Health Care Reform in the US

[prototoast]

So how do explain the lower overhead of countries (with pretty much any) obligatory coverage system?

I'd agree that the use of stats in this area is dodgy at best but I don't think 'overhead' is used the way you describe.

I don't believe the current institutionalized health insurance system in place in this country is a particularly efficient one, but I don't think using misleading statistics to promote an even worse system (medicare) is doing anyone any justice.

The fundamental problem is that the nature of insurance creates a moral hazard. To combat this, the insurance companies employ a lot of administrators. These people may or may not make the system more efficient depending on their directives (those "refuse to pay anything until we're sued" types don't help, but someone trying to catch excess medical procedures will help).

The federal government is largely responsible for creating this insurance paradigm, and I don't believe that further institutionalizing it will make things better. Whenever you hear a politician declare that every American should have health insurance, stop and think to yourself, "why is it necessary that health care be paid for by insurance?"

[jeff]

prototoast, what do you think of the Swiss model, with private but not-for-profit insurance that cannot reject individuals based on "preexisting conditions".

I'm not sure how you handle paying for healthcare for a population without insurance of one form or another to spread risks over a pool of individuals. Could you expand on your last sentence?

[dcmdale]

So would you support the free market alternatives?

Pre-existing conditions are clearly an issue, but I didn't think most medical insurance companies where able to adjust risk the way life insurers (or car insurers are).

After all a detailed battery of genetic tests, an extensive family history and life history would give any actuary a pretty good estimate of cost-risk.

I don't see the republicans pushing that.

At some point risk allocation defeats the purpose of insurance. A perfectly allocated risk model would mimic a pay-as-you-go approach, except that a pure pay-as-you-go approach would be massively cheaper because you could eliminate the overhead of insurance (31% and rising of health care costs) and place medical costs back into a supply/demand situation.

Far too much of the overall health care discussion puts insurance as part of the solution and not a major component of the problem.

[prototoast]

prototoast, what do you think of the Swiss model, with private but not-for-profit insurance that cannot reject individuals based on "preexisting conditions".

I'm not sure how you handle paying for healthcare for a population without insurance of one form or another to spread risks over a pool of individuals. Could you expand on your last sentence?

Personally, I believe that mandating that people with preexisting conditions are covered is thievery. Once that's out of the way, we need to divide people's health needs into separate categories, which I will loosely define as "catastrophic" and "routine"--where the distinction is made isn't terribly important, but roughly speaking "catastrophic" would involve getting something like cancer, and "routine" would involve seeing your doctor when you're sick, and getting tests. Much like other forms of insurance, the insurance should only cover the catastrophic health care needs. The rest should be paid out of pocket, and for those procedures which are too expensive to afford, but not yet "catastrophic" people should take out loans. Maybe even offer some government subsidized loans (like for education) if you want to help out poor people.

The problem with the insurance model is that people don't consider the value of a medical procedure. If given the choice between receiving a medical procedure that insurance is paying for or receiving the cash value that the insurance is paying, quite often people would prefer the cash (I know I would in many situations, I'm sure you would as well). Whenever the insurance has to pay out a claim like that, everyone is worse off.

[keith]

The federal government is largely responsible for creating this insurance paradigm, and I don't believe that further institutionalizing it will make things better. Whenever you hear a politician declare that every American should have health insurance, stop and think to yourself, "why is it necessary that health care be paid for by insurance?"

Relax some of us have been around the world enough times to realise medicare is not the only way.

I don't particularly care for the private insurance model but mandated pay as you go is probably more of a non-starter (politically) than a government single provider option. The issue is, as always, an unwillingness of individuals to carry the cost for unpredictable risk -TAXES RISE!!!!!

Even if you step down a level to high deductible policies, these are as much of a tax hike as mandated insurance. Not arguing against the validity of the approach simply that there is no way congress would be willing to force realistic savings into those accounts. See the current penalty discussion but also retirement saving.

I agree about moral hazard but fail to see why it would affect any policy differently - at the end of the day the moral hazard is about how many people we can comfortably have dying in the street. A separate issue to how medical care is provided.

At the end of the day the insurance model, whether fully private (Switzerland), hybrid (Australia) or governmental (UK), is the tested one. Insurance pools, whether private or public, are a useful tool to manage highly variable risks which have the possibility of being catastrophic for individuals.

[lindajdunn]

Much like other forms of insurance, the insurance should only cover the catastrophic health care needs. The rest should be paid out of pocket, and for those procedures which are too expensive to afford, but not yet "catastrophic" people should take out loans. Maybe even offer some government subsidized loans (like for education) if you want to help out poor people.

If I'd had to pay for the MRI that found my two meniscus tears, I'd probably still be limping and accepting the doctor's diagnosis of BURSITIS.

Who defines what is and is not catastropic? An x-ray for a potentially broken arm? If it's broken, then it's paid and if it's not broken, it's out of pocket?

[prototoast]

If I'd had to pay for the MRI that found my two meniscus tears, I'd probably still be limping and accepting the doctor's diagnosis of BURSITIS.

Who defines what is and is not catastropic? An x-ray for a potentially broken arm? If it's broken, then it's paid and if it's not broken, it's out of pocket?

You'd pay for the X-Ray/MRI whether it's broken or not. The cutoff for "catastrophic" would primarily be monetary and could naturally depend on how much you were willing to pay. Or conversely, imagine your existing health insurance with a $75,000 deductible.

[Bayou Bum]

If I'd had to pay for the MRI that found my two meniscus tears, I'd probably still be limping and accepting the doctor's diagnosis of BURSITIS.

Who defines what is and is not catastropic? An x-ray for a potentially broken arm? If it's broken, then it's paid and if it's not broken, it's out of pocket?

If you value your own health so little that you wouldn't pay for an MRI for diagnosis, then why should we? So, I'm supposed to fork over money to pay for you getting an MRI that you wouldn't pay for yourself, just so you don't have to limp? And you don't see a problem with that?

[Hauptman]

If you value your own health so little that you wouldn't pay for an MRI for diagnosis, then why should we? So, I'm supposed to fork over money to pay for you getting an MRI that you wouldn't pay for yourself, just so you don't have to limp? And you don't see a problem with that?

Isn't it possible that she couldn't afford to pay the cost of an MRI, and that it wasn't a choice?

Unless I'm missing something, that's generally the case for insurance in that people generally don't have the cash available to pay for large medical bills.

[jeff]

Personally, I believe that mandating that people with preexisting conditions are covered is thievery. (snip)

I must disrespectfully disagree with that assessment, and wonder what value is provided by a system that excludes everyone known to require its services. The idea of insurance is that all are covered, and actuarially it can be sustainable because not all need coverage, at least, not at any given time.

I wonder what kind of proposal you have that would prevent cherry picking, or if you don't find that a problem - how does a person with a condition requiring care (diabetes, COPD, or even high blood pressure and cholesterol levels) manage to get it? Some of those can be treated with relatively little expense (say, generic statins for the cholesterol), but some simply are not going to be affordable. Is the line between "catastrophic" and "routine" in your mind a distinction of deductible and co-pay?

The problem with the insurance model is that people don't consider the value of a medical procedure. If given the choice between receiving a medical procedure that insurance is paying for or receiving the cash value that the insurance is paying, quite often people would prefer the cash (I know I would in many situations, I'm sure you would as well). Whenever the insurance has to pay out a claim like that, everyone is worse off.

Are you saying that people would take the cash that would pay for their angioplasty and stent (or appendectomy, bowel resection, hernia repair, chemotherapy, etc) rather than have the procedure or treatment? If you're saying that people are cost-insensitive, the answer is pretty much "yes", but I don't think people line up in the streets to have those procedures for no reason.

Instead, that species of cost (stuff done that isn't needed, if I follow you) comes from from the provider side, not the patient side, because we have a "fee for service" system in which practitioners are paid to do things, and not paid when then they don't do them. Practitioners have an economic incentive to provide services even if not needed, and insurance companies have an economic incentive to not pay for services, even if needed.

[jeff]

Isn't it possible that she couldn't afford to pay the cost of an MRI, and that it wasn't a choice?

Unless I'm missing something, that's generally the case for insurance in that people generally don't have the cash available to pay for large medical bills.

Of course - and they pay premiums over a long period of time against that possibility. I think somebody needs a review of the basic concept of "insurance"... (wasn't that already pointed out? )

[keith]

(wasn't that already pointed out? )

Yep.

Although it was, perhaps, insufficiently flagged as a learning moment.

[keith]

You'd pay for the X-Ray/MRI whether it's broken or not. The cutoff for "catastrophic" would primarily be monetary and could naturally depend on how much you were willing to pay. Or conversely, imagine your existing health insurance with a $75,000 deductible.

.... but back to the moral hazard.

How does this avoid producing a situation that encourages catastrophe? The temptation will be X, Y or Z vs saving for medical care. Wait for catastrophe, borrow up to $75k to pass the deductible and then enjoy expensive corrective care. Promptly file for bankruptcy once fixed and Bob's your uncle. Or simply skip saving and get rushed to the ER - unless you close ERs to those with low credit ratings of course.

The only option is enforced saving, with enforced treatment. After all if your doctor recommends treatment X or test Y you have a disincentive to undergo preventative treatment/testing. Sure most people would be sensible but I suspect more than a few wouldn't be - any smokers in the audience? This all ends up looking much like mandatory insurance - you are left working on the assumption that there is sufficient efficiency of health care consumption that savings accrue. Which may be true but I am not convinced.

[prototoast]

.... but back to the moral hazard.

How does this avoid producing a situation that encourages catastrophe? The temptation will be X, Y or Z vs saving for medical care. Wait for catastrophe, borrow up to $75k to pass the deductible and then enjoy expensive corrective care. Promptly file for bankruptcy once fixed and Bob's your uncle. Or simply skip saving and get rushed to the ER - unless you close ERs to those with low credit ratings of course.

One could get rid of bankruptcy laws, which are a load of crap. The debt->bankruptcy paradigm you described isn't any different than exists now, but I'm not currently concerned with the troubles of the uninsured, I'm concerned with the problems of the insured. Ever been in a doctor's office? I'm sure you have. Ever seen a list of prices posted? I'd doubt it. People order their medical services without considering the cost. That causes them to order more of it than they would if they were considering cost. That causes insurances prices to go up.

Health care costs money. There's nothing inherently wrong with that. If you consider your own personal costs/benefit, you'll order the right amount for yourself. If individuals do not have to directly pay for their own care, the costs go up for everyone, and the healthy subsidize the sick.

And ER's should not be forced to provide coverage.

[Bayou Bum]

Health care costs money. There's nothing inherently wrong with that. If you consider your own personal costs/benefit, you'll order the right amount for yourself. If individuals do not have to directly pay for their own care, the costs go up for everyone, and the healthy subsidize the sick.

You're right. And when health care is free, I am going to use it constantly. I will not hesitate to have every test run to insure that I catch anything wrong as early as possible. I haven't had a full body MRI in a while.

[jeff]

One could get rid of bankruptcy laws, which are a load of crap. (snip)

Care to elaborate?

Ever been in a doctor's office? I'm sure you have. Ever seen a list of prices posted? I'd doubt it. People order their medical services without considering the cost.

They're posted in France, which has regulated insurers and private providers. They also pay much less than us and live longer and better, I know I've mentioned that a few times...

That causes them to order more of it than they would if they were considering cost. That causes insurances prices to go up.

Then why do people in those other countries not use an infinite amount of health care? Please explain.

Health care costs money. There's nothing inherently wrong with that. If you consider your own personal costs/benefit, you'll order the right amount for yourself. If individuals do not have to directly pay for their own care, the costs go up for everyone, and the healthy subsidize the sick.

And if it's priced out of reach for everyone - then the sick don't get coverage. And "healthy subsidize the sick" is how a risk pool works - private OR public.

And ER's should not be forced to provide coverage.

Let's take that back to Keith's remark about how many people you're willing to have die in the street.

[lindajdunn]

If you value your own health so little that you wouldn't pay for an MRI for diagnosis, then why should we? So, I'm supposed to fork over money to pay for you getting an MRI that you wouldn't pay for yourself, just so you don't have to limp? And you don't see a problem with that?

1. I didn't have the funds for an MRI as MRIs are not cheap.
2. Did I ask you to pay for it? No. Insurance is a fund and we all toss money into the fund in case we need it some day, which is why it's called "insurance". At the moment, 15-20% of that money goes to overhead.
3. I don't see a problem with insurance. I note the poll does not have any votes for "pay as you go" and what's being advoated here is "pay as you go".

[lindajdunn]

And ER's should not be forced to provide coverage.

Spoken like a true Republican: Go Ahead and Die!




http://www.youtube.com/watch?v=xNuCfD5bICQ

[prototoast]

1. I didn't have the funds for an MRI as MRIs are not cheap.
2. Did I ask you to pay for it? No. Insurance is a fund and we all toss money into the fund in case we need it some day, which is why it's called "insurance". At the moment, 15-20% of that money goes to overhead.
3. I don't see a problem with insurance. I note the poll does not have any votes for "pay as you go" and what's being advoated here is "pay as you go".

You shouldn't consider whether or not you would pay for it if you insurance didn't cover it, you should consider whether or not you would pay for it if you weren't paying for insurance.

[prototoast]

Care to elaborate?

When you owe the government money (taxes), does bankruptcy absolve you of your obligation? No, you pay or you go to jail/they forcibly take your earnings.

So if they demand you pay no matter what, why do they feel as though your debts to private parties are any less important?

They're posted in France, which has regulated insurers and private providers. They also pay much less than us and live longer and better, I know I've mentioned that a few times...



Then why do people in those other countries not use an infinite amount of health care? Please explain.

In general, there are rationing mechanisms in place. Health care costs won't go in infinity because the opportunity cost of going to the doctor exceeds the benefit, even without out of pocket costs.

Also, while costs may be less in France, many of the tradeoffs of these benefits are significantly lower GDP per capita. The reality is that if everyone were mandated to buy health insurance at the same price, it would lower the cost per person (as now healthy people would be forced to subsidize the sick). That's what happens in France. The "cost" of this, along with the "cost" of many of their other social programs is that it lowers income for everyone. Now maybe you agree that it's worth it, but the reality is that average person's cost for health insurance in this country (in our already messed up system) is less than the difference in average income between our two countries.

And if it's priced out of reach for everyone - then the sick don't get coverage. And "healthy subsidize the sick" is how a risk pool works - private OR public.

In a perfect world people would pay in based on their risks, and you would pay in to protect against major unforeseen events, not paying in for routine care, where there is much more certainty whether or not the payments out will exceed payments in.

Let's take that back to Keith's remark about how many people you're willing to have die in the street.

When someone dies whose lifetime expected earnings + the amount of money people are voluntarily willing to keep that person alive (those are really the same thing), society is better off than if it paid to keep that person alive.