Yesterday (Tuesday the 2nd) Romney was on Letterman. Towards the end of the interview Letterman asked him about health-care reform. I’m not sure what he meant by his answer, so I painstakingly listened to a YouTube clip of the interview and typed out what he said because I couldn’t find any written transcripts.
I’m putting this in GD because GD is where this post would wind up eventually. For the moment I don’t have a position on what he said, because I’m not sure what he means. Here’s what he said:
OK, I understand about products in the market place getting better and cheaper. All you have to do is look at electronics. Every year they get smaller, better, and cheaper. Where I’m stuck is how we do the same for health-care. Frankly, what does that even mean?
He also mentioned having all other 49 states adopt a program similar to Massachusetts. If you live in Massachusetts then how’s the insurance program working out for you? Would you recommend exporting the model to other states?
I know people hate posters who just post “What do you think” posts without offering an opinion of their own. I promise that I’ll give opinions once you guys help me figure out what Mitt is talking about.
Massachusetts is the opposite of what he’s describing. The state basically has socialized medicine, where people don’t pay for the actual cost of their own personal health care. Are you sure he advocated for a program like that in all other states?
It’s another iteration of the “invisible hand” meme, the article of faith of conservatives. The idea is that pure market forces would, if only left alone, produce an equilibrium in which choices would be increased and prices would be reduced.
Of course, health care is nothing like a free marketplace. Not so much because of regulation, although this is how Romney is spinning it, but because the incentives are in all the wrong places. Insurance companies are wedged firmly between health care consumers and health care providers. And those companies have a vested interest in maximizing income and reducing expense. Not necessarily because they are evil, or operated by evil people. Simply because that is the driving force of capitalism—the profit motive.
The insurance companies are caught in a squeeze. Health care costs are rising, partly because there is more care available (more tests, more treatments, more options as medical skills accumulate) and partly because of that separation between the patients’ purses and the generation of billing slips. Health care providers have no incentive to reduce prices. At the same time, to save (or re-direct) money, people opt out of buying health insurance whenever they think they can get away with it, like when they are young. And of course as premiums get ever higher, more and more people are simply priced out of the market.
The insurance companies, with increasing payouts and decreasing clients, have little ability to attract new customers, being mostly locked into group arrangements with employers. So they do whatever they can to reduce costs. Specifically this means denying coverage by exclusion in the policy (perfectly ethical to sell a policy that does not include certain stated health problems, as long as such is clearly disclosed) or by denying coverage for “pre-existing conditions” (ethical or not depending on the elasticity of the meaning of “pre-existing”) or even by denying coverage of things that should be covered (completely unethical, but there is no punishment for the practice beyond being forced to actually pay the denied amount, after protracted argument or even court action).
He’s saying that the reason that health care is so expensive is that people have insurance which pays for their health care costs. Since people know that their insurance will pay for expensive tests, they see no reason not to get them, and they go to the nearest/most convenient hospital or doctors and not necessarily the cheapest hospital or doctors. If health care were more free market, and there was some financial cost to people for choosing the more expensive stuff, then people would be forced to make actual financial decisions about their health care and that would drive prices down.
To equate health care with flat panel TV’s is ludicrous.
Really, I don’t know where to start.
Should a person that has a job be entitled to drive on the roads for free while the unemployed have to pay $1.00/mile?
Why is healthcare the business of business? Healthcare, just like clean water and clean air should be the responsibility of a government that looks out for it’s people.
The thing I can’t understand is why big business isn’t at the forefront of healthcare reform. The big manufacturing interests have been complaining for years as to why they are having problems competing in the world market because they are spending so much on healthcare. Get business out of the healthcare business.
National healthcare would spread the costs, get business out of the healthcare equation and allow them to compete worldwide on their own terms.
One question I’ve never seen presented is, how many productive hours of people working in private business are spent working on their own healthcare situation. This is not only the HR departments but people sitting at their desk, filing claims and talking on the phone to the the insurance providers. The insurers make it tough on legitimate people filing claims so those people argue it on the company time.
Healthcare is a huge drag on corporate productivity. The insurance companies are sucking the system of most of the money while only providing a service that is fundamentally unneeded. Yes, there would be inefficiencies in a government run system but not to the extent that we are currently experiencing. The difference is that the current system is exclusionary to those (the middle and lower middle class) that have the ability to be the biggest contributors if they were given fair access.
Another obvious difference between a free market for consumable goods (say, groceries) and health care is that, with the former, you have no need to ever touch the more expensive goods if you’re poor. If you never have lobster or steak for dinner, you can still survive quite well and happily. With health care, a poor person’s need for a liver transplant is as great as a rich person’s, but they would be circumstantially denied their need, which many (including me) think is basically unjust in a wealthy first world society.
Except this is not how the system works today. In most cases if you have health insurance you cannot go to any doctor or hospital which you want, but are limited to in-network doctors unless you want to pay significantly more. The insurance companies negotiate prices with in-network providers with clout that an individual does not have, and with far more time than an individual in need of care has.
Even if you tried to do this ahead of time, the clinic or hospital offers a wide range of services, only a few of which you’d ever use. How do you decide who was cheapest? If I were running a clinic in this environment, I’d offer really cheap check-ups, and then boost the price of tests and specialists.
As has been mentioned in other threads, insurance companies have no particular reason to force down the cost of justifiable tests (and most are,) since in the long run they get a percentage of health care costs as profit, and thus higher justifiable costs means more profit. Why risk people yelling “death panel” at them to make less money?
In addition, there is a massive imbalance of information. If a trained professional recommends a test just to make sure, how many people are going to delay detecting a possibly serious problem to go off and research whether the test is really necessary? What chance of missing a serious issue are they willing to accept? How many people have the background knowledge to make these kinds of decisions, and how much serious illness or even death are we willing to accept when those feeling a money crunch cut corners?
I think you are portraying Romney’s position accurately, but he is spouting the same old free-market bilge which doesn’t stand up to even a moment’s analysis.
And yeah, I was kind of thrown about how he mentions you can have 98% coverage without, “Breaking the bank,” or a, “government takeover,” or, “raising taxes,” or “a public option.” I don’t know about the other three, but requiring people to buy insurance sounds like a form of taxation to me. And although government may have not taken over health-care companies, forcing people to buy insurance isn’t the government taking a hands-off approach either.
Well I guess there are two things that make it hard for me to figure out how he would make health-care like a “market place”. First, he mentioned that it’s like a regulated utility. I’m fairly conservative, but have no problem with regulation in-and-of itself.
Second, the health-care system is so complicated. You have the health-care providers (doctors, nurses, etc…), pharmaceutical companies, insurance companies, and of course, the patients all interacting with each other. And each has regulations placed on them. Well, maybe not so much the patients. Anyway, a market runs by supply and demand. It sounds like he’s advocating that that is how health-care should be run by getting rid of regulations. Of course he kind of contradicts himself by praising the Massachusetts model which has a ton of regulations, but if we went to a supply and demand health-care…it seems to me you would then have to have hospitals competing with each other, and…well, I have no sites, but it seems to me it would be a little chaotic.
Big business is getting out of the health care business as we type. Google the changes in the GE health care plan since the start of this year. GE used to have a premier insurance plan. They have since bailed on that plan for their current exempt employees and their retirees. A younger friend of ours currently works for GE. His wife got pregnant last year. Under his employee based insurance plan last year he was responsible for a $100 copay for pre-natal care and a $100 copay for the delivery. Unfortunately his wife didn’t deliver her baby til Feb. of this year. His copay this year for the delivery was over $8000. He changed nothing, the company insurance plan changed.
American’s have NO control over their health insurance/health costs. How is this a free market?
What kind of costs? Is he advocating that insurance companies should provide less coverage or deny services so that it will cost us more and so we’ll be more responsible? Actually, he seems to be blaming insurance all-together. It sounds like he’s saying we should do away with insurance and go to supply and demand*. Well, the reason most people have health insurance is that we can’t afford to pay the thousands, hell, even sometimes the hundreds, of dollars doctors visits and hospital stays cost us. Who knows, maybe in time costs would come down so that everybody could afford it, but the costs would start out extremely high to average Americans. I can’t possibly see this working.
*Except of course in Massachusetts or other states that follow their plan. In those states not only is insurance not the problem, it’s mandatory.
Romney’s plan was announced at the Heritage Foundation in DC, and was put together with the help of Heritage economists. In this case, the right wing think tanks were trying to help.
However, the Mass plan is not socialist. It does require everyone to have insurance, and it provides a state buying pool for purchasing from insurance companies as I recall. Not so much of a public option as a public marketplace for grouping up.
Whenever I hear someone make the case that Romney is making I imagine the credit card companies running health care, with endless changes to your account, with endless pages of fine print legalese designed to make it as difficult as possible to compare apples to apples and ferret out hidden charges and the like. I’ve heard it referred to as “Gotcha Capitalism.”
I can see the same sort of system developing for health care providers/insurance companies under a system like Romney proposes. The aim will be to provide the least possible care for the highest price. The means will be to make the whole thing as confusing (with an overwhelming flood of “choices”) as possible.
I know its like that now to a large extent but what if it was ten times worse ?
Yes, big business is trying to weasel out of health care responsibility but they are not supporting reform. It seems as if they have told the insurers to screw over the participants at every turn to reduce their costs while not addressing the problem. Instead, they should be working with the government to get them out of the healthcare business. Manufacturing and industry has better things to do than run a healthcare business while their more highly paid employees are using their offices, phones and time to file claims and argue on the phone with the insurers.
As an former executive in a several major, recognizable corporations I could tell you stories . . .
People do not always make health care decisions rationally. Many health decisions are emergencies, or heavily laden with emotions due to end of life issues. As a result the concept of the dispassionate window shopper comparing prices may work in some areas (pharmaceuticals, primary care, elective surgery) but will not work in other areas like emergency or urgent care. You aren’t shopping for a TV or computer, you are trying to save your own life and the life of your loved ones in many situations.
People are not great judges of what health care they need. The average american has no medical training and reads at an 8th grade level. To expect us to wade through complex medical info to determine which treatment is best probably won’t work.
If you have a proper diagnosis and know what treatment you need, using market forces to find the cheapest treatment is ok. However what may happen is people just put off medical care or they try to get by with the cheapest care possible (which may cost more in the long run).
The website pharmacychecker.com is great for shopping for the best drugs. However, until you have a proper diagnosis and a proper route of treatment a person really can’t do any shopping for the best prices. An 80 year old with no health training isn’t a good judge on whether he needs medication, stents, surgery or another intervention. His doctor should make that decision.
Medical care is not split evenly among the population. Generally you either need a ton of it, or very little. We spend about $7000/person per year on health care in the US. However the most expensive 20% of the population use 80% of health spending. The most expensive 5% use 49% of health spending, the most expensive 1% use about 22% of spending. By contrast the least expensive 150 million use 3% of health spending.
So you have a situation where tons of people need $1000 or so in care a year, a small number need $20,000 a year in care and a tiny number need $100,000 in care for the year.
Basically, half the country uses 3% of spending while 1% is using 22%.
Comparison shopping doesn’t work in that situation because you either need way too little or way too much IMO. That is like a situation where most people have small black/white TVs while a tiny number of people have 102" plasma TVs. Market forces don’t work too well in that situation.
Market forces can be important, and I hope market forces and looking at both domestic & international providers of elective surgery, long term care, pharmaceuticals, etc. will drive up quality and drive down costs. But in other areas (primary care, urgent care) I don’t see why it’d work.
The best thing to do IMO is to do comparative effectiveness. Study which interventions provide the most healthspan and lifespan advances with the fewest side effects for the lowest cost.
Comparative effectiveness combined with market forces in areas where it may actually matter (elective surgery, pharma, long term care, etc) may bring prices down.
I think Mitt is saying simply that, if we all had to pay for our medical costs out of pocket the costs would go down because we would not be willing to pay those amounts. I completely agree with Mitt in this regard, I just can’t see how that is any kind of solution to a problem. It seems to me, he was asked a question about heath care reform and he answered with a statement of fact that most people would probably agree with. That’s politics.
I would not have had knee surgery if I had had to pay the full $150,000 (that’s right, I added it up afterward) that was eventually paid out by my insurance company - I would have lived with the condition or I would have found someone else to do it cheaper. Insurance, while helping me get the care I need and want, is also masking the costs involved.
Is that “would not” or “could not”? If you are one of those people lucky enough to bid out your operation and follow up treatment, that’s great. It means you have the luxury to wait around, possibly partly immobile or at least somewhat impaired, probably in pain, and without regard for any impact this may have on your job, either in attendance or performance. Does your job require you to physically perform in ways that are negatively impacted by your condition? Lucky you if not.
And you have sufficient leisure time to actually advertise for bids (would you send out a Request For Proposals providing your x-rays or something?) to various doctors, hospitals, etc. And then await receipt of those Proposals, rationally analyze and compare them (“Hmm, this one has a slightly cheaper surgeon, but I’m not so sure about the anesthesiologist’s credentials….” Or perhaps “Well I could go the old ‘cut it open and stitch it back’ method because it’s cheaper, or I might try the arthroscopic route because, although it costs more, it has less pain and a cheaper course of exercise therapy….”) and finally let a contract with some care provider for a package deal. Or is a package the best? Maybe you contract the surgery to one, but sub out the physiotherapy to another across town. Decisions, decisions.
And of course it presupposes your ability to actually pay out of pocket or through some loan or mortgage for the final amount. Do you believe, even if “everybody was doing it”, that the total cost would be reduced by 20%? 30%? Even 50%? I think that’s a pipe dream, but even if I’m wrong, you’re still looking at $75,000. This isn’t an amount that most people have sitting around in their bank accounts waiting for a health problem. (And I’m pretty sure I could defend that “most”, but I’m too lazy to bother. Anybody really think I’m wrong on that account?)
Finally there is the problem that much health care, especially very costly health care, is not elective, but critical or emergency. Do you really foresee a scenario where people are sitting around saying “I’ve got severe abdominal pain and a fever of 101, so I think I’ll need to send out RFPs for an appendectomy….” Or “I was just hit by a truck, anybody carrying some blanket RFPs on them? I’ve got envelopes and stamps……”
People really do not have the luxury, or the knowledge, to reasonably shop for health care. And since illness is a crapshoot (in any given time period most people need little health care, some people need a modest amount, and a few people need a whole bunch—but nobody can guess who will be in each group) health care is simply not amenable to normal free market choices.
Healthcare isn’t a normal product. Sure I’ll take a free television that I don’t need, but what’s the appeal of going to the doctor when I don’t really need to. I know I’m going to be bored, uncomfortable, possibly have some pain inflicted on me, and the ideal outcome is that I’m fine and the whole thing was a waste of time. The worst outcome is I find out I’m going to die. The idea that people are suddenly going to flood the doctors office because they don’t have to pay for it is weird.