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The Healthcare Reform Test

Submitted by Max Borders on Mon, 08/03/2009 - 10:45
in

Let’s put aside our right-leaning suggestion box for a moment and put the challenge straight to the left as follows… (Warning: intellectual honesty check.) Will your bill:

1. Control Costs? If you have any third-party payer system, you’ll have a situation in which people overconsume. Because they have no incentive to be bargain shoppers, they won’t shop for bargains. Costs will continue to go up. Subsidized healthcare ensures people will continue consume more of what they don’t have to pay for directly. That’s the major driver of costs in healthcare. How will you deal with this problem—which is the main problem (not “administrative costs”?)

2. Avoid Using Price Controls? Bureaucrats determining prices will, as it always has, mean gross distortions (that whole supply and demandt thing). In the absence of real prices, resources don’t get allocated properly, because prices are a way to deal with dispersed, complex information. This is the problem we saw in the Soviet Union and it’s a major problem for the Canadian system. Will your system use price controls?

3. Avoid a Special Interest Bonanza? Any subsidized, government-provided reform will mean healthcare becomes a Freddie and Fannie phenomenon. Private companies that serve the government insurer will become special interests. They will game the system and rape it, as they have in so many other spheres of our life when colluding with government. Their prices will go up (unless controlled) and their profits will remain private. Losses will get covered up by continued subsidies and cost-shifting through higher taxes. This may also mask the cost-spiral (for a while). Eventually, heavy rationing will ensue or taxes will go through the roof. Is this bill healthcare corporatism?

4. Avoid Rationing Healthcare (Limiting “Access”)? If the government really wants to control costs, it will have to ration care. The problem is, we need a system in which individuals ration their own care, not bureaucrats with little or no connection to the individual. I ration my own healthcare (by shopping with my HSA dollars) and I prefer to keep it that way, despite the protestations of leftish types who believe they can make better decisions about my healthcare than I. Rationing means quality goes down and access gets limited.

5. Avoid More Deficit Spending? President Obama seems to be betting on energy taxes (cap and trade) to pay for what would amount to massive increases in government spending on healthcare. If the cap and trade bill doesn’t pass, will the government be able to pay for healthcare reform by simply cost-shifting to the wealthy? Or will taxes go up for everyone and big time rationing happen? The American people are at their end with the record deficits. Are you willing to push the envelope?

If your healthcare bill can’t pass this simple 5 question test, it’s not a good bill.

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Comments

Love to see how Oboma tells the seniors about this

Submitted by jakehibore on Mon, 08/03/2009 - 13:19.

I guess he does not care about them huh?

 

Jake Hibore, Director Online Bachelor's Degree Programs

Let's take these in

Submitted by Mithras on Mon, 08/03/2009 - 15:11.

Let's take these in order:

  1. "If you have any third-party payer system, you’ll have a situation in which people overconsume." This argument proves too much. If third-party payer produces overconsumption, then all private insurance is bad, too. But if private insurance is okay then the public option is also okay, because people will be paying premiums, even if subsidized. And unlike other products, consuming more health care is inherently limited both because people don't like to go to the doctor and many procedures are nothing you'd do for fun.
  2. " Bureaucrats determining prices will, as it always has, mean gross distortions (that whole supply and demandt thing)." Fine. Base the premiums and reimbursement rates on market prices. Problem solved.
  3. "Private companies that serve the government insurer will become special interests." You mean doctors and hospitals? If they could get their political act together, we wouldn't be in this mess. So there is no public choice risk that they're going to rip off the government. Put another way, how is this different from Medicare? And if you think there is no difference, do you want to kill that too?
  4. "The problem is, we need a system in which individuals ration their own care, not bureaucrats with little or no connection to the individual." Again, this is an argument against private insurance, too, because that's exactly what happens now: Corporate bureaucrats with a fiduciary responsibility to deny claims and little or no connection to the patient decide whether you get your life-saving treatment paid for. If self-pay would solve the problem, then we wouldn't have uninsured people filling emergency rooms.
  5. "will the government be able to pay for healthcare reform by simply cost-shifting to the wealthy?" Right now the government and private insurance is already tacitly picking up the slack for uncompensated care - those people showing up in emergency rooms who can't afford a doctor. Creating a public option and providing a subsidy for those who can't pay full freight will save money overall.

 

somewhat of a counter

Submitted by SeanF on Mon, 08/03/2009 - 16:03.

Couple problems with this post.

Pricing: In most ways, health care is not a truly competitive sector of the economy. In many parts of the country, there are effective monopolies as only 1 insurance company serves them. Furthermore, the only choice I have from my employer is usually HMO vs PPO. I don't see that representing much of a "market". And finally, the whole pre-existing condition conundrum pretty much ends competition for the individual with a pre-existing condition. I don't make health care choices based on pricing. I make it based on what the doctor says I should do, and whether it feels worth it to me in terms of instrusion/benefit. The whole concept of pooled risk removes price sensitivity from the customer. Relying on "market forces" has gotten us to where we already are in health care. Unsustainability. Explain how continuing this will have any different result.

Finally, we regulate pricing with utilities across the nation, yet they still manage to provide power efficiently. Why would regulated pricing in health care be any different?

Bureaucrats: I trust insurance bureaucrats even less than I trust government bureaucrats. So I see this as a positive.

Rationing: we already have rationing, it's just based on an individual's finances instead of a formulary. The problem is, it's not smart rationing as it ends up making people sicker and more expensive to treat when they finally show up in the ER, uninsured. Smart rationing will get the most bang for the buck and are really just treatment guidelines. For those afraid of all the scary rationing, I'm sure it'd be possible for some innovative free-market-loving insurance company to offer extra insurance for all those redundant, medically unnecessary treatments you want.

that's it!

What Happened to the 45 Million Without Insurance Question

Submitted by ToddLuvsLounging on Mon, 08/03/2009 - 16:44.

I realize cost containment is a big factor in insurance reform, but as a liberal, how many uninsured people will be covered ranks higher than cost.

what if we set up high deductable plans for them

Submitted by Ironman on Mon, 08/03/2009 - 23:18.

to ensure they were stop-lossed from financial ruin, but if they want to pay out of pocket for day-to-day stuff, is that worth turning the rest of the system upside down over?

 I suppose there's an argument less affluent parents should get preventative care they might forego if they were on such a plan, but wasn;t SCHIP tweaked awhile back to deal with this?

Preventative care

Submitted by Old Billy on Tue, 08/04/2009 - 23:33.

Everybody should get more preventative care.  That's the only cost effective way to provide healthcare.  The catastrophic stuff that would be covered by a high-deductible policy is what drives up the price of healthcare.  You pay for the screenings, the immunizations, and the routine checkups and you won't get as many catastrophic events that are so expensive.  Look at Chris Dodd.  If he didn't have his annual check up with prostate exam, he'd be looking at much more expensive and invasive treatment in five years.  But thankfully, he has government-run healthcare.

HSA + HDCP

Submitted by ToddLuvsLounging on Wed, 08/05/2009 - 13:46.

I've looked into Health Saving Accounts (HSA) and High Deductable Cost Plans (HDCP). The only plans worthwhile, in my opinion, are the really high (HDCP) since individuals aren't required to have co-insurance (just means the individual pays) to pay 30% of the cost of hospitilization. Since other HDCP plans usually have lower deductable but high co-insurance (30%), there's a real danger for individuals to bankruptcy since cost can range to over $50,000-100,000. The catch to HDCP is you need $5K to $7K in your HSA. The premium was for around $150 for a 45 years old male.

My point being is good insurance should cover hospitalization fully, and most HSA and HDCP do not unless the individual is in a really high deductable plan. Republicans should come out with a detailed HSA and HDCP reform plan. They could make it work better, e.g., credits, subsidies for the poor, lower deductable. lower co-insurance, etc.

There are 4 basic criteria

Submitted by Dean_L on Mon, 08/03/2009 - 17:09.

There are 4 basic criteria that any health care system MUST address in terms of effectiveness. Every health care system in the world is faced with balancing the following four competing needs of a health care system;

-the quantity of available health care provders and facilties

-the quality of health care being provided

-the equality of care being provided for all

-the cost of providing the health care being provided.

The problem is that these requirements often stand in opposition to each other.  For example, more quantity of health care typically means less quality (it's simple supply and demand) or else more cost to compensate. 

So when the Democrats say they want health care for everyone, they are essentially saying more quantity and more equality of health care.  But something has to give - costs go up and/or quality goes down.  For more detail on this, check out here.  It doesn't matter what the Democrats promise - they cannot satisfy every one of these health care needs without doing so at the expense of at least one of them.  It's just not possible to provide everyone the best health care, fairly, for a dollar.  But listen to what the the President espouses.  Revenue neutral health care for all.  He's promising more (quantity) and 'fairer' health care (equality) with no additional cost.  All that leaves to be compromised to meet those goals is quality.

Is that what anyone really wants - health care that's readily available and free?  If so, then be prepared to have Karl the butcher doing appendectomies because doctors don't grow on trees.

Looking from the UK it all seems strange...

Submitted by Terri1978 on Tue, 08/04/2009 - 10:05.

I live in the UK, and we have a pretty good healthcare system over here.  It works, and it's 'free'.  Downside is, the healthcare system is a bit overcrowded.  It's probably far too late now for the US to impliment a healthcare system similar to the one in the UK.  Yet I can't help thinking that all countries should provide free healthcare to their citizens.  It works in the UK and Canada and a good number of other democratic countries.  Why did it start out so different in the US?  It really seems to have created quite a mess.   Just a little confused, Terri, Brainwave Entrainment

Does the right

Submitted by td on Tue, 08/04/2009 - 10:44.

 even have a realistic position on the issue at all??   I mean it seems to me that at some point in the last 4 or 5 decades the right would've troubled themselves to construct a position on health reform that was more articulate than "hell no".  Frankly they've abdicated their legitimate responsibility in the discussion and don't really warrant serious concern.   Its awfully easy to cherry pick your complaints but considerably more difficult to do the heavy lifting of leadership but by all means.... continue to mistake volume for content and keep hunting for that pesky Kenyan birth certificate.

"Hell no" comes with a lot of realistic positions

Submitted by Bryan Pick on Fri, 08/07/2009 - 10:21.

See, when people aren't bound by regulations, they can come up with all sorts of ideas to address our concerns.  Those who come up with the best ideas and execute them the best are rewarded by profit.

When the government gets involved, however, they suppress the experimentation and spread of good ideas, and instead force everyone onto an increasingly narrow path.

If you're looking for a positive idea that could exist if the government weren't in the way, try health-status insurance for one.  It guards against the possibility of becoming more expensive to treat.  If you move or lose your job or just want to change plans, you can do so without losing your coverage, which means insurance companies have to compete harder to get your business.

But right now, regulations and subsidies favor employer-based insurance.  Insurance companies face limits on how much they can adjust prices for riskier/more expensive patients, which encourages them to deny coverage and drop customers.

So there's a proposal from the Right for you: competitive, risk-rated health insurance combined with health-status insurance.  Lower costs, flexibility, portable and reliable long-term coverage.

Here's another proposal: remove the patchwork of state mandates that makes it hard or impossible for companies to compete across state borders.  Allow people to choose their own custom level of coverage.  That would reduce costs, too.

What say you?

Don't have to reinvent the wheel.

Submitted by Old Billy on Tue, 08/04/2009 - 23:36.

49 of the 50 most developed countries on Earth have some form of nationalized health care.  We don't.  We pay the most per capita already.  Why are you asking if nationalized healthcare can control costs?  Shouldn't you be asking why our current system doesn't?