Wednesday, March 24, 2010

American Health Care Reform

The so-called health care reform bill has been passed in the States by a very divided Congress. Not one member of the Republican Party voted for it. The Bill that was passed is really health insurance reform, and it requires all Americans to buy health insurance whether they can afford it or not. Those who can't afford it will be subsidized and its estimated by 2014 when the thing takes full effect 95% of Americans will have insurance.
I'm sure that the American system of health care is broken, but I have strong doubts that this new Bill is the solution. It is supposed to save money, well living in Canada I know that health care costs are rising at an unsustainable pace and eventually something will have to change. The Americans will likely find that their costs will also rise much faster than anticipated. This short video outlines three reasons why:
http://www.youtube.com/watch?v=Un505mz35dY

During the health care debate in the U.S., Michael Cloud of The Advocates for Self Government proposed six simple ways to dramatically cut costs for medical care without it costing taxpayers a penny. Here is what he wrote:


1. Allow price advertising. Let pharmacies, doctors, hospitals, and laboratories to publish their prices for goods and services. Eliminate all laws, regulations, and government provisions that hinder or prevent medical providers from posting their prices.

Charges for the same medical procedure can vary 30% to 300% within a 100-mile radius. But without price information, patients can't shop for the best value.

In the 1970's, U.C.L.A. Economist Sam Peltzman compared the costs of eyeglasses in states that allowed price advertising and states that outlawed it. Results? Much lower prices in states that allowed price advertising.

2. Let all Americans buy prescription drugs outside the United States. Do NOT force them to travel abroad. Allow them to have the prescription drugs shipped to their homes.

I've seen the 30% to 60% savings in prices of prescription drugs purchased in Mexico.

International competition for prescription drugs will drive down domestic prescription prices.

3. Let all people buy medical insurance across state lines. In New Jersey, a single man would pay $4,000 for medical insurance. If he lived in Pennsylvania, he'd pay $1,500. If the New Jersey man could buy medical insurance from a Pennsylvania provider, he'd save $2,500 a year.

Imagine this all across America.

This would cut medical insurance costs for millions who already have needlessly overpriced premiums.

AND, if the American Enterprise Institute study is correct, this would make medical insurance affordable for 12 million uninsured Americans.

4. Let doctors and patients negotiate discounts for paying cash. If a patient saves a doctor the time, trouble, delay and cost of dealing with insurance companies, Medicare, or Medicaid - let the doctor and patient share the savings.

5. Let patients, doctors, and hospitals enter into into legally binding, limited-liability contracts. This would reduce the cost of medical treatment by reducing the cost of malpractice insurance.

Just as Prenuptial Agreements limit marital risk, limited-liability contracts will limit medical risk.

6. End all government mandates that require businesses or individuals to buy medical insurance. End all government mandates that punish and tax those who do NOT buy medical insurance. Make insurance companies earn our business with lower prices and better quality - rather than lobby government to compel us to buy medical insurance by force of law.



4 comments:

  1. While I agree with a lot of this, it doesn't address insurance companies' proclivity for denying those with pre-existing conditions, and it doesn't address their tendency to price people out of the market if so required to provide insurance to pre-existing conditions folks.

    While competition may help bring down the cost of insurance, what happens when you just can't find an insurance that will cover you, and if you do, you can't afford it? Speaking from personal experience, if I didn't have a job that had the insurance benefit, it would cost my wife and I well over $1500 a month for insurance.

    So, while we can get it, and the price may even come down, I don't see it coming far enough down to be affordable.

    I'd like to propose a ban on advertising prescription drugs, also, since over 33% of the cost of medications is to cover direct-to-consumer advertising.

    Also, medication patents for some conditions hold consumers for ransom, basically. Take Asthma: you used to be able to get generic Albuterol inhalers for $5-15. Now, when the delivery system has been mandated away from CFC's, all of a sudden, there's a whole new patent on not only the delivery system, but the drug itself, since it's now Proventil HFA, and now costs upwards of $50. Inhaled steroids are worse. Flovent, the brightest leading inhaled steroid, costs over $250 for a 30-day supply, and it's not available in generic.

    With most insurance plans nowadays, consumers pay 50% of brand name drugs, and so that brings the price tag down to $125 a month. Still pricing people out of the market and making their asthma uncontrollable.

    And then you have medications that are offered as free samples for a time, but which have black box warnings stating that stopping them can lead to heart attack and other life-threatening cardiac events.

    While I don't agree with this health care bill, I hold that reform is vital to the survival of our society.

    As a healthcare worker myself, I see every day people who have easily treatable conditions coming in to my ER with exacerbations of those conditions that have become life-threatening and much more expensive to treat because they can't access preventative care. These aren't just homeless people, these are folks who work at Walmart and who have other low-paying, non-benefitted jobs.

    Something has to be done to get people access to preventative and primary care, instead of telling these people to get their care needs met at their local ER.

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  2. None of what I wrote is the whole answer to the US Health care problem. I know that the costs are huge, even as a Canadian I have close relatives in the States and I'm painfully aware of the costs.
    The single payer (Gov't) system that we have in Canada is not the answer either, but there solutions that exist in some Asian (Japan) and European countries.
    Insurance companies can offer some creative solutions, for example, where I live my auto insurer offers a discount for snow tires and alarm systems. Life insurers already offer discounts for non-smokers, can healthy living be negotiated? Its a thought. Many of our afflictions are brought on by bad habits, insurers can play a more active role in how we live for our mutual benefit. I don't have the answers, but the banning of things and government programs are not the way to go.

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  3. Unfortunately, for a goodly amount of Americans, discounts don't add up to affordability.

    Your point #3 is a big chunk of where I'm coming from. You say "If he lived in Pennsylvania, he'd pay $1500. If the New Jersey man could buy medical insurance from a Pennsylvania provider, he'd save $2,500 per year."

    The $1,500 a year is a VERY low estimate for health insurance for folks with perfect credit and perfect health. In some cases, it's $15,000 a year.

    I'm not saying that single-payer is the only solution, but I am saying that if you're in the business to make money, that's automatically a conflict of interest in the insurance business. You make money by not paying out for things. Insurance companies' motives are all about making money, not about saving lives or helping society grow.

    I'm really strange in that I tend to believe that the best place for heath care payments to be provided is the government, but I don't trust the government to do it right in the state it's in now.

    Both in government and in the health insurance industry, there are too many people who can't see past their own pocketbooks to see how much good they could do for society as a whole.

    Meanwhile, we all end up paying for it anyway, because every time the person with no insurance comes in to the ER for a splinter in their toe, or a bout of the common cold and doesn't pay their bill, it just gets passed on to those who do pay their bill. And when someone can't afford their seizure medications and ends up in the ER day after day after day, week after week, those costs get passed on as well.

    It's much cheaper to take care of someone before they get really sick than it is to nurse them back to health after a stay in the ICU.

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  4. There are parts of what you said that I absolutely don't agree with, and some that I can. This part I don't agree:
    "I am saying that if you're in the business to make money, that's automatically a conflict of interest in the insurance business. You make money by not paying out for things. Insurance companies' motives are all about making money, not about saving lives or helping society grow."
    I am not an actuary, so I can't explain exactly how insurance companies manage risk, but I know that they can make money and still offer good coverage at various price levels. Your argument if followed to extreme would disqualify all private money making enterprises because their goal is to make money and not help people. So why should government not take over everything because private enterprise is not to be trusted? The answer is very simple and complex at the same time - competition. Government programs are always monopolies - private enterprise demands the opposite. I can buy a very expensive car, or I can buy a relatively cheap car (even a used car) but still have a car that I can afford. In the US and Canada government is the main customer in the health care business. Government is influenced by lobbyists who are not interested in competition and the end result is higher prices than would otherwise exist if there was a real free market. I know that may sound simplistic, but real free market economics is simple. Were it not not for the complications of legislation, cronyism etc. medical costs would be cheaper. There is great competition in consumer goods and costs of these goods continue to fall because for the most part government is not involved. Insurance could work in the same way. There will always be some few whose insurance is too high. For those some form of assistance would be fine with me. But that simple welfare cost would be much, much, much lower than the huge costs and distortions created government monopoly.

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