The health of our Hilton Head Island real estate market, and indeed the national market, is dependent upon a variety of economic issues that now face our country. Our success as a nation is inextricably woven together through a number of issues ranging from employment to energy policies and taxation to banking, just to name of few. At the forefront of today’s headlines is the battle over health care. A client of mine and close friend, Lary Loew, owns the largest full-service employee benefits insurance agency in West Virginia. He recently went to Capital Hill and made a presentation to members of Congress on the subject of public health care. Along with the assistance of many others, the following information was made available to all of our country’s 100 Senators: “Before we can understand the results of a Public Option, we must first understand the current health care marketplace. While these are West Virginia numbers, they are reflective of every state’s problems. In West Virginia, 53% of hospital patients have their healthcare covered by either state or federal government plans which pay 82% of the actual costs. Another 16% of the hospital patents are uninsured, of which the providing source receives 10% of the cost. The remaining 31% of hospital patients are covered by private insurance company health plans and pay 177% of actual costs. In 2008, government plans in West Virginia represented almost 53% of hospital patients (in-patient and out-patient). These government plans include Medicare, Medicaid and PEIA (Public Employees Insurance Agency). Last year these plans paid on average only 82% of the real cost that hospitals incurred for services rendered, or simply put, hospitals lost almost 18% on over half the patients they treated. Also, an obvious problem is the uninsured. They represented almost 16% of hospital patients in West Virginia. Hospitals rarely collect any payments from these patients and collectively receive less than 10% of the cost they incur for their services. The balance of 31% represents the hospital patients that are covered by private commercial insurance companies. Most hospitals in our state and the U.S. in whole are not-for-profit. Even though there are no profit motives in these hospitals, it is still important that they break even so their doors can remain open. Now do the math. In order for these hospitals to break even, private commercial insurance companies are forced to pay 177% of hospital costs. That is exactly what happens in West Virginia with these costs transferred to your insurance premiums. The proper term for this transfer of cost from government plans to commercial insurance companies is often referred to as cost shifting. The 18% underfunding by government plans is shifted to the commercial insurance companies. The 90% of the underfunding from the uninsured is also shifted to the private insurance companies. If our federal and state governments paid just 100% of the costs to hospitals, our insurance premiums could fall by more than 20%. If the 16% of the people who are currently uninsured were covered by some sort of insurance, the same premiums could fall by an additional 20%. If this were to occur within the private insurance sector we would have a solution. While these are West Virginia numbers, they are reflective of every state’s problems. The same cost shifting occurs with physicians, just at a smaller level. If this Public Option happens many future physicians will be discouraged from entering the medical field and some of the best will refuse to participate with this plan. This leaves some of the best physicians available only to the very rich on a pay-cash-as-you-go-basis. Now let’s talk about the result of a new Public Option if it were introduced into the hospital marketplace. If this plan were only used to insure the uninsured you could make the case that the reimbursement for this sector would improve from 10% to 82% and some cost shifting would be eliminated. Unfortunately, this is not the concept that is being introduced in any of the plans now in Congress. The Public Option will be used to compete with our commercial insurance companies. Unfortunately, this competition will not be on a level playing field. This Public Option is intended to be priced 20-25% below market rates. How does this happen? First, reimbursements to doctors and hospitals will be substantially less than reimbursements made by commercial insurance companies as explained earlier. Secondly, these plans will be subsidized from your tax dollars. Under the current business climate most small businesses will have no choice but to select this Public Option.. As more and more employers choose this option commercial insurance companies’ share of the marketplace will diminish each year until they are forced out of the health care marketplace. It doesn’t stop there. As hospitals see their revenues fall from more and more patients entering their doors with less-than-cost reimbursements, financial pressures will force them to look for a government bail-out plan. Within 3-4 years we will see another large bail-out of the entire hospital system. I hope this helps you understand why any Public Option is only a predecessor to a full-blown, single-payer National Health Care Plan.” Michael G. Broadhurst Carolina REALTY GROUP This e-mail address is being protected from spambots. You need JavaScript enabled to view it (843) 384-6134 www.waterfrontlinks.com www.thebestaddressintown.com