It’s a bit late for proposals, but this is David’s ideal health care system. Feel free to negotiate.
Guest post by David JP
This may be way too late given the recent events at our nation’s capital, but I hope not. As I mentioned in my post on the People Dependent thread, I had already sent these ideas to a main-stream media outfit. They have not responded to date, which does not surprise me. But even if they do, I realize now that it would be best if these important topics are debated in public.
Our representatives in Congress seem to have a difficult time with this open debate concept. Fortunately, a blog, under the right conditions, is a great place to have such a public debate.
My goal in writing this piece is not to make any appeals to authority. I fully expect that you will call me out if any attempt at such appeals are made. Rather, I wish to share experiences, and gain knowledge in the process. The best answer in my mind is quite simply one that solves a problem effectively. How ‘effective’ is judged seems to be where the majority of disagreement lies. If someone proposes a better way, I need to find the courage and strength to discard my own notions so I can adopt the better ideas. The sooner I can do this, the more effective I become.
My bias, as alluded to in my earlier post, is that I’m completely dependent on modern health care services. I cease to exist in this form without our technological miracles. I’m not rich, so I can’t pay outright for the things I’ve needed. Group insurance has saved me many times. Unfortunately for me, I will probably continue to need these expensive things in the future.
I’m also biased with my belief that people perform better with carrots than with sticks. I think you’ll see that belief presented in what follows.
For what it’s worth, I’m registered as an independent voter (which is a curse because you get both phone calls at election time). I’ve never given any party or candidate my money (therefore the politicians can ignore me once in office). I’ve voted for individuals in both of the major parties, although I often wonder why I did so.
And before anyone asks, no I haven’t read all the pages of the bill that just passed. Elect me and I’ll promise to read it all. Although I haven’t read the bill word for word, I have been following the discussions as closely as my schedule will allow. The one thing that aggravates me the most is that, to my knowledge, many of the ideas below have not been debated publicly by our representatives. If that perception is true, I now ask: why not? It seems impossibly far fetched to me that I would be the only person who wonders about these topics.
Here are my ideas for health care reform:
The health care reform ideas are broken down into three main categories:
-Insurance company reforms
-Doctors, health care providers, and malpractice insurance/lawsuits reforms
-Intellectual property reforms
For each category I’ve made the following sub-sections in an attempt to organize things better:
-What society needs
-What society can give in exchange
-What the government can do
-Sticky left over details
Insurance company reforms (modified slightly thanks to feedback in the other thread)
-What society needs:
- Open coverage to all at a fixed price with no preconditions (only one group). People enroll during the designated open enrollment period. Contract is for one year at a time.
- Limits on company pay ratio as determined by a vote of the investors/shareholders. If bonuses are to be given out, they must apply to all at the same ratio and include sub-contracted workers.
- Stock that pays profit dividends to investors.
- Excellent service as judged by the survey results of customers (patients and doctors)
-What society can give in exchange:
- No corporate taxes so long as the above conditions are met.
- No income tax on the dividends for the companies that deliver excellent service to it’s customers (determined from the survey results).
-What the government can do:
- Administer/manage the surveys to doctor and patients.
- Provide income tax deductions to help people purchase the insurance based upon income levels/need (this replaces the benefit that large companies give their employees to purchase group insurance, my company currently pays about half of my luxury insurance costs).
-Sticky left over details:
What to do with the healthy folks that could afford to, but won’t purchase the insurance? First let me boldly say based upon extensive personal experience: if you aren’t rich enough to be self insured, it’s pure stupidity to not purchase health insurance if you can afford to do so. You stand to loose everything you have along with garnished future wages if something catastrophic happens to you and you don’t have health insurance.
The government and the insurance lobby seems to favor mandatory enrollment for those who don’t buy. I’m more in favor of the penalty for those caught sick without the coverage they could have afforded. The penalty could be the lesser of:
-paying for the costs outright (with a payment plan negotiated through the collection agency if you’re not rich)
OR,
-paying a penalty of 10 years worth of past insurance premiums (on a payment plan) with a further commitment to buy health insurance coverage for future needs.
Since the open enrollment will only occur for two weeks out of the year, and if it’s in November for selecting coverage the following year, then there isn’t much of an opportunity to game the system by waiting to buy the insurance the day you get sick.
Doctors, health care providers, and malpractice insurance/lawsuits reforms
-What society needs:
- A training requirement to keep the Doctors’ knowledge current.
- A collaboration requirement to ensure that the tough health care cases are seen by more than one Doctor.
- A review requirement so that the individual practice of any Doctor or Hospital can be compared with the industry’s best practices.
- A fair pricing requirement where the fees are posted for all to see.
- A Survey requirement where patients can anonymously rate the service they received.
- A requirement to spend some percentage of time treating those who can’t afford the insurance.
-What society can give in exchange:
Eliminate punitive damages for malpractice lawsuits resulting from necessary medical services.
-What the government can do:
- Formalize the process.
- Administer/manage the surveys to patients and provide access to survey results.
- Figure out who can’t afford the insurance, set the percentage of time/number of patients that Doctors should spend on the less fortunate.
-Sticky left over details:
Tort reform in the United States is a much bigger problem that affects more than just the health care community. This short treatment doesn’t cover everything by a long shot, and I have some other ideas for tort reform that I call the: 2-3-3 proposal. If Jeff decides my writings are worth something, then perhaps I’ll put together another essay at a later date to explain that proposal.
Most of the items I listed above as ‘society needs’ are already being done by my personal doctors. In my case, things were so complicated at times that different experts around the country were involved in my care. I actually flew out to Rochester MN for evaluation, testing, and second opinions. I paid quite a bit extra for that trip, but when facing a dread disease you need to do everything that you can.
It would be great if we could formalize a health care infrastructure that can speedily provide the knowledge your doctor needs to solve your health problem, regardless of where the knowledge comes from. This is where the technology can help.
Try to put together a system that doesn’t need to be sued all the time.
There is much more to the fine details here that I’ve left out, but hopefully not two thousand more pages.
-Intellectual property reforms
-What society needs:
- Patents should expire in 5 years if a company isn’t selling something using the technology.
- To extend the patent past 10 years, a company needs to show some form of cost reduction.
- Information should not be patentable (such as gene function/discovery; instead get the therapy working before applying for the patent).
-What society can give in exchange:
Eliminate punitive damages for lawsuits resulting from medical device/drug usage.
-What the government can do:
- Change the patent laws.
- Reform the public granting process for research studies (see my other unrelated post on this topic for climate science grant reform ideas:-)).
- Streamline the approval process.
-Sticky left over details:
This was the hardest category for me to think about. It should be obvious that Doctors without the tools and technology aren’t going to be able to provide the level of health care we’ve come to expect. How does one balance the needs of society for access to high quality versus the needs of the inventors to maximize profit from their innovations? Currently, I don’t think we balance these needs very well.
Rationing the technology will always be a big mistake. We should be doing everything we can to expand and improve the technology used to provide health care. This will make the difference to those who will become sick. The way to help the poor is to make it irrelevant to be rich, or in other words, make the things you need cost less.
Some say that we over test today for the simple things mostly due to fear of lawsuits. That may be true, but I’ve been at the other end where my complicated problem was initially missed by false negative test results. Some people will absolutely needed the extra testing, but will it be an option?
If Bill Gates ever asks me what to do with the funds he controls, I’ll recommend that he heavily invest in the new technologies that make measuring things possible. You can’t solve a problem well if you can’t measure it accurately. Despite all our modern advances in health care, we still don’t know a great many things. And as a result, statistics still play too big a part in our medical research studies.
Final thoughts before the discussion:
Will these ideas increase the deficit? Probably. But the better question is: are we going to get better health care for all with the above changes as compared to the new law?
What is the cost versus quality ratio for each of the health care reform ideas?
Let me know what you think.
the Air Vent 
Two words: free market. Every other system will fail just as equally, only the amount of time it takes to happen will differ among them.
Interesting note, with regard to shortening patents: many following the Austrian school of thought are actually dead set against patents (and copyrights, trademarks, etc.) in general. No need to go into the details of the debate, but the curious truth is that a patent is an example of a monopoly that cannot exist without government intervention. Monopolies being such a bad thing and all… 🙂
Mark
Thanks for the post Jeff. I hope you know what you’re getting into, this may be a more volatile subject than the usual mix 🙂
I should say that I have a great deal of respect for those who can write for a living.
If any of my written thoughts make it off the screen and into your mind the way I really intended, then I may be surprised.
Although this is quite a ways off topic for a climate blog, I believe that the quality of the folks who visit this site can offer a much better discussion on this topic than just about anywhere else.
I’m looking forward to it.
#2, my own solutions will be much more in line with Mark’s (not Karl). However, there are probably plenty of readers who have something to say on it. Currently, I’m just waiting in fear of the cost and performance degradation we are about to experience. People are so frigging stupid – including me.
Two Aspirin and a burial policy.
Mark T said it for me.
The problem I see is two fold.
1. Third party payers for EVERYTHING.
2. The bill reduces MSAs from 5K to 2.5K
The better solution is to let MSAs accumulate from year to year. That will bring market forces to bear at higher and higher levels.
Well, to start with, when you say that you’re dependent on care you can’t afford, you’re basically saying that you require welfare to live. This is fine, a small percentage of the population is always going to fall into this category, and as a society, we can afford this if our economy isn’t constrained.
So situations like yours are extreme, and really shouldn’t guide the process. But having said that, lets look at your proposals. You said society needs:
1.Open coverage to all at a fixed price with no preconditions (only one group).
No, explicitly not. Right now if I don’t smoke, and keep my weight down so I don’t have high blood pressure I pay a lower rate. By removing the disincentives for this you’re going to cause higher occurances of these. This is basic economics 101. Smoking for everyone is an option, keeping their weight down is for some people. Why should those who do this pay for those who choose not to?
2. Limits on company pay ratio as determined by a vote of the investors/shareholders.
Once again, no. Very bad idea. In most professional industries the top couple of percent of performers are several orders of magnitude better than the median performers – if you limit the pay of those people they’re not stupid – they won’t work or perform any more than their pay rate justifies. Once again basic economics 101, incentives work, remove the incentive and the work goes away.
3.Stock that pays profit dividends to investors.
And yet again, no. In most cases you’re better off letting the company use that money to grow the business rather than paying it to you where the government sucks off a percentage of it before it can go back to useful work.
4.Excellent service as judged by the survey results of customers
And here we have something that’s actually useful. But it’s one thing that will definitely not happen with government involved. Free markets are the solution here. And we definitely didn’t have a free market in health insurance before the current healthcare debacle – most of us got our insurance through our job where we really didn’t have a choice of the provider, because of the tax advantages.
I’m not going to get into what you think society needs for the other two areas, but in general they’re just as wrong-headed as these. I think pretty much you’re 100% going in the wrong direction across the board.
You’re going to need to amend the Constitution to get rid of patents:
Do you really think any private organization would ever invest in R&D for pretty much anything, much less new drugs and medical devices, without patent protection? Some things can be done with trade secrets, but not everything, and certainly not drugs or medical devices. As for shortening the time of exclusive use, do you have any idea how much time and money it takes to get a drug through Stage III trials? The patent application must be filed long before Stage I trials. Think generics are safe and effective? Think again, especially if they’re manufactured in India or China. A controlled release generic is even worse.
While we’re at it, why not eliminate money and go back to the barter system.
my idea is on the lines of whole life insurance. that is it. think about it.
whole health insurance…..
some with ADS/HIV took out(received) there life insurance money when they got terminally ill, just do that, but gear it for your life time. this would open up the field for ins. comp. and reduce cost.
that is the basics. there is a need to stop the fraud between providers and insurance.
Tim L
Jeff,
I’m going to predict now that this thread may end up in your top 5 for replies.:-)
I should clarify something for you, this isn’t my ideal health care system since I actually don’t know what that is. Ideally, I would much rather be naturally blessed so that I wouldn’t have to think about it much. I meet many naturally blessed people out in the world, and I imagine I’ll see some responses here from blessed folks as well.:-)
What would be very non ideal for me: is to be outed because I wrote a piece on a popular blog. I hope the MSM folks who do know who I am can be generous enough to keep me anonymous. Thinking ahead; with all the death threats and acts of violence over the health care debate recently reported in the news, it would be better for me to play it safe.
In other words: I’m not in this for the fame you’ve already earned with tAV.:-)
#7 Skip,
Not sure what you’re saying exactly. Must be another case where my writing skills didn’t transfer my thoughts accurately.
What would be bad about having the owners (aka investors, aka shareholders) of the company setting the max pay ratio? Every hear of getting the right people on the bus? It’s also important to get the wrong people off the bus. I think that’s the best way to take care of the non-performers.
What’s bad about returning all the profits to the owners if the company performs at a high level? I’m talking about privately owned insurance companies here, not government controlled. They still have the option of not accepting the tax break if they so choose. It’s a carrot. I was expecting an objection stating how my proposal amounts to corporate welfare due to the tax exemptions. But you’re reply has me perplexed??
Yes I’m dependent upon services I can’t afford, but I suspect you could be too. If you don’t believe me, why don’t you try and buy individual health insurance with pre-existing conditions sometime before the president’s plan kicks in?
I’m simply not as blessed as others. It’s a fact that I must accept. And it’s despite the fact that I don’t smoke, or drink, or do drugs, and I’m not overweight. When my cell counts will allow, I try to get out and be a productive member of the planet.
I’ve never been on welfare either. It’s either insurance through the company I work for, or my father’s when I was younger through the company he worked for. We could not afford to buy individual insurance for me at any point in my life. Some think that this is the way it should always work. However, I think there is an opportunity cost to doing it this way, but yes, I’m biased.
#8 DeWitt,
Are you replying to my post, or to Mark in #1?
To clarify my views, I don’t want to eliminate patents. As far as amending the Constitution to fix problems that the founders left for us, that’s a topic for another day.:-)
I certainly agree with you regarding the R&D investment for drugs and medical devices. This is absolutely not trivial in any way, shape, or form. I hope I haven’t left that impression.
I don’t have a patent for a medical device, but I’m am familiar with the process since I’m a US inventor. So my comments on shortening the time of exclusive use is based upon my own experiences in my own field.
I think a better balance with our patent laws (esp. with regards to medical devices and drugs) needs to be found. So I’m suggesting that the time of exclusive use be varied depending upon how the companies play the market.
I’m sure there are plenty of conservatives and libertarians that will choke on that last statement. Perhaps I’ll explain more later why I’m a recovering libertarian.
I would very much like to hear/read other suggestions on this topic.
My biggest frustration is not seeing this kind of debate anywhere before the vote on the bill. Perhaps I didn’t look hard enough. If anyone has a link to such a past debate or report, please post it.
#9 Tim L/Luke Sky
Hmmmmmmm. Interesting. I’m not terminally ill yet since I’ve somehow managed to stay slightly ahead of the technology curve. Not sure how that would work, but I’ll think about it.
I’ll be away and unable to reply until Saturday, but please don’t let that stop anyone from commenting.
best regards
Gravity is a law. So is supply and demand. Voting against gravity would be outrageously foolish and a complete waste of time. So is voting against supply and demand. Could our society be any dumber?
All the answers needed are found in the fundamentals of supply and demand. Sadly our country is so mis-educated that we cannot even really begin this part of the discussion. Hell, we can’t even correctly state the questions.
While the problems with health care are multi-faceted, none of them stray far from the very basic assumptions of the law of S&D. First, supply is tightly controlled. Second, demand grows as fast as the population and also with the age of the population. So, what do we have? Supply – artificially low. Demand – growing rapidly. And, of the 1st five assumptions of the law, ‘multiple wants,’ ‘substitutability,’ and ‘diminishing marginal valuation’ are on shaky ground or are violated outright. Because those 3 assumptions are violated, the demand line for individuals can be nearly vertical. That is, people may have to pay any price regardless of cost. This situation is ripe for unethical behavior and price gouging. So, do we try to define the angle between ethical pricing and unethical pricing? No, that would take comprehension of the actual problem, and an attempt to actually find a solution that is actually related to the problem. We prefer to just guess, and then blame each other when that doesn’t work.
How in hell are we supposed to solve these problems if we cannot be bothered to even describe them in a rudimentarily correct way? Who expects random guessing to actually be successful in the long term? Consider that not one of our politicians ever even made a distinction between cost and price, much less demonstrated any comprehension of the difference. Their thinking is even sloppier than their wording, so the best they could muster is just a collection of idiotic guesses.
Unlike our politicians, I think like an engineer. I start by identifying which natural laws apply – in this case, supply and demand. I always explicitly state all of my assumptions, and then check and recheck those assumptions. I never try to repeal universal laws; instead I study those laws and try to use them in my favor. When I do so, I remain humble enough to always acknowledge there are tradeoffs and I make a plan for the consequences of choosing to balance those tradeoffs in a particular direction. To do otherwise would be insane. And until drastic changes are made, our shared insanity will continue to be our foremost health care problem.
“Two words: free market. Every other system will fail just as equally, only the amount of time it takes to happen will differ among them.”
There is, on this topic, on this thread, something one can only call denial. Or perhaps it is wilful ignorance. We find the same thing in the UK, with much less of an excuse.
As I posted on the other thread, we have to systems which are failing in quite different ways in the US and the UK. The UK is providing universal coverage in a manner which leads to rationing by treatment delay or denial, and which also leads to lack of quality control. And which leads to relatively high costs, though not as high as the US system. But the coverage, as its proponents assert, is genuinely universal.
In the US you have a large proportion of the population without insurance, a very expensive system, and health costs account for a substantial proportion of personal bankruptcies.
In both the US and the UK, you have a vociferous class on both sides of the debate who conduct their argument along the lines of ‘look how terrible theirs is’. That is, people defending the NHS in the UK point to what they think of as the alternative in the US, and explain how terrible it is. People defending the existing system in the US point to the drawbacks of the alternative in the UK and explain how terrible that is. Often, as here, coupled with ravings worthy of Tamino at his maddest, to the effect that any change to it must be a communist conspiracy against liberty.
In fact, there is a third system, which has the disadvantages of neither, which you can inspect today by travelling to Continental Europe. It is more inexcusable for people in the UK to refuse to learn from that experience since it is only 50 miles away. But they will not. Similarly the American participants in this debate also will not.
It shows no sign of blowing up. It delivers defined coverage without rationing. It is not entirely free market, but in what counts, the choice of where to spend money on health care, what provider, it is totally driven by patient or customer choice. The only respect in which it is not free market is the choice of insurer, and there there is a private element, in that there is a supplementary insurance market.
To assert that this system either does not work or will not continue to work because it is not totally ‘free market’, whatever that is, is only explicable on the hypothesis that one is in the grip of some sort of fundamentalist religious mania. The fact is that it does work. Go look at it and see for yourselves! You do not have rationing. You do not have widespread lack of insurance. You do not have bankruptcies due to health care costs. You do not have the kinds of scandals the NHS has experienced in Maidstone and more recently the Midlands, which were truly shocking.
The way its come about is interesting too. It has come about through pragmatic evolution. In the UK, the present system came about through ideological dogmatism. As part of the wave of nationalizations after WWII, health care was nationalized. If the Conservative Party of the time had won its way, the UK would now have the continental system. In the US, the refusal to even consider state insurance provision is due to ideological fixations and the dominance of the finance sector special interest.
What works, and what we can see works if we will just look at it, is state operated insurance provision with defined coverage, privately operated medical care, and supplementary insurance availability.
You will find UK people defending their rationing saying that it will always lead to uncontrolled costs. In practice, it does not. You will find US people arguing similar absurdities. It is not true. There is a system which is neither right wing nor left wing in conventional terms, which delivers. Learn from experience, for goodness sake.
The Cantwell-Collins plan is almost exactly what Mr. Obama proposed in the campaign and after first taking office — a 100 percent auction of permits and a large tax rebate to the public.
“He called our bill ‘very elegant,’ ” Ms. Cantwell said. “Simplicity and having something people can understand is important.”
===
So after getting elected, why is it that Obama is no longer looking at this option seriously, which is a much more taxpayer friendly option? Is it because he and his banker buddies won’t be able to make as much money from gullible taxpayers?
Michel 3.15 has it about right for a nationalised health care. I am a UK citizen living in France for the past five years. The French system although not perfect is the best working system I have seen, it beats the UK system in every department that I know of. There are many areas in the French system that can be improved and made more cost effective( food, two cooked four course meals a day is too much when doing nothing) but the service is incredible. You are encouraged to take out top up insurance for the system only pays approximately 70%. All chronic conditions ie heart,cancer, diabetes, are covered 100% so insurance is not a problem. For a family of 4 my insurance is about 130 euros a month but this also covers eyes and teeth for basic service, gold teeth come extra.You pay 22 euros to the doctor every visit 18 euros paid back into your bank in ten days. They have the oldest living people in Europe, in my opinion because of their health system.
We need to recognize there are things the state does well, and things it does badly or not at all.
The European experience is that it can provide health insurance efficiently and cheaply, it is in fact the low cost producer.
The UK experience is that it cannot operate health care services efficiently or safely. Nor can it make cars….. etc
Do not condemn all state provisions of everything, because the state cannot do some things well. Do not condemn all private provisions of anything, because the private sector cannot do some things well. Be pragmatic. What the state can do best, have it do. What the private sector can do best, have it do.
And look around you for evidence of which is which. And don’t make wild assertions about stuff like rationing, if the phenomenon is not in fact observable in examples in the real world of what is being proposed. What we need is less religious fervor in political and social policy argument, and more evidence based argument.
The other way, Tamino lies. You may not like to hear this, but fundamentalist rants here are no more rational and no more attractive, than the same thing, coming from the opposite direction, on Tamino, by him and his cronies.
Evidence is what counts. Get the emotion and the kneejerk reactions out of it.
michel said
March 26, 2010 at 3:16 am
No, Michel, you’re in denial. Both theory and history prove me right. It’s bleeding hearts like yours that believe you can will away humans’ instinct to better himself, a result of free will, that is absolutely contrary to everything we know about how economies work. It is not a surprise that those with more capitalist/free market leanings do better. Not at all. And, not surprisingly, they tend to have healthier people in general.
It is a result of the free market in health care of the past that we live to be 80 instead of 40. It is the result of the free market in health care that we have transplants, artificial hearts, artificial limbs. It is the result of free market health care that we have nearly every major, life extending advance that medicine now knows. It is NOT the result of any socialist implementation of health care that any of this exists.
Denial, me? Yeah, right.
Mark
michel said
March 26, 2010 at 7:18 am
The state protects our rights fairly well, nothing else that is positive for us. What it does do very well, if left in the hands of people like you, is infringe upon and slowly take away, those same rights. But you either don’t believe in, or understand, the concept of individual rights, so this concept is beyond your comprehension. People like you will doom us to another reset. Just wait…
Mark
And, for the record, there is only one reason for collectivist systems and/or programs to fail: they have no means to account for demand. Of course you only need one reason to fail, just like you only need one reason for any theory to fail. This is why there is rationing, why there were lines for bread in the Soviet Union, why we will see the same repeated here in the US as occurs in Europe and Canada. Demand is infinite, by human nature, and supply is finite, and when you give everyone the ability to buy something they did not earn, there is no way to dole out the limited supply without rationing. Either somebody simply doesn’t get treated, or everybody gets treated a little less than they should, i.e., the overall quality of care will go down.
It is because of this, Michel, no matter how well intentioned you are, no matter how many in-depth descriptive paragraphs you pen toward your lofty goals and noble desires, you and your plan cannot succeed. It would be nice if you could, but it simply ain’t so. The pragmatists think they can try hard enough and make it work, but how many times do you have to repeat the same experiment before others declare you insane or you yourself give up and accept reality?
Mark
Re: Mark T (Mar 26 09:11),
The lion’s share of the increase in life expectancy is from public health measures like the provision of clean water and sewage systems. This is the sort of thing that government does fairly well.
The more I hear about the Austrian School, the more I think they’re living in some parallel universe, not the one we live in.
“People like you…”
Who are these people like me? I have now been excoriated on Tamino for being a neo-con, and now here for being something wicked from the far left.
Have you ever been to France or the Low Countries? Have you ever looked at their system of health insurance? Where is the rationing of which you speak? Have you ever visited the UK and examined the situation? You will find rationing there, and there is a reason why you find it there, but not in France or the Low Countries. What do you think this reason might be? What does the former Soviet Union have to do with this question of how best to deal with health care insurance? Nothing.
I found myself saying on Tamino, what are you people talking about? I found myself explaining that I voted Social Democrat, had all my life, was not some kind of crazed creationist right wing bigot. Now I have to explain here that I do not believe in the state running everything, and am not some sort of crazed neo communist. The state should run very little. But there are some things it does best. I do believe in a small state, and individual liberties. I do think the left is as much of a threat to them as the right.
Not that it will stop you ranting at ‘people like me’ or having crazed fantasies about how left wing we are, conspiring against freedom etc.
I am out of here.
#20, The reason is Tamino is a Marxist, he’s left comments on other blogs years ago which clear it all up. You are of course welcome to post your thoughts here, I do disagree with you but who cares what I think. It’s not like we should expect to convince people to change their views very often, you should have a thick shoulder shrugging skin in blogland. Because of the open moderation of this blog, I joke with friends that blogging is great, where else can you be wrong ten thousand times in the same day.
The Swiss seem to be pretty satisfied with their health insurance system. Purchase of basic health insurance is compulsory for all citizens and long term residents.
This will be long, but I think it’s worth the time to make these points in direct reference to the original material.
From the original post:
“Insurance company reforms (modified slightly thanks to feedback in the other thread)
-What society needs:
1. Open coverage to all at a fixed price with no preconditions (only one group). People enroll during the designated open enrollment period. Contract is for one year at a time.”
That won’t work well in a system that allows any emergency treatment whatsoever. It’s not that there should be restrictions to whether someone should get insured, it’s that the prices must be different for different levels of care needed. A healthy person should not pay the same price as an extremely hurt/sick person. That way leads very quickly to healthy people dropping their insurance coverage.
Let’s think about that for a sec. If an insurance company needs to suddenly pick up a large number of high-risk, high-cost people, and they can’t charge those people more relative to others on their insurance plans, they have to jack up the rates across the board.
What happens when a healthy person goes from paying around $1000 a year for medical insurance they almost never use to paying $3000 that or more? They drop their coverage. This will be especially true when the cost of not being covered is less than the cost of the coverage.
What happens to the income of the insurance company when their total number of policy holders suddenly drops? They have to raise their rates more across the board. Then more people can’t afford it and drop, causing the rates to increase again. It will bottom out when the only people who are covered are the high-risk, high-cost people who can still afford the extremely expensive policy, or the insurance company goes bankrupt.
From the original post:
“Sticky left over details:
What to do with the healthy folks that could afford to, but won’t purchase the insurance? First let me boldly say based upon extensive personal experience: if you aren’t rich enough to be self insured, it’s pure stupidity to not purchase health insurance if you can afford to do so. You stand to loose everything you have along with garnished future wages if something catastrophic happens to you and you don’t have health insurance.”
The reason that’s true is because the costs involved with the health care itself are absurdly high. Drop those costs and more people can afford to be self-insured. As you state later on, “The way to help the poor is to make it irrelevant to be rich, or in other words, make the things you need cost less.” When the health care itself, which is what the costs of insurance are based on anyway, become less, the number of self-insured will increase.
From the original post:
“The government and the insurance lobby seems to favor mandatory enrollment for those who don’t buy. I’m more in favor of the penalty for those caught sick without the coverage they could have afforded. The penalty could be the lesser of:
-paying for the costs outright (with a payment plan negotiated through the collection agency if you’re not rich)
OR,
-paying a penalty of 10 years worth of past insurance premiums (on a payment plan) with a further commitment to buy health insurance coverage for future needs.”
I agree that the government’s idea of a fine for those that are not covered is ludicrous. As I mentioned earlier, when the cost of the fine is lower than the cost of the insurance policy, it makes more sense to drop the coverage and pay the fine.
Your first option is actually just a way of saying “If you don’t have a policy, you are self-insured.” That’s all it is, and honestly that’s how the system SHOULD work. If you’re healthy, you either have a policy or don’t at your choice. If you don’t, and get hurt/sick, you pay for the costs out of pocket. If you need to get a loan from your bank to do so, you do that.
“The way to help the poor is to make it irrelevant to be rich, or in other words, make the things you need cost less.”
Your second option is just another way of instituting a fine such as the government’s proposal, only it forces people who could afford to be self-insured to buy insurance solely because it’s required by the government because they’re breathing.
From the original post:
“Since the open enrollment will only occur for two weeks out of the year, and if it’s in November for selecting coverage the following year, then there isn’t much of an opportunity to game the system by waiting to buy the insurance the day you get sick.”
I don’t see why the policy can’t be open-enrollment year-round. Why not let the insurance agent be in the hospital taking on new patients after they receive their care? They would basically just be doing a service similar to a bank issuing a loan, with the possibility of future coverage/loan at a better rate if the person is hurt/sick often.
From the original post:
“What society needs:
1. A training requirement to keep the Doctors’ knowledge current.
2. A collaboration requirement to ensure that the tough health care cases are seen by more than one Doctor.
3. A review requirement so that the individual practice of any Doctor or Hospital can be compared with the industry’s best practices.
4. A fair pricing requirement where the fees are posted for all to see.
5. A Survey requirement where patients can anonymously rate the service they received.
6. A requirement to spend some percentage of time treating those who can’t afford the insurance.
-What society can give in exchange:
Eliminate punitive damages for malpractice lawsuits resulting from necessary medical services.
-What the government can do:
1. Formalize the process.
2. Administer/manage the surveys to patients and provide access to survey results.
3. Figure out who can’t afford the insurance, set the percentage of time/number of patients that Doctors should spend on the less fortunate.”
Doctor training, performance reviews, and fair pricing are all good ideas. The survey you mention is already in place in many areas online. As another poster said earlier, this is the best way to handle it, not through the government.
Malpractice should definitely be handled better. From what I understand, malpractice suits are a large part of why our health care is so expensive. Unfortunately, that would likely require changes to our judicial system, such as judges being less politically correct, freely throwing cases out of court when they’re silly.
From the original post:
“Sticky left over details:
Most of the items I listed above as ’society needs’ are already being done by my personal doctors. In my case, things were so complicated at times that different experts around the country were involved in my care. I actually flew out to Rochester MN for evaluation, testing, and second opinions. I paid quite a bit extra for that trip, but when facing a dread disease you need to do everything that you can.
It would be great if we could formalize a health care infrastructure that can speedily provide the knowledge your doctor needs to solve your health problem, regardless of where the knowledge comes from. This is where the technology can help.”
There is technology already available that isn’t utilized as well as it should be that would greatly reduce the costs involved with large collaboration situations such as you had to go through. Our Health Care reform should be doing more to require those technologies (like, oh, the Internet maybe?) to be used by all hospitals to increase doctor-doctor collaboration.
Why we don’t have all patient records available to all doctors online from birth to death is something I’ve wondered about since I started using AoL to surf the web about 20 years ago. If you get a treatment in CT, for instance, a doctor in WA, or India, or Japan, should be able to pull that up and look at the results and CT doctor’s analysis within a few minutes, and contact the CT doctors if they notice something that the CT doctor might have missed. Right now, you’re lucky if you have a complete copy of your own medical records.
From the original post:
“Intellectual property reforms…”
Not going to quote an entire section of the original post if I’m commenting on the whole thing at once, haha.
I think you have the right idea overall for this section. You limit patents without destroying them outright, so the possibility of breaking monopolies on new technology exists, which means more competition among health care providers, which means cheaper health care overall.
It also means the health care will be more effective, since competition isn’t just over price wars, but also over quality wars.
“The way to help the poor is to make it irrelevant to be rich, or in other words, make the things you need cost less.”
Imagine if all the health care tests and treatments you’ve needed over your life had cost much, much less than they do today? And if you couldn’t afford the care out of pocket, you could just have a rolling loan from your bank that cost about the same month to month that your insurance policy does today?
Insurance, in general, is a drain on the consumer. It’s rarely helpful, and in most people’s cases, not really necessary. In the case of health care, it’s a band-aid on a broken health care system. The Health Care Reform Bill that the Congress just passed is a scarf to wrap around the band-aid over health care. A dirty scarf, in my opinion, as I believe the universal coverage with no pay rate differences, combined with government fines for no coverage, combined with State run hospitals, will cause the health insurance industry to collapse.
Then we’ll all be going to State run hospitals on the State’s dime, which means our taxes go up. We’ll end up with a system like Canada, the UK,or Europe. The sad thing is, when people in those countries need serious treatment in a reasonable timeframe, they come to the US to get the care.
Where will we go when that care isn’t available here anymore due to the backlog of bureaucracy managing the health care system?
Now, I’d rather there was no health insurance anyway, but I don’t want the health care itself to be run by the government either. For the sake of fostering competition for pricing and quality, health care must be handled by the free market system.
For what technological advances will we see in health care when there is no competition for pricing or quality at all because our taxes pay for it?
On an unrelate topic: JeffID, why is there no way to preview a post before posting it? It’d be a great way to test the spacing and html codes to make sure the post shows up on the forum the way you want.
Any claims of success for a European model of health-care are best viewed as the early meaningless claims of promoters and participants in a Ponzi scheme.
There could of course be the rare government with a tradition of fiscal sensibility (Swiss?). But what does trustworthiness in financial matters have to do with MY government, which has lied to me about Social Security since I was a child?
Are you guys totally insane? What does ‘being a Marxist’ mean? Is there some sort of organization which issues membership cards?
Very seriously, what you are doing is confirming the wildest fantasies of the AGW movement, in which all ‘denialists’ so called are in fact mad right wing fundamentalists with fantasies about communists and global conspiracies…. tin hatters in short. And you are discrediting the AGW skeptics in the process.
Tamino is an idiot. He may be a competent mathematician, but if so he misuses it in the worst way to deceive. He indulges in absurd fulminations of a tin hat variety whenever he talks about politics. He’s probably a very unpleasant fellow. He’s wrong, dead wrong, about AGW.
But is he a Marxist??? Who knows, who cares? Who can tell? Is Dr Spencer a committed Christian? Who knows, who cares? He is more right about climate, and in both cases, its of no importance what other beliefs they may hold,
#25, Happened to be online. My memory is that he was ranting on about marxist style wealth redistribution to make economics more fair to the poor. You know– Marxism. It’s not name calling or anything, it describes his politics. I lost the link over a year ago and haven’t gone back to find it, he used Grant Foster instead of Tamino I believe.
# 25. “Are you guys … insane … mad … fundamentalists… tinhatters…?”
Sorry if my Ponzi scheme comment helped to set you off. But you have to admit that with Europe’s dramatically aging population, the day of reckoning probably isn’t that far off.
Also, I may be able to help you with your questions regarding whether it matters – Marxist vs. Christian:
Christian philosophy discourages lying, but earnest statements may nevertheless prove to be incorrect.
Marxist philosophy is the opposite. It encourages lying (to further the cause), but the lies may turn out to be correct, as Marxists can be mistaken about what they believe to be true.
Hope that helps.
Braille, your post was excellent. Thank you for taking the time to raise so many good points.
A note on doctor training: one way in which some of the more lucrative specialties are kept lucrative is by the resident matching program in which the number of resident slots is limited in those areas. There are many more residents who would like to specialize in those areas, but more doctors in those areas would bring down the lucrativeness, so no slots are allocated for more residents to train there.
When it comes to the intellectual property part, the AMA makes a chunk of change out of CPT codes; they retain intellectual property in them, or they did, and charge fees for usage, and as everyone must use them; those fees may well amount to more than they get out of membership dues. Somewhat amusing aside: when those codes were in the works, the people involved with pricing them for “what Medicare will pay” actually had a sort of labor theory of value model in mind. (e.g., “how many years of training” was thought to be important in deciding how much should be charged for, say, appendectomies, etc.) Oh well, they were from Harvard.
“…the universal coverage with no pay rate differences, combined with government fines for no coverage, combined with State run hospitals, will cause the health insurance industry to collapse.
“Then we’ll all be going to State run hospitals on the State’s dime, which means our taxes go up.”
Sounds like the old Fabian socialist gambit. Which is so… late 19th century.
Re: Braille (Mar 26 14:11),
The answer is simple. If you put the complete records on line, then the chance that anybody and everybody will know your medical history becomes almost a certainty. The end result will be that doctor/patient confidentiality, already severely damaged, will cease to exist. If that happens, then patients will be reluctant to disclose anything that might be damaging to their reputation or employment to a physician. You know that form that you have to sign now in a doctor’s office about privacy? It doesn’t, in fact have anything to do with protecting your privacy. It’s all about informing you to whom the doctor can disclose your medical information. There is also no evidence that this sort of thing, where it’s been tried, has led to improved outcomes. As usual, the theory sounds good, but the unintended consequences are a nightmare.
After one day this thread hasn’t progressed quite the way I expected. 🙂 I think it’s because I wasn’t quite clear in my first guest post. So let’s back up for a second here and talk about the reform items one at a time. Insurance first.
A private health insurance company makes money by taking in more income from premiums than it pays out in insurance benefits. To do this there has to be more healthy folks in the group than sick folks in the hospital. So long as this positive imbalance is maintained, the health insurance company is solvent.
Note: There is no requirement to kick out the formerly sick folks after they get well.
Note: There is no requirement to charge a higher premium to the formerly sick folks either.
It gets a bit more complicated because there are things like fees, deductibles, and co-payments in the mix. And when you consider those extra things, the sick folks actually do pay more for being sick. But the amount that they end up paying more is manageable for them.
So what is one of the many problems needing to be solved? Which, by the way, the president claims to have solved for us all.
The problem is: if you are an individual buying insurance for yourself, you can’t buy the above described health insurance policy. What you can get instead under the now old way, assuming you don’t have preconditions, is something that is more worthless than worthwhile.
Why?
Because after a single instance of severe sickness, your rates are increased dramatically. You’re now in a different risk category, and you will be unable to pay the new premium amount with your meager middle-class income.
The insurance company raises the rates because it’s a ‘good business strategy’, and also because it can.
Overall, this makes it more difficult for people to live the libertarian dream and start their own businesses, etc. Instead, if you find yourself in a higher risk category, you then need marketable skills so that you can land a job at a big company that has health benefits (like I did), or find a job with the government which also has health benefits. I hear the government pays higher for similar work. 🙂
The large company I work for requires that I carry health insurance. If I don’t sign up for one of their plans, then I must show equivalent coverage from somewhere else. Sound familiar? This makes some of the distinctions between the government and the larger private companies appear superficial in my view.
Every year my employer negotiates the health care plans with the insurance companies and then offers up a choice at enrollment time. If an employee doesn’t make a selection during the enrollment period, then I believe that person gets automatically enrolled into an HMO or other low end plan. The insurance company then gets a one year contract which guarantees a steady income flow until the next enrollment period.
To get the same coverage (no preconditions, same premiums for all) for everyone, the government can use a big stick. This is the method I think the health care bill will use. Which I predict will lower the quality while raising the costs.
I don’t think that is the best way. So the first part of the proposal posted here is supposed to describe a giant carrot to get the insurance companies to offer the same coverage to all that the large private companies negotiate for themselves.
The only requirement is that the minimum coverage offered will actually cover the extreme expenses that would otherwise bankrupt a middle-income citizen who has a major illness. The insurance company can still offer more luxury plans if they so choose.
The carrot idea is superior in my view, because it includes an added incentive to do a good job of providing insurance to customers. The better the insurance company performs, the more money they can make.
They are still only selling insurance to folks who can pay. And they are still free to set reasonable fees, deductibles, and co-pays just like they do for the private group plans. Savings accounts can still be setup if that works better. They are still making money.
The insurance companies would now spend their time competing with each other to gain the most customers, while also providing excellent service to maximize their profits. That’s why this proposal for universal coverage is superior to the plan just passed.
The disadvantage of course is it will most likely raise the deficit (due to decreased tax revenue). Which is the better way to increase the deficit? By how much will it increase the deficit? I wish this analysis was done for all to see before the vote on the bill.
So this is what I’m trying to describe with the first third of the posted proposal. Apologies for not being more clear. It is my first guest post and I think it shows. But I’m getting better. 🙂
Thanks to all for the comments thus far. Obviously there is much more detail to this topic that explains why our costs are so high. When writing this proposal, I tried to rein in any desires to do everything perfectly all at once. Instead I’m trying to ask myself what could be different but is also practical to do now?
The European health insurance system is not a Ponzi scheme. Ponzi schemes work by paying the returns for existing members out of new capital subscriptions.
The European schemes are self funded on a current basis year to year. To call them Ponzi schemes is simply misrepresenting what they are. The US social security system may be a Ponzi scheme. The European health plans are not.
They are a conventional health insurance scheme with two distinctions. One is that the Government is the operator and insurer. The second is that everyone is enrolled, and remains enrolled, with no preconditions. Perhaps a third is that there is no variation of coverage from individual to individual. The same identical coverage applies to all. The individual has the power to raise his or her cover by buying supplemental insurance, but cannot reduce cover.
What will happen if there is an increase in illness, either because of an aging population, or an epidemic, or any reason? Costs will rise. Obviously, costs will rise. They will rise whatever form of insurance is in effect. If private companies are providing the insurance, rates will rise. If the Government is providing insurance, it will have to raise rates. If illness rises, and if treatment demands rise, obviously, obviously costs rise. It makes no difference to that point, who is carrying the insurance.
It is a characteristic of the totally uninformed illogicality of the debate, that people take circumstances which apply to both systems equally, and proclaim them to be a fatal blow to one of them.
So, tell me again, where is the rationing? Where is the Ponzi scheme? Why does an increase in illness increase the burden on this sort of system any more than where the insurance is provided exclusively by multiple private companies? The phenomenon actually has less bad effects in the European model, because in the real world, when it happens, you get frantic efforts by the multiplicity of private insurers to get out and discontinue coverage or raise prices, and screen their way to profit. All this costs a fortune. The Euro model does not incur these costs. It does incur extra costs, and has to raise prices to compensate, but the costs are restricted to the increased costs to treat.
The Ponzi stuff is pure ignorance of objective phenomena in the real world, leading to wild unfounded assertions.
As for Tamino, I have no brief for him, or for Marxism, which in the various attempts people have made to implement states based on it, has simply led to genoicide on a huge scale. I have no particular brief for Christianity either, which in many of its historical implementations appears to have led to war and persecution. Like most religions in fact. Christianity has perhaps had more redeeming features than Marxism, but as Gibbon remarked while discussing the Roman persecutions, it is a sad truth that obtrudes itself on the reluctant mind, that Christians have done more damage to each other than persecutors of that religion have ever done to them. So, to defend myself against yet another aspersion, I am not an apologist either for Christianity or for Marxism. Or for socialism. Or for bell bottom jeans. Or for Windows 98. I am a great admirer of the writings of Charles Dickens – maybe you can find some way to use that in this argument?
My point is: to attempt to discredit the views of a person by citing his other views on irrelevant issues is quite wrong. Whether Tamino is a Marxist, or whether Spencer believes in intelligent design is immaterial to the fact that Tamino is wrong and Spencer at least more right about climate. When you cite Tamino’s alleged Marxism in an attempt to discredit him, just like when idiots on Tamino cite Spencer’s beliefs in the effort to discredit him, the only people who get discredited are those making the ad hominem attacks.
Snip, keep it under control, or face the wrath of the scixors.
David JP wrote:
“The problem is: if you are an individual buying insurance for yourself, you can’t buy the above described health insurance policy. What you can get instead under the now old way, assuming you don’t have preconditions, is something that is more worthless than worthwhile.
Why?
Because after a single instance of severe sickness, your rates are increased dramatically. You’re now in a different risk category, and you will be unable to pay the new premium amount with your meager middle-class income.
The insurance company raises the rates because it’s a ‘good business strategy’, and also because it can.”
That’s not entirely true. It’s a good business strategy because they don’t want to lose the low cost people that keep the costs down for the high cost people. The fact is that if the costs were always evenly distributed between the high cost policy holders and the low cost policy holders, the low cost ones would leave for a better deal, which would end up costing the insurance company: they lose the freebie payments that allowed them to pay for the high cost ones.
Most of the time that “better deal” will simply be to pay for health care out of pocket for a while.
Now, let’s understand something. Health care is overpriced in this country. Health Insurance is reasonably priced for the health care it has to cover. When Blue Shield gets called up to Sacramento, CA to tell the legislature why they cost so much and they say that they’re only making 3-5% profit, I see a reasonably run business, not an over-gorged leviathan that must be slain. The US Congress is attacking the Insurance, the band-aid I mentioned in my last post, instead of attacking the Health Care itself.
Where would we be if we went after the health care instead? Well, for one, all health care would cost much less than it does today. Even high cost people might be able to go without insurance then.
The biggest issue with the Insurance industry is that it works too much like a loan from a bank, but in reverse. Get a loan from a bank for a specific amount and you pay it off over time, then don’t pay anything till you need another loan. Get a policy from an insurance company and they pay you the specific amount you need when you need it later while you pay for it over time, forever, even if you never end up needing anything from them. The reason that’s necessary is because the health care that the insurance covers is so expensive, so the ones that end up needing the policy cost far more than they should and need other payers in the system to keep the rates of the high cost payers under control.
Right now you might need treatments and tests that run over $50,000 per year. What if, instead, it was that amount over 5 years? Now you have what amounts to an expensive car, and might be able to afford a loan from a bank to cover it instead of an insurance policy. And the payments for each would probably be similar.
Here’s another example. I’m a healthy person normally, but I get into an accident or get sick and it costs me $15,000 in tests/treatments. I can get a loan to pay that off in a few years pretty easily. No need for insurance at all. But what if it cost $2,000 instead of $15,000? It’s hard to say that insurance is necessary for everyone at that point.
The only issue I can figure out with that situation is people who are the verge of dying of old age, since they won’t be alive long enough to pay off any loans without leaving them to their decedents. For that, some insurance may still be necessary.
David wrote:
“The carrot idea is superior in my view, because it includes an added incentive to do a good job of providing insurance to customers. The better the insurance company performs, the more money they can make.”
The problem is that an insurance company doesn’t have any real measurable performance of its own other than being reasonably free of administrative overhead costs where it can be. The only thing they can really do to reduce costs that has any significance is to reduce the number or extent of the high cost policy holders that drain their accounts. They can’t fix the over-priced health care industry, which is where the bulk of their expenses originate.
This is why I think insurance in general is a failed concept. We want the high cost individuals to get treatment, that isn’t up for debate. The insurance companies can’t afford to operate if they cover all of the high cost individuals that currently exist, though. It’s a grand Catch-22, and forcing the insurance industry to pick up the bill for people that it’s been routinely dropping out of their system is only going to increase their costs. There is no other possibility. When that is combined with an inability to increase rates for high cost individuals, the industry starts to seriously struggle to stay afloat. Combine that with alternative care provided by the government (it’s not like we can choose to not pay taxes toward this, btw, so you pay for this “government insurance policy” whether you use it or not) and a defined fine for not holding a policy, and you have a clear benchmark at which it makes more sense for the individual to drop their plan than continue with it.
Don’t mistake, it really is just math at that point.
More costs from taking on high cost individuals + No increase in rates for high cost policies = High rates for everyone
High rates for low cost individuals + care provided by government hospitals paid for by taxes + defined fines for not being covered = Low costs payees dropping when they cross the “fine” line.
In the case of this health care bill, the “fine” line is defined as $2,000 or 2% of income, whichever is higher. So at $200,000 annual income, the 2% kicks in, anyone making less than that pays a defined $2,000.
Now, if my current policy costs $1500 per year, and it gets jacked up to $2500 per year to pay for the upsurge of new high cost policies whose rates cannot be much higher than mine, I would drop my coverage and pay the fine, which would be less. I assure you, I make far less than $200,000, so this would be a net benefit for me.
However, that’s a net loss for the insurance company, as they would lose the $2500 they needed from me to keep their costs low. Additionally, I’m not the only one on that insurance company’s system that would make that decision. I’d guess more than a third of the policy holders would feel the same way.
When 1/3 of the policy holders leave, what happens to the rates of the remaining? They skyrocket. Now I’m paying $2,000 a year to the government and using their health care, and you’re paying $3,000 or $3500, possibly more. At that point, some more people on that company’s list will drop out and take their chances with the government system.
Now the high cost policy holders have to pay even more. Do you know how much your health care actually costs? Is it over $5,000 a year? More? At some point, even those that are high cost individuals such as yourself might start thinking that the costs outweigh the benefits.
If this bill stays with us, this is what will start to happen when the bulk of these policies kick in at 2014.
So we end up with this scenario: The lost cost people will have a low cost policy (from the government) and the high cost people will have high cost policies (from the insurance company). In the end, you’ve got the exact same thing as what would have occurred if the insurance company could raise rates on high cost policies. Unfortunately, it’s not all being regulated within the insurance company with competition among other insurance companies, and it makes the insurance companies look very bad in the eyes of the government.
What do you think the next step in that situations is? Well, if the insurance companies don’t go bankrupt on their own, which I think it highly likely, the government will step in and just put everyone on government provided health care, since the insurance companies will be deemed incompetent at handling health care costs for everyone fairly.
Wallah! No more free market for health care, which means no more competition, no encouragement to come up with new treatments, or improve old ones, or reduce costs anywhere. The people pay the taxes, the taxes pay for the care, the people stay in line for months for the care they want.
Seriously, which countries are coming up with all the innovations in the health care industry? It’s not EU, or UK, or Canada. They come up with some, but the vast bulk is from the US. Which is why folks from those areas in need of serious care come here for the care. We can provide it, and we have the newest stuff.
What happens to those high cost people from multiple countries and regions when they can’t find the treatments they need anywhere?
To fix the system, we have to reduce the costs of the care itself. If the insurance companies could pay for all their policies with just the income they get from the high cost policy holders, there would be no issues. If the only time someone bought health insurance was when they got close to the end of their life and the insurance didn’t cost all that much, either, we just might end up with a system that could actually work.
As a sort of after-thought, there is another option for elderly folks, though. If there were no health insurance at all, there would still be a place for Life Insurance. At that point, it’d be necessary to pay off all the loans that an elderly person accrued before they passed that they wouldn’t be able to pay off. Elderly people dying and leaving massive debt for their heirs is nothing new, and Life Insurance does help mitigate that.
Hi Michel – #31
What do mean by self-funded on an annual basis? That’s what I would call a Ponzi scheme.
Or do you claim that sufficient excess funds have been stored up in a vast reserve treasury by European governments for the future needs of retirees? If so, thank you you educating me and relieving me of my cynicism. (Otherwise I will have to explain things to you).
Cheers
bi2hs
Name-calling Social security as a ponzi scheme is political posturing. First of all, it is invested in something, in this case in treasuries. Secondly, it is currently running a large surplus. Thirdly, one could always make adjustments to the benefits paid out based on what it takes in. Lastly, it is transparent.
RB,
Social security used to run a large surplus. This surplus was netted against the general budget deficit and spent by Congress. As of this year, social security has started to run a deficit; that is, payroll taxes no longer cover social security outlays. This apparently is not widely known yet.
This shortfall will have to be made up by the additional issuance of U.S. Treasury debt. The social security trust fund is a claim on future general fund tax revenues. Since these tax revenues have long been insufficient to cover general fund expenses, it’s not clear how this claim by one department of the government against the government general fund will be discharged.
Of course, the U.S. government does have assets that it could sell, such as huge land holdings and gold holdings. It seems clear that there is no way that the U.S. government is ever going to cover its liabilities with additional taxes. The other strategy is, of course, to reduce the real value of the debt by inflating the dollar.
You are correct in saying that social security is not strictly a ponzi scheme. Charles Ponzi did not have the ability to print his own currency.
Philemon, yes, Bush did tap into the Social Security surplus but it is still running a substantial Surplus into the next decade as assessed by the CBO due to the interest payments on the federal debt held by the social security trust fund.
RB,
Calling it interest payments doesn’t change the fact that the general fund has to make up the difference now that payroll taxes are no longer covering outlays. Interest on the Treasury debt has to be paid out of the general fund. The general fund is itself massively in deficit.
OMG, really, this a proposal. If the government where to implement this, 10K + pages of garbage. I have a simple saying, actually sayings that I live by as an engineer;
to design a complex system is simple (>99% of people fall into this category)
to design a simple system is complex (<1% fall into this category)
JeffId – please keep with intellectual posts – this was and is a "grab the porcelain goddess and puke until your guts hurt" – absolutely unbelievable!!!
Unlike other people that posted at great lengths with regard to this subject, I can say simply state that this proposal is equivalent to a socialistic program and hence predestined to failure, gigantic failure! Why? Simply, making everyone equal equates to failure.
We are talking health insurance here. Not pension provision, not unemployment or welfare or any of that sort of thing. The European states, or some of them, have all kinds of problems with other sorts of welfare provisions. The health insurance business is one that France, Holland and Belgium have got right.
Its a bit like US foreign policy. There are all kinds of problematic cases, but there are also cases where its a model of how to do things.
How do you think that the European system of health insurance differs from how Blue Cross operates? And do you think that Blue Cross is a Ponzi scheme also?
What I am saying is that the European system is a perfectly ordinary health insurance system except that (1) the state runs it (2) membership is universal and cannot be withdrawn (3) there is only one coverage plan.
Hi Michel
As long as both health-care and retirement benefits are provided by a single over-arching entity (government or private business), it makes no sense to analyze them in isolation.
As a stark example, consider how an aggressive policy of “humanitarian euthanasia” by your health-care office might fix solvency problems for the pensions department. Has Europe solved this problem or are we destined to endure a repeat?
As a customer, I hope that Blue Cross is not operating a Ponzi Scheme. But I am comforted by the fact that Blue Cross does not have a private army to force me to buy their plan, nor to resist incarceration if in fact they prove to be criminals.
Cheers
Re: michel (Mar 28 03:58),
The present value of the unfunded liability of Social Security plus Medicare (income from all sources minus promised benefits) is over $100E12 (trillion in US terminology). Most of that is from Medicare, which is supposed to be health insurance. That may not be a Ponzi scheme, but it is a problem.
What’s the 75 year, or better perpetual, unfunded liability of the European health insurance plans at current premium rates? Given the current low birth rate and increasing life expectancy with the consequent increase in the median age of the population, I’m betting it’s substantial.
To put DeWitt’s numbers in perspective, the unfunded Medi-Care liability by itself is over $85E12, 40% more than the entire world GDP! (Michel, this is U.S. government health insurance for people over the age of 65.)
Nevertheless, I see ridicule in response to reluctance toward government control over ALL health-care. Has the smell of a Ponzi Scheme, but now I’m leaning toward Pyramid.
If Bernie Madoff had been investing his client’s money solely in his own company, then he would have been prosecuted for operating a Pyramid Scheme. Likewise, it’s dubious for the government to invest in itself via U.S. Treasury notes because the profits are not directly tied to the creation and unforced distrobution of wealth, but rather to the ability of the government to monetize its debt by printing excess money. So, it’s a Pyramid Scheme, if this is an example of moving money from the hands of one willing dupe into the hands of another.
Hope this helps.
Cheers
bi2hs
I forgot to mention that according to Wikipedia, “Medi-Care was a pay-as-you-go plan from the very beginning.”
bi2hs
I’ve been pondering what to say in this follow up post, but after four rejected attempts I’m going to find something else to do and clear my head.
Some folks may not like the government being involved at all. I can’t really reply to that because I simply don’t think it helps to have a polarized debate on that topic here. You can argue with me that everything derives from that basic debate, and I wouldn’t disagree with anyone on that point, but I’m not convinced it helps this particular discussion. Rather, I think such generic polarization of the topic will hurt our chances of doing anything meaningful to change the new health care law anytime soon.
The other thing I’m picking up is that there is confusion about the distinctions between my proposal and the new law in the U.S.
Obviously, I think these distinctions are very important, but I’m not sure what more to say here that can direct the discussion to these distinctions.
#4: “Two Aspirin and a burial policy. “
Hmmmmmm
This is illogical. They are distinct and independent programs, and the terms and conditions of one may be, and are, changed without affecting the other. You might as well argue that you should not discuss them without including garbage collection, or policing, or education. Of course you should. In the same way, a company can adopt a health insurance scheme and a pension scheme quite independently, and they do.
European health insurance schemes do assume lifetime membership. They are also pay as you go, that is, the claims this year are funded out of the budget for this year. I don’t see any problem with this. If the incidence of illness changes, of course this will change the costs. One reason for this might be a change in age distribution of the population. If it becomes more expensive to cover the population, rates will rise. If cheaper, they will fall. I don’t see any reason to think that realistic forecasts of predictable trends in illness, because of aging or any other reason, suggest that we will not be able to afford to provide medical treatment to the ill in the future.
I do not know. The Russians and the Germans in the last century both embarked on systematic programs of genoicide, and Europe as a whole embarked on two enormously destructive civil wars. I don’t think Germany will go down that route again in our lifetime. But who knows? I don’t know what this has to do with the merits of the health care systems in effect today in France, Holland and Belgium. The merits of the US system, either the old or the new, also are unrelated to US history and foreign policy.
David JP has it right in his last post. You have to start thinking about this by deciding whether you want there to be universal health insurance. Once that is decided, you can move on to the how.
David didn’t actually say to start with the question of universality, but to start with the question of government involvement. They are probably related. But the fundamental issue is that of universality. Once you have decided you want that, some role for government is probably inescapable.
The universality question hangs on this. When someone is ill, could be the result of accident or illness, and they haven’t money to pay for treatment, whose problem is it?
One school of thought here would say, its their problem. Its not our problem unless we make it ours. They either pay, or someone gives them the money to pay, or they get treated out of charity, or they don’t. But its not our problem. Similarly with insurance, there will be private insurance companies, they will offer health insurance under various conditions and prices, you don’t like it, don’t buy it. But don’t complain.
You have insurance which does not cover your condition, you should have thought of that. You get dropped, well, maybe your situation is one in which it doesn’t make sense for anyone to insure you. You got fired and your cover lapsed? There are always charities.
There are elements of this in the old US system, and much stronger elements of it in the period before Medicare/Medicaid, and one place you can still see it is the role of health care costs in the personal bankruptcy numbers. One thing you can do, if you get desperate, is to go into debt to fund your health care, then declare bankruptcy. People do it. Its fraud, of course, but one can understand why people do it.
So the first thing to decide is whether this is your approach to the problem. In many areas of life, it is a reasonable approach. If you cannot afford expensive suits, don’t buy them. If you can’t afford that new computer, not our problem. Get another job. If you can’t afford filet, maybe you should buy chuck. Not our problem.
If you can’t afford cornmeal, though?
I have to agree with Michael on one point. Most European systems are not ponzi schemes, but pay as you go. However, BlueIce2HotSea has an equally valid point. Simply put, giving cadilac care to everyone is just not feasible as the money does not exist.
England has solved the problem some what – they ration it. But their rationing is based on a first come, first serve basis (as good as any I suspect). When the money runs out, then no one gets the operation until the new fiscal year.
The US also had a solution for it. Contrary to what many believe, health care was never denied due to the inability to pay. However, access to the cadilac care was based on the ability to pay, so in essence it rationed cadilac health care as well. But by using a system of ability to pay for it (anyone can get treatment in the US, but not everyone can get a face lift because they want to look like Jessica Alba).
The problem (ignoring the suggestions made by the OP for now) is that the current law did not address any of the problems affecting American Health care. It was all about insurance, but that was only a symptom of the problem, not the problem itself.
So it comes down to what can be done. And what is being proposed is not that everyone gets access to cadilac care (except by the most naive of people), but that no one get access to cadilac care (England’s way) or that only those deemed good enough by some government bureaucracy get access to cadilac care. in other words, it no longer matters what you accomplish in life that dictates your care, but someone’s whim (that may sound harsh, but is essentially the bottom line).
David JP wrote:
“Some folks may not like the government being involved at all.”
I’m not against government involvement. I think the government should be involved, by sound regulation of the right things. Not by trying to run things themselves, such as the State run health care, and not by regulating the wrong things.
I think they’re going about this all the wrong ways by attacking the Insurance industry instead of the health care industry from which the insurance rates are ultimately derived.
Better regulation of various aspects involved in the pricing of health care products and services, such as the modification to patents that you proposed, would go much further in reducing overall costs to in the system. By reducing the costs in the system, Insurance companies would be more likely to pick up people with pre-existing conditions, or keep the elderly or sick/hurt covered, even without regulations requiring them to do so.
Michel wrote:
“One school of thought here would say, its their problem. Its not our problem unless we make it ours. They either pay, or someone gives them the money to pay, or they get treated out of charity, or they don’t….
If you can’t afford filet, maybe you should buy chuck. Not our problem.
If you can’t afford cornmeal, though?”
That would be my take on it, particularly since it would reduce the tax burden for everyone, no matter what class of society they role with.
Further, if the government was more concerned with regulating the Health Care itself instead of the Insurance, the rates would not be so high. Fix that, and the person who couldn’t afford cornmeal now can, and maybe they can afford the chuck, too. Or they can afford to get a loan for that new computer, or new liver, when they experience an accident and the old one breaks.
Re: michel (Mar 29 04:02),
There may not be a problem, but one can still calculate the current unfunded liability based on current premiums and the currently expected future. Unfunded liability means either premiums must increase in the future or benefits reduced or some combination of both. The current massive unfunded liability of Medicare in the US means that present levels of payments are unsustainable. Increasing premiums now and investing the surplus in Treasury notes won’t cut it either as it just postpones the reckoning and makes it worse when it finally happens. See this article at Forbes.com for example. That’s all based on data calculated by the US SSA that they are required to report annually. I ask again, is there any such data from anywhere in Europe? If there isn’t, you should be wondering why there isn’t rather than just assuming that everything will be rosy forever.
The US spend on health care at the moment seems to be around 17% of GDP. The current European spend is around 8-9%. There are studies showing how spend has increased in Europe – it has increased faster than GDP, as it has in the US. One instructive and detailed account is here: http://www.ncpa.org/pub/st286.
The Forbes article seems to state that the various Medicare programs amount to some 6.8% of GDP. “…Medicare part A, 2.8% of GDP; Medicare part B, 2.8% of GDP; and Medicare part D, 1.2% of GDP…” and then goes on to talk about an unfunded liability calculated from this.
I don’t quite see the unfunded liability part. If you adopted the same approach, you would find a huge unfunded liability from defence, from all kinds of government programs. Social security really is unfunded,there is a liability to pay pensions at certain levels for many years in the future. But health care is not in the same category. It does not make commitments about future entitlements.
There is no guarantee that in 30 years time, benefits will be at any particular level, or costs at any particular level. In the case of Social Security, there is a guarantee that benefits will be at a defined level. These benefits are unfunded.
It is quite possible that to deliver the same level of health care, European costs will have to rise as the population ages. There is some room for this to happen. More than in the US. It is likely that for the level of service to keep pace with demand, costs will rise, and will rise faster than GDP is rising. The same is true in the US.
In neither case is this an unfunded liability. It is a policy problem that is going to present itself. More acutely, however, and much sooner, in the US than in Europe, because the US starts from a higher base spend as a percentage of GDP, and because the drug, insurance and medical lobbies are much more powerful in the US and so extract more money. And the insurance industry is very inefficient because of the constant need to screen and expel people. Europe is getting, and probably will continue to get, much more bang for the buck. But this issue, that people want care which is maybe going to cost more than they can afford to pay out of disposable income or taxation, this is a real policy issue.
It is not a function of whether the state or private firms write the insurance. In fact, when the state writes the basic insurance, because its a low cost provider of insurance (though it is also a high cost operator of hospitals), state insurance schemes face the policy issue in less acute form. As we can see from the difference in spend in Europe versus the US.
By the way, someone spoke earlier about Cadillac plans. The European model is you have basic insurance which everyone has, to spend with the provider of your choice, and it typically covers some percentage of treatment. It might, for instance, cover 100% of pregnancy, but only 85% of a doctor office visit, 70% of hip replacement, and zero percent of a private room. These are made up numbers. But you can buy more insurance. It is common for company schemes to offer top up insurance, or you can buy it personally, in Belgium from so called mutualities. You can get means tested assistance for top up insurance. It is not a one size fits all implementation.
Re: michel (Mar 29 23:46),
There is no such guarantee nor can there be. Only a Constitutional amendment can bind future congresses. Congress could in fact repeal Social Security or reduce benefits at any time. They won’t, but they could. Medicare and Medicaid spending is nearly twice as much as defense spending, 39% of the 2009 budget compared to 23% for defense. Medicare and Medicaid, like other government entitlement programs, are just as much a promise to pay future benefits as any other form of insurance or pension plan. Private insurance companies are required to maintain reserves so they don’t have unfunded liabilities. They invest in a variety of assets, not just Treasury notes. Banks are allowed to use most, but not all, of the value of their loans as assets so they don’t have to maintain a reserve of 100% of deposits. But for the most part, those loans represent real assets.
Private insurance companies can and do raise their rates to keep from having unfunded liabilities when there are unforeseen increases in costs. But insurance companies are regulated both by the Federal and state governments as well as the stock market for investor owned rather than policy holder owned or mutual companies. Governments aren’t regulated by anyone except the voters at election time ( Quis custodiet ipsos custodes? ) and raising payroll taxes or reducing benefits carries a heavy political cost. As a result, not only do Federal programs have unfunded liabilities, but also many state and municipal health care and pension programs have large unfunded liabilities as a result of their succumbing to pressure for high wages and benefits by public employee unions.
Hi Michel
I am still disappointed at your nonchalance toward perhaps the most horrific atrocities in human history. And I noticed you blame Germans and Russians, not Nazi and Soviet socialism. (I suppose you would also blame the Chinese for 60,000,000 murders, not Maoist Communism.) It hints that you are blaming faulty genetics rather than political ideology. Certainly the French, for example, are not innately morally superior to either Germans, Russians or Chinese. So, it appears that the only safeguard you can offer us is to say that we should all be as unconcerned as you are.
But even if that 400 lb gorilla were not in the room there still is the issue of fiscal incompetence (which charitably assumes no corruption). I repeat, the pay-as-you-go Medicare health insurance has unfunded liabilities 40% greater than the entire world GDP.
Meanwhile, I am reassured by my socialist brother-in-law that Medicare is the most cost efficient program in the U.S. government and there is no need to be concerned about extending government control over all health insurance.
This is almost funny.
Cheers
I’m not nonchalant about them. Yes, the Chinese atrocities were appalling. The 20C was disastrous. Communist and Nazi both, but not limited to them. There was not just the Chinese in the Far East, Pol Pot also. All Communist regimes seem to end in mass murder, many start there. It is a deeply interesting and disquieting topic, the extent of mass murder in our species. The massacres of WWI, though not resulting from ideology, are part of this dreadful history and rival the genocides in extent. The genocide in the Congo in the late 19th and early 20C is part of this history. I find Hiroshima and Nagasaki horrific also. Nonchalance about slaughter is not appropriate, and I do not feel it. Almost all Communist regimes have seemed to involve mass murder, but there are other sources of mass murder than Communism.
However, I am not discussing the 20C history of mass murder. I am discussing the system of health insurance which has been in effect for some 50 years now in France, Holland and Belgium, and do not think that these events have any bearing on them.
DeWitt. Maybe it would be better, rather than talking about unfunded liabilities, to speak about whether a given funding level is going to be affordable going forwards. I think that is what you mean to question. Its different when we talk about health care and pensions. The pensions are a future obligation due in respect of present payments. Health care is a right this year in exchange for a payment this year. So if pensions are defaulted on, we have a fraud. If health care plans are altered, we have a non-renewal. It is not the same. To describe them both as unfunded liabilities is not correct.
I agree that there are circumstances in which European and US health care will be unaffordable. If it costs 30%+ of GDP to deliver it. I don’t think this is a problem with who writes the insurance, and think the European plan has some considerable leeway before it becomes unaffordable.
Re: michel (Mar 30 06:26),
That’s not how Medicare or Medicaid works. You pay into Medicare during your working years. You pay nothing for Medicare part A coverage and not very much for Medicare part B after retirement. Part D, the prescription drug coverage is even more complicated. There was a serious proposal during what passed for the debate last year to base US health care reform on expanding Medicare coverage to include everyone. Many doctors are now refusing to accept any Medicare patients because the compensation from Medicare does not cover expenses. Medicaid eligibility is based on need, so it’s really a welfare program, not insurance. If Obamacare is implemented in anything close to its current form, I expect a lot of M.D.’s to retire early. Polls indicated that half of all currently practicing physicians would seriously consider early retirement. Tennessee enacted something close to Obamacare to cover low income residents and it nearly bankrupted the state and that was before the recent economic unpleasantness. Health insurance premiums in Massachusetts have increased by ~40% since they enacted a program that looks even more like Obamacare. Meanwhile, the number of residents that don’t have health insurance has hardly changed because it’s still a lot cheaper for people who are healthy to pay the penalty rather than buy insurance.
Unfunded liability calculation is still the best way to see if current benefit levels are sustainable with current premiums.
Michel #54
I am aware that abusive outcomes are only highly correlated to these policies. So it is reasonable to have cautious optimism. On the hand,
three anomalous examples are no cause for reckless action. And working on the specifics of a plan which might doom a nation is premature, if not foolish or seditious. First you must identify the cultural factors that make these three countries different and successful. Then, answer these questions: Are the cultural factors present in the USA? And if not, how might they be acquired?
Also 50 years is a rather short historical baseline from which to make momentous projections. I suspect you and your ideas would be good for the USA, but only if they stay in Europe.
And the systems in those three countries are not nearly as successful as the socialist governments and/or media in those places would have you believe. Like any other socialist program, the money must come from somewhere else if you have any hope of preventing the inevitable collapse. France in particular is trying to figure out how to keep from bankrupting theirs…
Furthermore, any discussion using Holland and Belgium as comparison to real countries (the two together have under 17 million people – 4 states in the US have more than that) is blatantly disingenuous.
My predictions are testable, so were those that preceded me. The hit rate is something like, well, 100%. They will fail, as will ours (it would have failed anyway since it has not been truly free market for decades).
Mark