What sort of health care reform do conservatives actually support?

[brickbacon]

@magellan01

I have a question. I came across this cartoonin my internet travels. I’ve also heard some of these numbers thrown atound from some pundits, Huckabee, I think it was. My question is twofold:

1. are the numbers accurate?

They are fairly accurate numbers to which the author applied his own biased labels that mislead the audience. This site breaks down some of the numbers.

For example, the first group (“I can afford it, but I don’t want it” - 18 million) comes from this census report. Roughly 18 million uninsured people live in households with income above 50k/year. While that is illuminating, it does not mean they are all white-collar, carefree, latte sipping yuppies who are too miserly to buy insurance like the cartoon seems to imply. Remember, this is talking about households, so the number includes a number of dependents.

First, you don’t know where these people live. Seventy-five thousand is not a lot in many parts of the country for a family with a few dependents and student loans. Second, many of those people are temporarily unemployed, and will have insurance at some point. Third, insurance is often unaffordable to many people when purchased individually, or when there are preexisting conditions that raise the premiums. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. If you are buying that with after tax dollars, that might eat close to 25% of your income (assuming ~50k after taxes). That’s not really “affordable” in any sense. Maybe some of them could afford it if they cut all their entertainment spending, traded their car in for a moped, and decided to share a basement apartment, but that is neither practical, nor is it a reasonable thing to expect people to do.

The other categories the comic portrays are similarly filled with half-truths. Either way, it’s besides the point. The issue is that there are 47 million people out there who are an unaccounted for liability to the healthcare system, who will not be denied treatment when they become ill. Additionally, there are 90 million people who will be without insurance of at least part of the year. That is a problem, since the vast majority of them cannot afford to have a serious accident.

@magellan01

2. if they are, does it imply that a much more targeted, less sweeping approach might be called for?

Maybe, and I’m sure the end result will be a more modest change. But, the main issue is the rising costs. They are increasing at a rate more than double inflation, and will represent an larger and larger portion of GDP in the coming years (17% in 2008). This is not sustainable. We cannot continually spend roughly 1/5 of our money on healthcare.

@magellan01

Additionally, when Obama, or whoever, says that we need this sweeping reform because there are 47 million uninsureds, is he counting the number of illegal immigrants? If so, why?

It’s a political talking point, but it is also a more accurate depiction of reality. The reality is that illegal immigrants will still use our doctors and hospitals.

@magellan01

Hasn’t he said that the reform he envisions will NOT provide insurance to illegals? It seems like he’s just trying to beef up the number to paint a more dire picture. Am I wrong?

I imagine he decided not to include illegals in the public option because he was afraid of the political consequences. If things work as he envisions they will, illegals will still benefit from lower private insurance premiums, and lower costs and fees.

As far as the picture he’s painting, it’s not dire enough. This is the biggest threat to fiscal solvency we have faced in a long time. There is a great chance that without significant reform, this will ruin us in the long term. It makes our businesses less efficient, it ruins government budgets, and destroys our credibility.

[magellan01]

Thanks for the post and the cites, brickbacon. I’ll try to spend more time with them later today, but after a quick read they seem to be very helpful.

[Shodan]

@brickbacon

For example, the first group (“I can afford it, but I don’t want it” - 18 million) comes from this census report. Roughly 18 million uninsured people live in households with income above 50k/year.

Assume we can make a public option available to these folks who make an above-average income. Assume further that it will cost roughly what private insurance does now. What indication do you have that these people will choose to insure, if they do not do so now?

Or, assuming we set up some kind of sliding scale, where the taxpayer picks up more of the bill for people who earn less. Could you describe how such a sliding scale will work for people who earn more than the average, rather than less?

Regards,
Shodan

[ElvisL1ves]

If government is inherently so much less efficient than the private sector, it shouldn’t be any problem at all for private insurers to offer a better deal, now should it?

[treis]

@Sam_Stone

The first problem is adverse selection. When individuals buy health insurance, the insurance company is at a disadvantage, because of an information asymmetry. You know a lot more about your health than the insurance company does. So if the insurance company prices insurance at the level for people of average health, people who are above average in health will not buy it. This means the insurance companies are going to get a skewed clientele - people who are more likely than others to need health care. So… They price their insurance higher to compensate. This drives out the next-healthiest people. You wind up with a ‘lemon market’. The current solution to this problem is employer-based healthcare - by insuring a large block of people together, the insurance company gets closer to the statistical average health, and can price its insurance more efficiently.

The plan above solves this problem by having insurance company’s risk capped. The big worry for them is that they’ll take on a patient with some condition that winds up costing them millions of dollars. If the downside risk is capped by the government plan, insurance companies don’t need to charge a risk premium, and the adverse selection problem is greatly mitigated.

You haven’t solved anything. All you have done is capped the amount of insurance that companies can sell. It hasn’t done anything to address the information asymmetry, as you put it. It will still be a lemon market and there will still be huge advantages to insuring pools over individuals. The only change I can see is that instead of selling 10 million dollars of coverage for 100% more than an employer plan, they will sell 1 million dollars of coverage for 100% more than an employer play.

There will still be a strong incentive for employers to offer health coverage, and for employees to buy into it. You still will have the purchasing power of a large pool of people, and you still will be more likely to be close to the actuarial tables of risk. It is true that having to pay tax on the benefit will decrease the incentive, but I don’t see it being anywhere near enough to break the bond between job and health care.

Besides, (virtually) no insurance policy has an unlimited payment amount. They are all capped at some maximum lifetime payout.

@Sam_Stone

The next problem in health care is the third-party payer problem. Simply put, the price system is broken. People with universal coverage have no incentive to limit their use of the health care system. Doctors who are paid by a third party and not by the customer have no incentive to control prices or refrain from needless tests. Insurance companies know this, so their solution is an ever-increasing amount of red tape forcing doctors and hospitals to documents every treatment, every little expense. So the system’s management costs go through the roof.

This plan helps solve this problem by making people responsible for the first level of their own health care costs. Once you connect payments back with customers, they have an incentive to seek out the best value in health care. And once the first level of transactions are done without the involvement of the insurance company, the paperwork requirements diminish greatly.

I don’t believe that people by and by get unnecessary tests simply because they are free. Simply because they are not in fact free. Tests range from uncomfortable to painful, and people typically have to skip work and wait around a doctor’s office to get a test done. That is a strong disincentive for anyone to go to the doctor or have an unnecessary test done. Do you have any evidence to support that people in countries with UHC frequently have tests that aren’t medically indicated?

In fact, I would go so far as to say that increasing the cost to the consumer for individual tests would be a strong disincentive for them to have routine tests. If people have to choose between cutting near essential items (cell phone, cable, internet, etc.) or paying for a screening test, then I suspect they will skip the test. That would cost the system more in the long run.

In reality, the only incentive driving unnecessary tests is the people that get paid for doing the tests. You have done nothing to address this.

@Sam_Stone

The next problem in a public health care system is that you lose ‘early adopters’ - the very rich willing pay large amounts for experimental drugs and new devices. This stuff is insanely expensive. But under this plan, the rich are paying huge amounts of their own money for their own health care, with no involvement by government or insurance companies. So they can still choose to pay for the incredibly expensive treatments. This is critical, because it’s the early adopters that prove out new technologies and drugs and pay for the R&D costs, which then lowers the price of those treatments so the rest of us can afford them.

The very rich will still buy health insurance or dip into their own pocket to pay for cutting edge treatments. I don’t think rich Canadians or Britons go to a typical UHC doctor when they get sick. They pay and go to the best of the best.

@Sam_Stone

There are plenty of models for this kind of health care system, and they work very well. For example, dentistry in Canada works much like this. Dentistry is completely private, and people pay for it with their own money. But very expensive dentistry due to catastrophic problems is covered by the government. If I need reconstructive dental surgery after an accident, the government pays. If I just need a filling or a cleaning, I pay.

The result is that dentistry is a competitive profession. Dentists set up offices all over the place. There are no waiting lists for dentists. There is tremendous innovation. Dentists offer varying levels of service (some offer nitrous oxide at an added cost, others don’t. Some set up TV’s over the chair to keep the patient distracted, some don’t). You can pick and choose how much you want to pay.

And because the government pays for catastrophic dentistry, many companies in Canada offer additional dental insurance for their employees at a very reasonable cost. I’ve got very good dental coverage through my employer, and it doesn’t cost much at all.

Dentistry is very cheap compared to health coverage. Having a shit ton of work done at a dentists office might run you 10k. You can burn through that in one day at a hospital.

@Sam_Stone

Canada is moving more and more to HSAs and to delisting medical services from our single-payer plan.

No they aren’t.

@Sam_Stone

I’m not so sure why the left is so opposed to this. It maintains personal freedom, it avoids the moral hazards that come from removing personal responsibility from health care, it requires much less structural change in the current system, and it would wind up costing far less.

Here’s a good overview of current research on Consumer Driven Health Care Plans. There is actual data on cost savings and it’s very good. In addition, research has shown no decline in the level of care under such programs, and in fact show a significant increase in the amount of preventative care people get, and consequently better health outcomes for people under such plans.

What’s not to like?

We are opposed to it because it (1) doesn’t solve the problems of our health system and (2) leaves us with a system that costs more and covers less than UHC countries.

Honestly, I don’t understand how the right can argue this. I trend towards the pro-business, small government, and low tax side of the spectrum, but I set aside dogma in the face of incontrovertible facts. The fact of the matter is that the U.S. spends 17% of their GDP on health care while Canada (and other industrialized countries) spend 9-10% of their GDP. The fact of the matter is that the level of care is virtually identical between the U.S. and OECD countries with the OECD countries having slightly better outcomes due to higher access to care.

We pay much much more as a country for no better care. Along with that glaring issue, we have problems of bankruptcy from medical costs, uninsured people with limited access to medical care, people being tied to their jobs because of health care, runaway health care costs dragging down companies that provide insurance to retirees, and soaring health care costs making small businesses less effective. Why would I support tinkering with a broken system when there is another system that is proven to be better?

[treis]

@Tim_R.Mortiss

Well, *this *conservative has long favored two reforms:

1. The state-lines thing, which *will *increase competition. Why do you think car insurance is so much cheaper than health insurance?

I don’t think this is that big of an issue. Health insurance companies are still national companies that compete across state lines. The only increase in cost is complying with individual state regulations, which I agree that we can do without. If this were truly a problem you should see a disparity between big states and little states in insurance costs. In other words, California/NY have millions of people and therefore lots of competition vs. North Dakota, which has half a million and therefore little competition.

[sqweels]

@Shodan

Could you please provide a cite that shows that most conservatives in the US do not want any reforms to the US health care system?

Perhaps they do. But I at least get the impression that they would oppose any plan put forward by the Democrats. Tort reform and tax cuts do not amount to reforming the health care system and do little to address the problems I listed in the OP.

Furthermore, why did the Republicans not lift a finger on heath care reform when they were in power? (Or did I miss something?)

[ElvisL1ves]

They did do the Medicare Drug Bill, but it’s not at all clear who got the goodies and who got screwed by it.

[mazinger_z]

Either, or both. Let’s look at some of these suggestions.

Quote:
Originally Posted by mazinger_z View Post
I favor the following:

1. Competition across state lines
   In theory, this might be a compelling option, but in all likelihood, would not produce any welcome, or meaningful changes.

Quote:
If the change was implemented, here’s what she (Sandy Praeger, insurance commissioner for Kansas and president of the National Association of Insurance Commissioners) predicts will happen: Insurers will set up shop in states with few regulations and market low-cost policies to people across the country. These policies will offer minimal coverage and appeal primarily to younger consumers.

“It will be a race to the bottom,” Praeger said, and there will be “very few consumer protections. … You’ll have plans that don’t cover the benefits that people need. … And healthy people are going to buy those less costly plans, because they don’t think they need [the protection].”

That may be a good deal for young people who don’t have health problems, but it would probably become a bad deal for everyone else, Praeger said. The policies that sell comprehensive coverage would draw a sicker, older customer base, becoming more and more expensive.

The end result will be a segmenting of the insurance market into the “haves and have nots,” Praeger said. One segment of the market will become more affordable, but the other segment will become less so, disadvantaging those who need coverage most.
That’s not even counting the increased costs and confusion from having a national body to regulate all of these companies.

Quote:
Originally Posted by mazinger_z View Post
2) Insurance NOT being tied to employment.
But isn’t this one of the reasons many people can afford insurance? I agree there are many negative consequences of employer-tied insurance, but they have bargaining power that the individual doesn’t have.

Quote:
Originally Posted by mazinger_z View Post
3) HSA for everyone, and a simplification of the tax code to allow this
While this certainly addresses a fairness issue, it would cost a lot of money to do this. How do you pay for this?

Quote:
Originally Posted by mazinger_z View Post
6) Increase the role of generics and government purchasing of them, to allow patent holders to charge the premiums they need to for investment. I would probably increase the patent life a little, too.
All of these things are easier said then done. Plus, increasing the patent life on many drugs would undercut any of the savings from buying more generics (if that is even possible).

@brickbacon

In theory, this might be a compelling option, but in all likelihood, would not produce any welcome, or meaningful changes.

Combined with no ties to empoyment, it would be a race to the bottom for those people who have no health issues, I agree. However (and bear with me, it’s been a long time since I’ve studied insurance law), if one can “price-in” people with more chronic conditions and diversify those people amongst its healthy pool of people, then, in theory, the costs should decrease. The race to competition is to see who can build the biggest, most stable pools of people. The downside that I readily see, is that monopoly environments will eventually happen, and the only way to gain entry is to insure the even more riskier people. This could prove to be too high a barrier, but I am willing to allow the government to step in and regulate minimum standards in both insured pool composition and procedures for pay out and reimbursement. This makes more sense of a government function anyway.

But isn’t this one of the reasons many people can afford insurance? I agree there are many negative consequences of employer-tied insurance, but they have bargaining power that the individual doesn’t have.

Like I said, instead of competing with megacorps, insurance companies can risk diversify their plans across segments of populations. The tax savings and insurance costs that was previously spent on employee insurance should then be given to the employee in an increase in salary. Let the employee-buyer take the tax deduction and let him spend it with pre-taxed dollars (HSAs).

While this certainly addresses a fairness issue, it would cost a lot of money to do this. How do you pay for this?

Pay for it how? You mean in lost tax revenue? I would rather lose tax revenue than pay for it with future-borrowed dollars. Besides, the healthcare transactions are taxed. Also, if the HSA is allowed to turn into a Roth, then those distributions can be taxed.

All of these things are easier said then done. Plus, increasing the patent life on many drugs would undercut any of the savings from buying more generics (if that is even possible).

With the huge rigmarole needed to get the government to buy anything from the private sector, I would think that generic drug manufacturers would also comply with the government cost-plus pricing methods, which also enforce economies of scale, and competitive bid processes. The process is already in place.

[Backcountry_Medic]

@bjbrashier

Conservative, here, responding to the OP.

…

A) Disallow companies from providing health insurance. Force them to redirect all premiums back to the employees they were providing the benefit for. I realize that this takes away freedom from the companies offering insurance. I see this as a necessary evil, and perhaps a temporary one.

B) Force a doctor-patient relationship based on money. Something as simple as “your insurance premiums are tied to the number of doctor visits you have had in the previous x yrs” may suffice, but I’d bet we could do better. Maybe even a lagging heuristic of real costs.

C) Allow a form of health-care worker that is allowed to perform simpler tasks, but not harder ones, and can open their own clinic. Essentially this may well be nurses setting up their own shops. Honestly, I’ve known a lot of nurses that were better doctors than the doctors were. Lack of a piece of paper doesn’t mean a lack of knowledge or skill. At the same time, encourage more specialization by reducing medical GE reqs. “MD” is too well defined and too often “required”.

D) Give ER and other docs a limit on the expense of procedures they may perform on someone whose insurance or other ability to pay has not been verified. If they are “sure” they could save someone with something “just a touch over the limit” and it turns out the person can’t pay it, make the doctor himself liable for the costs above said limit. Obviously, charities may be formed (and should be allowed to be) to handle overages as well. I realize that this may cause problems (“Well, nurse, he died because we couldn’t do procedure x” “But doctor, his ID and accounts just came through! That was Bill Gates, and he had plenty enough to cover x!”), but I believe it’s a lesser evil than is currently in place (or alternatives that I’ve seen).

E) Set up tax-free medical expense accounts and encourage people to use them. This allows people to save for trouble, and is also another way to induce the insurance companies to provide a good service for a good price (since otherwise ppl will go elsewhere… ie. their own savings).

F) If you must have the government spend more money, have them spend it on the education of patients. The “ask your doctor” commercials I’ve seen recently are REALLY STUPID. But they’re right, and I can hope that they will work.

If we can do the above things, I don’t believe that we’ll need any further reform. Though, granted, this will stir up the nest quite enough.

It seems these points have gone completely unaddressed, so I’ll touch on a few of the more egregious ones.

B- Isn’t this just another way of punishing people for pre-existing medical conditions? And instead of making MD-patient interactions “based on money”, wouldn’t a better healthcare system base those interactions based on health? I can see that you’re trying to run an endgame around abuse, but won’t people just learn not to go to the doctor until they are really ill since your system would have cheaper premiums for one visit rather than ten, even if the one visit cost 100x more than all ten visits combined?

C- This is already happening across the country. However, just because you know some nurses who are “smarter” than doctors doesn’t give them the ability to practice medicine. Of course the best nurse is better than the worst doc, but how are you going to do quality control on all of these people? Doctors have a much larger skill set than nurses, which is how they are able to do a differential diagnosis for relatively ‘minor’ illnesses that could be symptoms of more serious problems. And in the end, is there any proof that a substantial cost of healthcare is wasted on doctors treating minor injuries, and proof that a nurse could treat them for significantly less? If not (and I don’t believe there is), what exactly would this solve?

D- Possibly the worst ‘solution’ I’ve ever heard. This is the ultimate example of rationed (ie ‘socialized’) medicine, pulling the plug on grandma, etc. I work in an ER and I can tell you that a serious accident can run up charges faster than you could count. Just from recent examples, I know we had a critical trauma that garnered almost 50,000 dollars in charges in less than 40 minutes. A few months ago we had someone that earned over 200,000 dollars in charges while being treated over the course of a couple of hours. Your plan would bankrupt ER MDs, so what would even be the point of taking patients to the ER? Why not just have the ambulance run your insurance and they could decide that you’ll need more treatment than your insurance will cover, so why not just let you die on the side of the road? Is this really a conservative ‘solution’ to healthcare costs? Even in your own example, people who could pay would still be ‘forced’ to die, simply because we don’t know who they are or how good their insurance is- and you may not realize this, but I would say this accounts for 95% of the patients we see on any given day.

[mazinger_z]

Here’s another idea that I thought of over the weekend:

One of the problems with health care costs is that there are too few doctors. Med school is also very expensive. It make more sense, financially speaking, to go to a four year program (and law school), get a CPA (or a JD), and work as a business/banking consultant (or at BIGLAW, but that’s really only available to 10-15% of all lawyers, less in this market) and work your way up, then it is to earn a living as a doctor.

Let the government pay for some or part of the tuition, and let doctors work it off or volunteer at free clinics throughout the city. Med schools already have rural medicine exceptions (i.e. entrance requirements are relaxed if the doctor works a year or two in a rural area). This could be easily handled through the DoE (working with state medical boards for admissions, and through itself to handle the financial aspect), and by expanding medicare coverage to open more free clinics. One could offer the same program to nurses, nurse practitioners, and physician assistants.

[sqweels]

@Backcountry_Medic

I work in an ER and I can tell you that a serious accident can run up charges faster than you could count. Just from recent examples, I know we had a critical trauma that garnered almost 50,000 dollars in charges in less than 40 minutes.

I’m not doubting you, but explain how these costs accumulate. After all, if the patient had not been there, wouldn’t the personnel and equipment still have to be paid for even if they had spent that 40 minutes sitting there doing nothing?

[furt]

@treis

In fact, I would go so far as to say that increasing the cost to the consumer for individual tests would be a strong disincentive for them to have routine tests. If people have to choose between cutting near essential items (cell phone, cable, internet, etc.) or paying for a screening test, then I suspect they will skip the test. That would cost the system more in the long run.

It may or may not, depending on the costs of the test, the treatment, and the commonnes of the disease.

If a $10 test prevents a treatment that costs $1000, that’s a savings … IF more than 1% of the people tested were going to contract the illness. If the chances of a given patient contracting the illness are less than 1%, the preventative care costs more than doing nothing.

In reality, the only incentive driving unnecessary tests is the people that get paid for doing the tests. You have done nothing to address this.

Yes, he has, when he addressed the need tort reform. There is a huge incentive to do unnecessary tests if you aren’t paying for them, but you will be held responsible for patients who come down with rare but preventable illnesses. Numerous experts have said that multimilliondollar malpractice suits (and the insurance against them) is one of the biggest drivers of costs. And yet none of the current proposals so much as breathe a word about lawsuit caps.

[treis]

@furt

It may or may not, depending on the costs of the test, the treatment, and the commonnes of the disease.

If a $10 test prevents a treatment that costs $1000, that’s a savings … IF more than 1% of the people tested were going to contract the illness. If the chances of a given patient contracting the illness are less than 1%, the preventative care costs more than doing nothing.

Yes, he has, when he addressed the need tort reform. There is a huge incentive to do unnecessary tests if you aren’t paying for them, but you will be held responsible for patients who come down with rare but preventable illnesses. Numerous experts have said that multimilliondollar malpractice suits (and the insurance against them) is one of the biggest drivers of costs. And yet none of the current proposals so much as breathe a word about lawsuit caps.

I don’t believe that tort reform is a driving reason behind the vastly increased costs Americans pay for medicine. It is a convinient red herring but in reality lawsuits and tests to prevent them are a minor fraction of our health care spending. Here’s a good article discussing the issue:

http://www.bloomberg.com/apps/news?pid=20601087&sid=az9qxQZNmf0o

[Backcountry_Medic]

@sqweels

I’m not doubting you, but explain how these costs accumulate. After all, if the patient had not been there, wouldn’t the personnel and equipment still have to be paid for even if they had spent that 40 minutes sitting there doing nothing?

Well, in that particular example, most of those costs were equipment, medications and procedures. The patient had a motorcycle accident, with serious injuries including subdural hematoma (bleeding in the brain), hemo/pnuemo thorax (blood/air in the lung cavity) and a tib/fib fracture. His blood pressure was low so he recieve rapid infusuion of blood and crystalloids, medications to help raise his blood pressure, pain medications, he was intubated to help his breathing (more meds), a chest tube was placed (to drain the air/blood from his lungs) and we splinted his leg because it was an open fracture and he was losing a lot of blood from the wound, plus on top of all that he got multiple CT’s, Xrays and a lot of bloodwork .

Again, it was a serious crash, but the treatment wasn’t excessive in any way and without treatment the patient would have most likely died. I just remember the cost off the top of my head (I think it was really about 48,500ish), but you also have to remember that it doesn’t include the doctor’s charges (there was an ER MD plus our trauma surgeon) for evaluating him while he was in our care (they bill seperately).

Of course these costs don’t even begin to cover his stay in the ICU, the neurosurgeon (and anything he might have needed to do), or the orthopedic surgeons charges either.

It’s not hard to nearly cover your lifetime allowance with one bad accident.

[furt]

@treis

I don’t believe that tort reform is a driving reason behind the vastly increased costs Americans pay for medicine. It is a convinient red herring but in reality lawsuits and tests to prevent them are a minor fraction of our health care spending. Here’s a good article discussing the issue:

http://www.bloomberg.com/apps/news?pid=20601087&sid=az9qxQZNmf0o

YMMV, but about 10 percent of the total cost of medical services (your cite) sounds like a hell of a lot to me, not a “minor fraction.” Most industries look for ways to shave off fractions of percentages of costs. 10% works out to over $100 Billion a year (my cite, based on the same research).

The chance to shave off whole percentage points and save hundreds of billions doresn’t seem like a “red herring” to me.

[treis]

@furt

YMMV, but about 10 percent of the total cost of medical services (your cite) sounds like a hell of a lot to me, not a “minor fraction.” Most industries look for ways to shave off fractions of percentages of costs. 10% works out to over $100 Billion a year (my cite, based on the same research).

The chance to shave off whole percentage points and save hundreds of billions doresn’t seem like a “red herring” to me.

It’s unlikely that you would be able to cut a significant portion of that 10% let alone anywhere close to all of it. According to the CBO:

CBO believes that savings from reducing defensive medicine would be very small.

http://www.cbo.gov/ftpdocs/49xx/doc4968/01-08-MedicalMalpractice.pdf

In short, you can slice out whatever you want from the 2% of money going to plaintiffs in law suits, but it is unlikely to impact the larger 8% of spending on “defensive medicine”. At best you are talking about slicing off 1-3% of health care spending. When you need to cut off ~40% of your overall spending to become comparable to similar countries that’s just not significant.

[Sam_Stone]

As far as I can tell, the ‘catastrophic insurance’ plan has more support from serious economists than does the administration’s public option or whatever the form of the monstrosities currently passing through the house currently have.

Nobel Laureate in Economics Gary Becker just posted an endorsement of Universal Catastrophic Insurance

Liberal Economist Brad DeLong, who helped work on the original Clinton health care plan, endorsed a 50,000 deductible government reinsurance plan for insurance companies. Essentially the same thing.

Nobel Laureate Milton Friedman wrote an essay for the Hoover Institute titled, “How to Cure Health Care”, in which he calls for government catastrophic insurance and medical savings accounts.

Mandatory Catastrophic insurance, coupled with health savings accounts, is supported by Austrian economists like Arnold Kling, and notorious right-wing senators like Ted Kennedy. In fact, in doing a survey of economists supporting various health care reforms, it seems that HSA/catastrophic insurance is probably the most widely supported reform.

In contrast, the current debacle is largely a concoction of politicians, not economists. Tom Daschle was supposed to spearhead the effort before his ethics problems removed him from consideration - he wrote a book on health care reform, dontcha know. And his prescription, like the various prescriptions coming out of congress, are the typical product of politicians. Rather than address the core issues of incentives and various market failures, the politicians have just stitched together various new regulations to ‘control’ health care. This senator wants more money for rural health care. This one wants community health centers. The Senator from California wants more spending on IT. Nancy Pelosi wants to attack the insurance company ‘villians’. Everyone’s got their finger in the pie, and the result is a bloody mess.

Time for a reboot. The public option is dead. Cost control is dead. The stuff that’s left is just a giant hodge-podge of ideas and payoffs to constituencies. It will make the system worse. The entire thing needs to be scrapped, and the root causes of the current mess have to be addressed.

[brickbacon]

@Shodan

Assume we can make a public option available to these folks who make an above-average income. Assume further that it will cost roughly what private insurance does now. What indication do you have that these people will choose to insure, if they do not do so now?

First, I’m not sure why you’d expect people to sign up for a public plan if it costs roughly the same, or why you think it will cost the same. Second, it’s a pretty disparate group so different incentives would motivate different people. It also depends on how big the government pool is, etc. The devil is obviously in the details.

For those who make a decent income, but cannot get coverage because of preexisting conditions, they would be able to find more affordable coverage if HR 3200, or something similar is put into place. For others, it would depend on their particular situation. It’s hard to make assumptions without knowing what they are.

@Shodan

Or, assuming we set up some kind of sliding scale, where the taxpayer picks up more of the bill for people who earn less. Could you describe how such a sliding scale will work for people who earn more than the average, rather than less?

Well a sliding scale would need to be based on both geography and disposable income. A family with two kids making 75k in San Francisco is obviously not swimming in money. Ultimately, there could be an committee set up to grant exceptions when the rigid sliding scale does not accurately reflect the ability to pay.

@mazinger_z

Combined with no ties to empoyment, it would be a race to the bottom for those people who have no health issues, I agree.

It’s a race to the bottom in the sense that insurance companies would all be located in the states with the fewest restrictions that require the least amount of accountability. Just as many credit card companies are in Delaware, health insurance companies will go wherever they can make the most money. In their case, that means denying care and avoiding liability.

@mazinger_z

However (and bear with me, it’s been a long time since I’ve studied insurance law), if one can “price-in” people with more chronic conditions and diversify those people amongst its healthy pool of people, then, in theory, the costs should decrease. The race to competition is to see who can build the biggest, most stable pools of people. The downside that I readily see, is that monopoly environments will eventually happen, and the only way to gain entry is to insure the even more riskier people. This could prove to be too high a barrier, but I am willing to allow the government to step in and regulate minimum standards in both insured pool composition and procedures for pay out and reimbursement. This makes more sense of a government function anyway.

I would appreciate it if you could elaborate on this. While I think it could work, the problem is that there will always be an incentive to avoid sick/risky people. The costs of insuring a large stable pool will still be lower if you could weed out the diabetics, the elderly, etc. I agree that if it is large enough, the costs could be negligible, but the incentives will still be there.

@mazinger_z

Like I said, instead of competing with megacorps, insurance companies can risk diversify their plans across segments of populations. The tax savings and insurance costs that was previously spent on employee insurance should then be given to the employee in an increase in salary. Let the employee-buyer take the tax deduction and let him spend it with pre-taxed dollars (HSAs).

But why should we assume that insurance rates will be the same for an individual as they are for all the employees of a megacorp? It seems to me like they would most assuredly be higher.

@mazinger_z

Pay for it how? You mean in lost tax revenue? I would rather lose tax revenue than pay for it with future-borrowed dollars. Besides, the healthcare transactions are taxed. Also, if the HSA is allowed to turn into a Roth, then those distributions can be taxed.

Lost tax revenue is (in most cases) future-borrowed dollars. That’s how we will cover any budget shortfalls in the short-term. Right now, it costs the government nothing.

@mazinger_z

With the huge rigmarole needed to get the government to buy anything from the private sector, I would think that generic drug manufacturers would also comply with the government cost-plus pricing methods, which also enforce economies of scale, and competitive bid processes. The process is already in place.

It’s in place in some situations, but not in others. You are discounting the political side. Lobbyists have bought so many members of Congress and the executive branch, that these price controls are nearly impossible to get. Even Medicare doesn’t bargain with drug companies. It’s not so much a flaw in your argument, but a flaw in the current system.

[furt]

@treis

At best you are talking about slicing off 1-3% of health care spending.

And again – most industries would jump at the chance to shave off 1-3% of their spending. 1% of health care spending is billions of dollars annually. Nobody is suggesting that its a panacea by itself; but tort reform is a glaringly obvious *part *of the solution, and there is no plausible policy reason for not including it. As your cite indicates, including it would help a lot in getting centrist and conservative support. It would also piss off trial lawyers, which is almost certainly why it has not been included in any of the Dems’ proposals.

To return to the point that brought me into the thread: your own cite makes it clear that your claim

In reality, the only incentive driving unnecessary tests is the people that get paid for doing the tests.

is obviously false.