Consider the following health insurance plan.
It refuses to pay for certain medical care and then doesn’t offer a clear explanation. It does pay for unhelpful care that ends up raising premiums. Its customer service can be hard to reach or unhelpful. And the people who are covered by this insurer have no choice but to remain with it — or, at best, to choose from one or two other insurers that are about as bad.
In all likelihood, I have just described your insurance plan.
Health insurers often act like monopolies — like a cable company or the Department of Motor Vehicles — because they resemble monopolies. Consumers, instead of being able to choose freely among insurers, are restricted to the plans their employer offers. So insurers are spared the rigors of true competition, and they end up with high costs and spotty service.
1. Terry Tee wrote:
From my side of the Atlantic I read this stuff with more and more impatience and even a tinge of embarrassment. Come on you guys. You can project military might anywhere in the world. Your world class universities outstrip all competitors. You have Nobel prize alumni by the score. Silicon Valley is an example of stunning innovation that through inspired R & D grasped the moment and ran with it. And still you cannot devise a national health care system?
Why? I mean this seriously. The article implies a mixture of clever lobbying by big industry (in cahoots with old-style unions) and lack of will in the general public. But Roosevelt’s 1930s reforms were driven through in the teeth of bitter opposition, and during the most severe recession in history. Somehow, he was able to shape and benefit from a consensus. I worry, as an external observer, that consensus seems so hard to achieve in the US today. And frankly, if the US is weaker, the rest of us are all more vulnerable. Hence my interest and concern.
August 26, 8:45 am | [comment link]
2. lou browning wrote:
Terry Tee - I haven’t any idea about your familiarity with how a federal government, as opposed to a national one, works, but they work very differently.
August 26, 9:36 am | [comment link]
I was with English friends at the time of the Florida “hanging chad” episode, who asked me over and over again, “Why don’t you change the voting laws so this can’t happen?” Repeatedly, I replied, “We don’t have national voting laws.” I’m not sure to this day if I made myself clear.
We function differently here than the UK and Europe. Your style of gov’t doesn’t apply. We have to do it our own way. And, we do not wish to change our way.
3. Jeffersonian wrote:
And still you cannot devise a national health care system?
No, and no one can for a diverse nation of 300 million people. It’s an impossible task as the knowledge and information needed to run such a system is dispersed throughout millions of people and organizations. Obama and the Democrats think they can centralize all the salient decision making, but it is utter folly. As Adam Smith so eloquently put it:
“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”
The best way to devise a health care system in the US is to put those same 300 million people in charge of it instead of a passel of lard-butted bureaucrats whose interests are most certainly not congruous to those of the American people. For that to happen, the State needs to quit stepping on our feet and get out of the way.
August 26, 10:32 am | [comment link]
4. Terry Tee wrote:
Lou, if you read my post again, you will see that there was no suggestion of changing your way. On the contrary I recalled US history and wondered if something had, in fact, changed, a change that would, I may add, not be in keeping with your best traditions. A move away from consensus towards a more partisan, embittered, embattled politics. Many US commentators ask the same question. BTW I am very familiar with how the US government and electoral system works. I even found myself once explaining to astonished American friends that the president was not elected by majority vote, nor even by the vote of both houses of congress, but by an electoral college: they did not know this.
August 26, 10:33 am | [comment link]
5. Phil wrote:
No, Terry Tee, we can’t devise a national health care system (not a competent one, to be more precise); nor can we devise a national supermarket system, nor a national fast food system, nor a national computer manufacturer, nor a national lawn-care service, among many other things. Sorry if that’s all so messy for you, but our country is founded on a notion of liberty. Whether it will maintain that foundation remains to be seen.
August 26, 11:02 am | [comment link]
6. Terry Tee wrote:
I take on board the objections raised by Jeffersonian (who is well named) and Phil about the dangers of a ‘one size fits all’ solution. I note in passing that Adam Smith was, err, a Scot, was he not? Bur Jefferson, is the proposed reform really one that would railroad peole into one inflexible system? And Phil, where is the threat to liberty? Do you mean by this the loss of consumer power, ie losing the freedom to choose one’s health care? If so, the article addresses precisely that fear and raises questions about whether what seems like health care choice in the US is often illusory.
August 26, 11:15 am | [comment link]
7. Jeffersonian wrote:
Bur Jefferson, is the proposed reform really one that would railroad peole into one inflexible system?
Not immediately, but almost certainly eventually, yes. The federal government can do things no private insurer can do: subsidize premiums, change the rules of the market, bully executives of competitors (as is already happening in Henry Waxman’s committee), require individuals who temporarily lose their insurance to irrevocably join the government plan, etc.
Much of health care choice in the US is indeed illusory, but that’s not the fault of private industry, but state intervention. Remove the state intervention, and choice will return.
August 26, 11:28 am | [comment link]
8. Phil wrote:
Terry Tee, under the proposals put forth (generally speaking), liberty would certainly decrease. As only a couple examples, citizens would be compelled to purchase health insurance or face large fines; and the offering of all health plans would be effectively standardized in short order, removing what little choice is currently available in the market.
I agree with you as to the conclusions of the article about the current system. The answer, however, is to make the system entirely consumer-directed, i.e., decoupled from employers. The plans being put forth not only don’t do this, they move in the opposite direction.
August 26, 11:37 am | [comment link]
9. Katherine wrote:
In addition, the “approved” plans will be more like the “cadillac” health plans people refer to today; the option of paying for routine medical expenses as you go and invoking the insurance plan only when something serious goes wrong will be eliminated.
August 26, 11:46 am | [comment link]
10. Lee Parker wrote:
Terry Tee, good post and while I’m still digesting the idea of NHC, I am convinced that it will require a political solution. There are too many special interests involved and our current system is very broken. May I say it this way. To date, special interests have had no incentive to fix the system but they are breaking the financial backs of Americans and many of us have had enough. There will be dramatic change in the not too distant future.
August 26, 12:43 pm | [comment link]
11. Phil wrote:
My suggestion, Lee Parker, is that the system is going to have to be changed dramatically as I’ve outlined in #8. If the change to which you refer is in line with what’s on offer from the Congress and the Administration, the financial back of our nation will be broken, and you will be seeing oncologists in 3 months instead of 3 days. That will be great for growing tumors and green-eyeshade government bureaucrats newly transferred from the DMV and Post Office, but not so great for your health. We will exchange one group of people facing serious financial difficulty from medical bills - and I agree that’s a problem - for another group of people dead and suffering. I’m not sure that’s a good trade.
August 26, 12:50 pm | [comment link]
12. Lee Parker wrote:
Phil, I think you might be right about uncoupling plans but this is a very small part of the elephant and much too simple. I have had the pleasure of corresponding with a “Health Care Economist” recently and she gets it. She is also a political liberal but her understanding of the system is excellent. My suggestion is that the system can not and will not fix itself and there are places in the fix for government intervention.
August 26, 1:03 pm | [comment link]
13. Jeffersonian wrote:
There are too many special interests involved and our current system is very broken.
Speaking as a free-market, right-wing maniac myself, I’d much rather those special interests were beating a path to my door than Congress’s. And you know a national health care system would increase the number of DC lobbyists exponentially, don’t you?
August 26, 1:14 pm | [comment link]
14. Phil wrote:
I agree, Lee, that the system won’t fix itself. After all, the players in the market are employers, providers and the government - not you and I - and they’re already adjusting the system to their benefit. Where I disagree is that the answer is “government intervention.” The government needs to alter regulations and tax policies that make the current arrangement viable, but that’s a far cry from both “intervention” and what’s being proposed.
August 26, 1:25 pm | [comment link]
15. Lee Parker wrote:
#13. Jeffersonian, since my livelihood exists on understanding markets and I am a practicing economist, I can simply say that our HC system is nothing close to a free market one. The second part of your comment is rhetorical. There are actually conservatives, including me, who believe that there might be a private/government beginning to a solution for monopolies which are out of control.
August 26, 1:31 pm | [comment link]
16. vu82 wrote:
We are seeing the result of the President’s policy of calling for reform- then having the Congress craft the legislation. With the sorry gang in charge of the Congress at present that was a recipe for disaster. They refuse to directly confront the problems- access and cost control- and instead look for another gross expansion of control and expenditure by the already bankrupt Federal monstrosity. The people outside Washington seem to see the evil in any new control bureaucracy inside the Beltway. As to cost control- any “plan” that excludes the best way to reduce costs in the system (tort reform) is a joke. And you won’t be hearing about tort reform from a President and Congress who are slaves of the plaintiff’s bar. Thus the Reform Circus- mostly low comedy.
August 26, 1:44 pm | [comment link]
17. Lee Parker wrote:
Phil, I truly believe that the proposal was nothing more than the beginning of negotiations. Let me give you one example of a “reasonable” place the government can intervene immediately.
The VA system has taken a lot of deserved criticism over the years but it is a system if improved could provide for health care for many folks who don’t fit in the private sector. My brother in law who has 25 years experience and is now a nurse anthesis has recently taken a job with the VA. One of my ex employee who attended Smith and then the Medical College in Charleston for PT is one of the key administrators in PT for the VA. My point is that there are quality folks opting for government jobs due to lifestyle issues.
I would not hesitate to see either one of these folks for health care. and I’m paying their salaries indirectly. Using this system for some of the folks who have preexisting conditions might be a portion of one part of the fix.
Please also note that I am not directing this at you. The reason I “walked” from ECUSA is that I found most laypeople to be talkers and not doers. In fact the overall lack of courage and conviction and the exposure of my children to a false gospel were my primary reasons for starting over. I’m not looking for a Glenn Beck type of fight here but I do think that it is time for conservatives in general to solve the problem or get out of the way.
August 26, 2:02 pm | [comment link]
18. Jeffersonian wrote:
#13. Jeffersonian, since my livelihood exists on understanding markets and I am a practicing economist, I can simply say that our HC system is nothing close to a free market one.
If there’s anything we’re going to agree on in this thread, it is this. Nearly one of every two dollars spent on health care in America is disbursed by government at some level, and that’s just the beginning of the distortions imposed by the State on the system. Mandatory coverages, statutory monopolies, restrictions on insurance purchasing, tax break that take decisions out of consumers’ hands, Certificates of Need requirements to build facilities…the list is almost endless.
In short, government intervention in the health care field has coincided with its manic increase in cost. As an economist, surely you’ve noticed the correlation.
The second part of your comment is rhetorical. There are actually conservatives, including me, who believe that there might be a private/government beginning to a solution for monopolies which are out of control.
Me too, starting with the government refusing to protect them in the form of the AMA and within-state insurance purchasing requirements. Removing the employer health insurance tax advantage (while paying employees the amount used to purchase said insurance) would also help connect suppliers with consumers, something sorely lacking in today’s system.
August 26, 2:09 pm | [comment link]
19. Jeffersonian wrote:
Oh, and actually the second part of my reply was not rhetorical, but practical. Putting nearly $2 trillion under the control of any central authority will draw lobbyists like honey draws flies. If you want to get special interests out of health care, put consumers in charge of their product not politicians. I can’t believe anyone would seriously suggest that federal control will do anything but increase the power and influence of monied interests.
August 26, 2:16 pm | [comment link]
20. Ross wrote:
I don’t pretend to have an answer to the health care problem. But it does seem to me that we can possibly shed some light by distinguishing three different kinds of medical expenses:
First, routine expenses—annual checkups, scheduled screening tests, a certain amount for routine minor illnesses, that kind of thing. Most everybody incurs these expenses, and they’re usually not unreasonably large. For this kind of expense, something like an HSA seems like a good mechanism for handling them.
Second, major “incident” expenses—you had an accident, or you need an organ taken out, or something like that. You may run up a really large bill in a short time, but once the incident is over it’s pretty much over and you’re back to your baseline ongoing medical expenses. This is exactly the kind of thing that the insurance model is meant to handle, and handles well, and insurance companies are happy to write policies for this kind of thing because they know exactly how to make money off of it.
But the third kind is the chronic health expenses. This is where the Bad News Fairy taps you with her wand one day and says, “Congratulations! From now on, you will consume $BIGNUMBER in medical care, every year until you die. Hooray!” And the problem is, I don’t know how this should be handled.
Unless you’re independently wealthy, you can’t afford to pay $BIGNUMBER every year out of your own pocket. And this really isn’t the kind of thing that the insurance business model is set up to handle—it would be as though you bought an auto insurance policy, and then called your agent and said, “By the way, it turns out that I’m going to have a fender bender every month from now on.” They’d drop you as soon as they legally could, or raise your rates through the roof, because otherwise they’re losing all sorts of money over you. But we keep trying to pay for this kind of expense using the insurance model, and it keeps not working very well.
So maybe we need a hybrid approach to health care. HSAs or similar for routine expenses, insurance for major incident expenses, and… something that I don’t know what it is yet, but not an HSA or an insurance policy… for chronic expenses.
August 26, 2:29 pm | [comment link]
21. Sarah1 wrote:
RE: “There will be dramatic change in the not too distant future.”
Oh there’s no doubt about that, Lee. And things will get far far worse in healthcare as a result.
That fact has some connection with this statement of yours: “I do think that it is time for conservatives in general to solve the problem or get out of the way.”
Problem is of course . . . there are very few conservatives either running for or getting elected to office.
So no, the “solution” [sic] to the healthcare “crisis” [sic] will be Obama and his buddies “fixing it right up for us.”
As for myself I’ll be looking to healthcare out of country—I’m already planning on that and doing some sniffing around about it.
You know . . . sort of like you did by leaving TEC. ; > )
August 26, 3:02 pm | [comment link]
22. art+ wrote:
The countries that have national healthcare are all having problems with providing fast, efficient healthcare. AND those countries are in almost every case smaller than one of our 50 states. The Europeans, unless they have been here and traveled the US from coast to coast have no concept on the size of our country. If we were all jammed into one small area it would be easier to provide healthcare, transportation etc than with us being spread out as we are.
August 26, 3:05 pm | [comment link]
23. clayton wrote:
#20 - finally, someone hit the nail on the head! Chronic condition management is the big issue. If you don’t have coverage for that, you are super-extra-screwed in a way that you’re not if you can’t cover a surprise operation or short-term severe illness. You’re absolutely right that there needs to be a serious look at that.
August 26, 4:21 pm | [comment link]
24. Capt. Father Warren wrote:
My healthcare insurance plan:
August 26, 8:44 pm | [comment link]
1. 300 million purchasers of healthplans
2. Totally unfettered insurance markets similar to auto insurance
3. Service providers scrambling like crazy to figure out what 300 million customers want
4. purchaser and supplier make a deal that both are happy with and insurance is the risk mediator.
25. Lee Parker wrote:
#20 and #23 are both good comments. Another true story today. My good friend who ironically was in medical sales and then medical recruitment called today. He lost he job and cobra is running out. He has no options because his wife has a chronic blood disorder that has nothing to do with a life style choice. She is uninsurable and has a young daughter. This is what it has come down to for him. He goes bankrupt to provide medical care for his wife, maybe finds a job at Walmart etc that will let him slip into the group (big maybe) or he watches his young wife and my good friend die.
Here’s the difference Sarah. I had great options for leaving ECUSA. There are few options and no good options for my friend. He pays for insurance for his congressmen, his state employees and even supports a portion of all private group insurance though the special interest structure. He has no insurance for his wife. Whining about the way we wished things were and a completely free market system for health insurance to include tort reform is not going to happen in the near future. So none of us like the Obama plan. So what. I have yet to hear one conservative plan that is doable. Let’s get started.
August 26, 9:35 pm | [comment link]
26. libraryjim wrote:
There have been many conservative health care reforms that were shot down by the Democrats:
* Shopping across state lines to increase competition and lower costs (currently prohibited by the Federal Goverment)
*Health savings accounts tax free
* Small employers forming associations to purchase cheaper insurance
These ideas were proposed by Republicans and killed in committees or by vote by Democrats.
The Government already runs some health care programs, such as Medicare and Medicade, which doesn’t reimburse the physician and hospital fully (the same problem plaguing the Cash for Clunkers program) and are almost broke. If the gov’t can’t run these programs efficiently, why do we think they would run health care for 300 million people efficiently?
August 26, 11:22 pm | [comment link]
27. libraryjim wrote:
Or how about this plan from “Whole Foods” CEO John Mackey? Interesting to note that for his decision to not support the House bill, his shop is being boycotted and he is being called “a bad guy” who doesn’t care about the poor by those who disagree with his right to disagree!
(note some of what he suggests has been suggested in Congress—by Republicans—such as those I mentioned above)
Jim Elliott <><
August 26, 11:27 pm | [comment link]
28. Jeffersonian wrote:
Indeed, Jim, it seems to be those that are braying loudest about wanting a calm, reasoned debate about health care are the ones that have savaged Mackey most ruthlessly and called for a boycott of Whole Foods. I’m planning on starting to shop for some things there this weekend.
August 26, 11:58 pm | [comment link]
29. Sarah1 wrote:
RE: “Here’s the difference Sarah. I had great options for leaving ECUSA.”
I don’t follow. I’m merely pointing out that I’m hatching my own escape plan in light of the fact that the folks running the asylum will be instituting their own “healthcare reform” [sic] plan, just as you hatched your escape plan in light of the folks running the asylum of TEC. We parallel nicely, only in different venues.
RE: “Whining about the way we wished things were and a completely free market system for health insurance to include tort reform is not going to happen in the near future.”
I don’t see anyone “whining” about that, Lee—merely acknowledging reality as it exists. The only ones I hear, er, *complaining* are folks like you who struggle with their own particular healthcare needs. I understand that and don’t label it “whining.”
RE: “I have yet to hear one conservative plan that is doable. Let’s get started.”
Go for it. You don’t hear any “conservative plan that is doable.” Obviously I’m not going to be “going for” anything that involves an even more grossly bulging State involvement, and since there aren’t conservatives in power to institute the reforms that I believe need to happen, I’m sitting easy and don’t have anything to participate in on this front. Go ahead and “get started” on an expanded State involvement with healthcare, since you don’t want any “conservative plans.” I’m not interested in working on any of that, any more than I’m interested in cries to “reform TEC by pursuing political office in same.”
I’m not quite certain why you need to worry or work on any of this anyway. Some form of further expanded State involvement will come to pass without your work, so you can rest easy. But I’ll certainly watch your efforts with interest.
August 27, 8:55 am | [comment link]
31. Clueless wrote:
‘Chronic condition management is the big issue.”
Exactly. And as I have mentioned before, this is exactly what would be best handled by the patient. Somebody has diabetes? Make the drugs nonprescription, and have algorithms available, so that the patients can prescribe for themselves. Some folks I know are way smarter about their diabetes and hypertention than a lot of docs. Those who are not, should be allowed to buy low cost info from folks who are comfortable managing meds. I am getting sewing lessons from somebody I met in an advertisement at the grocery store. She doesn’t charge an arm and a leg, but then she doesn’t expect me to sue her, and I don’t expect her to have a fancy license from the government telling me that she is competant, and constantly takes further education in fabric and its uses.
I was speaking to a neighbor last weekend at a garage sale. Her father was a physician during the (last) Depression. She says that their little Iowa rural township medical society met at her Dad’s house once a month, and there were 32 physicians practicing in that little farm township of under a thousand people. That was before the advent of insurance, (let alone medicare). Now, despite the county having doubled, and despite the fact that medicine has grown more complex and people are older and sicker, there are only 2 physicians in practice, and both physicians are old, and long past retirement age.
The solution to health care access is not more government (or more insurance). It is lower costs of entry into practice, and lower costs of doing business.
August 27, 10:45 pm | [comment link]
32. Clueless wrote:
Here is an economist saying the same thing. Read the article. I don’t like his attitude toward physicians, however I agree that the system outlined works pretty well. (And I agree that chloramphenicol is a great drug, with no resistance, only US physicians don’t dare use it due to malpractice concerns).
August 28, 12:42 am | [comment link]
33. Sarah1 wrote:
Clueless, the example about the Iowa rural township is great. You need to remember that one and use it the next time people try to make the claim that “the free market” is still working in healthcare, and the State has not hindered it.
August 28, 7:38 am | [comment link]