Wednesday, September 02, 2009

Ramblings on Health Care

A few points about the health care debate:

1) Health insurance is a funny thing to begin with. Most health insurance covers routine expenses such as immunizations, annual check-ups etc. Some plans even pay for prescription drugs. This is unusual in the realm of insurance. Imagine if you had an auto insurance policy that paid for your oil changes or tire rotations. That would be nice, except that it would have to cost a lot of money in order for any insurance company to offer it. There would really be no point, since you would just be trading checks with the insurance company every few months. In the case of most insurance, you pay regular premiums to the insurer in exchange for them taking on the risk of having to pay for large, unusual, and somewhat random events (for example, a house fire.)

2) Allowing people to purchase health insurance “across state lines” doesn’t seem like it would work. I assume that the proponents of this believe it will increase competition. There are a couple problems with it. First, insurance is regulated at the state level. So part of the reason insurance costs can vary so much from state to state is that each state requires different minimum levels of coverage, different limits and rules for medical malpractice lawsuits (which, in turn, affects doctor and hospital fees), and different procedures that are required to be covered by all insurance plans. Second, if we assume that we can have federal regulation of insurance, insurance companies would simply use territory rating that would mimic their different rates by state.
I guess I don’t understand how you could make insurance companies charge the same price for policies in different states when different laws would apply to those policies.

3) I am skeptical of the surveys I have heard about health care reform. One columnist claimed that a survey showed that most people want universal health care. There are just so many ways to ask the question that I am not willing to take any summary conclusions like that at face value.

4) There was an op-ed (from Senator Harkin) that claimed we don’t spend enough money on “prevention” in America. It is impossible to gauge this. Did he count the money I spent on running shoes, zucchini and green peppers instead of cable TV, doughnuts and potato chips? I think not. Prevention is a personal choice, a habit. Sure we can spend money educating and coaching people, but there is more to it than that. Also, soda pop and french fries taste really good. I am skeptical that any government prevention plan will be particularly successful in changing unhealthy behavior if the plan is to simultaneously mitigate the financial consequences of unhealthy behavior.

5) Have any of you heard this idea that we should be paying doctors based on results instead of number of procedures? The idea is that some doctors to extra tests, etc. so they can make money when the insurance company reimburses them. Paying based on results seems attractive, but it sounds a lot like Six Sigma mumbo jumbo to me. Who decides what results are reasonable to expect? I hope we wouldn’t stop treating people with chronic conditions. In those cases there are no results from treatment except continued survival or comfort.

6) Some have accused the opposition to health care reform (mostly the ill behaved town hall crowds) racist using the reasoning that they are opposing a black U.S. President or that they are opposing a plan that would disproportionally benefit minorities. I find this really tiring. I heard one woman (a Princeton professor, I believe) on NPR claiming that any arguments involving the idea of “personal responsibility” is inherently racist. I’m sure there are many racists in America, and surely many of them are opposed to health care reform, but to accuse all opponents of reform of racism seems especially lazy and, um, prejudicial. You will have to actually address my arguments to persuade me to your point of view. You can’t persuade me by calling me names, especially when they are unjustified as in my case.
If I wanted to be mischievous, I guess I could turn it around. Health care reform as currently proposed will cost lots of money, which will cause more government borrowing, which will lead to inflation which will be bad for people who have large bank accounts and money lenders, which are disproportionately one race (white). Therefore, the supporters of health care reform are racist. I guess I better be careful with that argument: if E.J. Dionne saw it, his head might explode.

7) Some opponents of reform like to use the argument that the government screws up everything that it does, so why should health care be any different? Sean Hannity in particular seems to like to say, “Name one thing the government is in charge of that it hasn’t screwed up.”
If anyone ever asks you this question, your answer should be “the military.” Then you can have fun while they try to figure out whether to admit you have a valid answer or whether to agree with you that the military is screwed up. If you want to go further, I guess you can ask them how their electricity utility performs compared to utilities in other countries.

8) One more thing about opposition to reform: Part of the reason there has been so much room for misinformation from the pundits and talk show hosts is that it is unclear what the actual information is. There are still multiple competing bills, and Obama has been pretty light on the details.
Also, I think there are a lot of people that think there is room for improvement, but are not sure this is the best way to go. The Democratic leadership and many in the media (including “The Economist”) seem to be missing the fact that there is actual opposition to health care reform in its current form that is based on policy arguments, and that can’t be dismissed as racism or ignorance.

9) I do think our current health care system leaves much to be desired. The current system has come about more by accident than by design. For example, I don’t like that you have situations where people get illnesses not related to work, which cause them to not be able to work and lose their jobs, which causes them to lose their insurance. Having said that, I don’t think our system is so bad that a poor effort at reform can’t make it worse. I don’t know exactly how to make it better, but I think we should be able to do it without erecting “a multitude of new offices.”

Anyway, I guess that will do for now. There is obviously a lot more to say, but I don’t really feel up to talking about the theory of vertical (across time) versus horizontal (across people) risk transfer in health insurance right now.

9 comments:

Nick said...

Concerning point #1. It annoys me to no end when people refer to the "right to health insurance", confusing it with health care itself. Your comparison to car insurance is quite apt, in fact it is that "revolving door" check writing (I write check to insurance company, they write checks back to me and the care providers) which is what drives up the overhead costs. People need to realize that their health costs are something that is paid by themselves, whether it comes out of their pocket in the doctor's office, or out of their paycheck as a premium, or out of their paycheck as taxes to fund a gov. run system, its just that we like it when we can't see it all at once there on the check we're writing. It almost makes me want to have insurance abolished so that people are confronted with how much health care actually costs.

Anyway, my devil's advocate question is this: except for its projected cost overruns in several years, most people seem to like medicare, especially seniors. Seniors also seem to take up the largest chunk of health spending. So right now it seems like a government program is paying for a vast portion of the total health care price tag for the country. Since it works so well, why not extend it to cover everyone for a slight increase in cost? And getting rid of the hundreds of billions of dollars of insurance profits would seem to make the whole thing cheaper.
As pro free market as I am, I have yet to see a data driven argument to this that isn't just ideological (ie, socialized medicine is nanny-statism), or fear-mongering (Death Panels!!).

Warren said...

For #5 we talked about this in one of my classes about unintended consequences. If you go by performance the sickest people will be bypassed so as not to hurt the doctor's rating. You could get around this by having different levels of sickness, but then that would cause another bureaucratic mess to determine how sick people are.

For #9 Health insurance offered by companies started in WWII when there were wage controls and so businesses had to compete with non-monetary wages.

JennyW said...

I don't have any good answers, but after 5 years of paying out of pocket for a private health insurance policy, I have to say the switch to an insurance plan through out employer has been, well, amazing. Our health insurance, co-pays, and prescriptions used to cost us an amount equal to our mortgage, property taxes, and homeowners insurance each month. It was like owning two homes. And that was when we were generally healthy. We knew the insurance was for more catastrophic things, and while we were on it our family had 3 unexpected but necessary surgeries. Without the insurance, we would have had to sell the house. But with the insurance, we still were getting to the point where we simply couldn't afford it.

What's annoying is that if we had been irresponsible and not had any insurance, those surgeries would have been covered another way, and we would have saved a lot of money. In fact, while talking to one of the hospital finance people (after having paid out several grand) she looked at our entire record and noted "Oh, you could have qualified to have this bill reduced based off of your income ... but since you've already paid it, it's too late."

Now, even though our rent is more than our mortgage was, our budget has much more room simply because the insurance costs are more reasonable. And I don't stress as much about being able to afford our health care costs. Which is good, because in the midst of all this, I developed a chronic condition that, if untreated, severely affects my ability to live my life (take care of Lucy, the house, etc.). And which, of course, is aggravated by stress ...

I just feel like health care is a catch 22 no matter which way we go about it ...

JonF said...
This comment has been removed by the author.
JonF said...

Nick, you say that people seem to like Medicare "except for projected cost overruns in several years". That's a problem you can't assume away. We need to fix Medicare as it stands now (which will probably include increasing payroll contributions) before we can talk about expanding it. Then we are talking about covering, what, 200 million more people than it does now? That's going to cost a lot more in payroll taxes. I don't think it will be a "slight increase in cost". Besides, many doctors and hospitals dislike Medicare because they think its reimbursements for care are too low. Hospitals charge patients of private insurers more than they otherwise would to offset the loss they take on Medicare patients. I can dig up citations for this if necessary... Anyway, I don't think expanding Medicare is a good answer.

Nick said...

Of course medicare needs to be fixed. But ask any person on medicare if we should outright end it and you'd be risking a cane to the face or your feet run over by this chick.

My point (meaning their point since I'm currently not for a public health system) is that the majority of all medical costs today are from old people on medicare. When my dad had his triple bypass last winter I went to the hospital every day for about 2 weeks. I think while I as there I saw exactly 1 patient under 60. Yeah, that's not scientific, but I can't imagine anyone disagreeing with the statement that most medical costs come from people over, say, 60. So why not just go ahead and extend it to everyone, raise payroll contributions or taxes which is more than offset for most people by no longer having to pay premiums and copays, and boom, everyone's happy. Except for the poor underpaid doctors.

So the cons are:
Low reimbursements to doctors and hospitals.
Thousands of unemployed insurance industry workers. Possible millions.
Longer wait times for non-emergency visits since now all the uninsured sick people will start going to their family doctor instead of the emergency room.


Where I think they have a point is that if you look at this from a strictly numerical perspective and get away from right/left ideological arguments, the expanded medicare plan is cheaper than us currently paying huge overheads to insurance companies.

JonF said...

Maybe you are right.
I just looked at my 9/15/09 pay stub. My costs for insurance premiums and contributions to my HSA year to date are more than 4x my contributions for medicare.
So if you eliminated my need for insurance but had to raise medicare taxes by 300%, I would still be better off as far as costs go.
Of course it gets more complicated than that because I don't know how much my employer is paying towards my premium, but anyway...maybe it would be the easiest way to get everyone some level of care.

savanna said...

Hello! My name is Natalia and I'm from the Latvian. In our country have similar problems, but I think that health problems radam we are ourselves, because
1st wrong to eat
2nd turned in a few
3rd stress
and yet a lot of different factors.
People themselves need to think about themselves and their health, care for, because unless we do, any state laws will not help us.
Will assist yourself!
health drinks

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