NM Symposium Part 2 Universal Coverage: Right Goal, Wrong Principle?

107 Comments so far ↓

• barker13 // Aug 26, 2009 at 8:54 am

  Re: Liv&Win // Aug 25, 2009 at 6:30 pm (#104) –

  Continuing to excerpt:

  “Modern group health insurance was introduced in 1929, and employer-based insurance began to blossom during World War II, when wage freezes prompted employers to expand other benefits as a way of attracting workers. Still, as late as 1954, only a minority of Americans had health insurance. That’s when Congress passed a law making employer contributions to employee health plans tax-deductible without making the resulting benefits taxable to employees. This seemingly minor tax benefit not only encouraged the spread of catastrophic insurance, but had the accidental effect of making employer-funded health insurance the most affordable option (after taxes) for financing pretty much any type of health care. There was nothing natural or inevitable about the way our system developed: employer-based, comprehensive insurance crowded out alternative methods of paying for health-care expenses only because of a poorly considered tax benefit passed half a century ago.”

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  “In designing Medicare and Medicaid in 1965, the government essentially adopted this comprehensive-insurance model for its own spending, and by the next year had enrolled nearly 12 percent of the population. And it is no coinci­dence that the great inflation in health-care costs began soon after. We all believe we need comprehensive health insurance because the cost of care—even routine care—appears too high to bear on our own. But the use of insurance to fund virtually all care is itself a major cause of health care’s high expense. Insurance is probably the most complex, costly, and distortional method of financing any activity; that’s why it is otherwise used to fund only rare, unexpected, and large costs. Imagine sending your weekly grocery bill to an insurance clerk for review, and having the grocer reimbursed by the insurer to whom you’ve paid your share. An expensive and wasteful absurdity, no? Is this really a big problem for our health-care system? Well, for every two doctors in the U.S., there is now one health-insurance employee—more than 470,000 in total. In 2006, it cost almost $500 per person just to administer health insurance. Much of this enormous cost would simply disappear if we paid routine and predictable health-care expenditures the way we pay for everything else—by ourselves.”

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  “The data are clear: in our current system, physician supply often begets patient demand. … The unfortunate fact is, health-care demand has no natural limit. Our society will always keep creating new treatments to cure previously incurable problems. Some of these will save lives or add productive years to them; many will simply make us more comfortable. That’s all to the good. But the cost of this comfort, and whether it’s really worthwhile, is never calculated—by anyone. For almost all our health-care needs, the current system allows us as consumers to ask providers, “What’s my share?” instead of “How much does this cost?”—a question we ask before buying any other good or service. And the subtle difference between those two questions is costing us all a fortune.”

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  “In 2007, employer-based health insurance cost, on average, more than $12,000 per family, up 78 percent since 2001. I’ve run several companies and company divisions of various sizes over the course of my career, so I can confidently tell you that raises (and even entry-level hiring) are tightly limited by rising health-care costs. You may think your employer is paying for your health care, but in fact your company’s share of the insurance premium comes out of your potential wage increase. Where else could it come from?”

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  “As currently structured, Medicare is a Ponzi scheme. The Medicare tax rate has been raised seven times since its enactment, and almost certainly will need to be raised again in the next decade. The Medicare tax contributions and premiums that today’s beneficiaries have paid into the system don’t come close to fully funding their care, which today’s workers subsidize. The subsidy is getting larger even as it becomes more difficult to maintain: next year there will be 3.7 working people for each Medicare beneficiary; if you’re in your mid-40s today, there will be only 2.4 workers to subsidize your care when you hit retirement age. The experience of other rich nations should also make us skeptical. Whatever their histories, nearly all developed countries are now struggling with rapidly rising health-care costs, including those with single-payer systems. From 2000 to 2005, per capita health-care spending in Canada grew by 33 percent, in France by 37 percent, in the U.K. by 47 percent—all comparable to the 40 percent growth experienced by the U.S. in that period. Cost control by way of bureaucratic price controls has its limits.”

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  * Ahh… none of this is anything you and I and some others don’t know, L&W, but will facts and logic change the minds of the “true believers?” No.

  ** It’s like Obama and the Dems with regard to spending. Bush and the RINOs spent, spent, and spent some more. After the RINOs were out and the Dems came in, Bush and the Dems spent, spent, and spent at an even more furious rate than Bush and the RINOs. And now with Obama, Pelosi, and Reid… spending, deficits, and debt that dwarfs anything Bush and the RINOs ever contemplated.

  *** Just as “Captain” Obama and various Democrats are ordering “full speed ahead” in the WRONG direction on fiscal policy, so it is with health “reform” proposals. Mainly, these folks want to ADD to the existing dysfunction.

  (*SHRUG*)

  BILL

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• barker13 // Aug 26, 2009 at 9:09 am

  Re: Liv&Win // Aug 25, 2009 at 6:30 pm (#104) –

  Continuing excerpts from page 4 of 6:

  “…as long as our government shovels ever-greater resources into health care with one hand, while with the other restricting competition that would ensure those resources are used efficiently, sustained high profits will be the rule. Health care is an exceptionally heavily regulated industry. Health-insurance companies are regulated by states, which limits interstate competition. And many of the materials, machines, and even software programs used by health-care facilities must be licensed by state or federal authorities, or approved for use by Medicare; these requirements form large barriers to entry for both new facilities and new vendors that could equip and supply them.”

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  “Take the ongoing battle between large integrated hospitals and specialty clinics (for cardiac surgery, orthopedics, maternity, etc.). The economic threat posed by these facilities is well illustrated by a recent battle in Loma Linda, California. When a group of doctors proposed a 28-bed private specialty facility, the local hospitals protested to the city council that it was unnecessary, and launched a publicity campaign to try to block it; the council backed the facility anyway. So the nonprofit Loma Linda University Medical Center simply bought the new facility for $80 million in 2008. Traditional hospitals got Congress to include an 18-month moratorium on new specialty hospitals in the 2003 Medicare law, and a second six-month ban in 2005. … Many hospitals still exist in their current form largely because they are protected by regulation and favored by government payment policies, which effectively maintain the existing industrial structure, rather than encouraging innovation.”

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  “The net effect of the endless layers of health-care regulation is to stifle competition in the classic economic sense. What we have instead is a noncompetitive system where services and reimbursement are negotiated above consumers’ heads by large private and government institutions. And the primary goal of any large noncompetitive institution is not cost control or product innovation or customer service: it’s maintenance of the status quo.”

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  “Between 1970 and 2006, annual Medicare payments to hospitals grew by roughly 3,800 percent, from $5 billion to $192 billion. Total annual hospital-care costs for all patients grew from $28 billion to almost $650 billion during that same period. Since 1975, hospitals’ enormous revenue growth has occurred despite a 35 percent decline in the number of hospital beds, no meaningful increase in total admissions, and an almost 50 percent decline in the average length of stay. High-tech equipment has been dispersed to medical practices, recovery periods after major procedures have shrunk, and pharmaceutical therapies have grown in importance, yet over the past 40 years, hospitals have managed to retain the same share (roughly one-third) of our nation’s health-care bill. Hospitals have sought to use the laws and regulations originally designed to serve patients to preserve their business model.”

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  “Consider the oft-quoted “statistic” that emergency-room care is the most expensive form of treatment. Has anyone who believes this ever actually been to an emergency room? My sister is an emergency-medicine physician; unlike most other specialists, ER docs usually work on scheduled shifts and are paid fixed salaries that place them in the lower ranks of physician compensation. The doctors and other workers are hardly underemployed: typically, ERs are unbelievably crowded. They have access to the facilities and equipment of the entire hospital, but require very few dedicated resources of their own. They benefit from the group buying power of the entire institution. No expensive art decorates the walls, and the waiting rooms resemble train-station waiting areas. So what exactly makes an ER more expensive than other forms of treatment? Perhaps it’s the accounting. Since charity care, which is often performed in the ER, is one justification for hospitals’ protected place in law and regulation, it’s in hospitals’ interest to shift costs from overhead and other parts of the hospital to the ER, so that the costs of charity care—the public service that hospitals are providing—will appear to be high. Hospitals certainly lose money on their ERs; after all, many of their customers pay nothing. But to argue that ERs are costly compared with other treatment options, hospitals need to claim expenses well beyond the marginal (or incremental) cost of serving ER patients.”

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  “Keeping prices opaque is one way medical institutions seek to avoid competition and thereby keep prices up. And they get away with it in part because so few consumers pay directly for their own care—insurers, Medicare, and Medicaid are basically the whole game. But without transparency on prices—and the related data on measurable outcomes—efforts to give the consumer more control over health care have failed, and always will. Here’s a wonderful example of price opacity. Advocates for the uninsured complain that hospitals charge uninsured patients, on average, 2.5 times the amount charged to insured patients. Hospitals defend themselves by contending that they earn from uninsured patients only 25 percent of the amount they do from insured ones. Both statements appear to be true! How is this possible? Well, hospitals bill according to their price lists, but provide large discounts to major insurers. Individual consumers, of course, don’t benefit from these discounts, so they receive their bills at full list price (typically about 2.5 times the bill to an insured patient). Uninsured patients, however, pay according to how much of the bill the hospital believes they can afford (which, on average, amounts to 25 percent of the amount paid by an insured patient). Nonetheless, whatever discount a hospital gives to an uninsured patient is entirely at its discretion—and is typically negotiated only after the fact. Some uninsured patients have been driven into bankruptcy by hospital collections. American industry may offer no better example of pernicious “price discrimination,” nor one that entails greater financial vulnerability for American families.”

  BILL

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• barker13 // Aug 26, 2009 at 9:36 am

  Re: Liv&Win // Aug 25, 2009 at 6:30 pm (#104) –

  Continuing excerpts from page 5 of 6:

  “…there’s been an active, competitive market for LASIK surgery of the same sort we’re used to seeing for most goods and services. The history of LASIK fits well with the pattern of all capital-intensive services outside the health-insurance economy. If you’re one of the first ophthalmologists in your community to perform the procedure, you can charge a high price. But once you’ve acquired the machine, the actual cost of performing a single procedure (the marginal cost) is relatively low. So, as additional ophthalmologists in the neighborhood invest in LASIK equipment, the first provider can meet new competition by cutting price. In a fully competitive marketplace, the procedure’s price will tend toward that low marginal cost, and ophthalmologists looking to buy new machines will exert downward pressure on both equipment and procedure prices.”

  * The author’s point is to contrast LASIK with trying to get your own CT scan or MRI; the contrast is between market forces creating lower prices yet better goods and services via free market competition and transparent pricing as opposed to “paid via insurance” (often at government price scale – always at government price scale for Medicare/caid) procedures.

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  * Ahh… and now we come to the author’s “review” of current Democratic proposals…

  “How would the health-care reform that’s now taking shape solve these core problems? The Obama administration and Congress are still working out the details, but it looks like this generation of “comprehensive” reform will not address the underlying issues, any more than previous efforts did. Instead it will put yet more patches on the walls of an edifice that is fundamentally unsound—and then build that edifice higher.”

  * Take off your partisan hats, folks; keep your eyes on the ball! Let’s not make things WORSE…!!!

  =====

  A central feature of the reform plan is the expansion of comprehensive health insurance to most of the 46 million Americans who now lack private or public insurance. Whether this would be achieved entirely through the extension of private commercial insurance at government-subsidized rates, or through the creation of a “public option,” perhaps modeled on Medicare, is still being debated.
  Regardless, the administration has suggested a cost to taxpayers of $1 trillion to $1.5 trillion over 10 years. That, of course, will mean another $1 trillion or more not spent on other things—environment, education, nutrition, recreation. And if the history of previous attempts to expand the health safety net are any guide, that estimate will prove low.

  * Anyone seriously dispute the author’s guess re: low balling future cost estimates? (*SHRUG*)

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  “The most important single step we can take toward truly reforming our system is to move away from comprehensive health insurance as the single model for financing care.”

  * BINGO…!!!

  =====

  “And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system.”

  * YAHTZEE…!!! (*WINK*)

  =====

  “…routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.”

  * GIN…!!!

  =====

  “First, we should replace our current web of employer- and government-based insurance with a single program of catastrophic insurance open to all Americans—indeed, all Americans should be required to buy it—with fixed premiums based solely on age. This program would be best run as a single national pool, without underwriting for specific risk factors, and would ultimately replace Medicare, Medicaid, and private insurance. All Americans would be insured against catastrophic illness, throughout their lives.”

  * Hmm… we’re simpatico on the need for universal PAID catastrophic insurance open to – indeed required by – all Americans. It’s where he proposes delinking the underwriting from specific risk factors (in other words, actuarial reality) where I pause. STILL… at least this is the sort of plan/reasoning that is open to discussion and compromise. Perhaps this guy is right… perhaps there should be no actuarial link; but that’s a subject for reasonable fact-based, logic-based debate.

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  “How would we pay for most of our health care? The same way we pay for everything else—out of our income and savings.”

  (*CLAP-CLAP-CLAP*)

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  “Every American should be required to maintain an HSA, and contribute a minimum percentage of post-tax income, subject to a floor and a cap in total dollar contributions. The income percentage required should rise over a working life, as wages and wealth typically do. All noncatastrophic care should eventually be funded out of HSAs. But account-holders should be allowed to withdraw money for any purpose, without penalty, once the funds exceed a ceiling established for each age, and at death any remaining money should be disbursed through inheritance. Our current methods of health-care funding create a “use it or lose it” imperative. This new approach would ensure that families put aside funds for future expenses, but would not force them to spend the funds only on health care.”

  * Yes! YES…!!!

  BILL

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• sinz54 // Aug 26, 2009 at 9:41 am

  barker13 quotes: “But fundamentally, the ‘comprehensive’ reform being contemplated merely cements in place the current system—insurance-based, employment-centered, administratively complex.”

  Obviously. But politically, how could any President change that? Any hero you want, Reagan, Bush 41, JFK, LBJ. How could even one of them have ripped away the state-regulated, income tax exempt, employer-based health insurance system that 75% of Americans currently have, without scaring the heck out of them and causing the entire thing to be rejected?

  In Massachusetts, Mitt Romney didn’t even try. RomneyCare left in place the existing employer-based system. He added to it some things to widen coverage and insure the uninsured.

  What NEITHER the proponents of a more free-market health care system NOR the proponents of single-payer have ever explained, is the ROADMAP by which Americans can be transitioned to the final goal without damaging the health care they currently get IN ANY WAY, without raising their taxes IN ANY WAY, and making the transition sufficiently painless that Americans aren’t marched back and forth through miles of paperwork and bureaucracy to get from here to there.

  And given how complex the current delivery is (private, co-ops, Medicare, Medicaid, state public plans, etc.), and how many tax breaks and indirect subsidies are built into the current system, that’s a tall order.

  Yet without it, a fundamental revision of the American system is impossible.

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• barker13 // Aug 26, 2009 at 9:47 am

  Re: Liv&Win // Aug 25, 2009 at 6:30 pm (#104) –

  Finish up… page 6:

  “What about care that falls through the cracks—major expenses (an appendectomy, sports injury, or birth) that might exceed the current balance of someone’s HSA but are not catastrophic? These should be funded the same way we pay for most expensive purchases that confer long-term benefits: with credit. Americans should be able to borrow against their future contributions to their HSA to cover major health needs; the government could lend directly, or provide guidelines for private lending. Catastrophic coverage should apply with no deductible for young people, but as people age and save, they should pay a steadily increasing deductible from their HSA, unless the HSA has been exhausted. As a result, much end-of-life care would be paid through savings.”

  * EXACTLY…!!!

  “For lower-income Americans who can’t fund all of their catastrophic premiums or minimum HSA contributions, the government should fill the gap—in some cases, providing all the funding. You don’t think we spend an absurd amount of money on health care? If we abolished Medicaid, we could spend the same money to make a roughly $3,000 HSA contribution and a $2,000 catastrophic-premium payment for 60 million Americans every year. That’s a $12,000 annual HSA plus catastrophic coverage for a low-income family of four. Do we really believe most of them wouldn’t be better off?”

  * One caveat: The government will need to do proper accounting so that this “dole” doesn’t become the property of the recipient in the sense that your and my unused contributions would be our property. At the death of the recipient unused balances would have to be returned to the Treasury – not willed to survivors as an inheritance.

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  “Some experts worry that requiring people to pay directly for routine care would cause some to put off regular checkups. So here’s a solution: the government could provide vouchers to all Americans for a free checkup every two years. If everyone participated, the annual cost would be about $30 billion—a small fraction of the government’s current spending on care.”

  * Or… better yet… we use the stick! If you don’t get your “required” preventive care (according to a minimum schedule) this will be reflected in higher catastrophic premiums and higher future reimbursements from self-borrowing.

  =====

  “Today, insurance covers almost all health-care expenditures. The few consumers who pay from their pockets are simply an afterthought for most providers. Imagine how things might change if more people were buying their health care the way they buy anything else. I’m certain that all the obfuscation over prices would vanish pretty quickly, and that we’d see an end to unreadable bills. And that physicians, who spend an enormous amount of time on insurance-related paperwork, would have more time for patients.”

  * Yep. That’s what I assume also.

  BILL

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• barker13 // Aug 26, 2009 at 10:00 am

  Re: Sinz54 // Aug 26, 2009 at 9:41 am (#109) –

  “But politically, how could any President change that?”

  By speaking the TRUTH, Sinz.

  By using the bully pulpit to EXPOSE the American People to such ideas, concepts, facts, and the logic behind the suppositions.

  Hell… President Obama love to read off his teleprompter, right? Let him read this entire Goddamned piece next Monday night at 9:00 p.m. with the broadcast going over every TV and Radio Station in the nation.

  (Of course I’m being a BIT flippant here… but only a bit; surely you get the CONCEPT I’m latching on to? It’s time for the President to LEAD. It’s time for politics to take a back seat to the good of the country. It’s time our political leaders talk straight to their constituents and instead of obscuring the truth begin to tell the truth! First truth… Bernie Madoff was a piker when it came to building a Ponzi scheme – Uncle Sam is the real master!)

  Sinz. Either work to provide solutions or else get the hell out of the way.

  Here’s your assignment: Call up your congressman’s office and the offices of your two senators and recommend the Goldhill article as something your elected officials should be reading.

  “In Massachusetts, Mitt Romney didn’t even try.”

  Who the f–k CARES…?!?! That’s the past. We’re aware! This is NOW, Sinz. Stick to NOW, Sinz. Stick to now and the future!

  Sinz. Your post is a bummer. You’re a bummer. How the hell are we EVER going to get anything done with people like you…

  (*SIGH*)

  BILL

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• liv&win // Aug 26, 2009 at 10:44 am

  Bill –

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