General Question

cockswain's avatar

How can the costs of the US healthcare system be significantly reduced?

Asked by cockswain (15249points) February 2nd, 2011

There is lots of disagreement about how the US healthcare system should be run. Regardless, the costs are too high. What should be done to reduce costs?

Please be as specific as you can, summarizing your opinions clearly. If you attach links, please have them be to articles of reasonable length or else specify which part of the link you’d like reviewed.

Please don’t just say “tort reform” or “repeal Obamacare” or something like that.

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72 Answers

thorninmud's avatar

A single-payer system is by far the most cost efficient. But that boat has already sailed without us on it. Even the half-assed plan that survived the sausage mill of of our congress would seem to be too radical for many.

marinelife's avatar

A national health care system would be the most cost effective.

Dutchess_III's avatar

Create committees to oversee hospital’s and doctor’s billing practices.

bkcunningham's avatar

@thorninmud and @marinelife would you please elaborate with specifics. This is a great question btw.

cockswain's avatar

@bkcunningham Thanks. My hope is to get beyond the politics associated with HCR the last couple years and see where people stand these days in the wake of it all.

thorninmud's avatar

Briefly (which is all I have time for), single-payer cuts private insurers out of the deal. There are many variations on that theme, but in the version I favor, rates for procedures are set by the supervising government agency. Doctors who agree to charge those rates get reimbursed directly by the government (the doctors are not employed by the government, just reimbursed per procedure). Patients seeing those doctors who have signed onto the government rates would be assured that all of their costs would be covered.

Doctors who don’t want to commit to the government rates could set their own rates, with the understanding that their patients would have to make up the difference out of pocket, or through a private insurance plan.

The cost savings are huge. There’s the administrative efficiency of having a single agency handling all claims. There’s the ability of the government to exert downward pressure on rates for procedures and meds.

And it doesn’t limit individual choice in any way. Anyone can choose any doctor they like. Doctors can charge whatever they like (though there will be market incentive to agree to the government rates). Doctors are freed from having to wrangle with hundreds of different insurers. Doctors never have to deal with charity cases for which they’ll never get payment. And on and on.

But no, if the insurance companies can’t keep their finger in the pie, then somehow it just can’t be an option it would seem. Funny how that works.

zenvelo's avatar

get rid of for-profit hospitals and for-profit health insurance companies.

Jaxk's avatar

The problems are complex and the current law doses nothing to stem the rise of costs. Even the cries that it will reduce the expensive emergency room visits are panning out. In Massachusetts (the plan most similar to Obama care) emergency room visits have actually increased. Government payments for Medicare and medicaid simply don’t pay the bills and doctors have little choice but to limit thier access.

Tort reform is a good way to reduce the exorbitant cost health care. The cost reductions vary considerably and you can pick you favorite guy to come up with a figure between $50 and $200 billion a year. It is not the actual lawsuit that accounts for most of the cost but rather the defensive medicine. Most of us are sent to a specialist for anything worse than a cold. Is it because the general practitioner simply can’t diagnose these complex problems? I think not. It is more likely because they need to shift responsibility and insure they don’t get sued. Here is an example from an emergency room doctor of what defensive medicine looks like. I put the costs much higher than even the $200 billion number.

Insurance across state lines. Competition is the hallmark of capitalism. Currently we restrict competition by not allowing you to purchase insurance out-of-state. Nevada may have a much cheaper policy that fits my needs much better. But I can’t buy it. I’m restricted to those carriers and policies provided in California. Interstate commerce is the purview of the federal government and should be subject to the free flow of goods and services the constitution provides for federal jurisdiction. At the present time insurance premiums can be double what they are in another state. Interstate competition would allow access to those cheaper rates and provide better choice while saving money.

The last point I want to make is that federal Medicare and Medicaid payments are low. They add about $1700 per family to your premiums. Doctors and hospitals have to charge normal insurance carriers more to make up for the shortfall in government payments. This skews the cost of those programs and increases the cost to all insurance policies. You can find the estimates here under cost shifting.

bkcunningham's avatar

I go with the Milton Friedman cure for the sick American health care system: The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment.

A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.

The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases.

However, the vested interests that have grown up around the existing system, and the tyranny of the status quo, clearly make that solution not feasible politically. Yet it is worth stating the ideal as a guide to judging whether proposed incremental changes are in the right direction.

Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending.

The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body.

The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.

No third party is involved when we shop at a supermarket. We pay the supermarket clerk directly: the same for gasoline for our car, clothes for our back, and so on down the line. Why, by contrast, are most medical payments made by third parties?

The answer for the United States begins with the fact that medical care expenditures are exempt from the income tax if, and only if, medical care is provided by the employer. If an employee pays directly for medical care, the expenditure comes out of the employee’s after-tax income. If the employer pays for the employee’s medical care, the expenditure is treated as a tax-deductible expense for the employer and is not included as part of the employee’s income subject to income tax.

That strong incentive explains why most consumers get their medical care through their employers or their spouses’ or their parents’ employer. In the next place, the enactment of Medicare and Medicaid in 1965 made the government a third-party payer for persons and medical care covered by those measures.

We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

The revival of the company store for medicine has less to do with logic than pure chance. It is a wonderful example of how one bad government policy leads to another. During World War II, the government financed much wartime spending by printing money while, at the same time, imposing wage and price controls. The resulting repressed inflation produced shortages of many goods and services, including labor. Firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit. That benefit proved particularly attractive to workers and spread rapidly.

Initially, employers did not report the value of the fringe benefit to the Internal Revenue Service as part of their workers’ wages. It took some time before the IRS realized what was going on. When it did, it issued regulations requiring employers to include the value of medical care as part of reported employees’ wages.

By this time, workers had become accustomed to the tax exemption of that particular fringe benefit and made a big fuss. Congress responded by legislating that medical care provided by employers should be tax-exempt.

Adagio's avatar

Is too simplistic to suggest that less would be spent on health care if more of the population were healthy? Diet might be a good place to start…

choreplay's avatar

My wife and I argued about how much doctors make so I did some research. Doctors in America make something like 5 times the average salary while Doctors in Europe make about 2.5 to 3 times as much. I am definitely focused on the ridiculous amount of money being made by doctors and the medical industry. My wife was of the opinion that doctors didn’t make as much as I thought. I used my professional resources to come to the following conclusion. General practitioners and pediatricians (sample of ten) live in homes with a tax appraisal value of $250,000. Took another sample of specialist and included GP and Pediatricians and the average tax appraised value on their homes was $550,000.

I think greed raines in the medical industry. How about we require these specialists to start in free health clinics for a couple years, practice as a GP or Pediatrician for five more years and than they can go on to make mega money in some specialty. Their schooling requires them to learn it all anyway.

The residency they are now required to serve only make hospitals rich.

tranquilsea's avatar

We have government run health care (Canada). We spend less money on health care compared to the U.S. We are not healthier (or perhaps we are slightly healthier).

Here is an interesting graph of health care costs compared to the GDP of major countries around the world

I’ll never understand how vociferously people defend the for profit system in the U.S.

cockswain's avatar

@tranquilsea Exactly! There is no reason we shouldn’t be able to get a far better value for what we spend. If both sides of the aisle could stop worrying about political gain, something could be done.

I can’t decide if the truly competitive, slightly regulated, free-market system would be best, or if single-payer is. Our current system is clearly one of the worst. Despite there being great innovation and technology in US medicine, I think it is over-valued in general. If I get three stitches, it costs $1000. That’s ridiculous. If I had options and choices, paying out of my own pocket (like Friedman suggests), I’ll demand the best value. Since insurance pays (mostly), I don’t see the cost. It’s like if I went to the grocery store and insurance paid for my food. I’d grab whatever and ignore the cost.

I did have a plan for a few years, where I would accumulate money in a health account year after year if I didn’t use many medical resources. That seemed like a good free market plan, but the insurance company pulled it. I’m convinced because they realized it wasn’t good for business if more did it.

The case to remove third party billing is significant. Anyone who has been to the hospital gets bills from all sorts of places, sometimes overlapping. It’s a mess and almost a scam.

Tort reform sounds good on the surface, but a recent thread caused me to reconsider why it really isn’t so simple after all. I recommend checking it out. Basically, it isn’t clear how to declare a case “frivolous” and shouldn’t be considered. iamthemob gave an interesting suggestion that tort reform occurs at the industry, not justice level, making business practices more transparent, corporate responsibility. Please contribute to that thread if you have any ideas.

The other hand is single-payer. I like that too, since our society is then taking the stance that health care is a basic human right. I also like the idea of a tiered system, so more skilled surgeons could practice in the private market for cutting edge procedures. Let the wealthy continue to feel better about themselves. But in general, three stitches could maybe cost $250. I get the idea the a single payer (and lack of a larger free market) could stifle innovation. But I’m actually OK with that. Our medical technology is really great these days, and I’m fine with putting the brakes on that for a generation in favor of getting control of the system as a whole.

And @Adagio, I completely agree that not being a bunch of obese, hypertensive, diabetics would tremendously ease the system as a whole.

Overall, I get the impression that it is one or the other (single payer vs free market), but not some hybrid. They are completely differing philosophies, and we shouldn’t try to hybridize them to appease everyone. We all know that won’t happen no matter what. We just need to pick one system, commit to it, and not worry about pissing half the nation off for several years.

BarnacleBill's avatar

Do away with state health care legislation – it drives up admin costs for health care companies.
All states need to enact the NAIC model, which is like the uniform commercial code for health plans; it should be a national standard.

Enact Good Samaritan laws that cap law suits for medical care settlements except in extreme cases.

Waive or rebate tuition for people entering health care fields.

gondwanalon's avatar

Tort reform would likely help.

cockswain's avatar

@gondwanalon See this thread about tort reform, if you’re interested. It’s tricky.

jaytkay's avatar

Adopt the French system. Whatever it is, they spend a lot less, they are healthier and they don’t shamefully leave millions suffering and dying needlessly.

bkcunningham's avatar

It is interesting to me and it is something to think about anyway, over 80 percent of Americans, according to studies, are satisfied with the quality of their own health care. I know it seems to be contradictary to policymakers and other calling for changes, but those are the facts.

I’m reading a book, “Reforming America’s Health Care System: The Flawed Vision of ObamaCare” by Scott Atlas, MD, where he shows that Americans have a better survival rate than Europeans for most common and rare cancers. In America, did you know that breast cancer mortality rate is 52 percent higher than in Germany? And 88 percent higher than in the UK and in Norway. Age-standardized death rates from prostate cancer from 1980–2005 have been reduced faster in the US than in the fifteen other developed nations in the study.

Americans have lower cancer mortality rates than Canadians. Breast cancer mortality is 9 percent higher; prostate cancer is 184 percent higher; and colon cancer mortality among men is about 10 percent higher than in the US.

jaytkay's avatar

Cancer survival rates mean nothing if you get cancer more often. I don’t know if Americans get cancer more often, but the survival rate is only half the picture. You can’t honestly brag about one without presenting the rest of the equation.

And picking one category for comparison, especially one including “rare cancers” is myopic.

cockswain's avatar

Here’s where the truth gets very difficult to ascertain. I thought the exact same thing as @jaytkay in response to the cancer stats @bkcunningham gave, but don’t have any substantive information to the contrary. Maybe I could find it, but then maybe I’d just be subject to confirmation bias as I searched to find the numbers that would prove my point. Knowing that, I need to make a concerted effort to be as unbiased as possible about finding these numbers. But even then, how do I find the right data? How do I not find data put together by someone with a strong bias?

Difficulty in finding the truth has plagued all of us throughout HCR. Some media outlets make it even harder.

But I digress. If someone has such data, I’d like to see it.

wundayatta's avatar

Single-payer health insurance for all, and education about how to use the health care system. If people have access to care, no questions asked, and if they learn when it is appropriate to use a health service and where they should get that service, we might be able to reduce health spending by perhaps as much as ten percent over the first five years.

There are savings because you eliminate over half of administrative costs. There are savings because people get care before their illnesses get any worse. There are savings because people use the health system more appropriately. There are savings because, overall, people will be healthier.

We spend, what? 17% of our GDP on health care? And we still have the problems of a third world country. Other countries spend as little as 5% of GDP on health care, and their health quality is much higher than ours. Why? Because having one insurer who insures everyone allows you to make all kinds of efficiency improvements that are impossible under a so-called competitive system.

WasCy's avatar

You haven’t convinced me yet that I should agree with your premise. Why do you think that “healthcare costs are too high”? Keep in mind that comparing percent of health care costs as a percentage of GDP in the US compared to other nations isn’t necessarily a valid comparison. GDP for nations varies all over the map, and so does “total cost of health care” ... and health metrics, such as life expectancy, wait times for treatment, variability (and choice) of treatments and physicians, for example.

I think there are a lot of ways to “reduce the cost of health care”, but I don’t agree that it’s the right target to be aiming for. Not yet, anyway.

However, in the spirit of “answering the question you asked” instead of a better question you might have asked, there are a number of things that we could do:

1. Break the “treatment monopoly” that the AMA has on “the practice of medicine”. By that I mean: allow competent nurse practitioners to treat non-life-threatening illness and trauma, deregulate most “prescription” medications to be over-the-counter, and allow para-physicians, EMTs and nurses to prescribe medications, as well as pharmacists themselves. This would reduce costs of a lot of treatment, make access more nearly universal, and reduce costs of prescription drugs.

2. Teach students better about “health” in general and get rid of high fat, high sodium, sugared snack foods and soft drinks in school cafeterias. Make physical education a mandatory part of all education, and not the first thing to be cut whenever budgets need to be trimmed.

3. Gradually (over a period of, say, five to ten years) do away with the tax incentive for businesses to provide health insurance for employees. This would have the effect of completely and radically restructuring the health insurance industry to serve consumers instead of businesses. As the industry works now, my employer is the “client” of the insurance company, and I’m simply an expense.

4. Allow more choice (per items 1 and 3 above) in health insurance offerings. It has always seemed foolish to me that “health insurance” covers such nickel-and-dime things as doctor visits. (I know that doctor visits are expensive. That’s because they have a monopoly on treatment, and they are supported by insurance companies.) If my auto insurance “covered” all of my trips to my mechanic and all of my oil changes, imagine how expensive that coverage would be; I wouldn’t be able to afford auto insurance. (And mechanic prices would increase substantially if they were supported by insurance companies.)

5. Teach basic economics. We can’t have something for nothing. Trade-offs are a part of economic life. If we’re going to have socialized medicine, then we’re going to have rationing of treatment. That’s a fact of life. The basic problem with socialism is that in a misguided attempt to “share the wealth” we end up instead “sharing the pain”, and making everyone poorer. People need to understand that. People need to understand that the reason insurance companies can’t cover “pre-existing conditions” is because if they did cover those, then no one would buy insurance until they had those conditions. Who would be so stupid to buy collision insurance for their car, for example, if they could buy it after the collision?

wundayatta's avatar

@WasCy points out the major factor that lead to the need for the health insurance mandate. If you force insurance companies to cover preexisting conditions and do nothing else, then no one will buy insurance until they need it. That’s not insurance. I don’t know what it is, but it isn’t insurance.

However, if you force everyone to pay into the insurance pool, then you can cover pre-existing conditions. There won’t be any, actually, since people will all be covered all the time. There will be no free riders.

cockswain's avatar

@WasCy I swear, you almost always provide a critique of my question before answering. Anyways, I like the points you make.

1. This is somewhat similar to a link @Jaxk provided above, regarding defensive medicine. I’m all for allowing more faith in the medical staff to make decisions and not crucify them for not covering every last possibility. I do not agree EMTs should be allowed to prescribe drugs.

2. Hugely agree with continuing to do that. I also wouldn’t have a problem with the FDA regulating salt content in fast food/processed foods, but that’s just my opinion.

3. This is like what Milton Friedman said, as quoted by @bkcunningham. I don’t know enough about it yet to decide if it is best, but on the surface, if properly transitioned, it would be fine assuming we fully embrace the free market model and not the single payer one.

4. I like more choice. I’d like to add I’d also like costs agreed to before treatment (when possible). How many times has a doctor started doing things, and you ask “how much will this cost” and he has no clue. More than once I’ve opted out of a test that the doc and I determined to be “overly cautious” and not a good value for me. Let me know the facts, let me choose my risk vs. cost.

5. Yes.

@wundayatta One thing that has irked me about the uproar regarding the individual mandate (and I think I saw @qingu mention it elsewhere recently), is why it is different than a tax. Suppose our taxes were raised to pay for it. People would have grumbled, but not about the constitution. At least I don’t think they would have. What the hell is the difference? I guess it’s all precedent.

Qingu's avatar

@bkcunningham, are you being comprehensive about mortality rates or are you just cherry-picking those that America happens to be better at?

Because while American health care may be better for breast cancer, it sure as hell isn’t better for infant mortality.

Looking at this data, the US is in the middle of the road for cancer deaths overall.

Not that cancer deaths really tell much about health care quality to begin with. If your country has very good health care, you would expect more people per capita to die of cancer. Everyone dies from cancer; it is for the most part an incurable disease. If you want to evaluate a country’s health care, it’s better to look at how many people die of easily preventable conditions, like malnutrition. Or, you know, infant mortality.

Qingu's avatar

I also don’t share the conservative’s cult-like devotion to the magic of the free market.

And it is magical thinking here. Friedman’s theology is based on the assumption that economic actors are entirely rational, that everyone knows how to spend their money to maximize value.

Not even Adam Smith believed this. If you’ve ever spent a day in a shopping mall, you should be smart enough not to believe it either.

There are also basic inequalities related to health care that do not apply to any other sector of the economy. How does the free market deal with people born with chronic illnesses? I guess they’ll just have to pull themselves up by their boot straps and pay millions of dollars a year for care. How does the free market deal with insuring the elderly? How does it deal with people who simply do not know that they are sick until it’s too late to buy insurance?

Answer: the free market deals with them by leaving them to die, because the free market is based on Darwinian natural selection. It is always interesting to see conservatives like @bkcunningham and @Jaxk advocating social policy on the moral basis of evolution, red in tooth in claw… especially considering they probably don’t believe in evolution.

bkcunningham's avatar

@Qingu the question asks for specific solutions. Do you care to offer your own opinions for a solution to reducing costs?

Qingu's avatar

Also, @bkcunningham, if you’re going to copy and paste from a website, it’s generally good form to cite that website.

Otherwise it’s just plagiarism.

cockswain's avatar

I don’t see how asserting that @Jaxk and @bkcunningham don’t believe evolution and would like to see the elderly or handicapped die is justified. Regardless of if you agree with all their philosophies, there isn’t cause to attack them.

bkcunningham's avatar

Sorry, @Qingu I said it was from Milton Friedman and thought that would be sufficient.

http://www.hoover.org/publications/hoover-digest/article/7298

Qingu's avatar

@cockswain, I’m sure they don’t want the elderly or handicapped to die. But they need to explain how the free market would solve this basic problem, because in a perfectly free market such people are not going to be able to afford care that would let them live.

I also take issue with the unwarranted moral valence that is assigned to the free market.

bkcunningham's avatar

The elderly and handicapped are taken care of through the single payer type system of Medicare and Medicaid now. Do you like these systems @Qingu ?

cockswain's avatar

in a perfectly free market such people are not going to be able to afford care that would let them live.

I also take issue with the unwarranted moral valence that is assigned to the free market.

I completely agree with both of those statements, and that is one of the things I view as the ideal role of gov’t to regulate.

Qingu's avatar

@bkcunningham yes… and they are single payer, not free market.

Edit: actually many people with chronic pre-existing conditions and people who find out they’re sick are not taken care of in the current system, which was the main motivation for HCR.

bkcunningham's avatar

So what is your issue with the current system @Qingu ?

Qingu's avatar

It’s grossly inefficient, it screws over millions of people with chronic and/or pre-existing conditions, and it screws over millions of people who find out they are sick and become victims of insurance company rescission.

I could probably think of a few more problems but those are my primary ones.

bkcunningham's avatar

So what are your opinions to reduce costs? I mean, specifically in the single payer. I hear people say “single payer” and most people either don’t really know what it means or have ten people give ten different definitions.

Friedman’s plan includes: “A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

“This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become ‘What’s wrong?’ not ‘What’s your insurance?’”

http://www.hoover.org/publications/hoover-digest/article/7298

cockswain's avatar

@bkcunningham The first question in my mind is how would that system provide care for the poor or mentally ill?

Qingu's avatar

Single payer reduces cost in a number of ways, many of which have already been discussed. Absent of single payer, you can reduce costs by incentivizing quality care over quantity of care (which does not exist in our current system; doctors are incentivized to run many unnecessary tests), by using universal electronic records, by establishing federal scientifically-reviewed best practices for doctors… all of which the HCR bill does, by the way.

“Catastrophic insurance” is hand-waivy. What counts as catastrophe? That’s the rub. Broken bone from a car accident? Being born with Crone’s disease? What about families who can’t finance non-catastrophic medical costs, particularly their children?

If you are saying that the government should discincentivize unhealthy lifestyles so people are invested more in staying healthy, I agree, but your suggestion doesn’t actually spell out how you’d do that. I would rather tax unhealthy foods and drinks to all hell and use the taxes to pay for more Medicaid.

bkcunningham's avatar

@cockswain the poor and the mentally ill would be covered under the catastrophic insurance policy. Don’t forget, even now, we have countless charity organizations, free clinics and other means of providing health care for the poor and mentally ill. Help is available now for the mentally ill. Sometimes the illness makes it impossible to keep someone in treatment. I can give you list after list after list of organizations that provide help for the poor to receive medical assistance. Having the added insurance would be a godsend to both the poor and the mentally ill who don’t have insurance.
@Qingu a certain amount of fees would be the determining factor in that I would imagine.

cockswain's avatar

I don’t understand how the poor etc… would be covered by this catastrophic plan. Also, do you think charities and the like would be a secure enough system in a recession? But maybe that is a moot point if you clarify the coverage.

wundayatta's avatar

Actually, I would take the Friedman plan. That would be a much better route to single-payer than what we have now. The Friedman plan would carve out a different kind of niche for the “free” market, but the important thing is that it would establish a precedent for universal coverage as a right.

The system would become untenable over time. I don’t know how much time. But here’s what would happen—something similar to what is happening under the current system.

The poor and those with chronic conditions or high health care needs, as per usual, would be unable to afford primary care, or they would delay it—certainly until their condition was much worse. This behavior would lead to a much higher amount of catastrophic care being needed than if people had access to primary care. The universal system would see much higher costs than predicted, requiring increased revenue to pay for it.

Essentially, exactly the same as now, the private system would be cherry picking the healthiest people, and letting the sick people be paid for in the public system. As a response, politicians would either try to dump the system and go back to…. God knows what; or they would bite the bullet and expand universal coverage for primary care… to the elderly… then to those witch chronic conditions… and then, maybe, even to the poor.

Now that might solve the cost problem there. But the middle class would be looking at this and wondering why they had to subsidize health care for everyone else. Why don’t they belong to the system? Unless they still let the idea of the “free” market blind them; or they were willing to accept a secondary care system for those with high health costs, and higher morbidity and mortality rates in that population. Of course, a lot of that population would be their parents, so they’d start wondering why they gave up Medicare.

Friedman is either completely ignorant about the health care system, or he’s an idiot, or both. Standard economic theory does not work in the health market. There are too many hidden subsidies and no possibility of setting conditions where true competition could occur (because that would require eliminating the mandate for hospitals to care for everyone who shows up in the ER regardless of ability to pay).

Of course, the Friedman plan is a “non-starter.” It’s completely theoretical and has nothing to do with the politics of the situation. Kind of like single-payer, I think. Americans believe in the great middle. Somewhere between those policies lies an idiotic policy that is somewhat politically acceptable. It will be attacked from both the left and the right, as people play a high stakes game with millions of people’s lives in their hands.

Honestly, I have no clue what a realistic answer is. So I work to protect the Obama plan. The ultimate success of that plan will depend on the results of future elections. The courts may try to intervene, but if the individual mandate is unconstitutional, there will be other funding mechanisms that achieve the same thing. People will pay taxes and the cost of health insurance will be 100% deductible. Big whoop. It’s all sturm und drang. The real battle is in the party loyalties of people elected to Congress. What else is new?

Qingu's avatar

@bkcunningham, what you are advocating sounds increasingly like socialized insurance. You want the government to provide insurance to the poor, to the mentally ill, to people with chronic diseases, and to people who suffer unexpected accidents and illnesses.

So the only people who would actually pay for insurance on the “free market,” in your system, are middle class and wealthy people (?), and only for basic, non-emergency care. Unless I am misunderstanding you.

cockswain's avatar

@Qingu That’s where I’m looking for clarification too.

WasCy's avatar

@Qingu

It’s probably not a bad assumption. We’re talking about a complete overhaul of a system that, creaky and cranky as it is, does work for the vast majority of Americans, in order to resolve real problems that a minority have with that system.

I keep going back to my supermarket analogy for ‘reasons why the free market generally works better’ (even though in this case it’s not entirely apt, and I know that). A relative handful of people (and in a country of more than 300 million, 3 or 4 million is a ‘relative handful’) have problems with feeding themselves. So we have food stamps, government surplus food distribution, and other systems to help them feed themselves. Should we on that basis decide that supermarkets should be replaced with government food warehouses?

Qingu's avatar

@WasCy, I think we need to be more careful about drawing analogies between different industries. I am the first to admit that the free market works wonderfully in, for example, the tech industry (although regulation is required to ensure competition). Consumers of tech products generally have lots of choices, they generally have the ability to inform themselves about those choices, and there are strong profit incentives for companies to make consumer-friendly products.

Supermarkets are slightly different; in many communities consumers do not have a choice of where to shop, which is why you have things like overpriced stores in ghettos. But in general, you can still say that for-profit companies will compete to please food consumers more (with several caveats, of course).

Health insurance is another beast altogether. Look at the profit incentives in this industry. You can make more profits if more people buy insurance… but if more people actually use your insurance, you end up making less profits. So insurance companies are incentivized to (1) not insure people who will use insurance, and (2) drop people who threaten to use insurance. Increasing competition doesn’t really help this matter, because there is no profit to be made from trying harder to insure sick people.

There are plenty of “industries” that you are probably okay with being under government control—notably the “law enforcement industry,” and the administration of public highways, etc. In deciding what industries should be regulated/controlled, and what should be left to the free market, we should look at what works, not at what ideology says.

bkcunningham's avatar

The plan I would support, first would have to be done in small phases. As a test of sorts to its effectiveness. We should restructure the entire system and make it more, as @Qingu says, free market, with less government control and intervention, giving way to the private market and directly paying for medical care to providers without the third party monopoly that the government and the American Medical Society has devised.

Since, everyone with the best intentions wants to devise a program to “take care” of the poor, I suppose we all agree, the poor with always be with us. But why not give the poor an opporutnity at a better life, more freedom and dignaty without so much dependence on the government? If we did away with the two biggest single payer “socialist” programs in America, Medicaid and Medicare, for our poor and elderly, they would be replaced so to speak, with the charity that already exists and with a new tax system. That is what we are talking about with these two programs, regressive payroll taxes. The problem isn’t taxes. It is how the taxes are spent. That is key, IMHO.

Many people benefit from Medicare and Medicaid, but it isn’t very cost effective. Do you think the money that is spent now on these programs goes directly to the people who they are suppose to benefit? Of course not.

All government programs and all paid for by the American people. Doing good with other people’s money. We are so tangled up now in a system that everyone wants to fix, any solution is going to be slow and difficult. But why not allow people to keep more of their own money with a restructured system of taxes, to be spent directly? Why not experiment with an intelligent flat rate tax allowing the security blanket we all seem to want for the poor. Whether the poor be the elderly or the indigent.

One of the biggest deterrent to an agreement between us, @Qingu , is, what we consider freedom and what we consider the intelligence of “other people.” In this example, the intelligence of the poor. I would like to see a system of free markets for our medical care and a system of taxes that would enable people to spend their money how they see fit, with the added bonus of a health insurance program for major medical expenses, I think it could work.

Qingu's avatar

@bkcunningham, I never said we should make the health care system more free market. I don’t know where you got that I said that.

It is, frankly, amazing that you believe charity can replace and absorb what is spent on Medicare and Medicaid.

Why do you think Medicare is not cost effective? What exactly are you comparing it to? Also, the money that is spent on Medicare has less middle men and less corporate profits to feed than the money that is spent on private insurance… which is why it is more efficient and effective than private insurance.

I don’t really see what the intelligence of the poor has to do with this discussion. You are talking about people having the right to spend on health care as they see fit… poor people don’t have money to spend on health care. Which is the problem.

You mentioned a “security blanket” for the poor/elderly/etc… again, without explaining what you mean by this, or how this is functionally different from socialized medicine (or socialism in general, depending on how broad you’re talking).

Qingu's avatar

BTW: here’s an article on Medicare’s cost-effectiveness. To quote:

• Medicare beneficiaries are overwhelmingly satisfied with their Medicare coverage, except for the absence of prescription drug benefits.

• The administrative costs of Medicare are lower than any other large health plan.

WasCy's avatar

@Qingu

Don’t get too carried away there. A lot of “law enforcement” in this country is done by private enterprise. Forgetting for the moment about for-profit prisons (about which I won’t ask your opinion), most commercial enterprises of any size have their own internal or subcontracted “security” people, some of whom are even armed. I have no problem with that for the most part. In addition to that, a lot of law is civil, and ‘enforced’ by for-profit attorneys.

Administration of public highways is another great example of how for-profit enterprise could do (has already done, in some cases) a better job than governments. The Mass Turnpike, which used to be a semi-autonomous entity (controlled by government, but with its own administration and budget), used to be one of the finest roads in the country. Not so much any more, now that the Commonwealth of Massachusetts has taken sole possession. The tolls are the same, but the maintenance of the road has suffered. I’m going to be interested to see how the Indiana Toll Road works now that it has been leased to a Spanish company – not even American! When I drove from Connecticut to Wisconsin last November it was the best part of the trip, and not for any ideological reason.

Supposedly health insurance is already highly regulated. If this is so, then how are all of the numerous abuses perpetrated against innocent consumers?

bkcunningham's avatar

@Qingu I wasn’t saying you support free markets for health care. Just saying that is how you define anything that isn’t government controlled.

Qingu's avatar

For-profit prisons are an excellent example of the limits of free market enterprise.

I’ll see your Mass Turnpike and raise you the Illinois Skyway or Chicago parking meters, which were both taken over by private enterprise, which raised costs. This is the problem with making anecdotal arguments in support of hugely broad policy positions, rather than statistics-based arguments.

bkcunningham's avatar

@Qingu I didn’t say only charities. Geez.

bkcunningham's avatar

@Qingu did you read anything that I wrote? Restructuring the tax system, major medical insurance?

Qingu's avatar

@WasCy, re: health insurance regulation, there’s a difference between “highly regulated” and ‘smartly regulated.” Though I’m not sure I’d call it highly regulated to begin with.

Also, there is a perfectly good reason for the “abuses” (rescision and refusing to insure sick people): it’s not illegal, and it increases profit.

Now, let’s say you want to make these practices illegal. This is ostensibly the main reason for HCR. Except now, you have a freeloader problem.

Here’s how it works. Right now, I am a healthy person, and I know that if I get sick, insurance will be super expensive or unavailable. So, I buy insurance in case I get sick (risking rescission). HOWEVER, if you make it so insurance companies have to cover sick people… why would I ever buy insurance when I’m not sick? I would wait until I got sick and then buy insurance.

The problem is that if only sick people buy insurance, then insurance becomes super, super expensive for everyone. You need a pool of healthy people to spread out the risks and the costs. This is where the mandate comes in, with all its unpopularity. If I am not required to buy insurance, then I have no reason not to be a freeloader, which drives up costs for everyone and makes the entire system unworkable.

This is the meat of HCR. It makes these practices illegal, but in order to do so, it also needs to mandate insurance to keep costs under control. Without a mandate, protecting against such abuses is simply not possible.

Qingu's avatar

@bkcunningham, I’m sorry if I misunderstood you. I was responding to this line:

“If we did away with the two biggest single payer “socialist” programs in America, Medicaid and Medicare, for our poor and elderly, they would be replaced so to speak, with the charity that already exists and with a new tax system.”

Maybe the non-charity part is included in your “new tax system,” but you still haven’t explained what you mean here. Do you mean a massive redistribution of wealth to poor people? (Based on your other political positions, I sort of assumed this is not what you meant…)

Qingu's avatar

Also, @bkcunningham, unless I am even further misunderstanding you (and apologies if I am), it actually sounds like there’s not much daylight between your suggested reforms and “Obamacare.”

A major part of HCR is setting up “insurance exchanges” so people can buy insurance apart from their employer plans. The point of the exchanges is to (1) drive up competition between companies and (2) pool individual purchasers, which drives down costs. It doesn’t eliminate employer-based insurance, but it seems like you’d agree this is a step in the right direction.

HCR also increases subsidies to poor and sick people, paid for through taxes… though I’m still unclear if you want to do this or not.

Simone_De_Beauvoir's avatar

1. Put the money we spend on end-of-life care into preventative medicine.
2. Cap salaries of health professionals, especially physicians and exterminate the fee-for-service system.
3. Put Big Pharma and insurance companies into their place – they shouldn’t be calling the shots on healthcare, ever.

wundayatta's avatar

I’m not sure what’s going on here any more. I’m a little surprised, @Qingu, that you seem to support the idea of insurance exchanges. I don’t understand the theory behind them—why this kind of competition will drive down insurance costs. Do you think it could actually work?

Frankly, I think the minimum benefit package will prove to be more expensive than any tax penalty for not having insurance, so most people will opt for the penalty.

Theoretically, if more people are insured, there will be less cost-shifting, and I’ll get lower health insurance premiums and higher pay. But it’s not just insurance that matters; it’s insurance with benefits comprehensive enough to eliminate at least 90% of the uncompensated care burden (or some percentage, anyway—I don’t know exactly what it would be).

As long as some people are uninsured or underinsured, any system will hemorrhaging money because of the cost shifting.

Qingu's avatar

@wundayatta, the main roadblock for individuals buying insurance, as I understand it at least, is that they do not form large enough pools (unlike pools of employees at large companies) to spread risk… so their insurance tends to be more expensive. So that’s good.

I’m not sure if the effect on competition will be all that great, and it will probably vary from state to state. But, I don’t really see how more consumer choice could hurt here.

Jaxk's avatar

I’ve been away from this thread for a few days and see a lot has been discussed. I would like to add that our current system provides health Care for the poor in the way of Medicaid. That’s what it was designed for. The problem is that many do not sign up for it and I don’t see Obama care having much impact on that.

Another quick note on Tort Reform. Of all the medical malPractice lawsuits in the world, 80% of the wards are in the US. Only 20% are in all the other countries of the world combined. That would seem to be a staggering number and shows our love of litigation. Also that 50–65% of all doctors will be sued at least once in their lifetime.

There is a lot of discussion on numbers from the World Health Organization, but if your not familiar with them you can be easily misled. For instance, Infant Mortality has a lot more to do with birth weight than it does with Health Care. Also the longevity figures can likewise be misleading. Traffic accidents account for more deaths in the US than in the European countries by almost double. That has an impact on longevity. If you look at longevity after the age of 60 we fair quirte well If you were 60 in the 2000–2005 time frame in the US, your life expectancy is another 20 years (you’ll live to 80). Same as France and the UK. I think it gives a better picture of our health care without the misleading traffic accidents.

And I like the suggestion that we should be able to buy more drugs over the counter. That would reduce doctor visits and medical costs significantly. And is more in line with the other countries you all love so much.

Qingu's avatar

@Jaxk, Obamacare essentially expands Medicaid with subsidies to go along with the mandate. There are a lot of people who aren’t necessarily poor but still can’t afford insurance, particularly people with chronic diseases.

The reason there are more lawsuits in America is because the American legal system is structured to encourage lawsuits. Lawsuits are the de facto disincentive for many behaviors that are more tightly regulated in other countries. I have no problem with tort reform; the problem is that you need to replace the disincentives it provides with something else. Tort reform would only accounts for a tiny fraction of health care savings, as we’ve discussed before; it is not by itself a “solution” to the problem.

I’m not really sure how your point about birth weight is actually a counterargument.

And even accounting for traffic accidents—even if you move up that longevity figure artificially—Americans still spend a lot more on HC than other countries.

Qingu's avatar

Also, nothing you said addresses the most fundamental problems in health insurance: discrimination against people with pre-existing conditions, and rescission.

Jaxk's avatar

@Qingu

Pre existing conditions are a problem. There are other ways to handle that rather than an immense take over of our health care system. Generally when you get health insurance from your employer, you need to sign up for it when your hired. Also you don’t get to change it whenever you want. And pre existing conditions are not much of an issue when doing so. If you wanted to make it so that insurance was offered once a year (much like Medicare) or on your 18th birthday it would eliminate the idea that you could wait until you’re sick. Yes, it would require some personal responsibility, but frankly I’m not against that. Nor am I against passing legislation that precludes your being cancelled when you get sick.

My point on the longevity and infant mortality rates is merely that using those figures to damn the health care system is quite erroneous. There are a multitude of factors that affect those numbers. For instance, longevity (pg 17) for males

Hispanic Male 77.9
Non Hispanic white 75.6
Non Hispanic Black 69.2

This discrepancy can not be explained by health care nor income. The ethnic mix in the US will play a role in longevity and thinking that revamping our health care system will fix it isn’t reality.

Qingu's avatar

I don’t see how anything you said serves as a counterargument to anything I said.

You seem to be confusing the freeloader problem in HCR with the status quo’s problem of discrimination against pre-existing conditions.

And I don’t even understand what you mean, or what you could possibly intend to mean, when you bring up race-based statistics.

mattbrowne's avatar

Incentives for visiting the doctor for preventive medicine i.e. measures taken to prevent diseases, (or injuries) rather than curing them or treating their symptoms.

In Germany we’ve got a system in place that requires 2 dentist visits a year, otherwise the health insurance covers less of the costs in case of dental troubles. I think this idea should be extended. For example to detect type 2 diabetes much earlier. Even colonoscopy for people older than a defined threshold. But this is controversial of course.

WasCy's avatar

@mattbrowne

I don’t know why that would be controversial; those seem to be perfectly sensible incentives for people to take advantage of professional care.

mattbrowne's avatar

@WasCy – The dentist and diabetes examples aren’t controversial as required preventive measures, but colonoscopy is. Many people rather risk getting colon cancer, which is relatively common, than having some doctor put a tube in their tushi.

WasCy's avatar

@mattbrowne

I’m sure a lot of people I read about them frequently enough have the same aversion to visiting a dentist as you describe for colonoscopy. (And it’s not the procedure itself that I object to, I think, as much as the prep for it.)

But the incentives are good ones. These are similar to the ones for life insurance, for example, that make it cost more for smokers than for non-smokers. It annoys me that my health insurance premiums are the same cost for me as for those who do smoke.

mattbrowne's avatar

@WasCy – All right, let’s stick to peeing on a stripe checking for glucose in your urine. It’s cheap. It doesn’t hurt. And it should be done regularly. Type 2 diabetics are a great burden on the health care system, because untreated they create many long-term complications including the need for kidney dialysis (very expensive). So I would increase health insurance premiums if people don’t take the peeing test.

For smoking it might be simpler to add a surcharge for every cigarette transferred to health insurance companies. Same for unhealthy food. XL french fries at McDonald’s: 20 cents to be transferred to health insurance companies.

But alas. This increases bureaucracy. And many people hate additional regulations.

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