The health care dilemma
Should the US adopt some type of universal health care system?
In “Health-Care Reform Could Kill the GOP,” Thomas Frank of the Wall Street Journal, a self-proclaimed liberal, writes that “half of the personal bankruptcies in this country are brought on, in part, by medical expenses.” Frank supports the creation of a universal healthcare system because in his view, it’s “good government stepping in to heal an ancient, festering wound.”
A photo by jc.westbrook, a Flickr.com user, shown under Creative Commons
Today around 45 to 47 million Americans are uninsured. How should the Republican party address this issue moving forward, while staying true to its core tenets of fiscal discipline and individual responsibility?
“Let me tell you something, if Democrats take the White House and pass a big-government healthcare plan, that’s it. Game over. Government will dominate the economy like it does in Europe. Conservatives will spend the rest of their lives trying to turn things around and they will fail,” said one Republican strategist in James Pethokoukis’ “How Tom Daschle Might Kill Conservatism.”
In describing how nationalized health care changed politics in Great Britain, Pethokoukis quotes Norman Markowitz in “Political Affairs”:
“After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments.”
Would the adoption of a universal health care system “pull America to the left,” as Pethokoukis concludes?
And other lingering questions. Could America afford a universal health care system? How difficult would it be to keep government from growing if government provides both health care and retirement? In the future, would we be able to reduce the size of government bureaucracy? Lastly, would a universal health care program be a type of welfare system and cause millions of Americans to become government dependents?
NO!
First, I’d like to say something about the 45-47 million number. That number includes nearly 10 million illegal aliens. It also includes 8.3 million people making between $50,000 and $74,999 annually and 8.7 million people who make over $75,000. That immediately takes the number of insured individuals down to about 7% of the population (20 million). (data is from 2005 census)
Let me just quickly give you my personal experience of doing rotations in universal health care settings (the Indian Health Services). It’s a bureaucratic nightmare. Wait time is long. No choice of Doctor. Time wasting protocols that dictate the order of diagnostic testing. Limited drug choice on the formulary (you can Rx for something outside, but patients’ rarely get it if they can’t get it for free from the pharmacy there.) And to be honest, the Doc’s are in no rush to see patients. They don’t get paid more for working harder.
Yes we need to do something, but giving control to the government is not the answer. And Obama’s idea of a “National Insurance Exchange” would quickly lead to a universal system when the insurance companies collapsed.
I’ll tell you what would fix the healthcare system: commoditize healthcare.
Have a transparent way of comparing prices between medical providers, and a way for it to be readily accessible by the public, and watch prices fall.
Currently the healthcare system through the insurance companies provide smoke and mirrors on pricing. You’re not really sure what the price of a procedure will be unless you ask the insurance company(s), and the doctor always tries to charge more to eek every cent out of the system. The bill you get is not deterministic in its pricing. Different insurance companies have different pricing structures.
You can see commoditization work in many different industies. Brokers on wall street used to charge an arm and a leg for trades, discount brokers have commoditized this service to the point where its cheap and easy to execute trades in the market. The price has been driven down by competition.
This has been working in realestate, where brokers used to charge an exorbant fee for their services, this has been rapidly being reduced and standardized under competition.
The best and proven way of bring down prices, is full transparency in the healthcare industry.
Another way to drive down healthcare cost is to drive off frivolous lawsuits. I grew up in the Rio Grande Valley and insurance for the doctors was so high, we lost doctors. Also, health care insurance might be the problem. It is my understanding that a hospital can charge what it does becuase the insurance company, not the individual, feels the pain.
“Let me tell you something, if Democrats take the White House and pass a big-government healthcare plan, that’s it. Game over.”
Usually I am not all that apoplectic about the White House changing hands, but this is absolute correct in my estimation. Health care is a kind of final frontier. If universal health care were to pass, the Republican Party will cease to be the party of small-government and will forever be the party of less-gigantic government. It would be nearly impossible to undo: if you think conservatives have image problems now, wait until you see the public reaction when conservatives try to undo “free” healthcare.
Universal healthcare, unfortunately, is the holy grail of those who believe the problem with the federal government isn’t that its too big, but that its policies aren’t “smart” enough and that we just need more “smart people” in public policy. This cult of the “smart solution” believes that the government can achieve anything as long as benevolent and intelligent people are at the helm. Well, sadly, the nature of our rotating leadership makes it more likely than not that, eventually, someone either selfish or stupid or both will eventually come to power. Then, those “smart solutions” turn out to not be all that smart. This is why I fear Obama will have the best shot of any democratic leader in recent memory of actually making universal healthcare happen: everyone (on both sides of the aisle) is convinced that he is both intelligent and benevolent, thus all his big projects can also only be intelligent and benevolent. This might even be true, but what happens when we must do without “The One”? Could you imagine universal health care in the hands of Hillary, or lord forbid, Nancy Pelosi? Barney Frank? This simply cannot be allowed to happen. {/rant}.
Let’s start by clarifying what the real issue is. It isn’t healthcare it is health insurance. By allowing the term healthcare to be used it is painting the wrong picture in peoples minds.
It is like when the Republicans voted for the economic package it was called a bailout, when the Democrats propose one it is called a stimulus package.
In addition to the illegal aliens which was mentioned before there is a group referred to as the “young invincibles”, those 18 - 25 no longer covered by their parents insurance or are enrolled in any sort of insurance plan through work.
First, I think one issue that needs to be looked at is moving off of the employer supplied health insurance onto a more personal health insurance plan, meaning that employment is not a precondition for having health insurance.
Second, there needs to be more portability in health insurance, once again allowing people to keep their insurance when they cross state lines because of employment transfers, or other reasons.
A third proposal is to allow small businesses to band together to form a consortium that would allow them to leverage the number of members available to get the same rates and benefits that larger companies are given by the insurance companies. Quite often your insurance premiums are set by the size of the company you work for.
If you want to know what nationlized healthcare, true healthcare that is, would be like talk to veterans who have to use the VA system. There are enough congressmen who have given speeches over the years bemoaning and criticizing the system to provide enough arguments for not imposing it on the rest of the population.
We have seen in recent months, perhaps more than ever, the detrimental effects that big government can have on the economy and our way of life in America. I do not think it is wise, especially at this point, to put even more control in the hands of the federal government by handing over healthcare to them. Not to mention the fact that Hawaii actually gave universal healthcare a shot and, less than a year later, the state gave up on it, finding it to be too costly.
I believe we could put several things into place to help the American medical system without nationalizing it:
1. British style “loser pays” tort reform.
2. Strict enforcement of anti-trust law with respect to insurance and drug companies.
3. A Mexican border fence and enforcement of existing immigration law.
4. Term limits for legislators and stricter ethics laws governing the behavior of PACs.
If we nationalize the existing broken system, as many Democrats are suggesting, we will simply have a broken nationalized system; one severely randomized by bureaucratic overhead. It brings up the specter or preserving the worst qualities of the existing system (i.e., the prevalence of insurance companies, the rampant malpractice lawsuits, etc.) while further reducing people’s medical options.
I think another thing we could all do — right now — to help fix healthcare is to get better educated about the current healthcare system. There are likely multiple interactions going on within the health care system that make it difficult to navigate and extremely expensive other than the mere presence of HMOs, medicare and frivolous lawsuits.
Here’s one example of something no one has brought up yet — the struggle of tertiary centers to keep solvent with specialty doctors defecting to private practice. Specialists generate most of the revenue for hospitals because they have the highest profit margins. Generalists on the other hand have very low profit margins (if they are in the black at all) because they do not do the big procedures or oversee the long hospital stays that generate revenue. However, when specialists leave these hospitals for private practice — where there is less bureaucratic nonsense and higher pay — they take their revenue with them, leaving the hospital to rely on a shrinking pool of specialists to generate income. To add insult to injury, sometimes hospitals lose entire specialties to private practice and then have to contract out that service at a high rate. It’s not unheard of for big tertiary centers to be relying on private orthopedic practices, private dermatology practices, etc.
How do we fix this problem? I have absolutely no idea. I don’t even know if this problem is all that significant considering the enormous challenges presented by HMOs, welfare, the uninsured and end-of-life care. But I think we certainly need to think carefully about identifying the biggest challenges facing the health system before we start monkeying around with it.
There are a lot of questions and variables related to this issue; too much to respond to here, but I provide more extensive analysis on the issue at Mark to Market (http://reiboldt.com/?p=23). The main thing with the discussion of universal healthcare, though, is that it while it may provide *some* sort of access to care for teh 46 million uninsured, it does not provide a solution to improving the quality of care for all patients. Indeed, such a system will only lead to a decline in the quality of care. But, there’s other issues at hand here, specifically the fact that such a system would remove any competitiveness for providers. This would also result in a decline in quality, but it would also lead to a system like the Canadians or British have. Trust me, all it takes for anyone to see universal healthcare, which - don’t be fooled - is the same as socialized medicine is to experience what it is like to need an operation in the UK or Canada. I have worked firsthand in European healthcare, and I can tell you that seeing their “top hospitals” ran by government entities and employees is simply scary. On top of all this, you have doctors who are already experiencing a decline in reimbursement from third-party payers and gov’t subsidized programmes, such as Medicare and Medicaid. So, it is difficult for them to keep their doors open, and the burden of frivolous lawsuits and increasing liability insurance is only resulting in more doctors completely going out of business. This has resulted in an increase in the shortage of qualified healthcare professionals, which is completely changing the dynamic of the US healthcare delivery system. You can expect this situation to only compound with universal healthcare. Our system is not built to support a socialized model, but that is what you will see with universal healthcare.
I think more and more people like the idea of having the government take care of them (despite its ubiquitous failure at all things), therefore it’s hard to believe that the tide of universal healthcare can be held back much longer.
We need to frame the debate about healthcare as Reagan framed the debate about healthcare in the 1960’s. In this Youtube video, Reagan explains the hazards and pitfalls of Universal Healthcare as only Reagan could.
http://www.youtube.com/watch?v=S0NWqvRidlk
@John Calla … it’s easy to think that when you don’t realize the fact that it will still cost. That’s the problem - too many people actually believe universal healthcare means “free healthcare.” Ask any UK or Canadian citizen … it certainly does not mean that. Indeed, you will see costs of healthcare for most Americans increase. Keep in mind, the 46 million uninsured only represents less than 20% of the population and a large percentage of those people don’t have coverage by their own choice. So, yeah, more people get coverage (despite it being low quality coverage), but the overall costs go up for everyone else. That doesn’t even include the costs/disadvantages for the providers. Too many people still look at doctors as being ultra-rich people jet-setting from their vacation home in a private jet. The fact is, most doctors can barely afford to keep their doors open. This is why so many are turning to hospitals to be employed or to buy their practices, which is an entirely new trend in the healthcare space. If you want to know more, I suggest learning about how the employment models work for healthcare providers - it does not work how you would think or how other industries work. As such, you will see the shortage of qualified healthcare professionals continue to grow, which will be another contributor to the decline in quality of care. Moreover, this will limit the access to care for the increasing aging population (i.e., Baby Boomers entering retirement). I understand some people like the idea of the gov’t paying for everything, but it won’t take long for them to experience the government’s horrible inefficiencies and the fact that costs will only continue to rise. Thus, socialized medicine will be a recipe for disaster for everyone involved. -Mark (www.reiboldt.com)
@Locke
It’s hard to be educated when doctors, hospitals, and insurance companies are all in bed together, with multitiered pricing that isn’t readily transparent to the patient.
e.g
scenario a: I go to a doctor for a routine checkup, pay the $25 co-payment. Doctor’s office bills the insurance company 175 dollars, insurance company A agrees to pay 120 dollars. I get a insurance statement saying that i paid 25 dollars, with what the doctor tried to charge, and what the insurance company paid.
scenario b: someone else goes to the same doctor, has the same routine checkup. he is enrolled with a different insurance company. pays 20 dollar co payment. The doctor bills for 190 dollars, and insurance company B agrees to pay 140. The other patient gets a statement that they paid 20 dollars.
doctor in scenario a gets paid: $145 dollars
same doctor same checkup scenario b gets paid: $160.
The doctor tries to maximize his fees with each different insurance company, with the actual “price” not being readily apparent to the end patient. All the patient knows is what he paid as his copayment, and whether he had to pay anything in his final bill.
our healthcare system is broken because no one directly pays for their healthcare (like you would pay for a gallon of milk at the store), and there is no easy way to shop across healthcare providers.
@ Jin - see, that’s just what I’m talking about. I learned something!
I would add that even with these procedural and managerial problems, there is a simple economic problem: healthcare is a scarce resource, and most people have nearly perfectly inelastic demand for it. In other words, people will never have enough of it. If they are dying, they will pay everything they have to get more of it. So on top of getting a handle on all the complexities of the issue from a policy standpoint, we also must grapple with a philosophical question: is it best to allocate healthcare by how much someone is willing to pay for it, or by government ration? Make no mistake, healthcare will be rationed one way or another.
@Jin, it isn’t the doctors who are “in bed” with the insurance companies (i.e., payers). The payers have the docs (i.e., the providers) by the you-know-whats just like they have you and me (i.e., the consumer). Healthcare is the only market where there is no direct flow of funds between the provider and consumer. We have this assenine concept called the third-party payer - the insurance companies. Their presence means we have no clue what really is going on with the price/cost of goods. Now, you’re assuming, though, that the providers do, but in reality, they’re just as much in the dark as we are. There is no clarity what the cost of goods are for them, because most of them is based on their time and expertise, which of course is difficult to place a hard valuation on. So, picture a normal market with two boxes next to each other and there is a flow of funds between them (i.e., consumer and provider). Now, picture a triangle where there is a third box above and in-between the two side by side boxes - this represents payers. They determine the price of goods (not based on any fair market value of costs) and they can drive/restrict supply at their discretion by not contracting with a provider. Supply isn’t a problem, because we’re all consumers so there’s always going to be a steady stream of patients (that’s what actuaries are for, i.e., to determine what the true supply will be and payers can hedge their exposure). The docs aren’t a part of this process - they’re in the dark like us. Insurance co’s tell them what they’re willing to cover and what the prices will be - docs just have to accept it or they don’t get credentialed (the technical process that determines whether or not a doc can bill an insurance co for certain CPT codes, i.e., procedures), in which case, they don’t get paid.
@Mark You didn’t read my comment closely enough. I blame the system, not the doctors being “in bed with insurance”. Which put your entire comment to moot.
We cannot allow universal healthcare in this country. First, we cannot afford it. Second, we cannot afford it. And third, it will ruin our economy. We need to remove government from the healthcare business entirely. I support the privitisations of Medicare and Medicaid. We cannot afford them anymore. It will decrease our budget and get us closer to a surplus.
I am so much interested in this topic. The issues are cost (including who pays and who profits), convenience, availability, locus of control and our general national health.
I think about GM, Chryler and Ford and how much less they would have to pay if somehow there was a differnt distribution of health care costs back to the consumers of it rather than through their organizations. What part of the $55 an hour cost is health care? What part of it would be if the costs were shared through national modeling?
Canadians don’t seem to have a problem changing jobs, being self-employed, starting up businesses when it comes to considering health care costs. From a small business point of view, I can see great benefits in having a state beauracracy taking care of that for me, as a business owner, in the same way they take care of the streets, public safety, and prisons.
I think this blog should rededicate itself to fact-finding and posting comparative costs from states and similar countries that have tried universsal health care. Universal education, though devolved by property tax cutting proposals and other poor funding schemes helped the USA evolve from an illiterate servant society to the rich to a booming literate middle class. Is now the time for the conservative and business communities to count the cost and benefits of taking such a step with health care?
Rather than looking at political allignment with the worn-out concept of survival of the fittest cloaked in the term “self-reliant”, we should be looking at the business model of how we survive as the fittest nation on the planet and our willingness to make the investment. As a small business owner, I want to be able to have healthy employees without having the provide the locus-parentus value alone just because I have a product to provide. I need to provide them with a good work place, good pay and good tools to use. But should I be required to compete with other comparable small businesses with something everyone needs - good health?
Another thing - hiring the handicapped. How am I supposed to keep all these folks off of social security disability by hiring them if I have to pay the premiums on all their pre-existing conditions? And they can’t - oh - so lets just have a welfare state instead of a healthcare state. I vote for the latter.
I have a few thoughts on the health care problems in our country. Ridiculously high payouts for malpractice in the legal system are a problem for all of us. Many doctors have problems paying their malpractice insurance premiums. Texas governor Perry put a cap on some of these payouts, I believe.
Health insurance CEO’s are highly paid. The CEO for United Health Group–parent company of UHCare, made 124 million in compensation. That’s a little much, when so many people go without insurance. I didn’t research it, but doubt you’d find anything different with pharmaceutical company CEO’s. I have a bit of a problem with things like health insurance and drugs being “for profit” to the extent that only a few can afford it.
Health insurance companies cherry pick their customers. My recently married daughter went for a short while without health insurance. Apparently she saw a physician one time for TMJ symptoms–which is an inflammation in her jaw. Never treated except for Motrin, and it was not a big deal, but she couldn’t find an insurance company that would give her coverage, even with a pre-existing condition clause. She was young and in excellent health. That’s wrong. I hate to think what someone with arthritis or a heart condition has to deal with.
I still like the idea of teaching hospitals providing health care itself, for indigent patients who are unable to pay for their care or any insurance.
I agree with Susanjane about the lawyer comment. There is too much money being made by trial lawyers on the backs of those who are disatisfied with medical treatment. The commercials they have on TV are infuriating enough!
Susanjan’es idea of teaching universities is a great one worth exploring at the policy level. We have universities supporting Charter Schools and the cost of education has come down and quaity up. What if teaching medical schools were granted to have Charter Clinics? Also, what if, like the GI Bill, we offered all who served the country in the military (ALL - including National Guard) full and universally free health care for the rest of their lives at VA or any medical facility that received any sort of government support? Education may have a few things to teach medicine.
Why haven’t I read any statistics about the number of Med Schools, and Med school graduates? We need more doctors — so we need more med schools.
Lawsuits and liability insurance should be an explicit part of the debate — how much (taxpayer?) money should go to those people who are not cured? Why is a car accident something the victim eats, but if there’s 80% chance of one sickness to be cured, the uncured 20% all seem to sue and get compensation?
Compassion towards victims needs to be done more fairly. The best Idea I know of is insurance.
Roger Cohen wrote in the NYTimes today, ”
Trillions are the new billions and because 80 is the new 70, or so we are led to believe, you will get to live longer to witness where all the debt accumulated by throwing money into the bottomless pit of A.I.G., and its cohorts in leveraged fleecing, leaves the country.
We are told that the collapse of A.I.G. would pose a “systemic risk,” but it would be a tonic to my particular system if someone in the Obama administration could explain why in plain language.
The battle lines are being drawn. Mitt Romney, the former Republican presidential candidate, said of the Democrats: “As they try to pull us in the direction of government-dominated Europe, we’re going to have to fight as never before to make sure that America stays America.”
Romney’s got it upside-down. The Republicans under Bush destroyed the American economy and what America stood for in the world.”
What we have to be careful, as Mr. Cohen went on to indicate, is in going too far in the other direction. But we must not hold onto the deadly doctrinaire dissent being shoveled up by the right guard. They are losers. The only thing that is going to save the entrepreneurial spirit in this country is a health safety net funded by all of us. We need that more than government roads, bridges, airports, windmill farms, or dams. We need it more than bailing out banks to a certain extent. And if we are going to restock the AIG barrel, we should at least make them become the federal health insurance company and start paying for small business people’s health care rather than loan sharking with thieving mortgage brokers! Republicans can fight Obama on everything they want except universal health insurance.
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