Sunday, August 23, 2009

More health care ramblings

Or, why single payer is the only workable option.

1. The current system is failing. Even if we completely ignore the individual struggles of people who are stuck paying for healthcare out of pocket, or who have to stand in endless lines at "free" healthcare providers, or who have to pay out of pocket for some condition simply because they had the audacity to get a different job, the costs of the current system are out of hand. Various googling leads me to believe that healthcare costs are increasing faster than GDP and/or individual incomes. That means, to me, that there is a looming bubble ready to pop. Like the mortgages, there will come a moment when enough people simply cannot pay for it. As they continue to become ill and continue to use the resources of the healthcare system, the costs for those who still can pay will increase even more.

1b- Slightly more worst-case, we start to have more and more public health crises, straining the system and needlessly creating more costs for someone to pay. The more people who are sick, the more people who will get sick.

("Sucks for them," you might say. And, looking at the individual, yes, that's right. But for every person out there who is more sick than they could be for want of decent care, there is an employer struggling to cover their time off. There is the community of family, friends and acquaintances who get exposed to this person-as-germ-incubator. Infectious diseases, previously thought to be mostly eradicated, are on the rise. We can blame the hippies who don't vaccinate their kids on "moral" grounds, but there are plenty of kids who don't get their shots in time because their parent's can't or choose not to afford it. Infectious disease isn't eradicated simply because we get a vaccine and now we are supermen against that disease. If we are vaccinated against a disease and we get a juicy lungfull of that disease's germs, we will become ill. A vaccine simply gives our immune system a head start in fighting that disease. We still suffer the effects of our immune system doing that fighting. No, the effectiveness of vaccinations is in the so-called "herd immunity". By reducing the numbers of people who contract the disease, or the time it takes to fight the disease, we greatly reduce the chances ("vectors") that people will spread the disease. Over time, there are quite literally fewer germs out there to go around. Like with smallpox- we so greatly reduced the existence of this germ that we don't even have to vaccinate against it any more.

2- Continuing from #1 above, the relative costs of healthcare will be going up more dramatically than we predict, I predict. History has shown that the Baby Boom has wreaked havoc on public systems as they age. By no means is this a blame-game, it is simply a reality of demographics and logistics. Their sheer numbers overwhelmed school systems. A case could be made that the brute force of them joining the workforce in the 1970's caused some of that decade's economic troubles. And, in the coming decades, their sheer numbers will overwhelm the healthcare system.

3- A reality of this fact is that no matter how you do the accounting, the health of an economy is the simple arithmatic of resources versus consumption. We could have all the savings in the world, but when the crapstorm comes, someone has to pay the doctors, nurses and hospitals for their work. It won't be the future generation of old people- they will be too old or sick to work. It won't be the social security trust fund- that exists solely in the form of IOUs. When we start trying to cash in those IOUs, someone has to have the cash. Best case, we manage to be productive enough that we can pay those bills and manage to maintain a semblance of a standard of living. Probably another period of stagflation. Worst case, massive income tax rates to pay for new IOUs to pay for the old ones, massive interest rates to coax enough cash out of the economy to fund those IOUs, massive unemployment for people whose skills are no longer needed in this feed-the-beast economy combined with tremendous workloads and low pay for those people whose skills will be in too much demand. And the rampant inflation that goes along with that.

We will have won the moral victory of not increasing government spending on healthcare, only to massively increase government spending to fund all the externalities of that Phyrric victory.

4- Everyone needs healthcare. You cannot insure something that everyone needs. Insurance is one person trading their money for someone else's risk. But when everyone holds the same risk, what we call insurance is simply skimming. Since everyone has the same risk, but not everyone has money, there are fewer people to pay for the risk. Again, look at the mortgage crisis- when every mortgage holder insured their risk with every other mortgage holder, nobody was protected. Same thing applies here.

5- "But," you might say, "what difference does it make whether we spread the risk using insurance companies, rather than letting the government do it? The government is inefficient and will just add a layer of bureaucrats in the middle." My answer to that is two-fold. One, what's the difference between a government bureaucrat and an insurance bureaucrat? Maybe on the surface there's none. But a little deeper down, there is a difference. The insurance company bureaucrat is beholden to the owners of their company. To varying degrees, their job is to preserve the profitability of the company. A government bureaucrat is beholden to the government, which is beholden to the people. At least in theory, they work for their clients.

5b- Derail- "blah, blah, blah, government is inefficient and is best at preserving and growing itself, not serving the people. Private enterprise is more efficient." That may be true in many cases. But that's not some Law of The Universe. It is not like people simply become better at their jobs because they work for a private company. They become better at their jobs because they have different motivations. And the motivation of private enterprise is profit. Nothing wrong with that- it is what makes the world run. The free market in an excellent allocator of resources. IF the playing field is relatively level. It is not *who* creates the incentives that create motivation, but what those incentives are. There is no reason why government can't create an environment that produces more cost efficiency than private enterprise, but lack of trying.

6- But the playing field is by no means level for healthcare as it stands. Healthcare providers are ethically and legally bound to provide certain care to anyone who shows up at their doorstep. Their ability to sell their services is crippled by that. (Not that it's a negative, but it is a reality.) Health insurance companies are crippled at every turn with regulations and lawsuits and lord knows what else; but in the contrary, are relatively protected from competition because those issues and other realities create a fairly large barrier to entry. And the healthcare consumer is crippled by the fact that we very often don't choose when our need for services will arise; we can't easily change our health insurance providers; and are in turn restricted by those insurance providers as to which services we can consume, and from whom. Not *totally* restricted, of course- we have the choice to accept care we have paid for from an unsatisfactory provider, or we can choose to pay extra for satisfactory care. But the incentives are all messed up- this incentivizes the insurance companies to provide barely adequate care to the extent someone still pays the premium. It incentivizes healthcare providers to provide not as good service to patients of insurance companies who don't reimburse them as much, and it incentivizes patients to feed extra money into the system.

6b- Or we could do it another way- add more regulation that intends to level the playing field for the healthcare consumer. The result might be incrementally better for the healthcare consumer, but it would do nothing to reduce costs. More likely it would raise costs, either paid for through government subsidies and higher premiums. The fact is, the restrictions placed on coverage by insurance companies DO reduce costs for them, because their cost structure is such that letting people make all kinds of changes all the time costs money.

7- OK, so reinsurance. Let the system stand, but create a government backed pool of funding to pay for care that is beyond what the individual policies cover, or care for people who cannot or do not pay for their care. That helps nobody. Or at least doesn't help nearly as much as it would cost. It spreads the risks and the costs unevenly. Paying for the risk is mandatory, but the reward gained from spreading that risk is not spread evenly. Providers benefit to some extent because they can be reimbursed for care they'd have to write off. Insurance companies benefit greatly because they now have no incentive to better coverage. Some individual patients benefit- the tiny slice of people who have insurance, just not quite enough insurance, will get coverage they wouldn't have gotten. But everyone else pretty much gets what they have been getting, plus a higher tax bill.

And so, single payer. Every other solution that I can see will cause undue burdon on some players, for not enough result for others. The only fair solution for everyone is to spread the risk to everyone, for the benefit of everyone.

(Yeah, life isn't fair. But that's no excuse not to try.)

My plan is forthcoming...


At Wednesday, March 10, 2010 7:06:00 PM CST, Anonymous Anonymous said...

I am reading this article second time today, you have to be more careful with content leakers. If I will fount it again I will send you a link

At Saturday, March 13, 2010 1:34:00 PM CST, Anonymous Anonymous said...

No matter what others say, I think it is still interesting and useful maybe necessary to improve some minor things


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