side effects on drugs

Click here for Main Menu+

The Collapse of the Health Insurance Industry

Posted on Sep 15, 2010 by in Featured, Portfolio | 277 comments

The Collapse of the Health Insurance Industry

R. Michael Kalthoff 10-23-12

We are on a path to the collapse of our healthcare financial system under Obamacare. Even if Obamacare is vacated then repealed this year, without major open-market reforms, healthcare’s financial system will still collapse between 2015 and 2018.

Vulnerable to this financial collapse are many private-sector companies who transact the finances of the healthcare industry. This list is dominated by the health insurance companies, then hospitals, physicians and consumers, as well as a myriad of supporting companies that handle billing, cash management, etc.

How do I know that collapse in healthcare is coming? The financial collapse of any industry can be foretold by looking at single-industry, multi-year excessive inflation and related government legislative action. One example would be the housing “bubble” that built up due to lax mortgage regulation, which led to lax credit policies, which led to the 2008 collapse of the housing financial industry, which nearly bought down the global financial system overnight.[EXPAND Click to expand!]

Another bubble has been forming for decades in the healthcare financial industry. Excluding higher education, healthcare’s annual inflation has been rising much faster than any other sector of our economy. Since the 1990’s, healthcare costs have been increasing at 2-4% per year more than average inflation. In any one year, this doesn’t sound like a lot, but added up over the last few decades, we are fast approaching a situation where these growing costs can’t be paid for by the rest of society. The burden is simply too great. Healthcare costs continue to grow at an alarming rate and are now consuming 17% of our entire economy and will reach 20% in just a few years. I believe it is at this point, the healthcare house-of-cards will collapse and will likely bring down the rest of our economy with it.

Some may argue that providing financial support to Medicare recipients to help them purchase private sector insurance will solve this looming crisis. Yes, this will bring some economic efficiency to the overall healthcare industry, but it will not solve the underlying cause of excessive inflation in healthcare. And until that cause is addressed, healthcare’s financial system will collapse in less than 6 years.

Some may argue that Obamacare has fixed healthcare and averted a collapse. Not true. Obamacare has actually shortened the time to collapse by 1 to 2 years because it never addressed the cause of excessive inflation and it adds financial burdens to the healthcare industry, which will impact all other industries. Obamacare increases taxes to healthcare companies and those costs will be passed on to the employer and then to the employee/consumer. This law also imposes thousands of pages of new regulations on nearly every business in healthcare, which will result in higher overhead costs needed for them to understand and comply with these new regulations. In fact, Obamacare has the potential to generate more pages of regulation than all other federal regulations combined. This law will certainly deal a fatal blow to the healthcare financial industry.

How is the private sector reacting to this crisis? Yesterday, Adecco, a global staffing company was quoted in a Reuters article titled, “Healthcare Costs Top U.S. Executives’ Concerns: Adecco Survey.” They polled senior executives and found that, “55 percent named healthcare benefits as their biggest current business challenge.” It is this challenge that will drive more companies to move the cost-risk of health insurance to their employees. And as I wrote in my previous article, “A Seismic Shift in Healthcare Starts Today,” major corporations have just started to limit healthcare cost-risk by giving their employees the cash to buy their own health insurance. In order to shed the risk of rising healthcare premiums, within 2 years, most companies in the U.S. will adopt a similar strategy forcing the health insurance buying decision to switch from employers to employees (consumers) who can then shop for lower-cost health insurance policies and drive down premiums.

Since health insurance companies cannot control medical cost inflation (as history has shown), this reduction in premiums forced by consumers will lead to an erosion of the income of private health insurance companies. They will be able to financially survive for a short time due to their strong cash positions, reorganizations and layoffs, but eventually an unrecoverable financial cascade and an eventual collapse of the healthcare financial system will result. In response, hospitals and doctors will see their incoming revenue sources move from insurance companies to consumer cash which will likely result in a growth of personal bankruptcies due to medical cost liabilities.

The major auditing companies who audit the books of all health insurance companies need to provide a sobering assessment of the risk of collapse and tell these companies and their shareholders what they could be facing.

Healthcare’s financial collapse will devastate the health insurance industry to be sure, but the effect on the physician community will have decades-long consequences. The long-term effects on an economic system when the fabric of that system is reduced or removed cannot be overstated. Core to the fabric of our medical system is, of course, our doctors. The collapse of our healthcare financial system will cause thousands of doctors to leave their profession. Doctors are not easily replaced. They each have 6-10 years of post-college education needed for them just to begin practicing medicine along with tens-of-thousands of hours of experience treating all of us.

Physicians over 50 are the most likely to leave their practices, resulting in the remaining physicians to become overworked. This will drive down the quality of care, drive up wait times for vital testing and surgical procedures and will create a spike in the demand for pain medications for those who have to wait months for treatment.

The Secretary of Health and Human Services has been granted a tremendous amount of authority in Obamacare (over 1,500 edicts) and many parts of Obamacare were vaguely written, allowing for further governmental takeover of healthcare. With declining reimbursement rates and increasing regulations, more and more doctors will be forced out of private practice and will seek employment through Obamacare-regulated Accountable Care Organizations. This will be the first major move to a government-run healthcare system where physician pay will continue to drop and wait times for exams and treatment will extend weeks to months, just as they have done in Canada, England and Russia.

It is my belief that there is only one way to avoid the collapse of our healthcare financial system. As I wrote in my book, “Saving Private Healthcare,” we as a country must adopt major open-market healthcare reforms that will move all of healthcare to the open-market. The open-market has worked well for all other sectors of our economy for many decades. It will work well for healthcare if the reforms are written and implemented properly.

We must:
• Repeal all of Obamacare
• Remove all medical/financial contracts between physicians/hospitals, health insurance carriers and the government
• Remove all public and private-sector medical price controls
• Stop all managed-care activities
• Stop personally suing doctors for medical malpractice
• Establish structures and remove obstacles that enable robust medical and insurance competition based on direct consumer purchase, open pricing and quality
• Get our government out of the business of medicine

If we make these changes, as I have outlined in my book, then by 2022, we will bring down healthcare costs by $2 trillion per year, while increasing the quality of medical care, and enabling physicians to take home more of their hard-earned income.

Only bold and decisive action will save the day, not piecemeal, half-baked and overly complicated changes. True and sweeping reform is not easy but we must do it if we are to avoid certain collapse of our healthcare financial system.

Michael Kalthoff is the author of the book, “Saving Private Healthcare,” available now on Amazon.com. This is the culmination of a 5-year effort that takes a critical look at our current healthcare system and describes a robust, forward-thinking plan and approach to actually fixing our healthcare system for generations to come.

[/EXPAND]

277 Comments

  1. cialis non generic cialis
    [url=http://buygcialisonlinerx.com]buy cialis online[/url]
    correct dosage of cialis 20mg
    generic cialis online

  2. el cialis y levitra

    [url=http://cialisonlinehocheap.com/]canadian cialis[/url]

    cheap cialis

    cialis ogni due giorni

  3. canadian cialis online
    [url=http://buygcialisonlinerx.com]buy cialis[/url]
    safe cialis pills
    cheap cialis

  4. buy generic levitra australia
    buy levitra online
    buy levitra with dapoxetine
    [url=http://levitramqo.com/#]levitra[/url]
    buy 40 mg levitra

  5. cialis cipla

    [url=http://canadiancialisonlinex.com/]cialis online[/url]

    buy cialis

    wow look it order cialis

  6. how much for 50 mg viagra

    [url=http://viagracanadiancheapl.com/]generic viagra[/url]

    viagra

    canada viagra welcome to

  7. how to import brand cialis

    [url=http://canadiancialisonlinex.com/]cialis[/url]

    generic cialis

    cialis dosage men over 70

  8. There are some attention-grabbing cut-off dates in this article however I don抰 know if I see all of them center to heart. There is some validity however I’ll take maintain opinion till I look into it further. Good article , thanks and we would like more! Added to FeedBurner as well

  9. prescription de cialis

    [url=http://canadiancialisonlinex.com/]canadian cialis[/url]

    cialis

    1canada cialis generic

  10. prix cialis lilly

    [url=http://cialisonlinehocheap.com/]cialis[/url]

    buy cialis

    cialis und ibuprofen

  11. viagra 50 preis

    [url=http://viagracanadiancheapl.com/]generic viagra[/url]

    viagra

    buy viagra in england

  12. wow look it real cialis

    [url=http://cialisonlinehocheap.com/]buy cialis online[/url]

    buy cialis

    el cialis y levitra

  13. cialis belgique forum

    [url=http://canadiancialisonlinex.com/]cialis[/url]

    cialis online

    super-cialis-online-apotheke

  14. cialis paris sans ordonnanc

    [url=http://cialisonlinehocheap.com/]buy cialis[/url]

    cialis online

    exemple ordonnance cialis

  15. buy viagra in pietermaritzburg

    [url=http://viagracanadiancheapl.com/]canadian viagra[/url]

    buy viagra

    sex mit viagra cialis levitra

  16. only here cialis mastercard

    [url=http://canadiancialisonlinex.com/]cialis online[/url]

    buy cialis

    cialis for bph cost

  17. I simply had to say thanks again. I’m not certain the things I would’ve created in the absence of the actual pointers discussed by you about that question. This has been an absolute horrifying circumstance in my view, nevertheless discovering this skilled technique you managed that forced me to jump over delight. I am just grateful for your service as well as believe you realize what a great job you have been doing training others using your blog. More than likely you’ve never encountered any of us.

  18. click now cialis cheap canada

    [url=http://cialisonlinehocheap.com/]generic cialis[/url]

    cheap cialis

    cialis seriose online apotheke

  19. order levitra online no prescription
    levitra online
    best buy levitra
    [url=http://levitramqo.com/#]buy levitra online[/url]
    order levitra professional oo

  20. we choice cialis alternatives

    [url=http://canadiancialisonlinex.com/]cheap cialis[/url]

    cheap cialis

    medical m cialis

  21. Hey there! Do you know if they make any plugins to
    help with SEO? I’m trying to get my blog to rank for some targeted keywords
    but I’m not seeing very good results. If you know of any
    please share. Many thanks!

  22. A lot of thanks for all of your efforts on this site. Debby really loves engaging in investigation and it’s easy to see why. Almost all learn all relating to the powerful medium you make reliable secrets on the web site and in addition foster response from people about this issue and our child is without question being taught a lot of things. Have fun with the remaining portion of the year. You’re the one conducting a brilliant job.

  23. cialis dalla svizzera

    [url=http://canadiancialisonlinex.com/]cheap cialis[/url]

    buy cialis online

    look there pfizer cialis 50mg

Submit a Comment

Your email address will not be published. Required fields are marked *