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The more covered lives the better for America

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Jonathan H. Burroughs, M.D.,  a fellow of the American College of Healthcare Executives and the American Association for Physician Leadership, discusses in Hospital Impact the importance of having as broad a patient base as possible in private- and public-sector insurance plans.

He poses the question:”Why are covered lives so important, and why should America pursue the ultimate goal of 100 percent healthcare insurance coverage rather than the ‘freedom from obligatory coverage’ that seems to have politicized the healthcare reform movement in the last decade?”

He answers:

  1. “Health insurance is more affordable if everyone participates.”

“In any population of covered lives—be it Medicare, Medicaid or commercial coverage—the rate of spending forms a pyramid, with the top 1% of people (with life-threatening diseases and injuries) making up 23% of the total spend and the top 5% (with multiple chronic diseases) making up almost 50% of the total spend. The healthy 50% of the population, which spends very little (less than 7%), makes up the base of the pyramid and provides the premium payments that enable the top 5% to receive care.”

  1. “Everyone pays for uncovered lives.”

“Next time you visit your local community hospital, you should ask healthcare administrators what their charity care and bad debt rate is and how they pay for it. If they are honest, they will tell you, you do that through cost shifting. What is cost shifting? It is paying $2,000 for a CT scan that costs the hospital $300 per unit volume to do. It is paying $500 for a medication that costs the hospital $25. It is paying an emergency medicine charge of $600 for a physician who gets paid $200/hour by the hospital, including benefits.”

“In other words, since any economic entity cannot afford the significant percentage of charity care (inability to pay) and bad debt (unwillingness to pay), it shifts that liability to the consumer through higher rates. Some organizations cost shift to the tune of more than 500%: Each individual who pays covers the costs of four other people who cannot.”

  1. “The average working American is one serious illness away from personal insolvency.”

“Healthcare is now the No. 1 cause of personal bankruptcy among working Americans. The average American family has approximately 90 days of cash on hand, which means that following removal of all paychecks, the average family would only have enough assets (including life savings, mortgage and retirement) to cover their costs for three months. An unexpected, life-threatening illness such as cancer can have a devastating impact on a family’s finances and place people in terrible conflict by having to choose between their family’s economic security and a person’s ability to survive.”

  1. “Health is the great economic stimulant.”

“You cannot work when you are unhealthy. Ask any large employer, and they will tell you that the costs of presenteeism (coming to work when ill and not being able to do your job) are even greater than the costs of absenteeism (not coming to work at all).”

“Meaningful healthcare reform will only be possible with more covered lives and more affordable coverage in a business model that is sustainable for all economic entities and stakeholders. The unfortunate trend of Democratic or Republican cabals negotiating secretly into the night is not a constructive model for change. It will only continue to divide the nation and fail to create the type of healthcare system that the country desperately needs.”

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