If you listen to politicians, you may have heard that our corporate tax rate, being one of the highest is curtailing growth of our job markets in the USA.
The NY Times recently reported that at Warren Buffet’s (of Berkshire Hathaway Fame) annual shareholder meeting, the Oracle of Omaha as he is called stated that while lowering corporate tax rates may help, the real problem is the tax that is known as healthcare.
Like it or not, healthcare costs and health insurance is a tax, and the percentage of our incomes it consumes is growing, while the actual quality is not on par with the rest of the world.
In a recent discussion with a woman who works for a company called NJ Institute of Technology who was hired to help doctors reduce costs, develop better referral habits and earn bonuses through Medicare, she said hospitals and doctors offices are not interested in her help or meeting with her in many cases.
In her experience, organizations such as Summit Medical Group that has multiple specialists under one roof are not very cost effective even though they are participating with the CMS medical home program. Medical home programs were promoted as “primary care that is patient-centered, comprehensive, team-based, coordinated, accessible, and focused on quality and safety”. Medical homes according to a 2014 study NCQA do reduce hospital admissions and reduce costs, but is the model a cure or does it put a pig on a diet to shave off a few pounds.
The problem starts with our current model of primary care and our fragmented delivery model
Years ago a primary doctor would spend time to help you through your problem. Today, your primary likely spends 10 minutes with you and then refers you for tests and specialty visits, fragmenting the care, while each specialists charges for their services on a fee for service model. This highly fragmented system that developed since the 1960’s has not cared about costs until recently, and rarely, has the value of this system been questioned. Shaving off some costs, while the system as a whole is purely overpriced, drug dependent and based on disease management is not a truly cost effective model. Perhaps, we need to simplify our overly complex way of diagnosing and treating the parts and instead look at the systems of the individual that a patient centered approach should do.
Hospitals have profited handsomely from this fragmentation of care, as well as the doctors. Is it any wonder the woman from NJIT is frustrated by the lack of interest in hospitals and large practices to meet with her? The services and the fees generated are relentless, and make little sense. Most doctors are paid a much lower fee than most insurers are billed for, so not having insurance leaves you in the position of having to sort this out. It has been estimated that as much as 25% of the costs associated with hospitals is due to administrators who often are paid more than doctors are, according to The Commonwealth Fund, which is more than any other country in the industrialized world.
The result of this mess is that each year, without fail, the tax we call health insurance goes up, even if a company is self insured. Health insurers, without fail have figured out the perfect formula using tiers, smaller networks and the fact that they have been part of the complexity problem continued to raise premiums for healthcare services. Obamacare only allows them to use 20% for administrative and other costs, which has incentivized them to increase healthcare costs by adding to confusion and complexity, consolidation of practices and hospitals which gave these institutions more pricing power, while passing the costs on to us. This endless spiral has pushed up healthcare costs, increasing the amount they make since their slice of the 20% gets larger the more we pay. Read about the real math behind healthcare costs here.
Check out Warren Buffets comments in the NY Times here
Forget Taxes, Warren Buffett Says. The Real Problem Is Health Care.
Andrew Ross Sorkin MAY 8, 2017
MAHA — “The tax system is not crippling our business around the world.”
That was Warren E. Buffett, the chairman and chief executive of Berkshire Hathaway, over the weekend at the company’s annual meeting, known as “Woodstock for capitalists.”
Mr. Buffett, in a remarkably blunt and pointed remark, implicitly rebuked his fellow chief executives, who have been lobbying the Trump administration and Washington lawmakers to lower corporate taxes.
In truth, Mr. Buffett said, a specter much more sinister than corporate taxes is looming over American businesses: health care costs. And chief executives who have been maniacally focused on seeking relief from their tax bills would be smart to shift their attention to these costs, which are swelling and swallowing their profits.