We really can’t do any better than this? The 2,000 page Affordable Health Care act passed last year is the best our country can do? Creating more regulations that we can’t possibly understand, an Individual Mandate (evolving into the Individual Responsibility provision now) and giving more control over our health care into the federal governments hands, is the answer to the problem? I am continually amazed at the desire of so many to put our health care into the hands of our government. I am among the first to admit that we need to reform our health care system. But turning it over to the government is not the answer. We don’t have to follow other countries examples to solve our problems. We are an innovative, creative country that has always found free market ways to solve hard problems. This does not mean that the government does not play a role in the reform, it should provide the framework to allow a free market solution to prosper.
Let me begin by saying that any reform needs to address pre-existing conditions and expand coverage to those currently not covered. I am not a cruel and heartless conservative schilling for health insurance companies. I just want a system that continues to provide the incentives for innovation and creativity while addressing some of the major flaws in our current system.
We also need to be realistic about reform. Turning our system over to the government does not mean there are limitless funds available to pay for everyone’s healthcare. Creating entitlements does not work some strange magic that creates money to fund them. Someone has to pay the bill, there has to be real money paid by real people to fund the program.
Government is not really very good at running anything
Why anyone would use medicare and medicaid as examples of successful government programs is beyond me. They are broke and creating huge unfunded liabilities. Why do we want our government to make promises that can’t keep, which cause huge deficits and in the end can’t deliver?
The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today’s dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.
The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.
We want more of this? This is logical and reasonable? We think that this makes sense? To learn most about this disaster of an entitlement, read here, http://www.ncpa.org/pub/ba662 or here http://www.forbes.com/2009/05/14/taxes-social-security-opinions-columnists-medicare.html The Forbes article indicates that all taxpayers would need a permanent 81% tax increase to cover the unfunded liabilities. I’m sure all of you would have no problem with that. All the wishful thinking and emotional handwringing will not make this go away and no matter how compassionate you are you can not justify making things worse by adding another entitlement.
New attitudes are needed
We need to examine our attitude towards paying for our health care. I find that we expect our insurance to pay for all of our health care expenses. We don’t want to pay for anything out of our pockets. Insurance is not and should not be a replacement for personal responsibility. Insurance should cover catastrophic expenses, not normal checkups, colds, flu, prescriptions, etc. Think about our auto and home insurance. We purchase this type of insurance to cover the big ticket items or the major accidents. We don’t expect insurance to cover oil changes, tune ups or tire changes. But when a tree falls on the house or our car, we expect our insurance to handle this. Our premiums could be reduced if we had larger deductibles and planned for and expected to pay for routine medical expenses.
A large part of the problem with health care is the exorbitant cost. Even the most basic out-patient procedure is more costly than most people can afford. Any solution to the health care issue must address the problem with cost. The current insurance system offers no incentive for health care providers to lower cost and improve efficiencies to attract customers. We don’t ask how much a test or procedure is going to cost. We don’t shop around for the best price, we just go wherever our doctor tell us. We don’t operate this way for other services. Most of us take pride in getting the best price we can. Lasik is an example of how competition and removing artificial cost constraints can drive cost for health care down. Lasik is not covered by insurance yet it is a popular procedure. The cost of Lasik has not gone up like other medical procedures, rather is has decreased by more than 50% from a cost roughly $4,000 per eye in 1997 to an average of $1,800 per eye today. We can’t always shop for price in health care, but if we were incentivized to do so, prices would certainly drop making it more affordable (insurance premiums would also decrease).
Government regulations are part of the problem
Part of the problem with our current system is too much Government intervention. Now before you accuse me of the desire to abolish all government regulation, let me explain. I believe there is a place for regulation to protect consumers, I just think that we need to periodically examine these regulations to ensure that they are providing the value that was intended. Often regulations create unintended consequences. For example, the cost of providing insurance continues to increase because of government mandates for what must be covered in policies offered by insurance companies. This is not necessarily a bad thing (although I disagree with some of the elective procedures required to be covered) but the unfortunate side effect is that the cost to buy these policies becomes prohibitive. I’m not advocating the removal of these mandates, but rather more choice for the consumer regarding what coverages they include in their policy. What I would like to see is more flexibility in the types of coverage one can purchase similar to auto insurance. A simple example, I’m 45 years old, so is my wife, we don’t plan on having any more children, so I would like the ability to buy a policy that does not cover obstetrics so I could save money. If people want to pay more for a policy which covers addiction counseling, sex changes, cosmetic surgery, etc. more power to them, just give me the ability to opt out so I can save money.
I won’t go into too much more detail on regulations, but I would like insurance companies to be allowed sell across state lines to have greater economies of scale (requiring cooperation by the multiple state dept. of insurance). Also, allowing people to join together and purchase insurance as a group, much like a large employer, so they can negotiate discounts with the insurance carriers would provide two benefits. First, the insurance would not be tied to your employer so it would be portable and second it would provide opportunities for those that do not work for large companies. As an example, I am in the Software Development industry. If a group of developers, testers, managers could join together to purchase insurance, potentially be hundreds of thousands of buyers, would result in significant discounts. Current state and federal regulations prevent these ideas from becoming a reality.
Ideas
The CEO of Whole Food offered some practical and in some cases ideas that are being practiced by his company. It is unclear to my why he was vilified by some on the left, but here is a link to his WJS editorial; http://on.wsj.com/g7r8UC
Nathan Sass does a nice job covering and alternative proposal that I think is pretty novel. Please take a look here; http://bit.ly/fl7dUX
Tort reform was left out of the AHCA. While I think that people who have been a victim of negligent medical care should be made whole and deserve monetary compensation in many cases the settlement is about punitive damages. Punitive damages are meant to punish the perpetrator of the offense so they won’t do it again. The problem in our current system is that health care providers can buy malpractice insurance which covers punitive damages awarded to a plantiff. They build the cost of the malpractice insurance into the the amount they charge for services, so it is the consumer who is punished not the doctor. I think that the best punitive action that can be taken against a negligent health care provider is to take away their license to practice. That is real and effective punishment that is not passed on to the consumer. It is no surprise that trial lawyers are against tort reform, they have everything to lose and nothing to gain.
I am interested in learning about other ideas about how the health care issue can be solved. Please feel free to post comments with ideas and links to others ideas. As much as I hope that the AHAC will be repealed, I also hope that we can quickly move forward with creative and novel ideas for solving the problem.
Orthodoxus Perspectus 