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One Moment, Please... Healthcare.glitch


Fri, Nov 15th, 2013
Posted in All Commentary

At a contracted price tag of $634 million, you’d think that the portal website www.healthcare.gov would work just fine. But, it fell flat on its face, and this is to be expected. After all, it’s a government project.

I could refer to companies like Apple, Amazon, eBay and Google, and how they could get the job done for a fraction of the price, but I won’t do that. Instead, I’ll refer to the equation of 106,000 people signed up for insurance through “healthcare.glitch” at a price tag of $634 million equals $5,981.13 per insured user, thus far. The goal was set at 500,000 users by now with expectations of hitting 7 million users by March 2014. The wasteful spending on this project only compounds the problem. If we truly want to help people with healthcare coverage, wouldn’t the amount spent on this website have been better spent on actual healthcare?

All of the money exhausted on the website doesn’t even take into consideration the amount of funding needed to employ more federal and state employees to administer the exchange programs. There will continually be more and more money tied up in facilitating healthcare coverage than actually providing healthcare coverage for uninsured individuals. Sad but true. And, ironically, ALL government employees receive better healthcare coverage than those who are signing up through the government-run healthcare exchanges. Isn’t that hypocrisy?

But, this epic failure to deliver has nothing to do with whether it was spearheaded by a Republican or a Democrat. It has everything to do with how we govern. The United States government operates with little accountability and wasteful spending, and all at our own expense -- the taxpayers.

And, as you’ll find on software developer blogs all over the Internet, this project wasn’t flawed because of the Affordable Care Act. It fell apart because there were “too many cooks in the kitchen.” With multiple software application contractors, there is an eclectic mix of talent and ego. Everyone is building their portion and when functionality hinders progress, the fingers start pointing in every direction. The Fillmore County Journal has a sister company SMG Web Design, and we have learned over the past four years to only take on projects that we can manage with internal resources. We have had a handful of projects that involved collaboration with other contractors. If everyone isn’t on the same team, and all accountable together for the completion of the entire project, lines get blurred. On a grander scale, healthcare.gov fell victim to a common problem in website development. Too many contractors, head-in-the-clouds-oversight, and unrealistic timelines were mostly to blame.

While Republicans will use the platform of a flawed website roll-out as reasons not to support the Affordable Care Act, pointing to the Democrats as poor leaders, the reality is that Republicans would be guilty of the same bureaucratic oversight. It all gets back to how poorly we govern, and both the elephants and the donkeys are to blame. We have the fox guarding the hen house -- a part of the problem, not the solution.

But, aside from the ailments of “healthcare.glitch,” we have much bigger problems with the Affordable Care Act. Many people in Fillmore County are finding out that their premiums are increasing in early 2014 for the same coverage and possibly even higher deductibles, mostly to subsidize providing healthcare for those President Obama promises to care for with his new plan.

Unfortunately, solving the problem of rapidly increasing healthcare costs will not be resolved by addressing the issue at the level of a third-party administrator -- insurance companies. The Affordable Care Act actually feeds the mighty beast of our financially bloated healthcare system.

What is affordable?

We need to address healthcare costs at the institutional level. Why do we pay $48 for a hospital gown that we only wear at the hospital? Why do we pay $12 for a box of Kleenex that we never use in each room during an overnight stay?

Why does healthcare cost so much? How much wasteful spending takes place at the Mayo Clinic, for example? They are a not-for-profit organization that has to buy up properties (making them tax exempt) all over Rochester and remodel their facilities continuously so they keep their profits minimal. Healthcare costs are increasing at a pace far beyond inflation, wages, and fuel prices, yet we are focused on fixing the problem with insurance coverage?

So, why are healthcare costs rising at an institutional level? Answer: excessive wages and wasteful spending.

A resolution addressing the source of the problem seems more logical, otherwise the Affordable Care Act will some day become the Un-affordable Care Act.

Value of benefits

And, furthermore, I think all of us need to understand the impact of healthcare coverage for employees. If a premium for a family of four is $700 per month, and the state of Minnesota requires the employer to pay $350 (50 percent) of that premium, the employer is contributing $2.02 per hour for a 40-hour-work-week full-time employee for their portion of premium coverage. So, if an employee makes $14 per hour, they are really receiving $16 per hour without necessarily seeing that compensation in their gross pay. And, this doesn’t take into consideration if they are receiving any other benefits like a company matching 401k or Simple IRA.

If history is any indicator, with insurance premiums increasing at a pace of 15 percent up to 31 percent each year, we will see premiums increase at a pace over the next 10 years at which employers will be subsidizing upwards of $13 per hour per eligible employee just for healthcare insurance coverage. And, that’s the amount the employer will have to pay, not counting the additional 50 percent that the employee will have to cough up.

So, when we talk about wage increases and associated benefits, we are going to need to start thinking in terms of the total package as a reflection of compensation. If you received a 3 percent wage increase plus your premium went up as a result of rising healthcare costs, your employer kicked in more than 3 percent as part of your total compensation.

Sadly, increasing healthcare coverage costs could lead us down a path of stunted wage growth for everybody else who doesn’t work in the healthcare sector. Note to self: encourage my kids to go to medical school.

Dental care

My last point that I have drilled before, which seems to get sidelined with this entire Affordable Care Act, is the importance of dental care. I remember 20 years ago when employers were able to support decent dental care coverage. Today, most employers have backed off from any sort of dental care coverage, because premiums have exploded over a short period of time. So, a good majority of employees of companies all over America have healthcare coverage, but minimal or no dental care coverage. And, what’s interesting and often overlooked, is that dental care has a tremendous impact on our well-being. Why are we placing such a low value on dental care?

As with any change in public policy, there is cause and effect. It will be interesting to watch how the free market responds to the implications of the Affordable Care Act.

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