Saturday, August 22, 2009

Some Thoughts On Health Care Debate and Policy --- Again

Everyone is writing about health care. I normally do not write about what everyone else is writing about, thought I do occasionally offer criticism of the things others write. However, as anyone who has read this blog knows, health care is one the issues foremost in my mind. I believe that American health care policy is in need of a near total overhaul and I've said so before. Then, I outlined many of the problems with our system that need to be fixed and attempted to attack those problems specifically in my ideas.

Much of the health care writing on the web and in print right now is centered on the health care debate itself rather than health care policy. This is somewhat dangerous. Indeed, much of this writing attacks or defends the process in Congress or the administration without advancing constructive ideas. There is also, of course, well measured and intellectual criticism of specific problems with the compromises being made in the Senate Finance Committee in the name of bipartisanship. This second quote piece is from Ron Chusid of Liberal Values, who is likely one of the most sensible and sober writers on the issue on the net. Not only is Ron a doctor, and thus possessed of a knowledge of the subject not always present with the rest of us in the blogosphere. He has a great deal to offer both on the debate itself, and in support of many of the reforms currently on the table, in addition to the aforementioned critique of the finance committee bill. He's not so far out on the left as I am, myself, but who really is?

I'm not going to write, this time, about the debate. I agree with the majority of Ron's comments about the debate (I believe passing the current reform agenda in the form most palatable to liberals and most likely to pass muster is extremely important, even if not the final word), though I do believe that those on the left criticizing current proposals have important views that should be heard as well. I believe the left has been shut out of the debate on a more meaningful level even than the right, and I think it's inappropriate that so much sound thinking on the left was merely dismissed.

Instead, I am going to offer something tangible: a new American health care policy. While it is unlikely anything on this scale will be included anytime soon, it is important that such ideas be presented and circulate for the future.

I am going to start by identifying what I think are the most serious problems with the current system, and offer specific solutions to those problems. I will then attempt to predict the problems such a system might create, and create ideas to attack those problems as well.

1.) The chief problem with our current system is financial. This is not the problem of 'health care costs' as described by the pro-reform voices in the debate, but rather the high consumer costs created by the utterly inefficiant means of paying those costs. Rather than pool all the available health care dollars into one pot to pay the total health care costs those dollars are divided between individuals (both those wealthy enough to pay for most health care out of pocket and those too poor to pay any other way, as well as the dollars paid to insurance companies... as well as Medicare taxes), corporations (both through employee benefits and workplace liability laws), insurance companies (who collect money from both individuals and corporations, take their cut, and then pay health care costs), and the government (through Medicare and Medicaid... and also into insurance companies for government employees.) So there are four different entities who pay into multiple pools. In the case of individuals, the government, and corporations those involved all pay into at least two pools and sometimes more. For example: the same person pays Medicare taxes and insurance premiums, while also paying co-payments out of pocket. That person is paying three times for the same amount of health care. Employers pay into insurance pools while paying corporate taxes that go into the budget to pay for Medicaid, and also pays any workplace liability claims. The government funds Medicare and Medicaid and private insurance costs for government employees. That's a horribly sloppy division of costs and is practically impossible for all of that money to be properly applied the way it is spent.

The solution to this is obvious. Eliminate all the pools but one. Every individual pays a dedicated tax, based on the Medicare tax, into one pool of health care dollars. The insurance companies are eliminated. They are only a drain on the system anyway. Their administration costs and their profit requirements merely serve to suck money that could be paying for health care out of the health care pools. The drain on resources to pay for health care that they create does far more damage than the benefits they provide. While there are some excellent companies that would provide a useful model for a single-payer system or national health service (Kaiser Permanente, despite real flaws, would be excellent for the latter), even the best companies drain money out of the health care pool by their business models. The goal is to eliminate co-payments and deductibles for medical care and confine costs to one dedicated payment that would replace health care premiums.

Medicare and Medicaid would also be discontinued and this system would replace Medicare and be extended to cover Medicaid recipients as well. Importantly, this would eliminate the additional expense of Medicaid eligibility testing. An entire bureaucracy would be shaved off, the money saved to supplement the new health care system as necessary.

2.) Access to health care is, by far, the second biggest problem with the current system. This takes two forms: access to actual care and access to care of sufficient quality. The first is actually a set of several subgroups: those who are refused coverage by insurance companies because of pre-existing conditions despite the ability to pay, those who cannot afford to pay for health insurance and thus do not seek medical care under most normal circumstances, and those who have health insurance but whose provider refuses to pay for care for a variety of excuses. The second group consists of members of all the subsets of the third group: those who generate sufficient debt due to the cost of health care that their physicians will no longer see them until they have paid off their bills.

This problem is solved by the previous solution. Everyone is paying directly into the same pool and so everyone has access to health care when they feel the need to exercise that access. This increased access and the increased ability of health care facilities to receive compensation that results from increased access should also have the benefit of including the quality of care to which many people in the second group have access. The reforming of the Medicaid ghetto into part of the mainstream health care system would give people now on Medicaid access to a better quality of care. This would cause those clinics currently providing services to Medicaid recipients on a nearly exclusive basis to improve or be replaced by better facilities. In this sense (and in that of many people on low quality private insurance) this increase in consumer choice would actually encourage a more 'free market' competition between medical facilities and practices. If patients can go where they please with fewer limitations, then facilities must compete for patients more aggressively with better services and care.

3.) One of the major weaknesses of our current system is one that few people on the left or center properly appreciate, one of the few areas where the right is generally correct in their assessment: the economic burden paying for employee health care costs places on business. Many small businesses cannot afford to pay for health care for their employees at all, while more and more corporations are ceasing to provide health benefits or dramatically shifting the burden of paying for those benefits onto employees. The lifting of this burden would do American business far more good than any corporate tax cut. Current health reform proposals seek to shift more of the burden of paying for health care onto American business and to make it more difficult for corporations to opt out of paying employee health care costs by requiring those that do not to pay punitive taxes. Not only is this punitive taxation potentially a bill of attainder and thus legally questionable, but it aggravates what is already a major economic problem.

The system outlined eliminates this problem entirely. There's no need to add much more than that, and this one of the strongest arguments in favor of single-payer or a national health care system. It lifts a huge de facto tax burden on American business.

4.) Insurance companies and medical facilities currently compensate many medical specialists at a rate far beyond what Classical economists would consider 'market value.' Classical theories of labor, based on utility, would argue that the most important medical practitioners would be primary care physicians. However, because of the inordinately high compensation offered to specific specialists (cardiologists, endocrinologists, neurologists, oncologists, psychiatrists, and specialty surgeons all come to mind), the most necessary facet of medical practice is grossly underrepresented while specialty practice is overrepresented. Specialties like geriatrics and internal medicine are also frequently underrepresented, despite the incredible need for doctors in those fields.

The new, single pool for which to pay for medical costs would allow medical study of the need for specialists in various fields to be done to restructure more reality-based compensation for both general practitioners and specialists. Increased compensation for primary care physicians and underrepresented specialties would draw more doctors to those fields. More reasonable compensation for less necessary, but overrepresented specialties, would help to impose some small degree of basic cost control on the system.

There are at least two problems that such a thorough-going reform could create, which must be anticipated and addressed.

1.) Successful medical programs grow in cost precisely because they are successful. This has been witnessed most specifically with Medicare. The huge change it has wrought in the lives of American seniors has steadily increased the cost of the program because of the increased availability of medical care for seniors and the fact that seniors living longer because of increased access to better medical care means that there are more seniors needing medical care. It is only natural and logical to make a baseline assumption that improved access to medical care for all Americans would have a similar effect on the budget of such a system.

There are several things, however, that can be done about this. The most obvious is that purely elective procedures and medications (plastic surgery not directly necessary for reconstructive purposes, Lasik surgery, abortion in any case where the termination of a pregnancy is not necessary to protect the health or life of the mother, elective hysterectomies and vasectomies, ED treatments, etc) would need to still be based on the ability to pay. If this sounds unfair, then perhaps it is, but there is such a thing as economic necessity and that the more efficient allocation of health care dollars should allow the health care industry to lower the costs of elective procedures to a level where more people can afford to pay those costs.

Second, and perhaps most importantly, is this: the current SS/Medicare tax is capped and income over a maximum level is not taxed. A dedicated tax to pay for national health care costs should not have this cap. All income earned above the current cap should be taxed to pay for health care. Such a tax would still be lower, in all likelihood, than the insurance premiums/deductibles the highest paid Americans are already paying for their insurance, simply because of the need for insurance companies to funnel a percentage of their inflow into profits.

2.) Increased access to health care presents the problem of demand outgrowing supply. This used to be the right wing nightmare scenario, before they decided 'death panels' were even scarier. The image of flooded emergency rooms full of the miserably ill waiting their turn was flaunted by the GOP during the 1994 health care debate.

While there are definitely areas where this will be a problem, some of it is actually highly exaggerated. Emergency rooms are already flooded because of the inability of those without health care coverage to simply make an appointment and go to a doctor's office when they have non-emergency health care concerns requiring attention. The increased ability to see a doctor would reduce the strain on emergency rooms rather than increase it, particularly now that 'urgent-care clinics' have become the ongoing medical fad. The recent profusion of urgent-care clinics would relieve much of the current strain on emergency rooms without overcrowding the new clinics. Emergency rooms, more and more, would only be patronized in the case of actual emergencies. That would relieve the system of a tremendous burden.

The area where demand is likely to outstrip supply is primary care. The shortage of primary care practices could mean longer waits until new doctors enter the field. However, demand creates supply. An increased demand for primary care physicians would naturally generate more primary care physicians to meet that demand. The restructuring of medical compensation to pay primary care physicians more equitably would speed this process. There would be a short-term period in which appointments would need to be scheduled further in advance and waits at doctors' offices would be longer, but this would gradually normalize as new doctors entered the primary care field. PAs and nurse practitioners currently fulfill many responsibilities in this area and the expansion of both fields should be encouraged as well.

Besides, in the simplest possible terms, a medical system in which the biggest problem was the office wait for routine care would be a massive improvement over the current mess.

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