TW: Some things I have learned on health care several months into the debate yet many weeks if not months from the end of it. Mostly what I have learned is how little I know. Our system is a cockeyed hybrid of legacy systems which provides sometimes world class, sometimes mediocre and sometimes no care very expensively. Some background thoughts:
The consumer buckets:
1) Government funded health care programs are open-ended pits with insufficient cost controls. These programs included Medicare, Medicaid, the VA, and a slew of public service employee and retiree plans. If Americans think these pits can continue to be funded in their current forms, I believe they are seriously wrong. These programs as currently structured with little patient participation in payment are recipes for ever escalating consumption of health care. If a product is essentially free, the demand for any product will be extreme. Btw, these programs have made millions of lives better, longer and more worthwhile.
2) Private funded health care programs are stealthily eroding the compensation of current employees. Most employees being only partially if at all aware of the problem. Much like bucket #1, with the connection severed between consumers and providers via insurance demand is escalating with no end in sight.
3) Those not covered by 1 and 2 above are increasingly left dangling. Those who argue "they can go to the emergency room" or "charity will take care of them", are wrong. I do not trust the level of care provided by emergency rooms and charity and it is not at all clear to me why folks under the age of 65 should receive poorer care than those above or for that matter those working at a job with strong insurance.
The growth in this bucket will increase folks staying in jobs they do not like or even perform well in but which provide strong health care not necessarily because their current job's plan is cheap but because they would struggle to find coverage elsewhere due to age or illness. As health care costs escalate discrimination against the unhealthy be they obese, smokers, or merely older or inheritors of some bad genes will increase. In a truly free health care market only the healthiest thrive, unfortunately one's health is governed not only by controlled factors but many uncontrolled factors as well.
Providers:
4) Insurance companies inherently benefit from lower costs and higher fees and premiums, just like all other businesses. These natural incentives are, in the absence of onerous, regulation bound to grow #3. But getting angry with insurance companies does not address the real challenges with health care. There are good, ethical providers and probably some less so but again that is nothing new or unusual. Understand though, insurance companies behave as rapacious capitalists (like most other industries). They attempt regulatory capture, they seek to restrict competition etc. In a heavily regulated industry their opportunities will be tremendous to exercise their rapaciousness.
5) Doctors/hospitals/drug makers/equipment makers etc.. Our system rewards usage more than productivity. Productivity in some ways is anathema to health care. These providers behaving rationally will optimize their revenues which means more and more costs. This does not make them bad folks, it means they are rational, normal folks like the rest of us. Rapacious capitalism married up with 3rd party payers is a recipe for fiscal disaster.
6) As medical technology advances many new and very expensive treatment options are being developed. Fifty years ago it would have been hard to spend a $1.0MM on a premee or cancer patient or heart attack victim or car accident victim. Today it is easy. Extending length and quality of life has costs, costs which we gladly bear. But how to balance them relative to other needs, to our fiscal limitations? These are challenging questions which most of us would prefer to avoid but ultimately we cannot.
7) Read up on international health care, Americans tend (like others but more so) we have the best of everything, we do not.
Some thoughts on the politics and solutions will follow on some new posts.
11 comments:
What a very helpful post!
1. Included would be military Tri-Care, different from VA, but if you could find info on it, the study might be helpful. I have no idea how much it costs the military, but this system serves the consumer VERY well.
It's different from the VA because it has its own treatment facilities and medical staff that patients see first, but, if it can't meet a given need, those patients are referred out "on the economy" and Tri-Care kicks in as the single payer coverage.
Probably the best insurance in the country. Again, how much does it cost? How much is saved by providing treatment in their own facilities first?
2. Yep. I see the problem. If all insurance became catatrophic and the rest were out of pocket, how much of the cost-pie would be affected?
3. Would you be willing to apply this same logic to our legal system, which, as opposed to health care, actually garauntees the right of a citizen to council? (red herring, you don't have to answer that. . .)
6. It is a conversation I'd like to avoid. How are we supposed to answer it? I cannot answer without appealing to my beliefs about life and therefore God. And you can't answer it without inherently denying my appeals to these beliefs.
Our "society" is pluralist. We can have this conversation about costs only if we let just one camp set the ground rules. And, obvsiously, there is no agreement as to which camp gets that privilege.
Re #6, you and many others might like to avoid it but until and unless folks confront it then we will be left with gaping abysses. This is THE issue from my perspective. Kicking the can down the road will not work much longer. Our system is built to have health care costs explode.
We have a political system whose primary purpose is to adjudicate societies pluralism. What do you mean only one side is heard? Folks vote, folks have representatives, folks have values regardless of their particular source and reference points. That is what government is about.
I didn't say only one side would get heard. I said there wouldn't be agreement unless the bedrock question of HOW we decide this issues were decided. And that bedrock issue will never be settled (on this side of eternity).
So, yeah, we can all debate and bicker the issue, and vote for those who see it our way. And nearly all the debating points we use to discuss the abortion question will be used to discuss the cost-of-life question. It's not one you really want to have with me, and not one I want to have with you.
But it occurs to me that maybe it can be delayed. You are convinced it's THE issue. Why? Do you have a breakdown of where health care dollars get spent? How much of the pie is spent on catastrophic spending? And do your projections account for how other care is coming down in price either because of market pressures or because other reforms would effect the change?
As for the other string and my own insurance: Yes. I know. And Bryan just got finished with his retirement class where all the details of retirement insurance were revealed to us. Knowing the direness of my situation but for this insurance is deeply, deeply humbling for me.
And it's the only reason I'm part of this discussion with you: I see that there's a problem. I don't know how best to fix it. I have deep misgivings about the current proposal to fix it. When it comes to other matters of policy and politics, I invest very little energy. It's not my sphere of influence. And I don't want to apply myself to matters where I have no influence whatsoever.
But in this matter, even though I have no influence, it's personal enough that it troubles me. And I find myself thinking a lot about it because I would at least like to know what the ideal solution would be, even if I have no power to see that solution come to reality.
I would define the rationing issues much more broadly than "catastrophic" or "end of life" etc. It is really "quality". Quality as embodied in the catastrophic stuff but also how many resources we devote to say phys. therapy or vaccines or a hundred other treatments.
But "open-ended" treatment of any sort "end of life/beginning/middle etc." is doomed to massive controversy. Our country's demographics papered over many of our systems faults, the bills are now coming due.
If folks want to extend life at all costs, then they better be willing to pay up and give up other things. And yes there are moral dimensions but many issues have moral dimensions and somehow we deal with them.
btw saying "free market" reforms can pay for it is not enough for me until and unless someone can define how that would work.
Again my point is we have a rock and a hard place. Largely open ended treatment funded publically (Medicare/VA, understanding there are caps already in Medicare/VA etc. which gets to the hyperbole of the current debate) and less open ended treatment with private insurers who have all sorts of incentives in the absence of regulation to minimize treatment and take on only "good" risks.
Our political system must address this quandary. Otherwise who will.
My interest in how the "pie" is cut up goes to the effect of what we both see as a good idea:
That no insurance, regardless of its type, would pay for anything less than the catastrophes.
If people were paying themselves for the check-ups, vaccines, antibiotics, wheel chairs, x-rays etc, etc, this would drive down consumption and, in many cases, costs because then consumers would start behaving like consumers in search of the best deal.
The debate about how to spread the money around preventative, or therapeutic, or other uses of medicine goes away, because under 20 grand, you're paying for it yourself and you get to decide.
(With this option, I'm picturing, of course, people and employers paying far, far less into insurance than what they pay now so that they have a bigger chunk of take-home income.)
And it also seems intuitively true that it's in the smaller things where limitless consumption is the problem.
That is, no one is signing up for 100K+ chemotheraphy regimens because they think they might want it, and heck, insurance pays for it. No one gets a bone surgery who doesn't actually have a broken bone. It seems like the big stuff only gets ordered when it's actually necessary.
And then, to further break down the catastrophic portion of the pie, how much of the spending is on, say, 98 year olds' hip replacements?
Is it possible to fix the system in such a way that whatever spending happens on what some see as debatable issues could be written off as a small problem with the system?
I generally agree with concept of folks paying for more health care out of pocket. Am far less sanguine about this step being a magic bullet to solve so many problems.
Challenges include:
1) $20K out of pocket is a lot for most folks so the actual co-pay/deductible would have to be set much lower
2) Studies are at best ambiguous about how behavior changes. I sense it would change towards less care but not to the point of freeing up a) enough $ to greatly reduce "insurance" premiums b) overall costs such that "catastrophic" care could be funded nearly limitlessly to the point that tough decisions do not need to be made.
3) I disagree that everyday care is the primary source of cost growth.
4) You still get tremendous equity issues. This is health care not fine dining. If I am wealthy I can afford lots of cancer screening for my kids or myself for that matter, if I am poor I cannot. Do we care? Some yes, some no probably. Say you subsidize the poor, which leads right back to the consumption.
Raising consumer participation is a step of several that is needed to help rationalize cost growth.
One related measure would be to eliminate the tax deductibility of employer health benefits. A Republican idea that I support (btw I support eliminating mortgage interest deductions as well). But one does not see Republicans pushing the concept for the simple reason most folks do not like the idea.
btw another wrench for your "free market" is genomics (posted on it a couple of months ago and will again shortly). DNA testing will increasingly permit folks to assign more accurate health probabilities to individuals making their risk profiles even less variable (i.e. a cancer victim at age 35 could be tagged at 20 as a high risk making him less able even at 20 to get insurance, correspondingly a "healthy" 20 yr old projected at 50 year old becomes a great customer candidate).
A law was passed last year forbidding any questioning or bias related to genetic screening.
They won't be able to ask my daughter if her mother ever had breast cancer, nor could they require that she submit to a genetic test for BRCA 1, 2, or 3 (if they ever find 3).
The technology is real. "Hiding" knowledge to me seems conter-intuitive. But my view is ultimately irrelevant.
The real issues will be adverse selection and moral hazard when folks get the tests done themselves. The cost of the tests are plummeting.
The "healthy" ones will opt out of some or all forms of insurance (adverse selection).
The "unhealthy" ones will have even greater incentives to opt into whatever coverage they can attain. The insurance companies would then be caught with assymetric information and in this case at a disadvantage.
Those type bans sound good but will likely falter in the face of reality.
Yes, in this sense, the genetic testing capabilities become relevant. And if it puts private insurance businesses at a disadvantage, leading, possibly, to an unsustainable business model, then wouldn't this be an example of the market working? e.g. Technology makes some businesses obsolete.
Your point, I think, is that if we wait for this to happen, then everyone with a genetic predisposition to disease will be screwed. So, following from this, let's enact universal care now before we all find ourselves living in a state of Attica?
I'm pretty sympathetic to this argument.
You should stop calling it "my" free market model, as though I'm willing to defend it as THE solution. I'm not. I can't. And it's not a love of it that makes me unenthusiastic with your guy's plan. It's problems with your guy's plan that's the problem.
And, as I've said before, I don't think the opposition is required to have a perfect solution before bringing just criticisms against the proposed one.
You asked earlier why I would insist on a perfect plan. I wouldn't. But as we look at the public discourse, the thing that is missing is the following:
The identification of the problems/weaknesses with the proposed plan and an honest debate about whether and why those are weaknesses we want to live with.
What we have, because of how the world is, is a set of talking points from both sides. Say what you want about the Republican efforts to kill this bill (that no one has actually read!!!), but there's not much more to be said for the Dem's engagement with the objections.
So let's hear from you.
What are the weaknesses in Obama's plan?
have been meaning to do a post on the problems with Obama's plan or more accurately the legitimate criticisms of the plan, will get to it...
Re the opposition and the response as I have said the cold hearted political calculus play for the Republicans is to oppose almost any plan and they have chosen that play hence death panels, throw grandma from the train stuff.
Not sure what you believe the equivalent Dem arguments have been. Certainly not mine. It is hard to have a "civil" debate with amidst the above. The Dem plan is by no means perfect but for now it is more or less the only alternative to nothing which is what happens when you play the "oppose more or less everything" card.
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