The U.S. Health Care Debate

[Banquo's Ghost]

Thank you Don, for taking the time to add such an interesting and constructive proposal.

1) We do not incentivize doctors to make people healthy, we incentivize them to "do something". I would recommend altering the way doctors are compensated to more of a fixed payment schedule, where they get paid the same whether they recommend you for additional procedures or not.

My grandfather used to tell me that the Chinese paid their doctors only when they were well - stopping payment the moment the doctor "failed" and they became ill. Like much of my grandfather's wisdom, this is probably entirely mythical, but it does raise an interesting perspective for state-run healthcare and preventative healthcare - maybe we should stop a doctor's salary when a patient gets ill? (Before rory has a coronary, I'm joking - but all health systems should have a substantial incentive towards preventative care - and how is this done in a "free market" rather than a public health system? The incentive for the free market is surely to have as many ill people as possible?)

2) Costs are best controlled when the decision maker is well informed of the costs of their decision. This is why I am so strongly in favor of high-deductible plans (level of deductible based on your income, to make it a sliding scale... such as 0.5% of your gross income or some such). I myself just went on a a high-deductible plan, and I'll tell you, you learn to ask questions like 'And how much will this procedure cost?'

I'm not sure what a high-deductible plan might be. I assume from the context that this might be similar to what we would term an "excess" - an amount of the total cost payable by the insured. The higher this amount agreed, the lower the insurance premium as the insurer is less exposed to the total costs. Again, young and healthy people will tend to take large excesses, knowing they are unlikely to need to claim at all - but when tragedy strikes, they then face enormous bills. Whilst I don't disagree that in most cases costs are controlled by information, the problem is one's health doesn't allow it. If you need a course of chemo for your cancer, the provider is in the box seat.

3) We have to nullify all the protectionist laws enacted on behalf of the pharmaceutical companies. They are anti-competitive and are a big part of how we got to where we are. End Medicare Part D (at the very least, the no bid requirement) and allow for competitive sourcing of drugs from other markets.

At the very least. Pharmaceutical companies are the ruin of all modern health systems. The patenting of drugs (most of which are researched by state-funded universities and then finalised into a marketable product by the pharmaceutical companies) plus aggressive marketing where patients and doctors are bullied and frightened into using the very latest and most expensive treatments should be the main aim for any reforms.

4) We need torte reform. I don't believe in limiting the ability to sue, or the damages rewarded. But I do believe that if the judge finds your case to lack any bearing, he can refer you to a judicial oversight committee. If they find your case to be utterly without merit, you (or your attorney) have to pick up the legal costs for the defense. That should end those "WhoCanISue.com" and late-night Robert Vaughn ads that run "IF you win, I get 1/3, if you lose, you don't pay a dime" shticks.

You have my vote.

For the coverage issue:

I like the way Germany, Japan and the State of Massauchusetts are set up. Require insurance from a government approved medical insurance provider. However, as part of this:
-Remove tax incentives for corporations to provide coverage, put everyone into the open market.
-Allow the formation of buying groups or co-ops (which are currently illegal in the US....well, they are and they aren't... large corporations buying for their employees are allowed, but I'm not allowed to form one).
-On an evaluation of an individual's ability to pay, the government will subsidize medical premiums. Families that make less than 40K a year will receive 100% of the money they spend in insurance premiums back at the end of the year. 50% up to 80K and so forth. Once your family hits 6 figures, you pay the whole nut. But, if you violate the law and do not get insurance, you don't get one red cent.

I like the idea. It would be interesting to do the sums and see if the cut-off point you propose actually does provide adequate cover. I'm totally amazed that you make co-operative illegal in the US - corporations really have the legislature wrapped around their fingers, don't they?

And one more thing I would do, to incentivize the insurance companies to cover everyone...

Set their income tax based on a new figure I would call their coverage index.

A 24 year old male with no family history gets assigned a +20. A 79 year old woman with Crohn's disease, diabetes and early stages of cancer gets assigned a -20.

The index is the sum of all individual ratings of everyone you covered for the entire year, pre-existing condition cases not included (if you don't cover them, you don't get their index points). At the end of the year, when your accountants calculate your taxes, they add or subtract your index from your corporate income tax. If you go out and cover a bunch of end-of-lifers, you'll be rewarded handsomely by the taxman. If you insist on dropping coverage on all risks, you'll be taxed heavily for that policy.

Fascinating proposal. I'm going to have to think hard about the implications of how that might be applied, since I would expect the big insurance corporations are unlikely to pay their full contribution to taxes anyway (they'd be mist unusual if they did). I suspect that like car insurance, there would still be a group of people who remained uninsurable because the balance of risk versus tax liability would mean most insurers would still cherry-pick with a token amount of "end-of-lifers" to reduce liability on the $15 they didn't salt away in the Caymans.

I am adamantly and irrevresibly opposed to single-payer systems.

This is an odd phrase doing the rounds, which I understand to mean a system where only the government buys healthcare. Even in the UK, patients have the opportunity to source their healthcare from a range of trusts, and even to pay for private treatment. These health trusts, while given taxpayers' money, have to apply a budget and they buy the services they need. Some trusts therefore develop an expertise in a particular field, which means patients will often try to access them for treatment in that field. The constraint of "trade" is the same for any system - distance from one's home.

The biggest damage to these budgets is the drugs bill - and as you noted, the lack of competition means the pharmaceutical companies can make up whatever charge they fancy. With the introduction of NICE (the body that decides whether a drug is worth the expense) there's been a number of times when the Pharma lobby has successfully railed in the press to get a rejected drug put on the list. If this pressure fails, they invariably drop their price quickly.

So I don't think the problem is so much the "single-payer" as the lack of a market from which to buy.