The U.S. Health Care Debate

[Banquo's Ghost]

At the moment, I am not really seeing much coverage of constructive alternatives in the press to which I have access. The proposals seem like a muddle and mess because real reform is being shied away from in favour of the minimum possible politically - and, it must be said, some startling level of cowardice being shown by Democrats if real reform is what they believe in. However, all I see of the other side is yah-boo scaremongering.

If I may, could I ask Don Corleone and Seamus to explain the kind of system that they would like to see in the United States? As far as I understand the numbers, something of the order of 46 million fellow citizens of the US are uninsured, many more part insured or vulnerable to redundancy, and there are 18,000 unnecessary deaths due to lack of medical insurance each year - and many more bankruptcies. (These are figures widely quoted in the papers here, so I am open to them being challenged with other evidence).

You two gentlemen are deeply Christian, wise and caring individuals who also believe in a conservative solution to most social issues. I may not always agree, but your opinions are always thought-provoking. Your thoughts on the best, even ideal, reform (given that the existing system, if the above figures are even remotely accurate, is deeply immoral and close to barbarism for a wealthy country) would be very valuable for me to understand the direction of the ongoing debate.

[Don Corleone]

At the moment, I am not really seeing much coverage of constructive alternatives in the press to which I have access. The proposals seem like a muddle and mess because real reform is being shied away from in favour of the minimum possible politically - and, it must be said, some startling level of cowardice being shown by Democrats if real reform is what they believe in. However, all I see of the other side is yah-boo scaremongering.

If I may, could I ask Don Corleone and Seamus to explain the kind of system that they would like to see in the United States? As far as I understand the numbers, something of the order of 46 million fellow citizens of the US are uninsured, many more part insured or vulnerable to redundancy, and there are 18,000 unnecessary deaths due to lack of medical insurance each year - and many more bankruptcies. (These are figures widely quoted in the papers here, so I am open to them being challenged with other evidence).

You two gentlemen are deeply Christian, wise and caring individuals who also believe in a conservative solution to most social issues. I may not always agree, but your opinions are always thought-provoking. Your thoughts on the best, even ideal, reform (given that the existing system, if the above figures are even remotely accurate, is deeply immoral and close to barbarism for a wealthy country) would be very valuable for me to understand the direction of the ongoing debate.

Thank you much for the high compliments, sir, and for your confidence in me to propose a free market solution. I'm not certain I can, but I would argue that our current situation is not a free market system either. Some practices/guidelines I would adopt for cost savings:


I believe we have numerous problems which overlay to form the quagmire that is our current medical system.

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.

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?'

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.

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.

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.

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.

Edit: Edited to add cost reduction measure number 4.

[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.

[Centurion1]

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?)

Hmm, perhaps bonuses for finding diseases before they become dangerous.

[Don Corleone]

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

Thank you for the high praise, and for the constructive feedback.

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?

I proposed one set of numbers and brackets, but by my very own admission, I have no earthly idea what the actual numbers should be. I meant them as variable placeholders. I think people who live below the poverty level should get their healthcare completely free, and I think the top 25% should be off the reimbursement. How it gets gradiated in between is open for discussion.

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.

Thank you. Well, you're flirting with another one of my other big reforms... tax reform. I don't believe in taxing corporations more heavily. In fact, I believe in lowering corporate tax rates. But, I would end the loophole of paying taxes based on where you created a good or service, or where you record the income. Whereever the transaction takes place, for online transactiions this means wherever the buyer is at the time of the transaction, that is the prevailing tax rates & authority.

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.

This could very well be the extremism of American politics raising its ugly head again, but it is my belief that one of the reasons for pushing for health-care reform is that the American left wants to collective health care. Not only engaging in cost-fixing measures (debatable) and universal coverage (laudable), but outlawing fee-for-preferred treatment or private insurance. I'm pretty sure that's how the system in Australia works, and that's how the American Left wants it to work here.

When you hear "single-payer-system" in America... rejected widely by the right, called for by the Left, initially called for by Obama, though now he claims he's willing to drop it FOR NOW, this is what we're all talking about... the ability to control your own medical care. It was over this very sticking point that Ted Kennedy and the Democrats in 1972 rejected Nixon's offer for Universal Coverage. And when you read most Left policy wonks today, like Paul Krugman, they allow that is the final goal, but one which Americans resist too much to be enacted now and therefore universal coverage must be a first step.

[Crazed Rabbit]

Some perspective on American life expectancies:

It's true that the United States spends more on health care than anyone else, and it's true that we rank below a lot of other advanced countries in life expectancy. The juxtaposition of the two facts, however, doesn't prove we are wasting our money or doing the wrong things.

It only proves that lots of things affect mortality besides medical treatment. Heath Ledger didn't die at age 28 because the American health care system failed him.

One big reason our life expectancy lags is that Americans have an unusual tendency to perish in homicides or accidents. We are 12 times more likely than the Japanese to be murdered and nearly twice as likely to be killed in auto wrecks.

In their 2006 book, The Business of Health, economists Robert L. Ohsfeldt and John E. Schneider set out to determine where the U.S. would rank in life span among developed nations if homicides and accidents are factored out. Their answer? First place.

That discovery indicates our health care system is doing a poor job of preventing shootouts and drunk driving but a good job of healing the sick.

CR

[Evil_Maniac From Mars]

Isn't the American life expectancy at birth also effected by a higher than average infant mortality rate?

[Beskar]

There are a couple of quotes from a TV comedy show about this, which I found amusing. Anyway:

"Only time a British person has the same Life-expectancy rate as an American, are when they do joint military manoeuvres."

"I read in an American newspaper that if Stephen Hawking was British and got treated by the NHS, he wouldn't be here with us today... which is a very good and emotional argument... however... Stephen Hawkings IS British, and he is commented saying he OWES his Life to the NHS, for saving him."

[Ironside]

Some perspective on American life expectancies:


CR

Any idea if they factored in what social group those who died a premature death belonged to? I suspect most ghetto residents doesn't exactly have the best healthcare the US can offer. But it looks like you might actually get something out of that 50% more spending than anyone else that you do.

[Beskar]

The biggest "drain" on the NHS is old people, with 6/8th of the patients being over the age of 65. In America, where there is a lot of gun-crime, etc, many people don't even reach that age and on-top of that, many old aged people might not get the help in America, due to lack of funds and the ones that do, could be argued coming from richer families where they might have a far healthier lifestyle such riches could bring. That is the problem about being selective with figures.