Why do medical insurance, HMO’s and PPO’s cost so much? Do Obama, the administration, and the congress have any answers? Most people do not realize that nearly all the health care dollars that are spent (about 70%), are spent by the federal and state governments; but mostly by the feds.

If you doubt this, add up Medicare, Medicaid, VA, and Federal Employees health plans. We have had socialized-type medicine for years. The only difference is they do not call it that. The one that is the most like European health care is the VA, which anyone treated at the VA, knows is not ideal.

So why does your group health insurance increase 12 to 14 percent a year or more? There are many things driving the health care pricing; the biggest is the cost shifting hospitals and doctors are forced to do to keep the lights on. Medicare and Medicaid pay for all services based on a fixed-fee schedule. No hospital or doctor can legally charge more than what that schedule allows. So how does this cost shifting work?

The Feds decide to lower a payment for a class of procedures, or DRG’s (Diagnosis Related Group) as they are called, by 20 percent. You are a hospital and you receive $5 million a year for that DRG, and now you will receive $4 million. You do not have overhead that can be cut, so you decide to bill more for the only patient class that is not based on a strict schedule—your patients with private health insurance. So they charge you $30 for a ten-cent Tylenol. This has been going on for years. The Feds are in a sense taxing all of us who are not part of their system, because we are forced to pay more for our own private health insurance.

So if the system that the government cannot fund itself without its cost being pushed to those with private health insurance, why would we want them providing our health care? Also, name one thing that the Federal government does that is efficient and cost effective. Do not say the post office; yes, they do get the mail to us, but they are billions in the red right now.

Some things the Fed could do to help drive the cost of health care and health insurance down:

• Stay out of the health insurance business. The private sector is not great, but it works better than the Fed’s programs do.

• Have the leading medical schools in America develop an online database of best practices for all health care treatments. And put in some incentives like limiting malpractice exposure for MD’s and hospitals to follow. Example: A person needs a hip replacement. There are many choices for the implant with different prices, and all may have the same result. Why should the most expensive option be used if it yields the same result as the lower cost one?

• All MD’s should have electronic medical records in one central location and one system so multiple doctors can view the same patient’s records. This would eliminate double testing and drug interactions. The Fed’s need to mandate one system via Medicare.

• Give F-1 Visa’s to any foreign student graduating from a US college with a master’s degree in medical research fields or Bio Engineering. We do not want to lose these top minds to other countries; keep them here in the USA where they were educated, and give them full citizenship after five years. The cure to long-term cost of health care is more cures for disease (cure cancer, diabetes, heart disease, and health care costs will plummet. Health insurance premiums will be the cost of auto insurance)

• Cut Federal spending and direct more money to medical research but instead of sloshing money around, create a national contest. Offer the company that cures diabetes no taxes for 10 years and a $5 billion dollar award; do the same for all the other leading diseases.

• If a drug or medical machine is approved by the FDA, then eliminate the drug maker’s liability to lawsuits except in cases of fraud.

If we implemented these changes, we could easily keep this ever increasing health care expense from destroying our economy. HCP National is a Southern California Employee Benefits Broker.