top of page
Search

$1.6 Trillion Healthcare Lottery Ticket?

If the US spent on healthcare per person what other developed nations (Germany, France, Canada, Japan, etc.) spent per person, we could give every person in the US (man, woman, and child) a $5000 check every year from what we saved. This overspending amounts to $1. 6 trillion dollars in wasted spending. This overspending is not only real, but well documented.


Picture from The Commonwealth Fund

Incentives and Disaster


Healthcare consumers have no choice and little voice on how healthcare money is spent. When consumers cannot choose and vendors trend to regional and national monopolies, providers have incentive to increase prices to highest levels the market will put up with.


When people say the healthcare business is a market, what they really mean is it is a business that includes for profit companies. More than 50% of healthcare is paid for by the government largely in the Medicare and Medicaid programs.


Healthcare is not a market with consumers having an ability to choose from a variety of vendors based on the consumers sense of value. Even worse, market power is shifting increasingly to healthcare providers and intermediaries with private equity companies running at full tilt to the high profit opportunities in the industry. With that shift come disastrous consequences.


The Government Calvary Is Not Coming


Some would argue that we need to nationalize healthcare to make it fair and start on the road to bring this industry to a better place. The current situation in healthcare shows the government is not the answer.


The healthcare lobby is one of the largest both nationally and locally, and this powerful financial and political force is already coopting efforts at true reform. There is frequent pricing abuse, and fraud with government watch dogs in place. Remember the opioid crisis.


Employers, Incentives and Market Balance


There is one powerful group that has a market incentive to reduce the price of healthcare and improve quality - private employers. Private employers have the incentive and the political and financial clout to move healthcare towards a balanced market. The largest category of non-government spending on healthcare is private employer sponsored health plans which account for about 40 percent of the spending.


Almost 78% of private employers with over 1000 employees offer a self-insured health plan option. These employers act as a self-interested buyer making choices on provider services, and they consequently reduce their healthcare spending by 20 to 40% while improving their employees’ benefits. Walmart, one of the largest employers in the country has done it at scale with bigger saving and much improved benefits.


CareMoat’s mission is to provide the guidance and resources to employers helping them to participate in better benefits and reductions in spending allowed by self-insured plans.


9 views0 comments

Recent Posts

See All
bottom of page