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September 18, 2003

HEALTHCARE IN AMERICA....Nathan Newman has a post today about the latest data from the Bureau of Labor Statistics on healthcare coverage. In the past ten years, the number of workers receiving healthcare coverage from their employers has plummeted from 63% to 45%.

That's a big drop, and I think it's a symptom of the fact that employer-provided healthcare coverage, an odd historical anomaly of the postwar 50s, isn't going to survive much longer. Employers are simply getting less willing to provide it, and we're reaching the point where a critical mass of people is going to start demanding that something be done. Relying on free clinics and emergency rooms is a fantastically inefficient way of providing healthcare to the poor (and, increasingly, the lower middle class), and I think the system is likely to break down completely in the next decade or two.

(Side note: when you hear about income inequality statistics, keep in mind that they usually include only cash compensation. The fact that the poor have no medical coverage actually makes income inequality in America even worse than it seems at first glance.)

And here's one more statistic from the BLS report: only 22% of people in service occupations get healthcare coverage from their employers, and only 35% of those who make less than $30,000 a year get it. Those are scary numbers if you happen to be in one of those groups.

Posted by Kevin Drum at September 18, 2003 09:36 AM | TrackBack


Comments

It sounds so nice, employer health benefits, right? The employee contributions, deductibles and co-pays are growing by such leaps and bounds that the only benefit the insurance provides is help in the event of a catastophic illness or accident.

Our healthcare system is a national disgrace and will continue on this way until politicians are weaned away from the pharmaceutical/doctor/insurance lobbies and decide it might be a good idea to tend to the troubles of their constituents. It would be nice if we could repeal any health benefit provisions for elected officials. A dose of walking in our shoes might be helpful.

Posted by: chris at September 18, 2003 09:52 AM | PERMALINK

"That's a big drop, and I think it's a symptom of the fact that employer-provided healthcare coverage, an odd historical anomaly of the postwar 50s, isn't going to survive much longer."

Good. Stop giving employers tax breaks, lower the overall tax rate to compensate, and let this absurd system die a long overdue death.

Posted by: Ken at September 18, 2003 09:53 AM | PERMALINK

Yes, something is going to give in the near future.

A personal anecdote, though I'm sure it's not unique:

I work for a very humane employer, and those in charge are committed to offering a top-notch benefits package. This very week we finished renewing our health plan for the coming year. Last year we had a premium increase of 35%. This year it was 26%. At the rate things are going the firm's health insurance costs are going to double in four years. Even employers who want to do right by their employees can't keep up with this year after year and the burden on employees is growing too.

In my first year in this job, the company paid the premium and also offered a generous uninsured medical expense account. In the second year, the company paid the premium, but the account went away and copays doubled. Now in year three, the company pays 2/3 of the premium, employees pay a deductible, and coverage went from 100% to 80/20.

So, to recap: In three short years I went from full coverage to having about 4% of net pay go to health insurance. To add insult to injury, it's not even the same plan. I'm paying more for stingier benefits.

And finally, this is all taking place in a profitable company that is doing a lot better than most of its peers.

Posted by: Joe Bob at September 18, 2003 09:57 AM | PERMALINK

I know I am going to get bashed over the head for this, but it's my wish that employers all over the country drop health care coverage for their employers.

Now, please. Let me explain. One of the reasons why health care coverage is so expensive is that most company plans are a 'one size fits all' solution that isn't right for everybody. Why does a single guy need maternity coverage? Why do young people need nursing home coverage? It's crazy.

In addition, the fact that a company such as IBM can make one health insurance provider nice and wealthy on their own, gives that same provider no incentive at all to deal with people who are self-employed. There is no competition. Who would you rather negotiate with? The company that has 1000 employees or the one guy working out of his garage? It's no contest.

The decision for choosing health care coverage should be put in the hands of the consumers. Imagine health care providers having to deal with hundreds of millions of individual customers. Real competition would no doubt result in a major drop in prices.

The auto insurance industry had a stranglehold on people until the Internet boom. Instead of being forced to go to a local agent and just accepting their prices because you don't want the hassle, I can now go on the Internet and shop around for the best rate (I just signed up with Safeco Insurance and reduced my yearly car insurance bill by $400).

Of course that would still leave open the question about covering the poor, but right now there are people I know personally, who are self employed and are feeling the sting of paying for their own health insurance. If it were me, I'd rather have a bigger paycheck and the opportunity to design a plan that fits my needs and not have to accept a plan where half of it doesn't apply.

Posted by: Jay Caruso at September 18, 2003 10:03 AM | PERMALINK

If you have access to the Wall Street Journal it has had a really good series on healthcare the last week called "Who gets healthcare?" They've been detailing how healthcare gets rationed and parsed out in different ways due to lack of capacity, nurses, access to drugs, etc. Yesterday it detailed how medicare contracts out rule-making and treatment guidelines to insurance companies on regional bases.

A few months ago it had a great story about an immigrant woman from Pakistan, holding down some crappy job, having to take care of some relative, having to skip college which is the whole reason she's here, with a severe eye malady, having to skip treatment and use prescribed medicines about 1/3 as much as prescribed simply because she can't get insurance and in reality poor people simply don't get free, adequate healthcare. It was all very sad and the worst part is it was very easy to understand how simply trapped she is.

All in all in leaves one with the distinct impression that the US does not in fact have the worlds best healthcare as so many reflexively believe.

Good stuff I highly reccommend

[ And, as an aside, just to head off anyone... the fact that poor people in the US are often overweight does not mean there isn't a health, healthcare or poverty problem in the US and that the real problem is dumb poor people. No. Obesity and poor health in the poor who are barely scraping by is the product of malnutrition from the fact that the cheapest foods are the most processed, least nutritious, most filled with sugar, etc. Starving is not how poverty manifests itself in the US, malnutrition is ]

Posted by: Tim at September 18, 2003 10:14 AM | PERMALINK

"I know I am going to get bashed over the head for this, but it's my wish that employers all over the country drop health care coverage for their employers."

In the thrall of your libertarian paradise you forgot about cherry picking the customers.

The purity of the narcissim that lapse reveals is amusing.

Posted by: Russell L. Carter at September 18, 2003 10:18 AM | PERMALINK

This is one reason why I'm really skeptical of anyone who says unemployed IT people (or manufacturing people) should just pursue careers in healthcare.

Posted by: Jon H at September 18, 2003 10:20 AM | PERMALINK

And here's one more statistic from the BLS report: only 22% of people in service occupations get healthcare coverage from their employers, and only 35% of those who make less than $30,000 a year get it. Those are scary numbers if you happen to be in one of those groups.

Yeah, very funny. The *numbers* are scary. I'm in one of those groups, and let me tell you, the scary thing is that I don't have any insurance for my family. My Father in Law took 3 days to die in the ICU last spring. Total bill ~30K. That happens to me, my wife and kids are instantly bankrupt.

Even employers who want to do right by their employees can't keep up with this year after year and the burden on employees is growing too.

Yes. Even the most giving employers are being priced out of it.

Posted by: Boronx at September 18, 2003 10:23 AM | PERMALINK

Jay Caruso:
Your idea is fine in theory but would never work in practice. Car insurance can be successfully underwritten on an individual basis because any one individual will NOT necessarily have an accident that will cost the insurance co. money. Therefore, you can buy your car insurance with every expectation, if you're a good driver, that you'll never be cancelled because you've started costing the firm more money than your premiums are giving them.
Doesn't work that way with individual health insurance. You will get sick......you may get sick a little or you may get very sick, but you will get sick and you have no control over it. Once you get sick enough to cost the insurance co money, you're gone.
Yes, regulations can be passed to forbid 'prior condition' exclusions or to prevent cancellation for sickness, but that can be got around simply by raising an individuals premiums to an unsustainable level.
Individual plans will never work, the health insurance industry is by necessity a pooled industry and getting rid of employer based coverage (which I support BTW) necessarily means government sponsored coverage. Why shouldn't I be able to buy into the same fabulous federal plan that my congresscritters get?

Kevin:
"...employer-provided healthcare coverage, an odd historical anomaly of the postwar 50s, isn't going to survive much longer..."
How do you square this with our legislatures recent passage of SB2, which mandates employer coverage for all firms over 50 employees (or contributions to a government sponsored pool)?

Posted by: flory at September 18, 2003 10:27 AM | PERMALINK

Jay,

Employer provided health insurance is the rational response of the free market (remember that?) to the problem of adverse selection. In a nutshell, the reason that insurance companies won't sell to individuals is that the very fact that an individual is interested in buying health insurance is evidence that the individual is greater-than-average risk.

Go read chapter 6 of David Friedman's book Law's Order, on the economics of insurance.

Without some kind of risk pooling mechanism, be they employer subsidies or state mandates, the health insurance market would collapse.

Posted by: Philarete at September 18, 2003 10:27 AM | PERMALINK

Jay: We already can't keep insurance providers here in Eastern Washington - they keep pulling out of the rural counties. I'm not sure how competition would improve the situation.

Joe Bob: The same thing has happened at my employer. I'm paying 17% of my net pay for insurance coverage for my family. Which I'd be almost okay with, if it were *good* health coverage...

Posted by: Ab_Normal at September 18, 2003 10:27 AM | PERMALINK

Jay, the problem is that individual coverage just won't work. Insurance companies will quite rightly cherry pick only the healthiest people and refuse to cover anyone who's at all risky.

Insurance only works if you're spreading risk among the members of a group. If it's individual, then insurance goes away and you're just telling people to pay for whatever medical attention they get. The result would be that only middle class and above could afford even routine medical attention, and only the rich could ever afford to pay for a truly catastrophic illness.

Catastrophic illnesses happen to only a small number of people. The only reasonable way to cover something like that is to spread the risk.

Posted by: Kevin Drum at September 18, 2003 10:30 AM | PERMALINK

Yes, there's no way to overcome the adverse selection problem.

This is one of those very basic issues that people should understand before even thinking about How They Would Solve the Healthcare Problem.

Posted by: Atrios at September 18, 2003 10:55 AM | PERMALINK

Kevin's right, the system will collapse sometime in the medium term. As it does, the government will have to step in. I have no idea what'll happen then - european style single payer, or something resembling Hilarycare, maybe? Libertarian go-it-alone for individuals won't be an option. Anybody who actually needs insurance wouldn't be able to get it.

Too bad that as we face this, the government's fiscal position will have been wrecked by the Bush administration.

Posted by: jimBOB at September 18, 2003 10:59 AM | PERMALINK

Could someone please explain something to me:

Why is there overwhelming resistance to universal public healthcare in this country? Other than a reflexive aversion to "Socialism" what rational objections are there.
It can't be cost cutting (the US pays more per capita than anyother developed nation), and it can't be increased taxes (the vast majority of people pay more for crappy health insurance now than they would pay in additional taxes).

Also, I don't understand why businesses haven't gotten behind this. Employer provided health insurance raises the marginal cost of labor astronomically. There are more dollars of healthcare in each American car than there are dollars of steel. And the problem is especially sever in relatively low wage labor intensive sectors where healthcare is a larger percentage of labor costs.

Could a conservative or libertarian please explain to me the rational objections to universal healthcare?

Posted by: WillieStyle at September 18, 2003 11:05 AM | PERMALINK

Pharmaceutical/doctor/insurance lobbies

You are forgetting consumers in the equation. The NYT on Sept. 13th had article on Medicare coverage in Boca Raton, FL. The article described a retired couple using the services of 10-12 specialists “including a pain specialist and a neurologist for his neuropathy, a cardiologist for his heart condition, "a pulmonary man" for his asthma, a rheumatologist for his arthritis and Dr. Miller for his prostate. Mrs. Bloomberg has her own doctors, including ones for heart disease and for diabetes. "We have two to four or more doctors' appointments a week,"

Would it not make sense to mandate employers provide catastrophic insurance coverage and have the consumer pick up the first $5,000 - $10,000 using pre-tax dollars? Clearly, this would not solve current retiree expectation of full coverage but it may compel consumers to drive a better bargain when in need of medical services.

As an internist reflected in the article, under the current system, “there is nothing to keep utilization down.”

Posted by: pshaw at September 18, 2003 11:15 AM | PERMALINK

To WillieStyle: There *are* no (keyword to follow) *rational* objections to universal healthcare.

There is a lot of money to be made in the healthcare system. (Pharmaceuticals, insurance, physicians, private hospitals...) If the government stepped in, all that money goes poof! To the extent that the politicans & others who profit from the current system can, they therefore malign every universal healthcare system that is currently up and running. Anecdotes run rampant. These same people who believe that George W. Bush never lies are naturally susceptible to every lie told to them about the horrors of universal health care. Which is not to say that universal healthcare is without its own problems. But we will never know how beneficial it could be here because no politician dares touch that third rail. Look what happened to Clinton when he even came close. There's a lot of smear campaign money involved in keeping things the way they are. And a lot of gullible voters who prefer to be ruled by fear than reason (hence Iraq, by the way).

Posted by: chris at September 18, 2003 11:17 AM | PERMALINK

I wasn't happy when my work health care started going up, but I can see, from a company perspective, why it is. The company isn't gouging me.

And to clear things up, most big companies doen't offer a single plan for everyone, and doen't make any one provider rich. They typically offer regional HMOs as options, and offer different plans for single, married, and married with N kids.

I also understand the need for large groups when selling insurance. But what is the proper size for the group? If we offer national coverage, then people from state A will get pissed that they are paying higher premiums because people from state B have more health problems. And then if we pool it by state, the same thing could happen at a smaller level.

Does someone have knowledge to know where it would be correct to draw the line?

Posted by: Tripp at September 18, 2003 11:22 AM | PERMALINK

I would like to hear an answer to Willie's question as well.

Another problem with health coverage is that it doesn't really fit into the insurance paradigm. As Kevin points out, the way car insurance works is that the risk is spread over a large pool, only a few of which will get into major accidents. While this works for catastrophic illness, it doesn't really work for a large portion of medical expenditures, routine care, pre-natal care, medication, etc. . .

Expenses such as a yearly doctor visit are predictable, therefore the idea of 'insuring' yourself against catastrophe doesn't really apply.

Posted by: David Perlman at September 18, 2003 11:22 AM | PERMALINK

"Why is there overwhelming resistance to universal public healthcare in this country?"

Because the "voting class" (slightly richer version of the middle class) hasn't started to lose coverage just yet.

Posted by: Jason McCullough at September 18, 2003 11:28 AM | PERMALINK

Why not solve the adverse selection problem by requiring insurance companies to cover individuals AND requiring individuals to have health insurance. A government program, or subsidies, could cover, wholly or partly, those unable to afford a policy.

Yes, it would be expensive.

Posted by: Bernard Yomtov at September 18, 2003 11:29 AM | PERMALINK

Why not solve the adverse selection problem by requiring insurance companies to cover individuals AND requiring individuals to have health insurance.

Because there's no practical way to do either.

Posted by: WillieStyle at September 18, 2003 11:33 AM | PERMALINK

I believe it when I hear that single payer, universal coverage would be less expensive than what we do now. I also believe it when I hear that the rich will get better care than the rest of us and that scares me. But then I realize that they are getting better care now. Doctors are admitting that they don't mention certain treatments to people who don't have coverage for them. I'm for single payer healthcare and as soon as possible. It would mean electing an entirely new congress that wasn't on payroll of Big Pharm and the Insurance Industry though.

Posted by: Paper Trail in 2004 at September 18, 2003 11:36 AM | PERMALINK

Another issue that the company I work for faces: only ONE provider in our area will offer us a policy. There are three other big providers in this market and none of them will even offer us a quote. Apparently, the people in our firm have a "high rate of utilization" and none of them want to even touch us. And no, this isn't a geriatric demographic akin to the situation referenced above. So, we are effectively subject to monopoly pricing.

This practice of pricing group policies based on the actual amount of services used also leads to some perverse consequences. There is definitely a disincentive to hire people who have obvious health issues, or those who will seek family coverage.

Also, you can't help but wonder if your co-worker who had the cerebral aneurysm or the one whose wife had twins, prematurely, is responsible for running up a lot of medical bills, and thereby blowing your premiums out of the water.

Posted by: Joe Bob at September 18, 2003 11:41 AM | PERMALINK

"Why is there overwhelming resistance to universal public healthcare in this country?"

Canadians who seek healthcare in the US complain about the "rationing through inconvenience" that they experience in Canada. Those contented with the single payor system in Canada stay quietly at home. Socialized systems in Europe include limitations that many US citizens would not accept. We dialyze our 90 yr olds with kidney failure while in Britain they do not. Our healthcare is rationed in complex ways, but few are willing to utter the R word. Underneath it all, as I see it, is a less homgeneous society, individualism in the extreme, and a virtual paranoia of anything socialized.

Posted by: Mark at September 18, 2003 11:54 AM | PERMALINK

Factor in the number of folks who once were employees but now are independent conttractors, often not by their own choice. Being a contractor means your former employer no longer provides any benefits.

Posted by: Chuck Nolan at September 18, 2003 11:58 AM | PERMALINK

As a specialist physician in academic practice, I'll try to answer Willie, though I confess (re-reading this as I proof) that it's going to be very long:

A national health insurance program in the US will indeed be very expensive. Unless you find a way to cap utilization -- that is, ration health care -- you'll find that the final cost is greater than the current cost of Medicare + Medicaid + Private insurance + self pay. This has been true of every government health care program in the US so far. A few specific examples to illustrate this point:

Medicare pays for renal dialysis. Dialysis is expensive and the patients generally can't afford it for every long so the Feds pay. That certainly seems to be the right thing to do, and these patients live much longer than they would otherwise. It has worked so well that program has grown by leaps and bounds, much faster and higher than was ever predicted. That's in part because patients who are dialyzed live longer (and then consume more resources). But the use of dialysis has expanded far more than was ever anticipated -- and since the Feds were paying, there wasn't much reason to keep the lid on. Unless you ration care, you won't control this.

Similarly, Medicare pays for home oxygen therapy and many kinds of home respiratory care (my specialty is pulmonary medicine, so this is right up my alley). Home oxygen therapy for patients with emphysema is a proven life-extender so it's appropriate medical care. The costs are about 10-fold higher than the highest prediction given when Medicare started paying for it. Why? More patients than predicted, escalating costs for new and better equipment (e.g., better oxygen delivery systems, and who doesn't want the best?), and the patients live longer. Unless you ration care, you won't control this.

A third example: in Illinois the majority of Medicaid funds go not to the poor for acute care, but to the elderly in nursing homes for their housing. Now these folks have to be taken care of and none of us would begrudge that. Nursing home care is expensive and few seniors have enough in savings to handle a 2 or 3 year residence in such a facility. So we end up paying. Unless you ration nursing home stays, you won't control this.

I can cite many, many other specific examples, but it all comes down to this: we in the US consume more health care than Europeans do because, in large part, we won't ration it. Yes, we're also somewhat more inefficient, and we also invest more in new technology (compare the number of MRI scanners in Chicago versus all of England). But in Europe, the system is very open about the fact that it won't pay for all medical care. That care is rationed in different ways -- lists for surgical procedures, pressure on primary care doctors to limit referrals, limiting the numbers of specialists, limiting purchases of new technology, refusal to pay for certain procedures, drugs and therapies, etc.

That won't fly in the US without a substantial change in the mindset of our people. Consider all the times you've seen reports in the media (or on a flyer at the local grocery store) about little Suzy who needs a bone marrrow transplant for some terrible illness, and how the community has had some sort of fund-raiser to send her to the Kaiser. Now imagine a system in which that doesn't matter, little Suzy can't get her transplant because that simply isn't on the list of allowed procedures. One can be tough and say, well, that's unfortunate but we have a system to run and that system has limits.

Unless you're Suzy. Or her parents.

Another specific example: there is a raging debate about the effectiveness of routine mammograms for women aged 30 to 40. Some fair data suggest that this isn't worth doing, and many insurers would like to drop coverage for it, but it isn't only the evil doctors, pharma and equipment makers opposing dropping this coverage. It's women, including the N.O. for W. and breast cancer advocacy groups. Now imagine a national health service in which such advocacy groups can influence their local Senator instead of a hard-hearted insurer. Which way do you think costs will go?

Rationed care means politicized care. That can't be helped -- every public process involving the public purse becomes politicized. That's our system (and that of Europe, where health care is heavily politicized). That builds in a number of inefficiencies in how care will be allocated. There are plenty of examples of good things in other areas of government that aren't getting done, and stupid things getting the money, because of the political process. I hope no one here expects health care to be different.

Willie suggests that the taxes will be lower than what we pay for premiums. I don't see how that will be the case -- spending will go up until someone draws a line, and politicians have trouble saying 'no' (consider the current $400 billion deficit and try to identify a member of Congress or Senator who courageously tried to cut non-military spending. I can't think of one.). While the year 01 costs might be within Willie's ballpark, the year 10 or year 20 costs for an American national health care plan will be far, far higher than the most outrageous estimate anyone here would offer. That's been our history to date and I don't see how that will change.

David and Kevin correctly note that some aspects of medical care don't fit the insurance paradigm well. One can insure a home against hurricanes, assess the risk and charge premiums because hurricanes don't hit everyone. Health care eventually does, particularly routine health care, and especially care for the last 1/3 of one's life. Atrios correctly notes the adverse selection problem. To which I add, you can't understand how to run a good health care system until you figure out how to deal with limiting health care.

Can one run a good government health care system? It's possible. The Veterans health care system, in the dumper about 20 years ago, has become remarkably better with vastly improved indicators for quality and service. It's also a lot more expensive -- that money was spent well, but more of it was spent.

Chris sounds rather skeptical of this sort of analysis. I'm not part of a conspiracy, Chris, but as a health-care worker I sure do see where the money goes and what we get for it. A national system might provide better care for some, depending on how you define "better". But it won't be cheaper.

Sorry for being so long-winded. I'm sure people here will pick this apart.

Posted by: Steve White at September 18, 2003 12:06 PM | PERMALINK

There is no real fix for the problem.

The working poor simply cannot afford the additional 5% tax it will take to pay for a govornment system.

Medicare doctors spend 8 hours a week just filling out medicare forms.

The private HMO have an overhead just as bad.

The government already eats 40% of this economy, taking another 5% would collapse the economy.

Government health insurance is simply health care rationing by another name.

California has been cutting medicaid right along with education. If Kevin's favorite liberal state cannot afford government medicaid, then why would the nation. In fact, the rest of the nation would need to drain more taxes from Califoria to pay for it.

We have a second world nation right next door, hardly a good sign for keeping costs down. We would have to fix Mexico before we could fix the US.

We are stuck.

I suggest we legalize drugs, use the saved money for medicaid, and make life a little more pleasant.

Posted by: M at September 18, 2003 12:17 PM | PERMALINK

My question is this: I'm sure we've all heard that the US spends more per capita than any other industrialized country. So how is it that western democracies with national health systems spend less and get better results? Results being things like life expectancy, infant mortality, etc.

Also, taking the example of Dr. White's MRI machines in Chicago: I'm sure there are a lot of machines because we use them more than the Europeans. But how many are there because it's profitable to proliferate them?

Posted by: Joe Bob at September 18, 2003 12:27 PM | PERMALINK

Steve wrote: "A national health insurance program in the US will indeed be very expensive. Unless you find a way to cap utilization -- that is, ration health care

The rest of your argument is pretty much moot, Steve, because that is precisely what a national health insurance program in the U.S. will have to do. We either ration health care by denying it to x million people, as we do today, or we ration it by denying or delaying access to expensive procedures, etc.

Posted by: PaulB at September 18, 2003 12:35 PM | PERMALINK

Thanks, Steve. The sooner people grow up and admit that everything of value gets rationed in this Vale of Tears, whether by restriction of supply or by price, and that rationing becomes more severe as more cutting-edge technology is employed, the sooner an honest debate can be had on this topic. The people who scream bloody murder whenever medicare is considered for cutbacks are often the same people who advocate universal health care regimes in which 75 year olds aren't eligible for bypasses, dialysis, or other ineivtable rationing measures. If some method of enforcing a law requiring people to purchase coverage at age 18, and maintain coverage until death, could be devised, then you may be able to create a workable market for health insurance coverage, with a variety of choices available for people with differing desires, in terms of amount of coverage. There still would be a need to have state-provided coverage for those who are already uninsurable by age 18, but if an insurance company had a pool of healty 18 year olds to draw upon, with confidence that they would be paying premiums until death, then the risk could be spread sufficiently , and with the required predictability. There still would be no avoiding, however, that at some point people who would like to have the best technology would have to be told, "No, we aren't going to pay for that." When your life hangs in the balance, this is about a nasty a message as can be heard, but it's nastiness doesn't make it any less true.

Posted by: Will Allen at September 18, 2003 12:37 PM | PERMALINK

Dr. White I appreciate your thoughtful responce. What follows is certainly not an attempt to "pick it appart".

As I see it the crux of your argument is that without rationing healthcare costs will skyrocket and rationing is simply politicaly untenable in the US.

I have four questions for you:
1) Healthcare costs have sky rocketed under private insurance, wouldn't price inflation be decreased under a public system since the gov't could negotiate from a polition of strength as a monopsony?

2)Couldn't rationing be explained as the public program providing the bare essentials? Anything more can be bought through private insurace.

3) I find it hard to believe that European and Canadian systems ration critical surgery like transplants (for little girls no less!) as one of your anecdotes seems to suggest.

4) Can't a lot of the overconsumption problems that occur be remedied by adopting a "French-style" system wherein consumers pay up front and then get re-imbursed 2 weeks later?

Posted by: WillieStyle at September 18, 2003 12:39 PM | PERMALINK

Tim: [ And, as an aside, just to head off anyone... the fact that poor people in the US are often overweight does not mean there isn't a health, healthcare or poverty problem in the US and that the real problem is dumb poor people. No. Obesity and poor health in the poor who are barely scraping by is the product of malnutrition from the fact that the cheapest foods are the most processed, least nutritious, most filled with sugar, etc. Starving is not how poverty manifests itself in the US, malnutrition is ]

Bullshit. Fresh produce is cheap. It's a lack of dietary and health education, combined with the pandering of corporations to American's desire for convenience above all that is responsible for the plague of obesity among the under- and middle classes.

I gave up meat recently and my grocery bills took a major nosedive.

Posted by: goethean at September 18, 2003 12:40 PM | PERMALINK

"Jay, the problem is that individual coverage just won't work. Insurance companies will quite rightly cherry pick only the healthiest people and refuse to cover anyone who's at all risky."

Not if you let them charge higher rates for the riskier people.

"Your idea is fine in theory but would never work in practice. Car insurance can be successfully underwritten on an individual basis because any one individual will NOT necessarily have an accident that will cost the insurance co. money. Therefore, you can buy your car insurance with every expectation, if you're a good driver, that you'll never be cancelled because you've started costing the firm more money than your premiums
are giving them."

Car insurance can also be underwritten on an individual basis because people who drive like maniacs can get charged higher rates.

"Employer provided health insurance is the rational response of the free market (remember that?) to the problem of adverse selection. In a nutshell, the reason that insurance companies won't sell to individuals is that the very fact that an individual is interested in buying health insurance is evidence that the individual is greater-than-average risk."

Actually, it started out as the rational response of a not-so-free market in which employers needed to pay employees more than the law allowed, and found a way to compensate them that wouldn't get them in trouble. Then, when the tax laws were changed to give employers deductions for giving out health insurance, the free market rationally responded by distributing health care in a way that was taxed the least.

The "adverse selection" problem is nonsense. Even the healthiest of us could get into an accident and wind up in the hospital. Perfectly healthy people would be more than willing to buy a policy, especially a cheap, high-deductible one.

"Factor in the number of folks who once were employees but now are independent conttractors, often not by their own choice. Being a contractor means your former employer no longer provides any benefits."

And if health insurance was generally bought by individuals, your employment status wouldn't even be an issue. Everyone could be an independent contractor, or switch jobs with impunity, and as long as the insurance companies kept getting their monthly premium checks, your coverage is completely unaffected.

On the flip side, prospective employers would have no reason to care one way or the other how expensive your health insurance is likely to be. They're not on the hook for it; they just give you cash, and paying for health insurance is your problem. No more problems with expensive-to-insure persons not getting hired because of health insurance expenses for the prospective employer.

Posted by: Ken at September 18, 2003 12:46 PM | PERMALINK

If some method of enforcing a law requiring people to purchase coverage at age 18, and maintain coverage until death, could be devised, then you may be able to create a workable market for health insurance coverage, with a variety of choices available for people with differing desires, in terms of amount of coverage. There still would be a need to have state-provided coverage for those who are already uninsurable by age 18, but if an insurance company had a pool of healty 18 year olds to draw upon, with confidence that they would be paying premiums until death, then the risk could be spread sufficiently , and with the required predictability.

The problem with your suggestion as I see it Will Allen is that Insurance companies still would not cover "risky" folks. Sure it might be economicaly viable to cover the at-risk under a mandatory insurance scheme, but it will always be more profitable simply not to. As long as insurance companies are profit organizations, the at-risk folks will not be covered. Note this is not a moral judgement. I am not implying insurance companies are evil. They just won't do this without a financial incentive.

And note the problem will only get worse as advancements in genetics make it easier to discern the "at-risk" from the general population.

P.S.
Let's try not to lower the level of debate by assuming those on the other side are "naive" or "calous".

Posted by: WillieStyle at September 18, 2003 12:47 PM | PERMALINK

Joe Bob, using life expectancy to gauge quality of health care between populations with different life styles is about as useful as using paternity rates to measure differences in amount of sexual activity between heterosexual and homosexual males. For instance, obesity and the attendent inability to achieve a high rate of metabolic exertion are among the BEST predictors of death, and Americans are the fattest, most sedentary, people on the planet, so Americans are just gonna die faster than the Japanese, on average, and quality of health care doesn't have much to do with it. Toss in higher rates of death among the young, due to homicide and car accidents, and it gets to be very difficult to attribute different life expectancies to quality of health care. I'll tell ya' one thing though; if you're a fat 75 year old with diabetes, there ain't any better place to live than the U.S.! There are also similar problems in using infant mortality rates to gauge health care quality, such as the fact that the deaths of premature babies are recorded differently from one country to another.

Posted by: Will Allen at September 18, 2003 12:57 PM | PERMALINK

"While this works for catastrophic illness, it doesn't really work for a large portion of medical expenditures, routine care, pre-natal care, medication, etc. . .

Expenses such as a yearly doctor visit are predictable, therefore the idea of 'insuring' yourself against catastrophe doesn't really apply."

So why are we even talking about using insurance for such things? That's completely nuts.

Our current practice of using employer-provided "insurance" for routine care is just a way for people to buy routine care with pre-tax dollars, with the insurance companies involved taking a cut. Without tax-favored employer-provided insurance, no one in his right mind would buy a policy that covered predictable, routine maintenance; he'd just pay the cost out of pocket. Putting "insurance" into that transaction is just a deadweight loss.

Posted by: Ken at September 18, 2003 12:58 PM | PERMALINK

The working poor can say good by to another 5% of their income when national health insurance is enacted.

Posted by: Matt Young at September 18, 2003 12:59 PM | PERMALINK

The point I was making, Willie, is to get people insured before they become uninsurable (risky), with a contractual obligation by the insured and the insurer to maintain the relationship until death.

Look, death is a guranteed event, and life insurers are able to spread the risk just fine, as long as the person is healthy when the policy is issued. At age 18, the overwhelming majority of the population is insurable. When a life insurance policy is taken out when the insured is quite young, the premiums are are also stable and inexpensive. What life insureres have, of course, is the benefit of payouts that aren't tied to rising technology costs, but this is an elements that can be dealt with if the insurance company knows that the insured will pay premiums until they die. As I said, however, there are 18 year olds who will be plainly uninsurable, and they will have to be part of a very rigid and very expensive state sponsored insurance system.

Posted by: Will Allen at September 18, 2003 01:10 PM | PERMALINK

One of the biggest problems with rationing healthcare in this country is that something like 2/3 of medical expenditures are in the first and last years of life, and extend life by only a few months. Who's going to advocate taking the preemie out of the incubator or grandma off the ventilator.

Posted by: flory at September 18, 2003 01:12 PM | PERMALINK

Charging more for 'risky' people means charging more money for people who are sick.

In other words, it isn't insurance anymore.

Posted by: Atrios at September 18, 2003 01:14 PM | PERMALINK

Will Allen:
"The point I was making, Willie, is to get people insured before they become uninsurable (risky), with a contractual obligation by the insured and the insurer to maintain the relationship until death."


You still haven't addressed the issue of cost. You can mandate coverage but unless you control the price, as soon as that healthy 18 year old becomes a 36 year old with cancer, her premiums will skyrocket. At that point, for mandatory car insurance she can chooose not to drive; what do you do with mandatory health insurance, choose not to live?

Posted by: flory at September 18, 2003 01:17 PM | PERMALINK

Exactly the point, flory. It may be preferable to have people be given choices about how much total medical expense will be incurred in their lifetime, with subsidies available to those unable to pay the premium associated with some minimal amount of coverage ($1,000,000? $2,000,000?; I don't know, but it would also have to have a inflation adjustor component added), and then once your coverage is used up, sorry, Charlie, you're on your own dime, or you're on your way out. Is this "fair"? Well, it's no more unfair than denying dialysis to the elderly, which, as has been noted by others, happens in places that have supposedly reached Nirvana through a state monopoly on health care. Either way, people are going to be denied health care that they would benefit from having, and some of them are going to die. There really is no way around it.

Posted by: Will Allen at September 18, 2003 01:24 PM | PERMALINK

About this rationing thing-let me plumb some intuitions by offering the following analogy:

You run an orphanage. Times are tough, and there isn't enough food for all the children to be adequately fed. Say each child requires 10 units of food a day to be properly fed, but you only have enough to give them each 9 units a day.

There are two ways you can handle this problem- you can ration the food, such that each child receives 9 units/day, or you can use some other way to distribute the food, such that some children get the full allotment, and others don't.

The first alternative is obviously meant to mirror the rationing of health care across the board under a government-run system, and the second alternative is a vague description of the set of systems of which our current system is one. In the current system, the metric along which the 'food' is rationed is (roughly) wealth.

Now I think two things come out of this analogy-
firstly, as described, there is a powerful intuition that the first alternative is more just. And secondly, the aptness of the analogy is not completely obvious in the same way.

The pertinent differences that leap to my eye are 1. The orphanage scenario is explicitly paternalistic, whereas such a conception might not be correct for the government/citizen relation
2. The situation is underdescribed, leaving out, as it does, the metric of unequal distribution, and the rationale for such. So, for example, if we add that we are going to ration food out by the body-mass index (a ratio of weight to size used in determining weight classes for health puproses, i.e. obesity, malnutrition, etc), and give the most food to those with the lowest BMI, and the least to those with the highest, then our inutitions (might) swing around.
3. The goods in questrion here (food) are treated as 'manna from heaven', to use Nozick's phrase. That is, they appear among us pristine and unsullied by previous human attachments and claims. So, for example, if some of the food you get for the orphanage comes from the relatives of a particular child, and is given on the understanding that it will go to that child, then perhaps the egalitarian option seems less appealing.

I think we can get around all of these worries by tightening up the example, but I won't bore you (further) with that exercise. Instead, let me just ask you what you think- Is the analogy apt/salvagable?
Is the intuition I claim shared?
If not, why not?

Posted by: epist at September 18, 2003 01:27 PM | PERMALINK

Flory, if an insurance company can sign up healthy 18 year olds, with knowledge that they will make premium payments until they die, then they can also contractually guarantee that individual insureds won't be singled out for premium increases. It is not incalculable as to how many 18 year old will incur cancer by age 36, and if the probability can be calculated, and total outlays are limited, then stable premiums can be devised. Hell, I can envision policies where physicals are required periodically, and premiums are tied to people remaining below a certain weight. The key is to have the insurer have confidence that the great majority of their insureds will be paying premiums for decades prior to exorbinant expenses are incurred. This is knowable, but unless some way is devised that all young people begin coverage early, and maintain it until death, predictability goes out the window.

Posted by: Will Allen at September 18, 2003 01:39 PM | PERMALINK

I think the main problem with your analogy is that it treats citizens as children throughout their whole lives. A child in a modern orphanage is not expected to work, plan or save for his own food. The same ought not be true for a citizen.

Posted by: Sebastian Holsclaw at September 18, 2003 01:40 PM | PERMALINK

Ken,

The logic of insuring routine and preventive care is that if you give people a cost incentive to forgo or delay that care it increases the likelihood they will be that much sicker when they finally seek treatment. Sort of how the poor and uninsured delay treatment until they can't stand it anymore, present themselves in an emergency room somewhere, and end up using a lot more resources than necessary.

Posted by: Joe Bob at September 18, 2003 01:44 PM | PERMALINK

The working poor can say good by[sic] to another 5% of their income when national health insurance is enacted.

As opposed to saying 'hello!' to bankruptcy or eviction if they ever get run down by someone in a SUV talking on their mobile phone. Or just get sick.

And the numbers are bullshit. Take away the immense bureacratic overheads of the current US system, and that frees up lots and lots of money that can be spent, y'know, on treating people.

Actually, isn't that something to stick in the eye of libertarian types? Always complaining about pork and gubmint waste, when no healthcare system in the work throws away as much money in form-filling and fucking over its customer base than the private American health insurers? Hooray for capitalism!

Posted by: nick sweeney at September 18, 2003 01:48 PM | PERMALINK

"The logic of insuring routine and preventive care is that if you give people a cost incentive to forgo or delay that care it increases the likelihood they will be that much sicker when they finally seek treatment. Sort of how the poor and uninsured delay treatment until they can't stand it anymore, present themselves in an emergency room somewhere, and end up using a lot more resources than necessary. "

But surely, if routine care is actually effective, then it will positively impact a person's risk factors and thus lower his premiums.

There's your incentive to get routine care.

Posted by: Ken at September 18, 2003 01:50 PM | PERMALINK

Epist, the analogy's weakness lies in that it fails to account for technological innovation's central role is improving health care in the future, and how forced rationing stifles innovation, to everyone's detriment. In the orphonage analogy, the required per capita supply remains constant; 10 units a day, so the real solution is lies in simply seeing to it that 10 units per child is produced. With a good or service in which constant technological innovation develops goods that are extraordinarily expensive, there will never be enough goods, but if you ration by restriction of supply, innovation gets choked off. It makes a difference when there is a market for 500 MRI machines, instead of only 50. My greatest fear of the United States going to a state near-monopoly on health care is that we will be deprived of technological improvements that we cannot even imagine. If the Federal Government paid for all automobiles in this country, Ford would likely still be making Pintos.

Posted by: Will Allen at September 18, 2003 01:55 PM | PERMALINK

You do not need to be a doctor to derive Steven White's analysis of skyrocketing healthcare under a "to each his need" program.

Government programs typically start providing all the service demanded at market cost, until all of government would be consumed; then when the realization that the system is unstable, rationing or rationalization takes place. We have 40 years of history on this.

Whatever you do, start with rationing. The most common rationing system for government is waiting in line, actually and figuratively. Dialisys, transplants, surgeries should be first come first serve, if you die before your turn, tough luck. This is the only rationing system that works, and is commonly practiced in all national health care systems.

Also, be careful that you do not kill the patient with hidden disease. When health taxes reach 10% and higher of the worker's income, his family will die of poverty before he gets sick.

Finally, remember, if you don't ration health care properly; citizens will drift over to the tax free cash labor market and your funds will dry up.

Posted by: Matt Young at September 18, 2003 02:02 PM | PERMALINK

With life insurance policies, individual risk is assessed at the time of application and an individual is assigned to an appropriate risk pool. As long as the policy is kept current, the risk pool assignment doesn't change -- even if the individual's health declines -- and the individual pays premiums that are uniform for the entire risk pool. In some cases, this can be a level premium (i.e., it never changes), or it can be one that changes from year to year based on expected expenses for that pool. This provides an incentive to purchase insurance early, when one is more likely to be assigned to the preferred risk pool, and to maintain the policy.

Why can't the health insurance industry work the same way? The industry could create underwriting standards that create a number of risk pools based on expected lifetime costs at the time of underwriting. For example, we could have five risk pool ratings with 20% of the population assigned to each pool.

The industry could also create standardized coverage products -- something similar occurs in homeowners insurance. For example, Form A health coverage would provide 80% coverage of the first $5000 of annual expense, but wouldn't provide maternity benefits. Form B would include maternity, etc.

The rules would be that companies that want to play in the health care market would have to provide certain standardized coverage products, and pricing for each product would be uniform within each risk pool (maybe it could also vary by age of the insured). To ensure the benefits of competition, once insured, individuals would be free to transfer similar types of coverage between insurers without having to submit to new underwriting. The insurers would compete on the basis of price and quality of service -- for example, which doctors are in the insurer's network, how long does it take to get an appointment, etc.

I'm sure this isn't a perfect solution (and there are a lot of details I've omitted for brevity) -- but it seems to address a lot of problems.

Posted by: scottd at September 18, 2003 02:21 PM | PERMALINK

" ...analogy's weakness lies in that it fails to account for technological innovation's central role is improving health care in the future, and how forced rationing stifles innovation, to everyone's detriment."

Well, there's the fallacy right there: "everyone's benefit". It's not everyone. It's a definable group of people. Why don't you specify it. But don't pretend that the person who is not receiving health care under your system is part of "everyone".

Posted by: Russell L. Carter at September 18, 2003 02:24 PM | PERMALINK

scottd,

Great idea, it would help reduce some of the overhead costs.

But, it is a free market rationing system. What the left wants is a government rationing system. The left is looking for a fair rationing system that does not depend in wealth.

Let's say you added government insurance subsidies into your system. Then rationed insurance payments in a dragged out brawl in congress each year. You would still have a government rationing system as limited funding would push some folks out of the insurance system altogether. But, in fact, it would be an open debate as to who is allowed to die and who gets medical care. And at least those voted to death would have some recourse to fund extra life on their own. This is better than the "waiting in line" rationing system.

The problem, as always, how do you replace a free market rationing system with a government rationing system.

Posted by: Matt Young at September 18, 2003 02:36 PM | PERMALINK

Russell, since I wrote "everyone's detriment", not "everyone's benefit", I really don't know what you are saying. If you wish to say that slowing technological innovation would not harm nearly everyone, well, we will just have to disagree.

Posted by: Will Allen at September 18, 2003 02:44 PM | PERMALINK

There's been a number of comments to the effect that raising taxes 5-20% to fund a "sufficient" level of universal healthcare would "bankrupt" people. I think that's ridiculous. My own family income has oscillated over 70% in the last 15 years about 6 times now as I started new ventures, the wife stayed home for years with the kid, etc. etc. Those of you nominal conservatives who think that people can't handle an extra 20% fixed cost in exchange for erasing an explicit large risk to their financial stability are imputing awfully juvenile and immature behavior on a population which otherwise you praise for self reliance and resourcefulness.

And another question for you so-called conservatives: do you fully understand that by running the insurance pool through large employers while exempting those businesses with fewer than ten employees your beloved "private" scheme provides a barrier to entry for innovative small firms? Having worked and managed a number of small firms, I can tell you it is a major PITA to hire highly qualified people if you can't offer health insurance.

Posted by: Russell L. Carter at September 18, 2003 02:50 PM | PERMALINK

Sebastian-

You're right, this is a paternalistic set-up. I said I thought we could get around that, and still preserve the intuition. Let me try-
Imagine instead of an orphanage, we have a desert island with a single water source. Assuming that everyone needs a certain amount of water to live, and a certain amount more to be fully sated, and assuming that the source cannot provide sufficient water for everyone to have the latter amount, we have the problem again, in the absence of any paternalistic assumptions- no governmental distribution system, no assumptions of paternalistic motives.

Is the desert island a case where we ought to portion out water along a metric of work/effort/planning, with the more productive among us getting more water, and the less productive less? I grant that the intuition isn't as crystal clear, but the case does highlight certain problems for your approach.

For example, those who are underproductive through no fault of their own (illness, deformity, bad luck, the actions of their ancestors) seem to be shortchanged. Also, there seems to be a very strong residual intuition that there is a threshold level, a minimum amount of water that must be given, even to those who are underproductive of their own accord. Allowing the feckless to die of thirst just doesn't seem compatible with justice, at least to me.

Will-

I have heard this argument before, and it certainly has some pull. But to really make it out, I think you're going to have to make out some difficult claims. While we can stipulate that lowering the amount of money in a field will reduce the innovation in it, and that socializing health care will reduce the amount of money in the field, these two are not sufficient to conclude that we ought not socialize health care.

What is needed for the latter conclusion is a stronger premise, something like: the loss in innovation will cost us more (on some scale) than the gain the availability of health care due to declining prices. And this is difficult to make out for a number of reasons.

For one thing, we don't have any way to measure the amount of innovation lost to declining revenue. This is because innovation is not exactly an economic variable. It is difficult to measure, and it's provenance and even its contours are fluid.

For another, we don't have a concrete understanding of the link between innovation and the quality of health care. While advances in treating certain diseases are obviously vast improvements over what went before, in terms of measuring bang-for-the-buck for health care dollars, it would seem that preventative screening and basic health care education is more efficient at producing a healthy population in the long run than basic research. I submit that this is the reason that many first world nations do better on many health measures than the US, despite the fact that they pay much less per capita.

Also, while the benefits we forfeit by socializing health care are in the future (often in the distant future), the gains to be realized by the move exist in the present and the very near future, as well as the distant future. It is a standard practice (among those who practice these dark arts) to discount future benefits when compared to present benefits, merely because they are distant. I'm not defending the practice in all cases, mind you, but it does seem to have some pull here.

More importantly, the nature of the sacrifice is one of delay, not denial. That there will be less research, and thus less innovation, if we socialize medecine, means that the advances that come under a private system would come later under a public one, not that they wouldn't come at all. While this doesn't seem like much of a difference to those whose lives are shortened or blighted because they are born before the public system gets where the private system is already, it is in fact a point in favor of socializing the system.

Since research will continue, at a reduced rate, when the system is public, the public will get both the short term benefits of public care, and the long term benefits of innovation. The private option can only give us one of the benefits, although that benefit is larger. So an opponent has to argue that the long term benefits of innovation outweigh not just the short term benefits of public care, but those short term benefits plus the long term benefits of innovation it offers, on a longer time frame.

To determine which is the better deal, we would need to know how much longer the public system would take to produce the same innovations that the private system does, and then we would need some formula for discounting that effect for its distance in the future. I don't think any of these things are really in the offing, so we'll just have to feel it out by intuition, at least until we get better measurements.

Hows this for an inutition pump?-

Would you rather have everyone get basic health coverage now, and get a cure for disease X in 20 years, or would you rather leave the current system in place, and cure disease X in 10? Let us assume (charitably, I think) that the number of people who will die or suffer badly from X in the intervening ten years in the first scenario is larger than the number of people who die/suffer from lack of basic care in the second.

Which option would you take? Notice that the the benefits of second option stop after the society in the first option cures X. After that date, ceteris paribus, those in the first society are better off than those in the second, since they have basic guaranteed care and a cure for X. Every day that that condition persists, the scale will tilt more toward the public side.

Of course this scenario is taken in isolation. There are other diseases that will be cured quicker in the second society, and we can assume (for the sake of argument) that there will always be an X such that the second society has cured it and the first has not. So now the problem's really complicated. At what point should we investigate the differences? From whose perspectives should we calculate?

It seems to me that the group of people who could truly be said to be harmed by the system in the public scenario is that group of (ever changing) people who have an illness that would have been curable under the private system, but is nor yet curable under the public. But that is a bit misleading.

More carefully, the group that has a right to complain is that group whose members both have such a disease, and would have been able to pay for treatment of that disease under the private system. Furthermore, the newer the cure, the more expensive it will be under the private system, and thus the smaller the pool of potential paying customers among the afflicted. And of course, the older the cure, the higher the likelihood that the public society has come up with the cure. So what we have is a small window of people who are both unlucky enough to have the disease, and wealthy enough to pay for treatment were it available, and that pool is limited at the front end of the timescale by prohibitive cost, and at the back end by the advent of the cure in the public group.

Of course, this is really difficult to do without numbers, but I hope you see my arguments, nonetheless.

Posted by: epist at September 18, 2003 03:04 PM | PERMALINK

epist, I don't have time to respond in depth, but I think you entirely miss the fluid, unpredictable, and non-linear nature of technological innovation. What is a 10 year gap today can very easily become a 50 year gap tomorrow, because technological innovation feeds on itself. It is not unreasonable to say that markets foster innovations that may NEVER take place under centrally planned regimes. Of course, central planning has produced breakthroughs as well, but markets don't preclude government efforts, while state enforced monopolies DO preclude efforts by market forces. Modern health care IS technology, and anything that would slow development of technology must be looked upon with great suspicion.

Posted by: Will Allen at September 18, 2003 03:25 PM | PERMALINK

"But the use of dialysis has expanded far more than was ever anticipated -- and since the Feds were paying, there wasn't much reason to keep the lid on."

What do you mean, "keep the lid on?" The alternative is keeling over dead, right?

"Epist, the analogy's weakness lies in that it fails to account for technological innovation's central role is improving health care in the future, and how forced rationing stifles innovation, to everyone's detriment."

I think I can summarize this as "the poor must die today so the rich can live longer tomorrow." Then again, it's not like the poor will have health care in the future either.....

Posted by: Jason McCullough at September 18, 2003 03:31 PM | PERMALINK

Jason, I think your point can be summed up as the sort of demagogic twaddle that inhibits useful discussion of the topic. Tell ya' what, go to a local children's oncology center, and explain to some lower middle class parent, or even poor parent (yes, poor people will be there), and explain to them that it has been decided that they will be receiving 1960s-era treatment, when childhood leukemia had a 90% fatality rate, because, really, market driven innovations just cause too much disparity.

Posted by: Will Allen at September 18, 2003 03:51 PM | PERMALINK

WillieStyle answers my question:

"Why not solve the adverse selection problem by requiring insurance companies to cover individuals AND requiring individuals to have health insurance."

With

"Because there's no practical way to do either."

I disagree.

Requiring companies to offer individual coverage is a piece of cake. They offer it in Massachusetts, and cannot vary rates based on health history.

And you can require people to be covered. Get a form from your insurance company once a year, send it in with your tax return. Don't have it? The cost of coverage is added to your tax bill.

Doesn't seem impossible.

Posted by: Bernard Yomtov at September 18, 2003 04:18 PM | PERMALINK

Bernard, I think you are right that it would be possible to mandate that individuals purchase coverage, and theriein lies the seeds of a better method, although not a "solution", because the word "solution" tends to imply a world in which scarcity and rationing no longer exist. That isn't going to happen.

Posted by: Will Allen at September 18, 2003 04:59 PM | PERMALINK

Will Allen:
"...then they can also contractually guarantee that individual insureds won't be singled out for premium increases.

Precisely, as I said, you have to control cost. Now you have a government mandated system with government imposed price controls. How much different is this from a government run system?

Posted by: flory at September 18, 2003 05:38 PM | PERMALINK

Flory, you control costs by limiting total payout on an individual's policy. After the limit is reached, the individual either pays for care himself, or, lacking funds, goes without care absent charity. Does this mean that some will die for want of care? Yes, just as some 75 year olds die in Europe when they are deemed ineligible for certain procedures.

Posted by: Will Allen at September 18, 2003 05:45 PM | PERMALINK

Solving the rationing problem.

The problem with "waiting in line" type of rationing is that it is quite random, or worse because the longer you wait in line the worse you condition may be.

We need a rationing system that gets patients a financial award for foregoing treatment. For example, if a senior gives up 10 years of life, but recovers $200,000 to pass on to the children, well that is a better rationing system than waiting in line for heart surgery.

It seems cruel, but certainly no crueler than any other rationing system devised by government.

Posted by: Matt Young at September 18, 2003 05:50 PM | PERMALINK

Will Allen:
I repeat "...then they can also contractually guarantee that individual insureds won't be singled out for premium increases."

If you're contractually guaranteeing no increases in premiums based on a risk based analysis of future costs, you've now limited the pool of revenues going into the system. Limiting the pool of revenues leads to less revenue to pay for medical care(supply) than there is demand. (There is no way medical care would end at the $2,000,000 cutoff you postulate; it would be paid for by some type of Medicaid/indigent care program just as it is now.) So demand for care would remain the same but revenues would be constrained....which leads directly to the same rationing scenario you're arguing against.

Posted by: flory at September 18, 2003 05:57 PM | PERMALINK

"Russell, since I wrote "everyone's detriment", not "everyone's benefit", I really don't know what you are saying. If you wish to say that slowing technological innovation would not harm nearly everyone, well, we will just have to disagree."

Sure Will, we're going to disagree. But you are right about the quote, though if you notice, it doesn't change the meaning one iota.

Will, come again, which groups don't get covered in your plan? I know the healthy and the wealthy are there... are there any more? It better be everyone, otherwise, you're not benefitting "everyone".

What is it about the word "everyone" that you don't understand? Instead, is it the phrase "human race" that you mean if pushed to be precise? That makes sense. But "everyone", no. You don't really mean "everyone".

So I ask one last time, before writing you off as a crank, who besides the healthy and wealthy get included in coverage in your plan?

Posted by: Russell L. Carter at September 18, 2003 06:11 PM | PERMALINK

One aspect of this discussion that hasn't yet been mentioned is the moral hazard inherent in the current system. When the consumer of the service is not the person paying the bills, there is no incentive to limit demand. One of the reasons there is so much money sloshing around the US healthcare system to subsidize the technological progress some posters are so fond of is the excess and unnecessary care which is common in this country. Anyone who pays any attention to the amount of useless antibiotics prescribed by physisicans to treat viral diseases because "it'll make the patient feel better" has seen the tip of this iceberg. Some of this is defensive medicine, some is clever marketing by drug companies and medical device vendors but IMO, a damn lot of it is simply that, for the insured population, there has historically been no constraint on demand. What are HMO's most effective at....limiting demand by making the process time consuming and difficult. What are HMO's most reviled for....limiting demand. Until it becomes accepted that every new drug, device and procedure is not necessarily technological progress but some are simply new covers of old songs, the system will never be sustainable. How many marginally different NSAIDs does the US market require?

Posted by: flory at September 18, 2003 06:18 PM | PERMALINK

"What is needed for the latter conclusion is a stronger premise, something like: the loss in innovation will cost us more (on some scale) than the gain the availability of health care due to declining prices. And this is difficult to make out for a number of reasons."

Given enough time, that cannot fail to be the case.

"For another, we don't have a concrete understanding of the link between innovation and the quality of health care. While advances in treating certain diseases are obviously vast improvements over what went before, in terms of measuring bang-for-the-buck for health care dollars, it would seem that preventative screening and basic health care education is more efficient at producing a healthy population in the long run than basic research. "

Really? How do you figure that? And where do you think preventative screening and basic health care education came from in the first place?

"Also, while the benefits we forfeit by socializing health care are in the future (often in the distant future), the gains to be realized by the move exist in the present and the very near future, as well as the distant future. It is a standard practice (among those who practice these dark arts) to discount future benefits when compared to present benefits, merely because they are distant. I'm not defending the practice in all cases, mind you, but it does seem to have
some pull here."

Granted. However, one of the future benefits to come from medical research is a cure for aging. This treatment will add hundreds, if not thousands, of years to the lives of everyone treated. Even discounted for time, that benefit is worth one hell of a lot.

"Which option would you take? Notice that the the benefits of second option stop after the society in the first option cures X. After that date, ceteris paribus, those in the first society are better off than those in the second, since they have basic guaranteed care and a cure for X. Every day that that condition persists, the scale will tilt more toward the public side."

No it wouldn't, because the second society will, after curing X, go on to cure Y 10 years faster as well, which means it has a cure for X and Y 20 years faster. Also, after the second society has had cure X for ten years, it will cost less than the brand-new cure X will.

The two societies will continue to diverge over time with respect to the treatments available and their costs.

"Of course this scenario is taken in isolation. There are other diseases that will be cured quicker in the second society, and we can assume (for the sake of argument) that there will always be an X such that the second society has cured it and the first has not."

There will be ever increasing numbers of them as time goes on.

"So what we have is a small window of people who are both unlucky enough to have the disease, and wealthy enough to pay for treatment were it available, and that pool is limited at the front end of the timescale by prohibitive cost, and at the back end by the advent of the cure in the public group."

But, in the private group, the absolute cost of every existing treatment decreases over time. That means that the total amount of rationing that needs to take place (by price in the second case, by the political process in the first case) is less in the second society than in the first.

Not to mention that cure for aging. Everyone in the first society that died without it lost hundreds or thousands of years of life - per person - compared to those in the second society. That will definitely impact your calculation.

"I think I can summarize this as "the poor must die today so the rich can live longer tomorrow." Then again, it's not like the poor will have health care in the future either....."

Of course they will. In the future, they'll have today's state of the art at much lower prices.

Posted by: Ken at September 18, 2003 06:32 PM | PERMALINK

Flory, cutting off people from treatment because they have exceeded a $2,000,000 limit is no more arbitrary than cutting off a person from treatment because they are 75 years old, and if you don't think that happens with Medicaid patients here, as well as patients in Canada and Europe, you are mistaken. Also, if you are not fond of technological progress, can we assume that you would prefer what medical science offered, say, 30 years ago? The moral hazard issue is best solved by having people choose between much higher premiums for low deductible coverage, and lower premiums for high deductibles.

Posted by: Will Allen at September 18, 2003 06:32 PM | PERMALINK

Russell, before I write you off as an ass, I'll encourage you be make an attempt at civility. Now, if you don't think that impeding technological innovation harms everyone, I suggest you construct a raft and sail to the nearest third world country, and if you get there without perishing, you will be find even the poorest of the poor no longer suffer from a disease called smallpox. How do you suppose that happpened? The virus got bored and decided to leave the planet?

Posted by: Will Allen at September 18, 2003 06:40 PM | PERMALINK

"When the consumer of the service is not the person paying the bills, there is no incentive to limit demand."

Absolutely. The structure is deeply flawed for sure and will be reformed/revamped. But I want it known that I have a preexisting condition in some part due to genetics, (no big deal, I would have thought), that prevents me from obtaining any kind of individual coverage with the current system we have now and as well apparently under anything proposed by the chaps out there on the "Right" on this blog today.

It's not abstract.

In fact with my condition, a yearly comprehensive checkup and a quick knife fix it. The cost is about $200. It's called melanoma.

If you're out there living in the utopian libertarian society in your head, and I'm not on the table for even catastrophic individual insurance, which is the precise case today, in my state, no matter how much money I offer, you're ... nuts.

(I'm now on an employee plan...)

Posted by: Russell L. Carter at September 18, 2003 06:44 PM | PERMALINK

"Russell, before I write you off as an ass, I'll encourage you be make an attempt at civility."

Will, thanks for your patience. I'd like you to spell out which groups in addition to the healthy and wealthy get included in your scheme. Just describe the demographics of your plan.

This is the third time asking... why so coy?

Posted by: Russell L. Carter at September 18, 2003 09:02 PM | PERMALINK

Heavens, perhaps I should stick to medicine and not discuss politics ..... ...... ...... nah!

WillieStyle asks four questions. I'm not sure I have four answers.

1) Healthcare costs have sky rocketed under private insurance, wouldn't price inflation be decreased under a public system since the gov't could negotiate from a polition of strength as a monopsony?

Only if government uses its coercive power, as is done in several (not all) European systems -- that is, outlaw private medicine. One major result of our current Medicaid system that has a very low reimbursement rate is that a large proportion of physicians refuse to see Medicaid patients. In Illinois, the Medicaid reimbursement rate is about 9 cents on the dollar billed, and payment time is up to a year (the system is $1.5 billion or so in hock right now). Miserly as you might want to be, you can't run a medical office on 9% reimbursement unless you get more from other patients. The system of 20 years ago allowed that; you'd jack up your rates for patients with Blue Cross. That can't happen today.

One could argue that in a monopsony there still has to be a natural limit; if reimbursement is too low health providers would simply quit. Somehow I don't think that's a situation we'd want to provoke more than once.

2)Couldn't rationing be explained as the public program providing the bare essentials? Anything more can be bought through private insurace.

The problem is: what do you do for those who can't afford the private insurance? For example, Medicare doesn't cover all expenses, so seniors with more money buy "medigap" insurance. That annoys the folks on the left, and it would make our leftist friends howl in rage if applied nationwide. Reason? It makes moot the idea of a "universal", equitable system where everyone pays in and everyone gets back about the same. I'll let the more left-leaning people here explain that in more detail.

3) I find it hard to believe that European and Canadian systems ration critical surgery like transplants (for little girls no less!) as one of your anecdotes seems to suggest.

They do. One way to handle it is to redefine what's critical. Example -- liver transplants or pre-natal vitamins? Do that a thousand times. Oregon tried this with their Medicaid program a while back, developing a rank-order list for all medical therapies, and drawing a line at about item #600 -- anything below that wasn't covered. It was and remains controversial.

The problem with a government rationing system is that after a while, it's not very rational -- hot button items with an advocacy group get better coverage, political issues get worked in, etc. It's an irresistable urge for politicans. The current system is self-correcting to some extent -- since health-care providers drive the costs to a large degree, as we get smarter/better/more reasonable, spending priorities tend to self-adjust. But once you lock in a priorities list in a bureauocratic/governmental system, the ability to correct-on-the-fly ossifies.

4) Can't a lot of the overconsumption problems that occur be remedied by adopting a "French-style" system wherein consumers pay up front and then get re-imbursed 2 weeks later?

I'm not familiar enough with the French system to comment. Perhaps someone else will.

Posted by: Steve White at September 18, 2003 09:08 PM | PERMALINK

Will Allen:
Why do you think that technological innovation would slow or cease under a state-rationed system? I think you'll concede that we have rationing of a sort now, so you're simply saying that a different sort of rationing will cause this problem. Is it the amount of money going into the system? That doesn't make any sense, because technological innovation doesn't come from family practice physicians, oncologists treating children with leukemia or cardiologists treating senior citizens with heart failure. It comes from research labs, which aren't funded by patient treatment at all, and to a lesser extent from teaching hospitals where those labs are housed. Jonas Salk didn't discover the polio vaccine, and Judah Folkman didn't make his breakthroughs in anti-angiogenesis, because private patients or health care plans were funding their research! Research hospitals won't disappear under state rationing, unless part of that rationing is a reduction in research funding.

As to the one specific technological item you've mentioned, MRI machines: it's true that there are many more of these in the U.S., per capita, than in Canada or Europe (or Australia or Japan). So? If we have 500 per 1,000,000 citizens, and many of those machines stand idle for several hours per day, or if we place a lot of them in small hospitals so that they serve only a few patients while there's a backlog at some larger hospitals, how has the greater number of machines made health care better? There's probably an optimum number of machines, but I have no idea how to determine that, and the number we now have is a result of all sorts of factors that have little to do with good quality health care.

Let me give you an example from another medical "technology" -- in this case, a procedure. Angioplasty is much, much more successful when performed by a doctor who does this procedure regularly, in a hospital that does a large number of these procedures. Most people who have an angioplasty don't get it on the spur of the moment. They arrange it ahead of time or are in a hospital for a number of days before the procedure takes place. However, even small- to mid-sized hospitals all over the U.S. perform these procedures. It's more prestigious to have a cardiology unit that does angioplasties, and a lot of patients will opt to get care close to home (say in Cobb County) rather than at a regional center (say in Atlanta), regardless of the actual quality of care involved. As a result, many of these procedures are performed in situations where we can predict that the typical results will not be as good as they should. There are "market" reasons for this -- economic, social, and cultural -- but the arrangement that results is more expensive, less efficient, and provides poorer care than it should.

One last thing. Steve White mentioned transplants and several other writers have mentioned rationing of this procedure. This has next to nothing to do with denying care because of scarce funds, and almost everything to do with denying care because of scarce organs. There's no shortage of surgeons who can perform transplants -- not in the U.S., not in Britain, and not in Canada. However, there are too few organs for to serve all the people who need them, and the relative scarcity is greater in Europe because people there donate organs much less frequently than Americans do. Managed health care will not change that situation at all. You can imagine market-based incentives that would change the numbers, but some of those incentives are even creepier than Matt Young's proposal that we bribe sick people so that they'll forgo care. Ultimately, very few people decide to list themselves as organ donors (or not) for financial reasons, and very few parents decide to donate organs from a terminally injured child (or not) for financial reasons. There's also a moral economy at work in this, but I don't think that's what the market advocates here are talking about, is it?

Posted by: Keith at September 18, 2003 10:39 PM | PERMALINK

Ken- A couple of points:

Fisrst, while I agree with you that the price for new cures declines in the market case, it declines similarly in the public case. In fact, it would likely decrease much more rapidly in the public case, since a larger percent of the research costs will have been paid up front by the government, and there will be less cost to recoup via intellctual property charges.

Secondly, it seems to me the scenario that you describe, wherein a 'cure for aging' is eventually reached, argues for the public, not the private system. A cure for aging would ( I assume) be a cure for cell degeneration and death due to repeated division. If we really can achieve such a thing, it would be tantamount to the perfect medecine. I submit that such a radical mastery over the technology of cellular reproduction and lifespan (or cellular replacement regulation) would be the end of cellular disease altogether. That would leave only viral and bacterial problems to handle, and while that's hardly a walk in the park, it's not an infinite set, either.

But if the set of diseases is finite, then both societies eventually reach the plateau of perfect medicine. But if that's the case, then any difference between the time it takes the public system to do so and the time it takes the private one vanishes in the limit. As you point out, the utility (or whatever) enjoyed by those who reach the plateau will stretch out (presumably to infinity, or to whatever maximum might exist). So the net utility of both societies will eventually reach the maximum, as the period before perfect medicine receedes in time.

to put it another way, the only way the private option comes out clearly ahead is if there is an infinte set of diseases that it will cure ahead of the public system, so that there is always a set of people who are worse off in the public system than the public one (on the asumption, again, that the set of worse off people is larger in the public society than the private one). As soon as we reach a limit where those in the private society cannot get better off, then the public model will be able to catch up (well, not strictly speaking 'catch up', as the initial difference in utility will always remain, but as time progresses, that difference will appear smaller and smaller. If we reach the perfect medicine plateau at 1% into our alloted time for the private model, and 3% for the public, then the difference between the total utility between the two systems will seem very small indeed.)

And this also speaks to Will's point about an increasing gap between the public and private model. On the assumption that the curve of innovation is non-linear, then you're right Will, over time the gap between the two will grow. (although I don't see why you say that some discoveries would never be made. Are you supposing that the public society simply abandons some projects, never to return to them, or that the society will end before it has time to complete them?)

But, if Ken is right, and there's a limit to the amount of progress we can make in medicine (and that limit is achievable well before the run of the societies involved is over), then this divergence won't matter in the long run. Eventually, the public group will catch up, since the private group will stop moving away.


In terms of stright betting behaviour, it seems to me that the safe way to go if you had a choice between being plopped down in a public system or a private one depends on the relative size of the 'unlucky' groups in the public case. If there are many unlucky groups, and their suffering is severe, then you ought to opt for the private system. But as those groups shrink, the public system looks better and better, which leads to the following (strange) conclusion-

The more successful medecine becomes, the more rational it is to socialize it.

I never said decision theory was pretty. . .

Posted by: epist at September 18, 2003 11:25 PM | PERMALINK

When figuring net present values, an earlier cure for aging is going to outweigh a later cure for aging; since differential discounting is applied to a huge value, the difference is going to be rather large.

If you wait until after the cure for aging exists to nationalize the medical system, the relative costs will be different. But if we have to make that decision today, the net present value comes out rather heavily in favor of the society that has a cure for aging first.

Also, the cure for aging may be "perfect medicine", it will still have a cost, and that cost will decrease over time. That means that, for quite a while after the introduction of this perfect medicine, there will still be differences between the two societies.

Posted by: Ken at September 19, 2003 05:54 AM | PERMALINK

Catastrophic illnesses happen to only a small number of people.

No, we ALL eventually get sick and die. And most of our health care $$$ are spent at the end of life.

Posted by: Shamhat at September 19, 2003 06:30 AM | PERMALINK

Health care is a joke. It's driven by insurance. And, insurance, by definition, is a world of uneducated clerks.

And, doctors can't proceed without 'approvals.'

There once was a time a doctor could run his office with his wife answering the phones. Maybe, medicine wasn't as sophisticated back then; but the illnesses are ANCIENT. And, cancers, heart disease, and such have a long history of being diagnosed. Oh, and bones got fixed. Without X-ray machines.

We came into our world where the benefits could have made things more efficient. But the lawyers, and politicians decided to grab the pot of gold; and now it's just a mess.

And, you can't fix it. Becuase the insurance and legal lobbies control.

Today, you're pushed out the door quickly. No one knows your name. There are no relationships that develop over healing time. Just faces that come and go. Rotating medical help. With the money going into pockets you just wouldn't believe.

Worth it? Nah.

The day doctors feared law suits was not the day medicine got better, but worse.

Posted by: Carol in California at September 19, 2003 02:41 PM | PERMALINK

Keith writes: One last thing. Steve White mentioned transplants and several other writers have mentioned rationing of this procedure. This has next to nothing to do with denying care because of scarce funds, and almost everything to do with denying care because of scarce organs.

No, I wrote bone marrow transplants, specifically, and for a reason: that is a transplant where the scarity is indeed funds, not organs. I did choose my example carefully.

Posted by: Steve White at September 19, 2003 03:22 PM | PERMALINK

Russell, if you had read my posts above, you would have seen the answer to your questions. I'm not given to repeating myself for those who are merely looking for an ad hominem exchange.

Posted by: Will Allen at September 19, 2003 04:17 PM | PERMALINK

Steve White:
Point taken. I should have re-read your post more carefully, after skimming later posts and before composing my reply. Mea culpa.

As I understand it, some types of bone marrow transplants depend on genetic matches, and those are determined by a scarcity of donors, not a scarcity of funds. But in cases where, for example, you can use your own bone marrow, it's a cost question. However, most transplants involve organs, right? That's the point I was making. The fact that it's harder to get a kidney, heart, or cornea transplant in the Britain than in the U.S. is because there are fewer kidneys, hearts, and organs donated, not because there are not enough transplant surgeons to perform the operations.

Posted by: Keith at September 19, 2003 06:59 PM | PERMALINK

82 comments and the advocates of government health insurance haven't a ration plan better then "waiting to die".

Seems a little disgusting to me. If the advocates had to choose between the current system and the "waiting to die" system, they would take the latter. You know, the free market system is at least related to individuals acting rationally without external cohercion. Yet, tha advocates would prefer the "waiting to die" system.

If the advocates refuse to accept incentives to forego medical procedures, the more humane approach, then at least pick the random lottery system. Any thing is better than "waiting to die".

Posted by: Matt Young at September 19, 2003 08:16 PM | PERMALINK

"Russell, if you had read my posts above, you would have seen the answer to your questions. I'm not given to repeating myself for those who are merely looking for an ad hominem exchange."

Of course. I'm going to end this exchange by observing that you never did answer the original question. Which means: there is no one covered but the healthy and wealthy under your plan.

Posted by: Russell L. Carter at September 23, 2003 10:48 PM | PERMALINK

Where's the proof that market driven health care has more innovation? I believe the bulk of health care research is funded through NIH grants. In addition, we have seen a lot of example of pharmaceutical companies who spend research $$$ on tweaks to blood pressure medications in the hope of extending patent lifetimes. The sad thing is that some of these newly developed drugs are even a step backwards in quality from time proven drugs developed 30+ years ago.

Posted by: miggles at September 26, 2003 10:31 AM | PERMALINK

I am not currently homeless, but soon may be due to the federal government... The food stamp office now is making me reapply every six months and has cut my food down to $74 dollars a month... They wont consider my entire bills, yet they base my need and food stamp amount on only some of the portions of the bills I owe... They told me they now want me to reapply every six months because ,"I can barely live on the entitlement of money I receive", I guess that is why they cut my food amount nearly in half and will not allow my entire bills to be accepted... Do you know anyone who can help in this situation... I contacted Hud and was told, to "get my help from a church or move into a government owned rental unit that cost more than my current mortgage,",, and i dont want to lose my home just because I am disabled...

Posted by: Susan at December 4, 2003 04:11 PM | PERMALINK

Just as a solid rock is not shaken by the storm, even so the wise are not affected by praise or blame.

Posted by: Waller Lisa at December 10, 2003 09:13 PM | PERMALINK

Very interesting things in you site

Posted by: Legesse Dan at December 20, 2003 11:17 PM | PERMALINK

With love comes strange currencies.

Posted by: Williamson Zach at January 10, 2004 01:16 AM | PERMALINK

Hello

Posted by: eMule at January 14, 2004 09:13 AM | PERMALINK

A lengthy post,
I have five points of issue:

1)One neglected point that only Carol in California mentions is the state of tort litigation in this country. Doctors in specialties such as OB/GYN and General Surgery must pay huge insurance premiums. In Dade County, OB/GYNs pay hundreds of thousands of dollars every year on malpractice insurance, which in turn goes to overhead expenses that the doctor must levy onto consumers.

Doctors in my county are walking away from OB and other "risky" specialties. The inherent risk because of mass litigation has made it such that most doctors simply cannot practice thier profession. Patients in Orlando who receive severe head trauma must be flown to Jackson Memorial in Miami. Who pays for the plane ride? How many patients will die because of the impending physician shortage? You can thank lawyers for all of that. Put a cap on non-economic damages, drive healthcare costs down, and that's one way we can make a very serious problem better to some degree.

2) Shame on those of you who have accused doctors of being greedy, self-serving, money makers. Yes, doctors are well compensated for their work, and justifiably so.

No other profession requires such work ethic and rigorous academic training. A MINIMUM 8 years after college, and you expect doctors to work for cheap. Canada and other European nations can afford to pay their doctors well because of their demographics. A socialized system would be unable to do so because of the heathcare costs due to innovation and the welfare state which has developed thanks to Clinton. That in turn reduces physician morale and the quality of healthcare.

If a plumber gets called to do work on the weekend or at 3 AM, he gets paid over time. A doctor is on call and receives the same rate of pay regardless of the time or day, at a much higher degree of personal liability because of the human life involved. AND doctors are not allowed to unionize.

The problem is NOT the doctors. If you want to point a finger, point it at lawyers or greedy corporations who make millions in profits but refuse to adequately insure their employees (a la Walmart). BUT don't blame the ones who heal you. There are much better and faster ways to make money than in medicine...most doctors do not sacrifice 15-20 years of their life in training because they are greedy.

3) I agree with Will Allen. Technological Innovation is accelerated in a free market system, not socialism. The personal incentive to make monetary gain is always more productive than a federal system: Need proof: Goto Yahoo finance, click on Industries>>Biotechnology>>Medical Device Companies. There will simply not be enough money to pay for Healthcare AND Research.

4) The highest income bracket pays between 33-38 percent in taxes. You want them to give more to pay for people of a welfare state, and then receive the same care as everyone else? When they are the ones bolstering economy? That's not fairness, that's a welfare state, that's socialism. There is plenty of money in corporate America to pay for healthcare, but then that slows the economy indirectly.

5) At the same time, people should take personal responsibility fo rtehir own health. Why do other countries have better health indicators than the US despite the superiority of our system? It's lifestyle choices.

American obesity is one. Unlike any other country on earth. Our overconsumption is disgusting at times. You guys were talking about the unexpected demand for dialysis machines, and how it costs so much? What is oneo fthe main contributing causes of diabetes? OBESITY.

In a recent study, it was reported the Average American saves 1-2% of their income yearly. With consumer debt at all time highs and poor finance decisions, of course peopel won't have money to pay or even co-pay for healthcare.

--Socialized medicine may be the direction this country is headed. But it is an easy way out for people who should be looking on changing themselves before blaming others.

Other industrial nations may have universal healthcare, but they do not have the welfare and military budgets that are also integral to our nation. Any liberal idealist can spout the benefits of socialized healthcare, but the bottom line is, it really is not the right fit for America as we know it today.

-A Concerned Medical Student


Posted by: MedStudent at January 16, 2004 09:46 PM | PERMALINK

Wow, nice blog. Lots of reading to do. I'll have too make sure I bookmark this and come back when I have more time.

Your Certified

Posted by: Your Certified at January 21, 2004 04:45 PM | PERMALINK

Hello! Super work performed. Top PAGE, further so!

Posted by: ??? at January 27, 2004 05:39 PM | PERMALINK

Hi,

I just wanted to make the comment that private and public healthcare arent necessarily mutually exclusive.

A lot of people have commented on the difficulties of rationing healthcare under a public system.

There have also been comments about the fact that medical care doest really fit the insurance model of risk management and sharing.

Australia has a system in which there is a basic level of care provided by the governement, and that this care is complemented by various private insurance providers who undertake to cover care not provided by the public system.

This system always struck me as eminently fair - everyone is assured of a basic level of care through the public system, but no-one is guaranteed extensive and/or expensive treatments. A triage/rationing system tries to make the best of the resources available.

Complementing that is the private insurance system, which provides for people who want and can afford better and/or more comprehensive coverage.

Of course, theres a continuous debate on the what the correct public/private balance should be.

Posted by: damien morton at January 29, 2004 06:14 AM | PERMALINK

I'm very busy procrastinating writing a paper on this topic and have found this little discourse on the subject enraging, amusing, patriotically heartening, and a bit juvenile.

Before I put in my two bits, let me explain my perspective. I am grunt management for a very large retail pharmacy chain who doesn't make much money. My last job was managing a gas station and I don't make much more now. I do not yet have a college degree due, in part, to a genetic disorder I have lived with my whole life. However, my wife an I live comfortably well on my income alone while still paying for my college classes (which aren't as cheap as in CA to say the least). We live comfortably because my wife and I are both very intelligent people (don't count someone without a degree as uneducated) and we make wise economic decisions from day to day. We eat very well (from both recreational and healthful perspectives) and furnish our home with very nice highly valuable things. We live more comfortably than many of our well paid professional friends. We also save much more than 10% of our income. I say this to dispel any ideas that I am one of those much maligned "wealthy and healthy."

My situation is not permanent, however. My wife does not work because she is a student. She will graduate with her MD in just over two years and then begin her residency. A doctor's residency is, in fact, paid (pathetically little) and I will then quite working and return to school full time to pursue a doctorate in psychology. I explain this so that some readers will not disregard me as poor sputtering republican.

There has been a lot of posturing in this discussion about why universal healthcare would, wouldn't, does, or doesn't work. Somehow a great deal of high faluting terminology and vague philosophical ambiguity has found its way into the discussion. What really matters is this:

We seem to all have the same idea that everyone is entitled to enjoy life and, somehow or another, make sure that people can put to use their "inalienable rights" even if they can't or won't be a productive member of society. Everyone has a different idea about how to go about that and has different priorities on what to include but we're all working toward the same goal -humane.

The reason this nation keeps going is because there has always been a balance of perspective. Over the past 226 years liberals and conservatives, under the guise of various political parties, have worked against each other to maintain peace and tranquility in our nation. It's worked. If our nation was founded by nothing but modern far rights, we wouldn't have a constitution. We would have bloodied the Brits, stolen their supplies, bloodied them some more and then set up shop with a more oppressive and segregated society than in England. On the other hand, if liberals had had free reign the constitution would still be in progress with the first draft of the text, to date, occupying all of New Jersey 3 feet deep.

I know everyone is bound and determined to not let the other person get their way, but Damien (another recent add to the discussion) has brought up a concept to consider. Why not both? Personally, I don't think mimicking Australia is a sound idea, but he's on to something. Since America has never done very well with adopting what works for other countries but we've proven pretty good at adapting. Rather than dive into despair because nothing will work, lets make up something that will.

If the idea of truly universal healthcare access is generally agreed upon as good and all the economic mumbo jumbo about private healthcare is also agreed upon as good, then lets see if we can channel these good things from each concept into the right places. We will need a system that promotes medical innovation in the form of forward advancement and discourages redundant innovation (12 different names for propranolol HCI). We need a system that ensures that everyone (not just the healthy, wealthy, middle aged, important, or indigent) has access to healthcare at a reasonable cost. We want automatic stabilizers that will keep the level of accessibility at an acceptable level for each individual while maintaining the fiscal integrity of all parties involved. We want the agile adaptability of free market to be efficiently channeled without affecting its unique "self correcting" characteristics. We want to valiantly defend the rights of the poor and downtrodden, honorably respect the hardworking wealthy, and be particularly careful not to exclude those in between by way of oversight.

How can this be done? No one know because no one has tried. One idea is this:

Mandatory private health insurance for every living soul. I read one comment somewhere above here about sending in proof of insurance with your tax return; good idea. A good example for the logistics for this is our current auto insurance system, where parents are responsible for their children’s coverage and insurers are obligated to insure them until the age of eighteen or through "standard" college. After that, you're on your own.

There is the problem of those who don't make enough income to pay the premiums. Government regulation of the industry will install appropriate price caps perhaps on a sliding scale. In addition, government programs would be installed that SUBSIDIZE health insurance premiums which would replace Medicare and Medicaid which SUBSITUTE for insurance. Similar, perhaps more humane, principles can be applied to determining eligibility.

Employer provided insurance is passionately clung to by many as an important tool for fishing in the labor market. I agree. But, this doesn’t have to be obliterated, just changed. The advent of direct deposit has brought with it the technology to offer healthcare allowances to employees with no more, if not less effort. These allowances are paid directly to the insurer of the employees choice adding considerable stability to a very fluctuating insurance field. Employer contributions are still tax free to the employee and deductible for the employer.

What will happen with end of life expenses? On one front (the most talked about), end of life utility will be absorbed by a >30% increase in the number of premiums being paid (even after discounting for the lower rates caused by the same). On a lesser discussed front, a minimum level of coverage will be enforced which will include preventative care. Comprehensive health maintenance will postpone and shorten the high utility period at the end of life. Truly healthy people tend to die more quickly than their unhealthy counterparts regardless of length of life. Essentially, the intended outcome is happier more productive (rate and run) life with fewer bills at the end.

I am intentionally leaving out any plans for how the private industry will function. This is because it's not my job. CEOs are paid far to well to just be told how to run a business. Government involvement in this healthcare reform involves outcomes based guidelines, internal restructuring of existing programs and nothing more. The private sector MUST do the rest. That is where the right wingers and the left wingers come together. As long as certain criteria (everyone is covered at all times with x minimum level of coverage not to exceed y $$) are met, it is up to the industry to make it's own money.

What are the drawbacks compared to our current system? Those with borderline incomes who would normally opt not to have health insurance in order to put money away for later would be forced to pay insurance premiums. The homeless really throw a wrench in the politics and logistics but then again they do now anyway so its not an issue as long as they get some basic care -catastrophic only perhaps. Also those who currently have "Cadillac" insurance would still have it but would get less bang for their buck or maybe even have to settle for BMW insurance and pay out of pocket for a couple things during their lifetime.

What are the drawbacks compared to other universal access options? There aren't really any drawbacks compared to a strictly private option because all the benefits of the private sector have been included in the plan. There is much less uniformity of care in our hybrid plan compared to the public route and income is still the primary mode of rationing.

What are the benefits compared to our current system? Universal availability of healthcare (which was our primary goal). Better aggregate health nationwide (read into it whatever you want about life expectancy or infant mortality but it boils down to happier, healthier, more productive Americans which I think earns more points that when people die in relation to their birth) brought by universally accessible preventative care. With replacement of Medicare and Medicaid payer programs with new subsidy programs, healthcare will not be (albeit inadvertently) further rationed by forcing patients to deal with the bureaucratic agencies directly regarding their care. Instead, those who benefit from the programs will deal with them regarding payment of their premiums which is much more straightforward.


What are the benefits compared to other healthcare options? The government, in all of its gargantuan glory, does not have the burden of carrying out the role of payer; rather, its role fits within the existing mold. Lobbyists and other political tweakers will not gain leverage in healthcare affairs and may even lose some (but don't spread the word). Personal freedom is left intact and the wealthy and beneficiaries of charity can access the care their funds can afford. Retaining a funds rationed system will maintain the level of research and advancement (I really don't like the term "innovation") that a free market sustains. Retention of company benefits options and other economic perks of the current system will reduce the initial and long term impact on the economy.

There are certainly a lot of issues that many of us consider to be problems to fix that this plan does not even address. If everyone were to have reasonable access to healthcare, could medical professionals accommodate the load? No. If everyone who needed to see a doctor right now called to set up an appointment with the appropriate physician, every slot in every doctor’s calendar would be filled for the next several years. This is not a reason to give up but merely something to fix. On the same note, the average appointment at a doctor’s office is scheduled for 15 minutes. It has been well established and I’ve confirmed it myself that appropriate and personal care cannot be given to a patient in fifteen minutes. Not only are there not enough doctor’s to go around but their schedules are already too full to provide America with adequate care. Would more doctors solve the problem? Not really. Doctors actually work for a living and the number of patients a doctor sees affects his/her income. Would you want to voluntarily take a 50% cut in pay to do your job better in the same amount of time at work? There are lots of other issues that can be championed but those are for another time. Given the complex society we have built up around us, I think a hybrid system of healthcare like I outlined would put our existing resources to the best use possible. If America gains vast new resources, we’ll revamp again.

This is quite long in retrospect. I hope you held in there are read it. Let me know if anyone agrees enough to vote for it. You never know, reform may be closer and better than any of us thought. At any rate it's a good start on my essay.

Tim

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