Why Do They Do That? 4 – Health Care Reform
As we talk about caring for the poor, we run upon an increasingly serious problem: The US is the wealthiest nation on earth, yet millions of people don’t have healthcare. Those that do are seeing their costs skyrocket. Can’t we just create health coverage for everyone and tell companies how much they can charge?
Sure – if you want to ruin our healthcare system.
Insurance, Not “Healthcare”
First we need to clarify the terms of the debate. Every American has access to healthcare, even if they don’t have health insurance. We don’t have large numbers of people dying because they can’t get any help.
Everyone can get treatment at a public hospital. It’s not ideal for anyone – patient or caregiver – but they do get treated. Do they get every single test a person with expensive private insurance would get? Sometimes yes; sometimes no. In my experience, though, patients we get from the county hospital often have fewer restrictions than with some insurance companies, and in the end everyone gets the treatment they need whether they can pay or not.
If anyone gets the shaft, it’s the guy with not so great insurance who has restrictions on where he can go and who he can see and what they’ll pay for, but that’s caused by attempts to keep costs under control.
Sources of High Costs
No healthcare reform is possible without addressing healthcare costs. I can’t give a succinct explanation why costs are rising so quickly; this situation is as complex as it gets. I can, however, identify a few culprits that will shed some light on the problem.
First, healthcare technology has been undergoing incredible advances in the last decade or so. Treatments that were unfathomable 20 or 30 years ago are commonplace today.
New technologies are expensive to develop and to introduce into the clinic. And everyone wants them because they want to be able to give their patients the best care and because if they don’t offer patients the new technologies someone else will.
Another contributor is the shifting of costs from those who can’t pay to those who can. We can’t do this for free, so healthcare providers try to charge so that they can make the money they need off those who can pay. Does that sound unfair? The underlying causes have to be dealt with.
In any business there is a cost to comply with regulations; healthcare is no different. Many have to comply with ridiculous regulations; healthcare is no different.
The Joint Commission on Accreditation of Healthcare Organizations is a non-governmental organization to whom the government has essentially ceded regulatory power; they make sure patient records are handled properly, staff are properly credentialed, and safety procedures are followed. They also force hospitals to spend millions every year making sure staff personnel files aren’t arranged in a “discriminatory” manner and ensuring all employees know the hospital’s latest mission statement. I wish I was exaggerating.
Medicare also has its own rules about how things must be done. In my specialty, we are often forced to do things in an inefficient manner in order to get paid properly.
And there’s still OSHA, FDA, NRC…. That’s not to say all regulations are unnecessary, but they are a burden that has to be acknowledged. Man-hours are spent and materials purchased to comply with rules, and that costs money.
The cost of health insurance is also spiraling out of control. And here a significant part of the problem is – wait for it – government regulation.
Each state requires insurance companies operating in that state to cover specific medical conditions and treatments. In one state a company may be required to cover massage therapy, fertility treatments, and liposuction. They cannot offer you a policy that doesn't provide those services, and they will pass that cost on to the customer.
An example of why this matters: Many younger people are uninsured because they don’t have families and don’t want to (or can’t) spend the money on insurance. If insurers could legally offer these people a bare bones policy covering only preventative and catastrophic care, the policy would be much more affordable and these people wouldn’t be a burden on the system when they have a car wreck or get cancer.
Tort reform will be necesssary if we want to get healthcare costs under control.
One of the factors in the high cost of health insurance is the frequency with which doctors order every test under the sun. There are certainly doctors who do that for profit, but many do it out of fear.
One of the issues in the Terry Schiavo case was the $1 million her husband won in a lawsuit because her gynecologist didn’t detect the chemical imbalance that contributed to her condition. OB/Gyns don’t really check that, but you can bet her doctor will run a lot more tests from now on, and he will bill the insurance companies, and they will bill their customers.
Oh, and his liability insurance went up, and so he will need more money to pay for that. And so it goes.
All of these things and more contribute to the rising cost of our healthcare system.
Market Solutions vs Federal Fiat
If healthcare and insurance costs are racing out of control for a variety of complicated and interrelated reasons, how can we get this situation under control?
Conservatives prefer market-based solutions because we believe limited government is both Constitutional and prudent and the market will by nature try to control costs and please the customer. (Why doesn’t it please the customer now? It does; the customer is your employer, not you.)
Some market-based ideas that have been thrown out include making health insurance individual- instead of employer-based by changing the tax code, allowing individuals to purchase insurance across state lines (like employers can), and improving on health security accounts (HSAs) to encourage the customer to lower costs.
Employers purchase health insurance pre-tax; individuals cannot. Shifting the tax benefit to the individual would not harm those with employer-based insurance, and it would allow everyone else the same tax benefit. Changing from employer-based insurance makes the consumer aware of the cost of insurance thereby encouraging him to spend less and ask for less. This has the potential to encourage healthier lifestyles too.
Think about car insurance. People often avoid filing claims on small problems to avoid making their insurance rates go up. Also, people avoid purchasing products they don’t need to save money – for example, when my wife and I commuted together, our insurance didn’t cover rentals; we had a spare old car, so we didn’t need it. We saved money by identifying insurance we didn’t need. Make the consumer responsible for his own health insurance, and the same situation will occur.
Allowing people to buy insurance across state lines deals with the regulation problem mentioned above. It’s been suggested that all of the insurance companies will move to the state with the laxest regulations – the “Delaware” of health insurance. So? We’re talking about minimum coverage; if a market for more exists, it will be provided. Really, the notion is that the other states will start changing their laws to avoid losing these businesses. Since it costs 4 times more to buy insurance in NY than Connecticut, maybe NY would decide to back off their regulations to compete.
Once insurance is based on individuals who are more aware of the costs, people will also pay more attention to how much hospitals charge. Every test under the sun won’t be acceptable to people who don’t need it. Charging person A to pay for person B won’t be acceptable either. Hospitals will have to change how they do business; once the first one does it, the rest will have to follow or lose business.
If this all sounds pie-in-the-sky, remember that it’s been done before. Market forces were employed to our benefit in keeping costs in the new Medicare prescription drug program down. They were also used, if not in their purest sense, to develop drugs for B-list diseases in the Orphan Drug Act.
The alternative to a market-based solution is a government-based solution. Many people think this is the way to go, but given the astounding successes of Social Security and Medicare (both of which will soon be broke), the FDA, the TSA, and pretty much every federal program except the Army, I’m leery.
Why ask the people who broke the system – who created the excess regulations, who give too much responsibility to the FDA, who basically invented HMOs – to fix it? Their track record is just not that good.
When people try government patches to the present system, they usually come up with something like what happened in Massachusetts. What has been proposed lately depends on price caps and required insurance; the former will force everyone to be charged the same rates as a 60-year-old, and the latter, experts tell us, will very likely result in the destruction of the private insurance market entirely, creating a single-payer system. And like every other government program, it will cost more than expected.
Single Payer Systems
So what if it turns into a single-payer system? Can’t we make it work? Doesn’t it work well enough elsewhere?
The first question we should ask about a government healthcare system is who would run it. Are we going to entrust it to the FDA – the people who force drug companies to spend a billion dollars and years of testing to bring us fine products like Fen-Phen? Or perhaps it’ll be run by the folks who run the VA – the institution that treats our veterans with the best technology 1993 had to offer. Given the roaring success of the nearly-broke Medicare and Medicaid – where people can hardly find doctors at all – I’m not sure we want government-run healthcare.
The fundamental problem with our system is the out of control prices, and single-payer systems do nothing to stop that because, as we’ve found with Medicare et al, when something is free, people use a lot of it. Costs skyrocket.
Well, the response to the rise in costs is typically to restrict how much can be charged. When money dries up, research and development is generally hit hard. Our expensive healthcare system is the best in the world because companies have an incentive to develop new drugs, procedures, and technologies. Take that away and we become, well, Europe.
You see, for all we hear about the greatness of European socialized medicine, when someone gets really sick, they come here. But what will everyone do with if our system becomes like theirs? Right now the US has a better cancer survival rate than other countries (see Lancet Oncol 2008; 9: 730–56), do we want to go down their road?
Canada’s system, though a favorite among American liberals, has had problems with rationing and long waits. They send patients here, even though in Canada private insurance is illegal. Currently the wait to get a hip replacement is much shorter for a dog than for a human. That’s a system to emulate! Similar stories have come out of Great Britain, Turkey, and Poland. They don’t work, and no one likes them except American liberals.
At their worst, single-payer systems encourage struggling governments to start to regulate the behavior of citizens. Many might say they don’t see a problem with the government telling people to quit smoking or to eat right, but these things will get out of control. Go rent “Demolition Man” again; remember “salt is bad for you, thus it is illegal.” Let’s not tempt fate.
Did I say that was the worst? Oregon has gone one better – their health system, trying to control costs, refused a woman curative treatment but offered to pay for euthanasia. Is this the road we want to go down?
Is There a Place for Government?
As I said before, most conservatives have gotten comfortable with the notion of a government safety net. It is not optimal; the safety net should come from the community or the church, but there will probably always be something like Medicare for people who are extremely poor or uninsurable due to their health. But we want to have as few people in that program as possible – for everyone’s sake.
We’ve looked at issues affecting the poor in America; next time we’re going global.
Recommended reading on the candidate's positions:
McCain Is the Real Health-Care Reformer
Obama and Health-Care Equity
McCain Is the Radical on Health Reform
The Obama Plan: More Regulation, Unsustainable Spending
False or Misleading in Every Particular