• csmi61

Why Aren't They Attacking Cost REDUCTION?

The healthcare debate still assumes that, by and large, the best we can do is limit the increase in healthcare costs. There is precious little discussion about slashing the cost of healthcare. Yes, every now and then we hear about how EHR will make things more efficient, but we don't hear any game-changing ideas that will truly plummet the cost of at least some aspects of healthcare. So here's one idea:

Offer a capital gains or income tax incentive to companies that offer products and services at 50% or greater discount compared to current pricing. This would not only make large companies rethink their pricing strategy, it would trigger enormous private capital investment in startup companies that can reduce the cost of healthcare, given than the profits from such investments would be tax-free.

As I've written before, medical devices and medical tests are a complete rip-off. The pricing is entirely related to milking Medicare based on the reimbursement rate for a given procedure.

So let's say that Companies A,B and C are operating on this business model of grabbing, say, 60% of the reimbursement by charging physicians $60 for a disposable gizmo to perform a procedure, leaving the doctor to get the other $40. Company D comes along and offers the same equipment, but eliminates the disposable piece, or sells it for what it really costs plus a nice margin, probably $9.95. Further, they mandate that their physician customers obtain this pricing only if the physician agrees to bill Medicare $50 for the procedure. Company D now has tax-free income as do its investors. Medicare now pays half of what it paid previously.

Now let's extend this offer to the physician. If the physician now decreases his charge to Medicare even further, and bills Medicare half of his original margin, $20 instead of $40, the physician gets to earn that income tax-free.

The idea is simple - provide tax incentives to the medical industry to DECREASE costs, rather than the perverse system we have now, and share the taxpayer savings with the industry.

Too complicated? Compared to what? The current healthcare system, or the current tax code?

We have to think outside the box, and we have to create incentives to lower costs. Unless we do that, this healthcare reform will end up costing us far more than the existing system, since it has to cover more people and does not have sufficient mechanisms to LOWER costs.

The bill that eventually emerges MUST have mechanisms for not only covering more people, but for addressing the cost side in a truly meaningful way that opens the floodgates of creativity to deliver low-cost healthcare.

21 views0 comments

Recent Posts

See All

A lifelong friend in New York recently told me, "Clive, I don't call you because I don't want to talk, but because I really do want to talk." The same applies to blogging on Thinklabs website - I've h

This week cannot pass by without observing the passing of a giant of the computer world. It is a rare thing for one person to touch the lives of billions of people, for one's work to have a global inf

The Nobel Prize for Medicine was just announced and one of the winners, Dr. Ralph Steinman, died of Pancreatic Cancer 3 days ago. What can one say, other than this is a cruel irony - that a researcher