The Bottom Line on Health Care
Senate Leader Harry Reid, in the fight of his life for re-election in Nevada and hated by the far left wing, has promised to bring their pet project, a $1 trillion government-run health insurance program, to the floor of the Senate in the health care bill. Now they love him, and the White House has been painted into a major corner on this one.
The problem is that the only senators supporting this massive new entitlement program are either (a) Democrats scared to death of what the acidic left (e.g. MoveOn.org, DailyKos) will do to them if they don’t give in to their demands, and (b) diehard left-wingers who are members of the former (e.g. Chuck Schumer, Barbara Boxer).
These supporters of government insurance are running around with these arguments:
- This new government insurance program is just like Medicare, and that works great. Well, Medicare is broke. So it doesn’t really work all that great. But it’s true that it works in that it provides low cost insurance to the highest cost patients. But doesn’t that strike you as a little strange? A big reason is that the health care system shifts the cost of those patients to the rest of us who buy regular health insurance. Get rid of the rest of us, and there is no one to shift the cost to. That’s when this whole thing ceases to “work”.
- But we’ll just take all of the profits from the health insurance companies and that will take care of those costs. If you took every dollar of profit out of those rapacious, greedy health insurance companies, that would pay for four days of American health care. Four days. And if you think health insurance premiums are bad now (and they are), just wait until there is ZERO competition.
- But polls show everyone loves government insurance. That’s what happens when you collude with drug companies and offer to exempt them from the effects of your program if they’ll run millions of dollars in ads to help pass it. Plus, I’m all for representative democracy, but we elect our leaders to look around corners and think about the effects of our initiatives, not just blindly do whatever we tell our pollsters sounds sorta good at the moment.
- We can’t afford not to do this. We need to be a civilized country and have great health care. Actually, we already have a world class health care system that few complain about. But we have a horrible way of paying for it, pricing it and incentivizing innovation and efficiency. Health care is the only consumer staple where pricing is opaque and secretive, and where we use insurance to pay for routine, predictable expenses. Go read about that Atlantic piece by David Goldhill, a lifelong Democrat — his article will make you think twice about the sustainability of either our current course, or the proposed reforms.
The bottom line on health care: every single Democrat and Republican of a moderate or conservative point of view understands that we can’t possibly afford a new $1 trillion dollar entitlement program. Our government is flat broke, and we are talking about putting a massive new burden on the job creators in this economy. Are we crazy?
I was annoyed with President Bush for his lack of discipline when it came to federal spending. The national debt increased tremendously in his eight years. But on the other hand, President Obama has been in office for 10 months, and has already increased the national debt by 9% — $1.325 trillion dollars. At this rate, if government insurance were to pass, President Obama would nearly double it with $9.3 trillion in new debt in his four year term.
This spending spree has got to stop. This isn’t about opposing a Democratic president. It’s about opposing unsustainable practices for our country.
I think we need health insurance reform in a big way. I’m working on a post with some of the best ideas I’ve heard about fixing our system. I’m by no means a health care expert, but I’ll be the first to say that we need to do SOMETHING.
Now, here’s something new.
I know from the Google stats and from some of you e-mailing me that we have a lot of “silent readers” of this blog, and I think you all have a lot more to contribute to the conversation than you have so far. So we’re going to hold a little contest to try to draw a few of you out of your shells. 
Answer the following question with a comment here on the blog, and you’ll be entered in a contest for a copy of Who Killed Health Care: America’s $2 Trillion Medical Problem by Professor Regina Herzlinger (paper or Kindle edition, your choice). This book is sitting on my Kindle in the to-read pile. I’m quite sure I don’t agree with every one of her recommendations, but it looks like an excellent read.
So, here’s the question…
What is the best idea you’ve heard for fixing the health care system? If it’s something I’ve disagreed with here, go ahead and make your case for it — but I’m also hoping to hear about other ideas that are sustainable, affordable and will produce real results — bending the cost curve while making insurance affordable and accessible for more Americans.
I believe the one small step that would do the most good is to take a cue from Auto Repair shops. Here in CA, they must post their rates in a highly visible location. If all health providers had to post their rates (and charge them to all customers, including the uninsured), competition would be possible. Now, does anyone really know what they (and their insurance) are being charged? (Thanks to Gregg Easterbrook, among others, for the idea)
1 Tort Reform, similar in scope to Texas' current setup.
2 Encourage people to purchase high-deductible plans for use not for normal doctors visits and regular service, but for emergencies and high-cost services.
3 Remove regulation preventing main-stream medical services from running like currently competitive services such as Lasik and plastic surgeries, both of which offer higher value and lower cost today than 10 years ago.
4 Echoing Fiddlrts, encourage awareness of the cost of services, which combined with patients paying out of pocket for regular care and the competitive market, will keep competition high and costs low.
End the fee for service system and eliminate malpractice insurance altogether. Replace pay for fee with SALARIES. End malpractice insurance with per-visit insurance paid by the patients.
What would replace the fee for service system, Josh?
I get fee/wage replacement, but who would pay the salary?
First of all the US Government can not run a business. Under their control, we would have a huge mess that would be very hard maybe impossible to change for the better. This country is in for a terrible time as long as these Democrats are in control. God bless the rest of us.
Emliminate fee for service and it almost doesn't matter who pays. Medicare/caid, Group/private insurance, out of pocket, government option…
Health planning and costs would be much easier to calculate and a doctor/patient ratio system would determine costs; the skills of your negotiator or how large your group plan truly have no bearing on the actual costs of delivering health care to an individual. Doctors only have so much time in their days and hospitals only have so many beds – whether that person is paying cash, under an individual plan, part of a large group plan etc.
Whether or not we choose to accept it, medicine operates within a market just like every other system wherein there are limited resources and a given level of demand for those resources.
What effect would eliminating fees for service have on frivolous and spurious requests for medical aid?
It isn't exactly easy to say this or that terrible pain is psychosomatic without certain amounts of testing and hospitals and doctors cannot just turn people away for not having significant or real enough symptoms.
“Sorry, but unless the arm is completely green, through and through, we can't admit you for testing.”
Make health insurance like car insurance: everyone has to have at least minimum required coverage, obtained through the carrier of their choice. If they get declined by two or three carriers, they can purchase a bare-bones policy through the government, which is insured through the pool of carriers doing business in that state. Problem solved.
Why this solution? The health insurance behemoth came into existence when it got special treatment to be an employee benefit and turned into a non-portable concept tied inextricably with employment at a large organization. It removed the consumer from having any contact with what is consumed, and insurance companies market the idea of covering day-to-day items to the large corporation that couldn't care less… but makes it wildly unaffordable and impractical for any average consumer, and creating crazy expectations in the mind of those who use it but do not pay for it. It is also administered by HR personnel more concerned about retaining quality employees, and are happy to lobby to have more things covered rather than say “we can't do that due to cost.”
That's my take.
Two more things:
1 Forbid “minimum required coverage” policies to extend beyond general dollar amounts. Forbidding mandatory coverage of elective and/or optional procedures would allow normal people to purchase cheaper plans as they have no need for exotic or elective procedure coverage.
2 Allow purchasing of insurance from any carrier, anywhere, without restrictions by state or region such as currently exist. This broadens the market further, increasing competition for everybody and thereby lowering prices further.
As expressed earlier on this blog there is a simple solution to the public treating health care as a big spin lottery: Something goes wrong, win millions! What we need to do is cap awards, but alllow the patient to purchase malpractice insurance. So if they want to play that game its on their dime, not the health care industry's dime. This would have the added benefit of creating a private structure for rating doctors.
Problem here is the root cause of all this is government restrictions and regulations. Taking away another part of the free market and putting more caps and restrictions in place would only exacerbate the problem further, not to mention the logistical nightmares caused by trying to implement a patient-pay malpractice system.
Tort reform is a separate issue: if we want to do that, let's do it in its own section, and not something specifically designed to “fix” healthcare. Malpractice issues are a problem, but only a small part.
OKay, Aaron, so only 15% of Americans currently don't have healthcare… this turns it into approx 20. Then there's the stories: A. from England about the 20ish kid who needed a kidney transplant and didn't get it… and B. from Canada about the 2+ year wait for hip replacements… how much pain can one stand? The message I get from the owner of my company from England is awful. They give you a certain amount of $$$ when you are born for healthcare and then when you use it up… it's really horrible! Can you imagine the lines, the waits and the positioning?
I actually have a chronic illness… I'm still really young but have really bad kidneys. I am lucky enough to have kids who will, at the proper time, make sure I have a kidney. However, with the new healthcare plan, I probably won't be high on the list for surgery funding…. and still I believe with all my heart that this is a BAD idea. My 22 yr old daughter doesn't have insurance… and still I believe this is BAD for our country!
Then there's the fact that this bill will, in essence, take over the finances of small businesses, which in our country still provide most of the jobs and are already having a hard time. You think unemployment is bad now… we “ain't” seen nothing yet!
This is a great point. The lack of transparency in pricing makes it impossible even for those who are consumers to shop around for the best deal. Some health care organizations have even refused to quote pricing in advance. Amazing.
All great points. Do you know what kind of regulations prevent the scenario in #3? And what kind of services could you see opening up to a more consumer-driven approach there?
I'm not sure I buy that this will work. If consumers want health care, why can't they be allowed to buy it?
Further, how do you “end” fee for service? I'm not sure you can make it illegal to offer medical services for a fee, and I think a lot of new providers would pop up in a free market.
Convince me.
Rationing health care to limit access won't work any more than blowing the door off and providing unlimited free care will.
I think you've got to use a sliding scale of direct cost to the health care consumer (the more expensive or catastrophic the procedure is, the smaller % you have to pay) to allow market forces to work.
Bill – I can't disagree. Medicare is flat broke. I can't expect the government can run an entire health insurance program for the rest of us and do better. I don't care whether you put Republicans or Democrats in charge of it.
I agree completely with your second paragraph. The lack of consumer-centrism in the way we finance and pay for health care is one of the biggest problems we have.
On the mandate issue, how would you enforce that? The current health care reform bill has a mandate with a fine, but as some have pointed out, even when the fine maxes out years from now, it will still be only 25% of the cost of a health insurance policy.
There's also a question as to the constitutionality of forcing people to buy health insurance. It's a decent argument – I don't have an inalienable right to drive on public roads, so I get the car insurance mandate. But I do have an inalienable right to live, and the government has never before been able to force me to buy something to exercise that right.
I have an idea I'll be putting in the next post for accomplishing the same goal without a mandate, but I'm curious if you have other thoughts on the matter. It really is unfair when those of us who buy health insurance in effect have to carry the load of those who refuse not to. (And it's hard to distinguish between those who refuse and those who can't afford!)
1-this is an interesting point. there has to be some level of definition on what a policy covers, or everyone could be insured for $1/year (“full coverage of any stubbed toes while visiting the North Pole! some restrictions apply.”) what's the right balance?
2-dead straight. this is huge and I don't understand why it's not in the current bill. The White House keeps saying some states have only one health insurance carrier. Cool. Fix it with one stroke of the pen. This would pass with wide majorities in Congress.
Oh, that's a very interesting one. I've never really thought about patient malpractice insurance. Fascinating idea…
I would say we can't totally eliminate lawsuits and liability for malpractice, but you could cap it only to direct damages if patient malpractice insurance was available.
But why couldn't patient malpractice insurance be like travel insurance? Seems like there would be a good market for it if tort reform capped malpractice awards to actual costs.
The solution to true malpractice is getting the doctor's license, not money for emotional distress. If someone wants money for emotional distress, why can't they buy an insurance policy to get it? That way, I don't have to pay for their emotional distress.
Not disagreeing with your point, but remember that every American has health care. They just don't have health insurance.
The debate in this country is about how to finance and pay for health care, and I agree with you – rationing will not work, loading up the job creators with more mandates won't work.
We've got to bend the cost curve on health care. It's the only industry where they haven't gone in and taken the costs out and gotten efficient, and it's largely because they don't have to. The only real consumer of health care is the government, and they've never been too great at efficiency.
The rest of us don't know how much anything costs. We think we do (“I paid a $15 copay out there!”) but we have zero understanding of the actual cost.
Great comments, everyone. I hope to do the next post summarizing the ideas and announce the winner later this week!
These are great points… when discussing tort reform. My comments were aimed at showing that mere tort reform – even if fully enacted according to what reformers want – will be little more than a spit in the bucket in terms of its affect on healthcare costs.
It is the market system that is the big issue here, even though the malpractice environment gets just as much media. Create a consumer-driven system without the blind middle that separates user from payer, and you have people who are going to know much more about what they are getting, because they have to pay for it. Greater responsibility (payment) results in greater knowledge, and greater knowledge leads to less surprises. I realize I'm speaking in soundbytes here, but I don't think this program allows for theses…
There is a dichotomy, not only in enforcement, but also in punishment… you can take away my driver's license, but what is the analogy? Will the government seize my health?
As far as enforcement, Ohio would send out random letters to people with license plates asking them to show proof of car insurance. A few stories of irresponsibility and its consequences hit the news, and suddenly the rate of people covered went up significantly. The state could send out similar notices asking for proof of health coverage…
Consequences are a bigger issue, particularly because we're discussing affordability also. And as you mention, there is a much larger reach to this, as I can always decide to just stop driving. But the reality is, this affects everyone. Everyone needs healthcare at some time or other, and catastrophic policies are really not that expensive… and from an actuarial perspective, those costs should reduce even more if everyone participated.
So my thoughts are fuzzy on this as yet, but one idea comes to mind: what about a 50% or 100% rate increase for twelve months for offenders? The simple solution is to make the consequence cost more time, hassle, and money than compliance would. However, the fact that it is easier said than done doesn't make it impossible to do…
Agreed, tort reform isn't a silver bullet, as important as it is.
I'm going to write more deeply on this in my next post. We generally agree but how you structure this matters, both to its effectiveness and its respect for the balance between individual freedom and personal responsibility.
Agreed, tort reform isn’t a silver bullet, as important as it is.
I’m going to write more deeply on this in my next post. We generally agree but how you structure this matters, both to its effectiveness and its respect for the balance between individual freedom and personal responsibility.