...I thought I'd share my own thoughts on all this health care reform bizzness.
I subscribe to The Atlantic, and last month there was an excellent article on health care reform. I could feel my brain growing and neurons connecting as I read it. So, I thought I'd share.
First off, I'm not a complete dummy when it comes to health care. A good portion of my education was spent on health economics and health systems of different countries, so I'd like to think that my opinion is slightly informed. Now, if you ask me about football, I am a dummy. I'm also a dummy on roman numerals, Bernoulli's principle, artificial insemination of cows, underwater basket weaving, and Civil War generals. OTHER than that stuff, I know everything about everything.
But first, a quick funny story that begs to be told. I had a certain health economics professor (who shall remain nameless) at George Washington who was quite an interesting guy, but he taught the most boring class ever. I was not in the least bit interested in the subject, although I still did listen. I was paying too much not to listen. Just ask K about that one time we sat down before we were married and listed off our debts to each other. Oh, it was a shocking moment for him, but thank god I had already entrapped him into loving me. ANYWAY, one time as this professor was lecturing about the cost benefit ratio of inpatient care in local not for profit hospitals, blah blah, his tooth totally fell out of his mouth. In slow motion - because when funny stuff like this happens, time does slow down - his front tooth dislodged, rolled onto his bottom lip, bounced onto his chin where it then made a left turn and fell into his front pocket. I KID YOU NOT. And, he didn't even miss a beat. Just kept lecturing away like a jolly ole jack-o-lantern. Oh how I laugh.
But back to the matter at hand.
The article I read, by David Goldhill (much of what I'll be regurgitating here), presented a list of radical solutions to our current health care problems. And no, they are not in line with what Obama is proposing now. Whereas I do support the overall intention of the current administration, and I've been known in the past to fall on the side of universal health care, I think the ideas this guy raises are extremely interesting and potentially life saving, literally. And now I'm thinking of this health care bizzness in a whole new way.
We all know the stats. We know that our spending on health care is utterly ridiculous. We all agree that the system is extraordinarily unfair to a good portion of the population. It is not debated that Medicare is going to bankrupt future generations. So... let's start at the beginning.
Insurance. Why insurance? The basic principle of insurance is to protect us from extreme financial burden should something tragic or out of the ordinary happen. Like a car crash. Or death. Or a house fire. Stuff like that. But when it comes to health care, we use it for nearly all our expenses. We don't use auto insurance to pay for our gas? If you think about it, it's kinda crazy.
Did you know that it wasn't until 1954 that Congress passed a law that made it beneficial for employers to offer health plans? This minor law had the accidental effect of making employer based health insurance the most affordable option for any type of health care. Even Medicare and Medicaid (designed in 1965) followed this same model.
But hey! I like my employer based health plan. I hardly have to pay anything. Someone else pays it. Not me! OK then. Exactly who is paying this? Does your employer have a money tree? The truth is, your company's share of the insurance premium comes out of your potential wage increase and earnings. Where else could it come from? You can feel grateful if you want for not having to pay the majority of your bills or even for your Medicare coverage, but only if you are ignorant about how much you spend to fund these systems over your lifetime AND if you think you're getting good care in return.
Quick example. You're 22, and make $30,000. You get married, have 2 kids, retire at 65, and die at 80. Let's assume (and this is TAME) that insurance premiums, Medicare taxes, and out-of-pocket costs will grow no faster than your earnings per year - say, 3%. By retirement, you will be earning $107,000 and over those years, you and your employer together will have paid $1.77 million for you and your families health care.
And the consequence of this is the insane inflation of health care costs. Because it's insurance itself, that is the cause of health care's high expense, because insurance innately is the most complex, costly, and distortional method of financing anything.
Goldhill uses this analogy: Imagine sending your weekly grocery bill to an insurance clerk for review, and having the grocer reimbursed by the insurer to whom you've paid your share. An expensive and wasteful absurdity, no?
This is a big problem. For every two doctors in the U.S., there is now one health insurance employee. It costs $500 per person to administer health insurance. Maybe we should stop and think about how this HUGE cost would simply disappear if we paid routine health expenses the way we pay for everything else:
BY OURSELVES!
Oh wow! That is what this article proposed! The minute I read that I thought... there is NO way I could afford a pregnancy, or an x-ray, or dental cleanings every 6 months. It COSTS too much! I can't remember exactly what it was, but I think that Clara's birth cost somewhere around $9,000. In that craphole of a hospital! And that was just the part of the bill the insurance "allowed"!
But really, I don't know how much anything costs. I NEVER ask my doctor how much my ultrasound is going to cost or how much a blood draw is. Do YOU ever ask?
And this is where things start to get complicated. Everyone thinks that all this new hospital technology, all these medical advances are what keeps things expensive. But that is completely counter-intuitive to how things, like the free market/economy, work. The author gives the example of LASIK, which is seldom covered by insurance and exists in the competitive market. Therefore, people who get LASIK, act like consumers. You do your research for the best doctor with the most competitive price. In theory, this should fit all medical models. As a doctor or hospital, you have to acquire the machine, whether it be a CAT scan, etc. Once you have it, the actual cost of using it is low. Then more hospitals/doctors get the same technology and the first guy can meet the competition by cutting the price. As these technologies are bought, it will exert downward pressure on both equipment and procedure prices. It's called competition. It's called the free market.
The current climate of the health care industry has created the high prices of procedures. This discrepancy can be seen in your bills that come from your insurer. Have you ever noticed the "billed" and "allowed" and "payed" columns? Does that make any sense to you? Should someone with no insurance have to pay triple the price for the same exact service as the insurance company? Is that how much it really costs?
See, I really did listen to my toothless health economics teacher.
So, what is wrong with the single-payer system idea? Other countries do this and have shown a huge reduction in administrative costs, but this comes at the cost of rationing care. That's the truth. When we lived in Britain, I saw a friend wait 6 months to get a biopsy done on a lump in her neck. She was fine with that though, because if she wanted a biopsy sooner, she would have paid for one. The National Health Service is like a religion... albeit one that apparently is going bankrupt.
Personally, I don't like the idea of wait lists and rationing. I can't wait an extra minute when it comes to mine or my family's health. But should I expect to get service NOW and for it to be FREE?
Another point the author makes is a simple one: When it comes to health care, we are not the customer. Our insurance company is. He states, "It's astonishingly difficult for consumers to find any health-care information that would enable them to make informed choices - based not just on price, but on quality of care or the rate of preventable medical errors. So while every city has numerous guidebooks with reviews of schools, restaurants, and spas, the public is frequently deprived of the necessary data to choose hospitals and other providers."
So, with all these problems, what does the author suggest we do?
He states that the most important step we as a country can take is to move away from comprehensive health insurance as the single model for financing care. The government's role should be in supporting consumers by bringing greater transparency and competition to the health care industry.
A consumer-centered health care system would use different forms of financing for health care. Here's the breakdown:
- Routine care would be our own financial responsibility.
- Major, predictable expenses (like giving birth, end of life care, etc) would be funded by our savings or credit.
- Massive, unpredictable expenses would be covered by insurance.
Let's start with the insurance. Just like car insurance, all Americans should be required to buy catastrophic insurance, run as a single national pool, without care for risk factors. Everyone would be insured fairly. This would ultimately replace Medicare, Medicaid, and private insurance. Definition of "catastrophic?" Say, anything above $50,000.
Next, our routine care. This we pay ourselves, from our income and savings, specifically, through a Health Savings Account (HSA). HSA's would be maintained by regular contributions or a minimum percentage of post-tax income. Every American will have one and they would be ours to control. Every month, we put aside funds for future health expenses and once a desired ceiling has been reached, we can use the funds on other things. We could also borrow against future HSA contributions for immediate needs.
Obviously, this is a quick simplified description and moving from our current system to something like this would take a full generation, but I think it would be a move in the right direction. I don't think that additional government funding will ultimately stabilize and fix our current problems. Instead, we will continue the illusion that someone else is paying for our care.
But once we're made the consumers, where providers are accountable to us because we're the ones who pay the bills, we will demand more affordable care and better medicine.
It makes sense to me.
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