenses, or if their deductible is more than 5% of their income, then they fall into that category.  Right now, 25 million people are underinsured.

So, to do a little quick math- if we add the number of uninsured and the number of underinsured we get 70 million people.  That’s 42% of the under-65 population (folks older than 65 automatically qualify for Medicare).  Which means that nearly half of us don’t have health insurance, or have huge deductibles and co-pays that we can’t afford.  That is a big, big problem.

Where did these problems come from?
There are two major components of the health care system:

  1. Health care providers- the doctors, nurses, hospital staff, etc. that actually provide care.
  2. Health insurance companies, which pay the providers.

Both groups are contributing to the problem.  Check out “The Health Care Napkin” – it explains how the two groups interact with each other:

Like the napkin says, most of the changes being proposed in the health care reform bill are directed at the insurance companies.  So tomorrow we’ll talk a little more about how insurance companies work, and then in our next post we’ll FINALLY look at what’s in the bills.  We promise.

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