Regarding Health Care Reform

(This essay on health care reform is a work in progress but these are my thoughts at this time. More documentation and more thoughts to follow.)

I don’t want more government; I want less. I wish government nowhere built sports stadiums or convention centers. I would even support privatization of some current government services such as our Interstate Highway System, TVA, and mail delivery, so I certainly do not advocate nationalizing health care. I don’t want socialized medicine. I don’t support “single payer.” However, I think we must do something about health care in America.

In a recent CNN poll, 80% of Americans said they were satisfied with their health care. That may be seen as an excuse to say, “Leave well enough alone.” We can’t. There is a crisis. We cannot continue along the current trajectory. What we have is not working very well. We have a problem. Just saying “no” and supporting the status quo is not a solution. We need to get all the smart people in a room and figure out what needs to be done. I hope there really is a debate about health care. I am not sure what reform, I can support at this time but as I think about the issue here are some “givens” on my part in this debate.

We need health care reform. I accept that what we currently have is flawed and needs improvement. It is not sustainable.

Health care costs are rising. Health care costs are rising considerable faster than increases in the general price index.

Rising health care cost will wreck the economy and bankrupt the government. (More to follow.)

We do not have the best health care in the world. “Best” is a subjective term, but by many measures we do not have the healthiest people on the planet. What we have may be the best that money can buy but unless you are extremely wealthy you can’t afford the best.

The you-want-be-able-to-choose-your-own-doctor argument is exaggerated. Until we see the particulars of a specific plan this argument is nothing more than an attempt to manipulate people into opposing any change. Most people do not now go through a methodical process to choose a doctor. How many doctors did you interview before you ending up with your current doctor? I belong to an HMO and can choose from quite a long list of doctors but they have to be on the list. Unless we end up with a very draconian, almost boot camp military-style health care system, you will probably have about as much choice in choosing a doctor as the choice you exercised in choosing your current doctor. In many cases your current ability to choose a doctor depends on what kind of insurance your employer provides you.

Employers should not provide health insurance. There is nothing natural or inherently rational about your employer providing you with health insurance. The practice of our employer providing our insurance really took off in World War II when the nation had wage and price controls. Employers could not offer higher wages to attract labor but they could offer better benefits. Unions also had a roll in pressuring employers to provide insurance. Your employer should no more provide your health insurance than they should your home insurance or auto insurance. How many people are working at a job they dislike, just for the health insurance benefits? We are like serfs on the manor. We are often tied to our desk by our insurance. Breaking this tie would be liberating. Divorcing insurance from employment would free labor to me more mobile. I suspect that if people were freed from a dependency on their employer for health care, we would see a growth in small business and more overall economic growth.

Taxing of health care benefits should not be taken off the table. I do not want the taxing of health care benefits to be used as simply a tactic for destroying consumer choice and forcing most people into a government insurance program, but the concept that health care benefits should be taxes seems rational. If you are receiving your health insurance from your employer that is the equivalent of additional income on which you are not paying taxes. If all other factors are equal and you earn $30,000 and get $3000 worth of insurance benefits and your neighbor earns $33,000 and no insurance, should he have to pay more in taxes than you do? I don’t think so. It is usually the lowest income earners without employer provided heath care benefits. I am generally opposed to increasing taxes, but part of health care reform should consider taxation of employer provided benefits.

There is not a functioning “market” in health care/the market does not work. There is really not a price for health care cost. For some services, such as an office visit there may be a set price, but it is very difficult to actually determine the cost of a medical procedure and a hospital stay. The price is a function of who is paying the bill. Different insurance companies have different reimbursement rates. Many times those without insurance are charged a much higher rate than those with insurance, yet in many cases they default on the bill and do not end up paying it. Those without insurance who are charged the ticket price often bankrupt on medical bills. The roll of price as a reflection of supply and demand for a service is simply not functioning in heath care.

When a third party pays for a service, demand and cost will rise. It really does not matter whether it is the insurance company or the government paying the bill, when a third party pays the bill, people do not consider what something cost. Also, when the patient is not the one paying the bill, service providers are not as mindful of the cost. Imagine you paid a set fee for groceries and then someone else paid your grocery bill, would you eat more steak and lobster? Would you care what something cost if someone else was picking up the tab? If someone else is paying the tab, that someone has to have a roll in restricting supply. Whether it is your insurance company or government; someone has to control cost when the consumer is not the one paying the bill.

The government is already involved in health care. Many opponents of health care reform argue they do not want the government involved in health care. The government is already involved. Medicare, Medicaid, SCHIP (State Children’s Health Insurance Program), and Veterans hospitals already account for over 50% of American health care spending. On top of that, each of the fifty states has massive bureaucracies to regulate health insurance and often dictate what insurance must cover and what they can and cannot do. Also, many cities support charity hospitals and public health clinics. Most cities and states have a Department of Public Health. A lot of medical research is paid for by government grants.

Too much is spent on health care administration. With a variety of complicated health care plans and a different set of government rules in each of the fifty states, we have too much of our health care dollars spent on paperwork, bureaucracy, and administration. Surely there is a way to reduce the overhead.

Too many people are without health care. 46 million Americans do not have health insurance and the number without health care is rising. A third of the companies in America do not offer their employees insurance. Many individuals are uninsurable. This of course does not mean all of these people are totally without health care. Hospital emergency rooms are required to serve anyone with an emergency. So, without regular health care, many people depend on the emergency room for all of their health care. Who pays? We do. Free services given away by hospitals are covered by increasing the cost to the paying customers. When this happens, your health insurance cost increases. Also depending on the emergency room care for health care means many people do not get preventive care or get diagnosed for an illness until it is advanced.

Not all of those without health care are unable to get it. There are some people (we don’t know how many but maybe up to half of those without insurance) who are now now covered by insurance who could now get insurance if they wanted it. Some of those without insurance are young adults who think they are invincible and prefer fancy cell phones and electronic gadgets, eating out and going to concerts over having health care. They are people who could afford insurance; it is simply not a priority. There are other people who qualify for Medicaid or some other existing program but are too ignorant or trifling to enroll.

Mandatory Health Insurance should not be taken off the table. I don’t like the concept of mandating that one purchase health insurance, but we should not out right dismiss making people at least carry catastrophic health insurance. Most states require people who own a car to have auto liability insurance. I am not so sure that mandating health insurance is any more odious than mandating that one pay taxes or be subject to a military draft. Another person’s failure to have insurance does impact my financial standing, because we all pay higher prices for our insurance to care for those without insurance. There should perhaps be creative opt-out provisions for those who will bear the full cost of their own care, but the idea of requiring one to have some sort of responsibility for their own health care, even if it means mandatory health insurance coverage should not be summarily dismissed.

Top Stories