Health Care – Is there a solution? Part III

This is the third and final post in a series on Health Care in America. To view the previous posts, you may click here and here.

Health Care – Is there a solution? Part 3 of 3

The first move to make in health insurance reform is forcing consumers to make medical decisions based upon market forces. During the wage and price freezes of WWII America, companies were forced to offer benefits in order to attract workers since they could not offer more money. Once this became an employment “entitlement”, the provision of health services was taken out of the market-sensitive environment. Rather than deciding whether to use services based upon need and price, consumers with insurance neither purchase services nor are treated by providers of services on that basis. “Do whatever you need to do for whatever price you charge. It doesn’t matter to me. I have insurance”.

This has been clearly seen in the provision of laser eye surgery. With insurance providers refusing to cover this procedure, market forces have driven the cost down to a level where more consumers could afford it. Even with medically necessary services, consumers would be more discriminating in choosing where they receive those services. Insurance plans should be crafted to give consumers a benefit in making some medical decisions based upon market forces. Higher deductibles, Medical Savings Accounts, and Catastrophic coverage accomplish this.

The following points outline the changes I recommend that we immediately put into action here in America.

As is the case with Major League Baseball, Health Insurance companies enjoy an exclusion from market competition. Does anyone remember how fast phone bills went down with the AT&T breakup in 1984? Same thing here. We must remove this exclusion. When we allow insurance companies to sell to customers in other states, rates will go down and quality of services  will go up. Then, perhaps, health insurance companies can focus on serving customers and improving the level of care. Without this reform and the  resulting lack of competition, there are few incentives for insurance providers to improve their services.

Stop providing health care to people who are not citizens unless they have health insurance. Perhaps they will find their way back home to their native countries to receive care there. Taxpayers are not required to care for the world without their consent. Recently Danny Williams, the Newfoundland Premier, opted to come to the United States to pay for an operation he could have received for free under Canada’s national healthcare plan. He chose to forego those services (and the resulting wait that is commonplace in that system) and come here to have his procedure.

Pass meaningful tort reform to slow the growth of defensive medicine. Recent polling of physicians suggests that they use an additional 26% of resources to prepare for potential lawsuit opportunities. That amounts to a lot of co-pays paid by the patient/consumer.

Stop talking about fraud, waste and abuse in the system and start prosecuting people to the fullest extent of the law who intentionally misuse Taxpayer money. This applies to Medicare/Medicaid and all state-run healthcare program.

Encourage Health Savings Accounts (better known as HSA’s) to encourage better market price sensitivity. These accounts encourage consumers to purchase services on a more market-sensitive basis. This also encourages planning for medical expenses.

Allow individuals within a company plan to own their own policies so that loss of job does not mean loss of coverage. Allow them to take that coverage to a new company and continue to be a part of the corporate risk benefit.

Allow individuals to join larger constituency groups (NFIB, etc) to reap savings in plan costs. These organizations are currently unable to create large risk pools.

Stop requiring hospitals to spend huge sums of money caring for irresponsible people. It is unfair to allow individuals to ignore health coverage while requiring hospitals and physicians to lose millions caring for these same irresponsible people. If one is free to avoid health insurance, providers should be free to refuse care. It sounds heartless, but we do not require farmers to feed people who refuse to work or display other responsible behaviors. Accountability has a benefit to holding down unnecessary costs to the taxpayer. There may be an attendant drop in demand for cell phones, cable TV, luxury purchase, and other unnecessary expenses, but such is the nature of life.

This is an interesting side-note. One of the constituency groups that got a pass in the recent health reform legislation were the Amish. In the Amish community, young men are not allowed to marry until they can demonstrate to the community that they have the financial resources to care for a woman and they are not allowed to have children until they have the cash available to pay the hospital and physician for the services, without benefit of insurance. How do they manage to survive without health insurance? On the contrary, they not only survive, they are thriving.

Each one of these reforms can be accomplished without one additional penny in cost to the taxpayer. The main reason they are not attractive to the Progressives on the left is that the power rests with the people, and not leftists. They assume that Americans in general cannot make these tough decisions. When we truly analyze the situation, the reality is brutally clear: government power is what this discussion is all about.

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4 Responses to “Health Care – Is there a solution? Part III”

  1. Stephen Collings Says:

    Jeff,

    Thanks for the clear and concise list of proposed solutions! That’s something that’s missing a lot in this national discussion. I think you have some good ideas. However, I’m not sure that some will have any significant effect, and others I’m not sure are possible at all.

    First, the HSA. A health savings account is basically a tax break when money is saved for a specific purpose, much like an IRA for retirement. It’s a reasonable plan. The problem here is that many of the people lacking access to health care are low-income families who have little to save in the first place, and whose taxable income is so low that a tax cut isn’t going to make that much difference in their ability to afford medical care. A family of four with a total income of $26k/yr pays no income tax at all! An HSA only helps if you have taxable income to begin with. The same family making $30k would have to save $4k to get a tax cut of $400. The odds of a family like that being able to save even $1k and still get by are pretty slim. And in the case of an actual medical necessity cropping up, $4k isn’t going to go far at all with today’s cost structures. I’m sure you know how much simple dental work can cost! For the people having trouble paying for insurance in the first place, this just isn’t going to make enough difference to matter.

    Also, I’m not sure how your suggestion of company insurance portability differs from existing COBRA plans, which allow employees to stay on company policies after leaving the company. Is there a substantial difference I’m missing?

    Now, for what’s impossible. You suggest that medical care providers stop providing care to illegal immigrants and to “irresponsible people”, which I’m presently interpreting as people who can’t pay. (Correct me if I’m wrong.) The issue here is that this isn’t just a matter of law, it’s a matter of medical ethics. Doctors are required to treat the patient in front of them. That’s why ERs are used by so many as free primary care clinics, and no law is going to change that.

    I’d like to direct you to (shameless plug) my own website, where I discuss the results of a report by McKinsey and Company analyzing exactly why health care costs so much more in the US than in other countries:
    http://collings2010.com/index.php?page=issues#18a
    http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp
    We agree that tort reform is important, but according to this report, it’s actually a relatively small factor in the much higher cost of health care paid by Americans. Other more significant causes include physician conflict of interest, prescription drug costs, and administrative overhead. Any market-based reform needs to take these issues into account, or it’s going to be of effectively no consequence. I’d love to hear your opinions on those issues.

    Thanks again for the post!

    -Stephen Collings

  2. Jeff Hartline Says:

    Stephen:

    Irresponsible people are people who engage in irresponsible behavior, use their money to buy things other than health insurance, and then demand that I take care of them. That was the group I was referring to.

    As for the poor, they already have access through medicaid. A non-issue. A family of 4 with income of $26,000 should be able to at least get their children on TennCare of some SCHIP program.

    Why should providers be required to provide care for illegals? They should not be here and thus, if we were enforcing our laws, would not be showing up at Emergency Departments for care. Never mind about the billions we would save in other social programs and education.

    Defensive medicine is responsible, according to the most recent polling by physicians, for 26% of unnecessary health care expenditures, not a small amount.

    I hope you have not bought into the Progressive “boogeyman” of drug companies, doctors, medical evice manufacturers as the real bad guys.

    Administrative overhead could be cut by 26% via tort reform. Additional cuts could be made with market-based plans where more people pay with cash.

    As for the real bottom line. The Producers of culture want to be able to make the ultimate decision as to whom they choose to provide things for at no cost to those receiving the benefits rather than being forced by a tyrannical government to care for anyone who can affirm that they need those benefits. This track allows individuals to avoid developing networks of care, like being a good neighbor, or attending a church, or being a part of an organization that does something for someone else. These are the networks that rally to raise money for people who need kidney transplants and such.

    Continue to grant these benefits without expectation and you kill the golden goose. It is just plain wrong to demand people’s stuff because you can. Continue to grant these benefits and there is no end to the demands that “entitled” individuals demand of the Producers. By the way, do not interpret Producers as the rich, but as those people whose personal responsibility bar is so high that they cannot ever see themselves as depending upon someone else for anything, regardless of their income level.

  3. Stephen Collings Says:

    Jeff,

    If you want to stop socialized medicine from taking hold in this country, then I very strongly suggest you look at that McKinsey report I linked. Every poll shows there’s real public support for socialized medicine in the US. It’s not a majority yet, but the support is there. Have you ever asked why that support is there in the first place?

    That report shows you: because our health care costs are vastly more than countries which have socialized medicine. Say what you want about the free market or the comparative quality of care here. None of it will matter. The cost of medical care hits people in their wallets, and that will always, without question, drown out any ideological argument you can ever make.

    As long as our costs stay so much higher than everyone else’s, support for socialized medicine is going to grow, until it overwhelms us. Single-payer isn’t on the table now, but it will be before long if we don’t make some major moves to lower costs. That report is the best analysis I’ve seen of where the extra money we pay goes. If you don’t know exactly where the extra money is going, how can you hope to deal with the problem?

    I’m not suggesting anyone is the “bad guy”. I’m saying that if you make this about identifying and beating the “bad guys”, you’re making the same mistake everyone we send to Washington makes. This has to be about clearly identifying the problem, understanding that problem, and solving it. Otherwise we’ll still be stuck in the same bipartisan war that’s been tearing this country apart for decades, and nothing is ever going to get better.

    So the first question is, what do you see as the problem? I say it’s the high cost of health care, which has led to increasing public support for broad government intervention and, eventually, single-payer. Do you agree that this is the fundamental problem? Or is the problem you’re trying to solve another one?

  4. Ed Dodds Says:

    Jeff: Speaking of shameless plugs, I just did a post on HSAs with some recent data which may be of value to your readers – http://www.mobilehealthwatch.com/blog/cdhps-hsas-will-play-a-greater-role-mhealth

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