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Health care disruption has consequences

As much as our health care system could be disrupted for the better, the risk of doing great damage is very real

Jim Mueller - Mueller QAAS
Jim is the founder, President, and CEO of Mueller QAAS, LLC, an independent healthcare consulting firm located in Waukesha, Wisconsin. Jim provides leadership and strategic direction to Mueller QAAS, and also provides his clients with objective market insight on their employee benefit decisions.

As the next presidential election creeps closer by the day, we will all hear a lot about our nation’s health care system over the next year, whether we like it or not. All of the remaining Democratic contenders support an expansion of public health insurance programs. Some, including Bernie Sanders and Elizabeth Warren, have even called for eliminating the private health insurance industry. Meanwhile, the President and his allies are already making his opposition to these policies a pillar of his reelection campaign.

Regardless of your political views, it should be clear to everyone that the status quo of perpetually rising health care costs is unsustainable. In a perfect world, politicians and the media would engage in an open and honest conversation with the American people about the pros and cons of the various proposals to control costs, ensure access, and maintain or improve quality. At the risk of sounding pessimistic, I think it’s far more likely that the public will tune out the incessant arguments and the future health care will be decided by industry insiders and their lobbyists.

All the same, I think it is important to try to understand these complicated and important issues. After all, everyone needs quality, affordable, and accessible health care, and this industry represents nearly a fifth of our national economy. As much as our health care system could be disrupted for the better, the risk of doing great damage is very real as well.

For example, more than 20 million Americans work in the health care industry, and hundreds of thousands more work for private health insurance companies and brokerage firms. Giving the government control over health care reimbursement may mean pay cuts for many of those who deliver health care services. This could encourage senior practitioners to retire early and discourage young people from entering the field.

Labor shortages result in higher prices in a market-driven environment, but under a system of government, price controls would require rationing access to care. In addition, the six, seven, and eight-digit compensation packages for top health care executives and staff would likely be cut, which could push top leadership talent to leave for other industries. This could be counterproductive, if it results in less effective management and even more inefficiency.

More obviously, downsizing health insurance companies would eliminate thousands of good-paying private-sector jobs. Investors both personal and institutional would also be harmed by the elimination of the markets that support some of the largest companies in the country. Although shareholders of some insurers have seen their investments grow by up to 600 percent since the Affordable Care Act was passed, they will not be happy to see these investments lose value.

Pay cuts, job losses, and diminished shareholder value all mean less tax revenue for our already strained federal budget. Any new public health insurance option will cost billions, and Medicare for All could cost up to $3 trillion per year. Planning to spend more and take in less does not sound like a good idea. Instead, political, business, and health care leaders should come together quickly to promote true transparency and use market forces to improve quality and eliminate waste, fraud, and abuse in our health care system. If we fail to develop a positive alternative to a government takeover, I fear there will be negative consequences for all.

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