Thursday, July 23, 2009

Understanding Healthcare costs

Whenever we think that something "costs too much", it is helpful to understand how costs become costs. What goes into the price of (in this case) healthcare? After all, the great policy debate of healthcare is about "lowering costs"? Congress's Speaker of the House, Nancy Pelosi said that healthcare reform can be summed up in two words..."Lowering cost".

In healthcare, the costs have skyrocketed in recent years due to factors above and beyond the simple calculation of a medicine or health service. two things come to mind quickly:

1) Bureaucracy -There are medical practices in America that have on staff more people that do administrative work than there are people to provide healthcare service. Our healthcare system is overloaded with paperwork. Insurance forms, medicaid, medicare, federal reports, state & local reports and so on. This massive cost ends up as part of "healthcare costs".

2) Legal costs- We live in a litiginous society, unfortunately. granted, some of it is necessary. But in recent years costs tied to legality and lawsuits have risen dramatically. It is now very common for many in the medical profession to pay malpractice insurance that is in six digits (or even seven). In other words, part of being a medical professional is to pay over $100,000 per year just to keep yourself from being sued out of your job!

Current healthcare proposals will do little (nothing?) to address these two very expensive components of "healthcare costs". But...if you think healthcare costs are high now, what do you think it will be after so-called "reform"? the "math"...

Before "Reform": Healthcare costs
After "Reform": Healthcare costs + 31 new federal bureaucracies

Ask your representatives in Congress to come up with the "new costs".
Hint: the total amount will be north of $1 trillion on top of current costs.

I can sum up my feelings about healthcare reform with one word: YIKES!

Wednesday, July 15, 2009

Paul Mladjenovic

Hello everyone!

There is so much happening that I wanted to get this blog going so that I can share what I can about the economy and financial markets. new postings will come soon...

Stay well,
Paul Mladjenovic