08.09.09
Fixing Health Care
Fixing Health Care
Note: Because this is such an important message, I release this post into the public domain. Please re-post it elsewhere, print it out, send it to your congressman, your senator, local (and national) groups that you may be involved in, and any public forums, online or not. I ask, but do not insist, that you leave my comments exactly as I wrote them, with your own additions and commentary appended.
Introduction
The recent presidential campaign re-introduced the idea of universal health coverage to the American people and our political system. Sixteen years ago President Clinton tried to pass a health care plan. We were told then that “the free market” would take care of things for us. What nobody considered is that there is no free market in health care. Meanwhile, health (medical, dental, and vision) care insurance costs have skyrocketed, and an unacceptably large percentage of our population continues to be uncovered.
In response to President Obama’s proposal, we again hear cries of “let the free market solve the problem” and “say no to socialized medicine”. There hasn’t been a free market since at least the 1960s, when Medicare and Medicaid were created. Further, I don’t hear anyone rushing to give up their congressional coverage (taxpayer-funded and government-run equals socialized), their Veterans Health Administration coverage, their civil service coverage, or their Medicare coverage. It seems to me that listening to the blathering of the insurance industry is hurting everyone.
The Main Problem: 3PP (Third-Party Payers)
What is the big problem? Why are we having this discussion? Is it because young, healthy workers intentionally choose to skip medical insurance? Is it because a third of our population cannot afford it? Or is it more insidious, possibly a conflict between large insurers (both public, such as Medicare, and private insurers) on one side and consumers and patients on the other?
I believe the facts support the idea that this is a battle between large organizations that pay for medical care and both the individuals covered under their policies and the individuals who have no insurance at all. The stakes are too great to allow those organizations (whether public or private) to shape the debate. We have to get the organizations out of the way, or we’ll never have a viable plan to bring coverage to everyone.
The problem is third-party payers. Their interests are not aligned with those of patients. 3PPs want to eliminate costs, while collecting the largest possible premiums. Patients, on the other hand, want more care, more personal attention, and preventive care, all of which cost money.
Third-party payers are also partly shielded from being directly sued by patients for some of their coverage and payment decisions when the coverage is part of an employer-sponsored plan. Why? Because the patient has no “standing” to sue.
Under some kinds of coverage, federal rules may apply, overruling states’ consumer-protection and insurance regulation activities. Again, this favors corporations and government agencies and potentially harms consumers and patients.
Here’s another way that third-party payers are behind the problem. Everyone talks about the costs of health care increasing, but insurers (remember that this includes government programs like Medicare and Medicaid) typically negotiate discounts off of the medical provider’s fee schedule. Those discounts are sometimes augmented by rebates, too. Now, if you walk in with your VISA card, you pay full price, and that price may even be higher because of discounts that were given to insurers. In effect, the uninsured patient subsidizes everyone else’s care.
Insurers also require all sorts of extra paperwork, typically delay payment, and bring their own auditing and reporting costs to the doctor’s office. Those costs may not be passed back to the insurers, meaning that they are added to the overall price and uninsured patients wind up stuck paying for them.
No Free Market
After 16 years of watching this imbalance between large organizations (public and private) and individuals, how can anyone seriously say, “let the free market solve the insurance crisis”? Seriously? Did you fall on your head? Let me repeat it: THERE IS NO FREE MARKET IN HEALTH COVERAGE. There are some government plans (which cover a significant percentage of the population, particularly the elderly, government employees, military members, government retirees, and many poor children [but not always their parents]) and some private plans (heavily regulated by both federal and state laws). There are high barriers to entry. You and I cannot just decide tomorrow to start our own health insurance company.
There are some things that free markets, true free markets, require. Among those things are competitive markets, markets where neither buyer nor seller has “market power” or pricing power. In our health care market, the insurers have quite a bit of power to set prices (premiums) and the consumer can either take it, leave it, or hope that another health insurer will have a better price for a similar plan. Because they are the payers for patients’ treatments, they also play a very large role in setting the prices that doctors can charge.
Market Power: Private vs. Public Health Care – Human Nature Still Rules
The GOP/Health Care Lobbyist talking point that the “Government will get between patients and doctors” ignores the reality that under the current system “corporations get between patients and doctors”.
This comment in a blog post exactly summarizes the present situation. The non-existent health care free market is what brought about the current intolerable situation. To appeal to that supposed market as a reason to leave things the way they are is to signal one’s approval of a powerful oligopoly and political contributor. Sixteen years ago, the insurers one and all swore that they would be different from now on. I’m here to tell you that they lied then, and they are lying now.
As long as the government programs and private insurance companies can do so, they will continue to fight against consumers and patients. Any proposal that appeals to the free market without also telling us how to bring back a free market in health care.
Failed Reforms
The state of Massachusetts passed a law that required everyone to purchase health insurance. Implicit in such a law is the idea that the problem is those young whipper-snappers who think they are invincible, and therefore voluntarily go without coverage. Because they aren’t paying into the system while they are less likely to draw from it, they cause rates to increase for older and sicker people.
What kind of ignoramus writes this stuff? Let’s say you work for that big blue retailer that the author mentioned. You’re working 20 to 30 hours per week, so you won’t get any overtime, getting paid up to $9 per hour–$7 after withholding–or about $9100 per year. Most months, that is $700. Out of that $700, you have to pay rent, utility, clothing, food, and transportation costs, plus repay any student loans you piled up in college. If your transportation includes a motor vehicle, you have to buy auto insurance, too.
Any plan which mandates that everyone buys insurance will similarly fail. Why? Because “the free market” only works when customers are free to say no. And because mandatory purchasing means that there is no incentive in the insurance industry to restrict their management and administration costs, prices (and profits) rise steeply. (By the way, this is why mandating auto insurance is such a dismal failure.) In California, for example, mandating auto insurance led to cries for rate regulation. Courts ruled that insurers were entitled to a fair profit percentage. What this meant is that spending extra funds for marketing and administration merely meant a larger pie from which a fixed percentage is allocated to profit. And so it is with mandating the purchase of medical coverage: the incentive is for insurers to pad their administration and marketing costs, so that overall costs rise, and with those rising costs, profits also rise.
A few years ago, California came out with a plan to cover more children in uninsured families. I think this is actually a joint federal-state program. In California, the program is called Healthy Families. The program cannot keep up with the growing numbers of potentially-eligible children. I am not familiar enough with the program to know whether there is some premium involved, but if there is, it must be pretty low. This is a government-funded and subsidized program.
So how is it a failure? Because it is facing an influx larger than it can handle. Why? First of all, resources are not unlimited. There is an absolute limit each year for how many children can be covered. Besides that, the availability of coverage for children of families without employer-provided coverage is always going to have a growing market. Whenever there is free or discounted medical care available, demand for services grows at a rapid clip, while available resources have a smaller growth rate.
Rationing Is A Part Of Every Health Care Plan
This fast-growing demand for services and slow-growing resource allocation results in rationing under every health care system. The Canadian model uses wait time to ration care. It is not uncommon for financially well-off Canadians, from what I have read, to cross the border in order to receive more timely care. The current US system uses money–and access to employer-paid insurance–to ration care. People who can afford to pay for their own care, or who have employer-paid health plans, can get care. People who don’t fit into either group must depend upon the government or just hope they never become sick.
I have not read the bill that is proceeding through Congress. I have, however, heard people discussing how the proposed law chooses to ration care. According to some people, the bill seeks to ration care by subjecting care for elderly patients to strict cost-benefit tests. All health care provision should be subject to cost-benefit testing, I think, but from whose perspective? And who decides whether the same procedure is more valuable when performed on a 20 year-old patient than when it is performed on a 73 year-old patient?
Real Solutions Needed
If we want to fix our national healthcare situation, we have to stop with the halfway measures and look at real solutions.
- Get rid of separate pricing for cash (or more likely credit card) customers vs insurers (including Medicare, other government-sponsored plans, and private plans). This is one of the reasons that a “free market” does not exist and its promised benefits and savings will never happen. Think about it: uninsured patients, through the higher rates they pay, actually subsidize insured patients, enabling insurers to spend less on care and more on advertising. Cost-shifting has to be the first thing that goes, because suddenly, a lot of medical plans will have to face the financial drain that their organizational hierarchies place on their rate-payers. This will also mean that a lot of medical providers will have to become more flexible about how they accept payments from patients. By bringing back equity between direct-pay patients and third-party-pay patients, a lot of the cost distortions inherent in our present system will be revealed and in many cases forced back into line.
- Get rid of student loan problems for medical students–if a student majors in a medical field, completes his/her classes and internship, and actually enters practice in said field, consider the debt fully-paid after five years of practice. One of the reasons often given for high medical rates is the high cost of repaying medical education loans.
- Get rid of barriers preventing more students from entering the field. That is, stop allowing medical groups to grant quotas to medical colleges. A medical college should decide how many students to admit based on how many it can successfully educate, how many apply, how many are likely to be hired after graduation, and the quality impacts that class size has on the school’s interns and graduates.
- Get rid of barriers preventing patients from suing their insurers, including suing over care decisions and termination of coverage. As with all consumer contracts, the stricter of federal and state consumer-protection laws should apply.
- Rather than force more low-income workers to become lawbreakers (or to live in their cars or eat a diet consisting solely of ramen noodle soup), let us get rid of the whole “you have to buy” idea. This whole concept is so anti-working-poor and so pro-insurance that it makes one wonder why the ultra-liberals are backing it at least as much as the ultra-conservatives. The idea isn’t to enable insurance salespeople and executives to buy boats and vacation at Great Salt Lake every year. The idea is to enable people to obtain medical treatment regardless of their income level.
- Don’t fall for the “illegal immigration” ploy. These people are here, they are working, they get sick too. A lot of agricultural, food processing, and hospitality enterprises completely depend on the ability to underpay (and pay not benefits to) immigrant laborers. This really tells us that we need highly active workplace standards enforcement, so that companies whose business depends upon underpaying staffers will either revamp their price and cost structures or shut down as they deserve. Any decent health plan will not focus on the patient’s immigration status, but on his / her medical condition and what financial resources he / she brings to the table.
When all is said and done, the health care debate is a microcosm of the biggest issues facing our nation today: the power and influence exercised by corporate entities versus that of individuals. Whether those corporate entities are for-profit or non-profit, religious or secular, governmental or private, they tend to vastly distort political and economic debates based solely on their own potential benefit, and not (as it should be) what benefits the overall population of this nation or any of its states. The solution is, at the core, to reduce and restrict corporate influence on political decision-making, government agencies, and on the economic environment we all live in. As I often mention, Greenpeace and MoveOn.org are as much a part of the problem as Exxon and General Electric.
…..
Powered by ScribeFire.
