Universal health care in Massachussetts
http://www.npr.org/templates/story/story.php?storyId=5330854
http://www.npr.org/templates/story/story.php?storyId=5336532
http://www.iht.com/articles/2006/04/05/news/insure.php
http://www.kqed.org/epArchive/R604110900 (could it work in CA too?)
The bill has points that will satisfy both the left (sliding scale of premiums and subsidies for the impoverished) and the right (personal choice and responsibility in health care decisions). Of course the numbers and details are not totally worked out, but it seems feasible and is set to take effect this summer. Of course MA is a pretty wealthy state with good medical infrastructure and only six million people. However, they still have over half a million uninsured residents, and state legislators found that situation to be unacceptable, as well they should.
WHAT ABOUT THE REST OF US?
The USA has over 80 million uninsured citizens, and we’re the only developed country with over 15% of the population uninsured (the percentage worsens to over 30% if you factor out the elderly who have government coverage). This was a major sticking point in the past few presidential elections that neither Bush nor Kerry seriously addressed in 2004. Of course the Clintons attempted to enact “single payer” legislation and health care overhaul in the 1990’s, but were summarily beaten down by powerful physician groups and insurance lobbies. The plan had its share of flaws, and conservatives disliked the lack of patient choice and “socialistic” overtones. After Gingrich and Co.’s 1994 “Republican Revolution” in Congress, the bill was pronounced dead, and universal health care was never seriously addressed on Capitol Hill again. Meanwhile, health care costs, medical errors, and the number of uninsured Americans continued to rise at alarming rates into the 21st century.
http://msnbc.msn.com/id/5224207
http://en.wikipedia.org/wiki/Clinton_health_care_plan
http://www.fair.org/index.php?page=1221
http://www.princeton.edu/~starr/20starr.html
We all know the system is broken, failing, and getting worse. One would be hard pressed to find the evidence to back the claim that we have the “best” health care in the world. Even if this were true, our system is the most inefficient in the industrial world (we spend much more per capita and get fewer/worse services in return). If your personal wealth permits carte blanche access to medical care, you will get great service and better health outcomes (like Magic Johnson and Lance Armstrong). If you are poor and live on a remote Indian reservation in North Dakota, or even in urban areas like New Orleans’ Ninth Ward, good luck. The US spends the highest fraction of its GDP on health care (around 15%, versus sub-10% for France, UK, and Japan). Shamefully, we rank 37th in world health care systems according to a WHO study in 2000 (on par with Slovenia and Cuba). Universal health care nations like France, UK, Singapore, Japan, and Canada were all ahead of us, with France being the top nation.
http://www.webmd.com/content/article/26/1728_59750.htm
http://www.photius.com/rankings/healthranks.html
http://www.who.int/inf-pr-2000/en/pr2000-44.html
http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html
If America is the world’s leader, the land of opportunity and good life, how can this be? Our economic system is the most robust in history, and our wealth is unmatched. Is health care a human right or a privilege? We believe in a level playing field here, but how about the ones who fall off the edge? One impoverished, uneducated child can cause major social problems years down the line. Would we rather pay a little more in taxes to improve bad schools and drug rehab, or pay lots for security to keep desperate criminals out of our gated communities and away from our families? The same goes for public health: would we rather work harder to cover the uninsured and improve care, or let people roam sick and unmonitored among us during this time of epidemic paranoia? Millions of American families are one accident or illness away from financial ruin, yet some profligate patients get all the Viagra and MRI scans they want courtesy of taxpayers. Let’s forget the uninsured for a moment, because Blue Chip titans like General Motors are going bankrupt trying to pay for employee and retiree health care too. How can they compete with Toyota and other automakers from nations with universal government coverage? Why aren’t more people up in arms about this mess and why aren’t our elected officials doing more to address the problem (Massachusetts excluded)?
http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/20/8369111/
http://www.ahcpr.gov/news/costsfact.htm
http://www.nyu.edu/projects/rodwin/american.html
So we are the wealthiest and freest nation in the world, we boast the strongest economy and medical research industry (apart from stem cell work), and spend the most money (per capita and overall) on health care. The percentage of our population employed in the health care field is the highest in the world too. Yet our system is far from dominant, and actually we are terribly lacking compared to other First World countries. In the study below, we ranked worst in various medical care quality metrics behind New Zealand, Australia, Canada, Germany, and the UK (nations that spend a tiny fraction on medicine in comparison).
http://www.medicinenet.com/script/main/art.asp?articlekey=60890
http://www.thecompounder.com/HealthCareCanKill.html
Yes, it is expensive to be an American and to care for one, especially with the growing ranks of elderly and retirees. The meager money I give to Kaiser each year (and I have the cheap, $88/month “Don’t get sick!” plan) could provide care for several villages in Chad. But even factoring in cost of living, wages, life expectancy, and whatnot – we’re still getting totally RIPPED OFF for sub par health care. But we don’t have a choice, right? We need protection in case we get cancer, have a car accident, or get pregnant – not to mention LASIK and other non-essential surgeries. Some people lack even minimal access to health care, and others abuse the system and take more than they need. HMOs and doctors are partly to blame, but they’re also getting squeezed with rising costs and malpractice insurance. Whom to insure, whom to treat, who will make us more money? Tough questions. And our state/federal governments play the fool with our hard earned taxes, getting overcharged for medical reimbursement by greedy drug companies and unscrupulous physicians (yet people still prefer to blame illegals for draining our resources!?!). Bush’s recent Medicare “reform” package is a clear example, which only serves to confuse seniors, marginally reduce the cost of their pills, and yet reward drug makers with subsidies that will cost the nation trillions in the long term! Unfortunately, some people and businesses profit from a defunct, inefficient, wasteful system. Over 10% of American medical expenses are lost to “administrative costs” (a.k.a. bureaucratic waste), that is about $1,000 a person (or $275 billion plus total) according to Harvard Medical School – but it pays people’s salaries and boosts stock prices.
http://www.hmsa.com/risingcost/feature/part1/4.asp
http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=32260
http://www.townhall.com/opinion/column/brucebartlett/2005/10/18/171730.html
HEALTH CARE ABUSE (An overly-preachy side note, skip to the next section if you like)
Pharmaceuticals, biotechnology, hospitals, insurance, private practice, and whatnot are multi-billion-dollar industries, and often times they profit when we abuse or overuse health care. The establishment may resist any efforts to downsize, streamline, or reorganize such a cash cow. Those who prefer to maintain the status quo may have more voice with lawmakers than the rest of us. So what are we to do? Drug makers and health care providers might hype or even invent illnesses to try to convince us that we need to shell out many dollars for treatment (attention deficit disorder, depression, allergies, chronic halitosis, etc.). The ad campaigns brainwash us into believing that our lives will be so much better from these wonder pills, hence the rise of non-essential “lifestyle drugs” like Viagra. It’s not just about being healthy and happy, but we need these drugs to be perfectly healthy and supremely happy with our bodies. We’ve been conditioned to expect our bodies to behave exactly as we would like, at peak performance at all times, otherwise something’s gravely wrong with us. And that’s just unrealistic, if not totally ridiculous. But that is the prevailing ideology unfortunately. No wonder why pharma is the most profitable sector of the Fortune 500. We’re flawed, weak humans, not gods! It’s ok to have love handles, minor aches or infections, even deep sadness at times, and yes – someday something will kill us.
By all means, if a patient is in need, he or she deserves access to the best quality care and as many helpful therapies as possible, within reason and ethics. But NEED is the key word, and it’s a misused and abused term in health care. A billion people in the Third World need mosquito nets and antiviral AIDS cocktails (REALLY need them, as in their lives depend on it), yet we’re going batty about flu shot shortages? We all want to maximize our quality of life and avoid heath problems. We all deserve to live long, comfortable, happy lives, but we must assess the cost-benefit of our actions. With finite supply, the health care resources spent on us means that other people, maybe people in greater need, won’t get them. It’s about living responsibly and recognizing your place in the greater community (“what I want” versus what we all need). Plus the more drugs we take, the less effective they become and the more dependent we become. Some pathogens are evolving to develop drug resistance, and maybe our innovations won’t be able to keep up. Most ailments won’t kill us, and maybe we should endure them instead of running to the doctor to remedy every little discomfort.
And what happened to fixing yourself and preventative health care like exercise, smart eating, good personal hygiene (without being obsessive), and relaxation? Those are great therapies, much cheaper and more effective than Prozac, Lipitor, and penicillin. Wouldn’t we prefer to wean ourselves off such medical intervention, even if it means a reduction in extravagant doctor salaries and pharma profits? Just imagine the time we’d save and stress we’d avoid: endless waiting rooms, stuck on hold with the HMO hotline, or the reams of paperwork! And if we really get sick and need help, it will still be there for us. But Americans can be lazy, and we want the immediate, easy, quick fix pill solution rather than enacting lifestyle changes or toughing it out. Our bodies can be frail, but also amazingly strong. Somehow, much of humanity endured microbes, anxiety, and even pandemics before drugs/vaccines were invented. It might involve some hardship and discomfort, but our bodies can heal themselves better than any physician. I’m not calling for a return to medieval lifestyle or the abolition of medicine, but we can’t sterilize the world and thwart every single disease, no matter how hard we try. Most health care providers and health industry workers are good people who want to help humanity. But the system is malfunctioning because often they are forced to help themselves first (even at our expense). Something has to be done.
http://heterophily.com/blog/?p=88 (a blogger’s comments on Laura Penny’s very provocative chapter on the abuses of the pharmaceutical industry in The Truth About Bullshit)
A PROPOSAL BY ECONOMIST TIM HARFORD
Now we are in a quite a pickle, and it’s getting worse with each day we refuse to act. Even some fiscal and ideological conservatives admit that we have no choice but to nationalize America’s health plan. Private companies competing in the tight global economy just cannot keep up with ballooning worker health costs under the current system, and much of the GOP thinks they shouldn’t have to. Plus the number of uninsured Americans is just appalling, and many liberals refuse to tolerate that indecency. Can we nationalize the system and still remain true to our small government, free market traditions? We need a system that provides patient choice, grants individual responsibility for most health care decisions, and punishes/discourages waste, ignorance, and exploitation. We should be able to do the research, compare the cost-benefits, and choose accordingly, not be forced down one path or another by the HMO Nazis or doctors with conflicting interests. We need a health plan that will cover catastrophic problems with no questions asked (as the Massachusetts plan does), so people have the peace of mind that their family won’t go hungry if tragedy strikes. Patient choice and universal coverage… can we have our cake and eat it too?
http://amconmag.com/2006/2006_03_27/review1.html
http://www.commondreams.org/views02/0525-06.htm
http://www.findarticles.com/p/articles/mi_m1282/is_n24_v41/ai_8206533
Like Levitt’s Freakanomics, Tim Harford’s recent text The Undercover Economist takes a rogue approach to the analysis of everyday socioeconomic problems/mysteries in the world today, thankfully in laymen’s terms. He spends a chapter evaluating the US and UK health systems, and then proposes a better alternative that is a mix of the liberal and conservative approaches (kind of like the Massachusetts bill). He operates on the economic principle of maximizing efficiency (benefiting as many people as possible without making anyone else worse off).
http://www.amazon.com/gp/product/0195189779/103-9305564-5839827
Harford diagnoses our current health care system dilemma mainly as a problem of information imbalance or inside information (brought to light by Nobel winner George Akerlof). I know, it’s not what you’d expect, but he uses a clever analogy. Like with the used car market, only the seller truly knows the condition of the vehicle. Is it a lemon or a gem? People will try to sell a lemon for top dollar if they can. The buyer can’t help but be suspicious, and obviously wants to pay the minimum possible. But this impasse actually destroys a fair or “perfect” used car market, where buyers pay actual value to sellers and everyone is better off. Instead, everyone loses, just like health care. Based on the car analogy, we customers are the sellers and the HMOs are the buyers. They can’t tell if they’re selling insurance to clunkers like Dick Cheney, or gems like us young, healthy folks. They try to give us questionnaires or tests to gauge our health and scale their premiums accordingly (plus reject costly customers), but an information imbalance still plagues the health care market.
Health insurance is obviously very important, because we don’t know when we’ll need it. But it shouldn’t be so expensive to protect oneself against tragedy or bad luck, and we would hope that the healthy customers help pay for the sicker ones in a group plan. But with premiums so expensive, it encourages unhealthier people to buy (like lemon used cars) – the ones who will actually use the services and get their money’s worth. The healthier, poorer people might decide to cancel their insurance and pay out-of-pocket at the rare times they’re ill (sadly, this option is becoming more and more financially justifiable). So if only sickly, needy people buy health insurance, costs-per-customer will rise, and the HMOs will be stretched and forced to cut back benefits or raise prices to compensate, and they do. Fewer people buy insurance, and those who do get crappier, pricier care. Hence the downward spiral in coverage that we’ve all observed. So insurance companies combated the information imbalance with probes to identify the lemons (could genetic testing be far off?), such as price-targeting consumers with a whole range of different plans to buy (high premium, low deductible plans for the sick, low premium, high deductible ones for the healthy). But all this ends up excluding the most needy customers from care (or pricing them out of the insurance market), which defeats the whole purpose of health coverage anyway.
Obviously the malfunctioning US system is not the only one with problems. Harford is British and he also examines the Western European systems. The voluntary, market-driven US system is linked to risk instead of income (you pay more if you’re sicker, no matter how rich or poor you are – government aid aside). But health insurance is also linked to market forces and employment, which involves the greed factor and makes the US labor market less competitive, as we’ve already discussed. The mandatory, government-driven European systems are linked to income instead of risk (health insurance is a legal requirement like auto insurance, so everyone has access but you pay into the system through taxes on your wealth). Wasteful US health coverage per person costs twice what it does for most Europeans. But both systems have flaws: a voluntary system means that some will go without, but a mandatory system creates care rationing and the “moral hazard” of people living less cautiously when they know their health care is guaranteed and paid for. But universal health care is a source of nation pride for Canadians, Britons, and others who seem to respect human dignity a little more than we do. Imagine being able to walk into any clinic in the country and get treated (when your turn comes) without question and paying hardly anything? A measly 17% of American respondents were satisfied with their health coverage, but only 25% of Britons were happy, so universal coverage isn’t an automatic panacea. The UK’s National Health Service has the huge responsibility of rationing out care. They quantify and evaluate all the medical interventions out there, and decide who is eligible for what treatment based on supply, demand, and the potential improvements to quality of life. But these value judgments are hard for a government organization, people always try to abuse a free service, and some deserving people get snubbed.
People on both sides of the Atlantic complain about the quality of health care and others making choices for them (either the government or the HMOs). People want and deserve a say in their health decisions, but are we responsible enough to make informed, appropriate choices? We need incentive to do so, such as giving everyone PRIVATE HEALTH SAVINGS ACCOUNTS. People can choose what forms of health care they want to buy, and must live with the consequences of frivolity and excess. So they do their homework, consult the right people, and make sound decisions with their future in mind, like selecting which university to attend or what home to purchase. I know some people will mess anything up if you give them the chance, and this sounds eerily similar to Bush’s Social Security Privatization Act, but stick with me here.
The government would be responsible for covering catastrophic costs, so no one will be financially ruined by a sudden cancer diagnosis or broken neck, even if they don’t have much money left in their health savings account. The “catastrophe insurance” would be compulsory in the form of taxes, but actually an individual’s taxes would decrease, because there would be no need to support the inefficient US government employee and public health systems. People would use their income to pay into the health system, like we do for retirement, and everyone would get routine, equal deposits from the government. Lower-earning and especially needy people would get extra subsidies. Unused dollars in the account would accrue interest like a savings account, and could be doled out as retirement supplements or passed on to beneficiaries in your will. Like with Roth IRAs, this is clever because health care costs are generally low when you’re young, but you would build up a lot of savings and interest by the time you’re aging and in need.
Therefore, we can have our cake and eat it too: everyone is covered against catastrophe and patients have choice and access to the highest quality and range of services should they desire. Waste and ignorance are reduced because people have incentive to study their options and conserve health savings dollars for only the most critical needs. Healthy living is also encouraged so people can earn interest and accumulate their health savings for retirement. But if you really want braces or colored contact lenses, you still can, and paying out-of-pocket is always an option. Raw medical costs to us would also diminish, because the HMO middleman is eliminated and medical providers must compete in a free market for patients. So you can get more care for your buck. Of course this reform does not address health care shortages and a growing elderly population, but with less bureaucracy and other inefficiencies, we’d hope that our system would have enough resources freed up to expand and improve for everyone. The inherent conflict of interest between provider and consumer will remain (you want the best care during an emergency, but government needs to ration money), but it will be greatly mitigated. So the system will still be market-driven, but private insurance would be taken out of the equation, saving billions. It’s not a single-payer system, but more like an “everyone pays” system with a government safety net.
What do you think?
This innovative “keyhole economics” system that Harford describes is actually SINGAPORE’S of the last 20 years, which expectedly is ranked #6 in the world by the WHO. Singapore has a higher life expectancy than the US, and the health costs to each citizen are about $1,000 a year, or roughly the cost of US health care bureaucracy alone! Of course Singapore is a small, highly efficient and orderly country with vast sums of wealth and stringent government controls. Yet still they live in a safe, democratic, and capitalist society with shrewd and intelligent pragmatist leaders. They saw beyond the petty political and ideological squabbles of market-driven versus “socialized” health coverage, and decided to merge the two instead. But if we’re the greatest country in the world, why can’t we do just as well, if not better than Singapore? It can’t be all the fault of illegals, frivolous lawsuits, and terrorists, can it? Without health, nothing else matters, right?
APPENDIX
A major tour-de-force analysis from Physicians for a National Health Program:
http://www.pnhp.org/docs/TheHealthCareMess-KipSullivan.pdf#search='health%20care%20industry%20waste%20administrative%20cost'
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I don't think HCSA's will work; while I'm all for market dogma the fact
of the matter is that healthcare is not elastic and won't respond to
market forces in the same way that a non-durable good will. If you take
a look at what a hospital typically bills for a procedure vs. the
negotiated rate the insurance company ultimately pays there's a factor
of 10 difference; this means the rates that the providers are charging
are systematically inflated and won't be significantly affected by
universal HCSAs. A single-payer system, however, can exert serious
price pressures on providers (at the cost of bureaucracy and patient
control.) It seems (though I haven't researched it enough) that the
Massachusetts plan is a step in the right direction, though I've learned
that you can never trust a GOPer or his plans for the poor.
The reason unfunded liabilities are becoming such a problem for GM and
the like is that health care costs are rising at an accelerating rate
and doubling every 5 years. Short of traveling to Mexico for that next
bypass operation there's not much that a globalized market can do to
reign in costs; outsourcing medical imaging, etc. to the third world
ultimately serves to increase profit margins but does little to drive
down costs when the tradeoff between saving $ and saving lives is
non-negotiable.
The healthcare industry is also so heavily regulated that efficiencies
often take a backseat to things like privacy concerns or other
regulations that may or may not make sense (drug safety guidelines?).
The idea that saving $100 by getting your CT scan done across town is
absurd if costs your doctor time and/or convenience (and ultimately your
care) in terms of accessing the results due to privacy regulations, etc.
Most people who truly are in need of healthcare will either (a) pay,
whatever the cost, to get the best care they can or (b) receive
substandard care with the expense shouldered by the public. While I
have Kaiser and BlueCross/BlueShield coverage my doctors at UCSF are
never able to access my test results from Kaiser and vice-versa - I've
found that, even if Kaiser is cheaper for things like MRI, CT, or
Ultrasound, it's better to get it done at UCSF since the doctors there
have immediate access to the results and known what to do with them.
Being a savvy healthcare consumer is not a market externality waiting to
be realized - it's a fact of life. For anyone who ever gets seriously
ill there is no "choice" to become a savvy consumer - you either do or
you subject yourself to substandard care and risk death! While I
certainly can see how a healthcare consumer of the future could logon to
a web page and decide which doctor to visit based on price, I don't see
how doing so would (a) change the quality of care for the better or (b)
significantly impact the *real* cost of healthcare which stems from
regulation and management of liability and risk.
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Well, actually a lot of this stuff is going to show up in my
thesis. A little more info...people often think there are two
paradigms of
healthcare deliverance, privatization (US model) and government-run
healthcare (UK model). But, there is a third model, which is used
in most continental European countries, including Germany and
France. This model is the Sickness Insurance Fund (SIF), where
citizens are required to join different (govt.-private hybrid)
organizations. The benefits are things like shorter lines for the
doctor, etc. However, it does cost a bit more as a percentage of
GDP.
Of course, nothing rivals the cost of our system because we pay so
many of our bills out-of-pocket. Incidentally, the same pattern
holds in education (again, we spend way more). The crucial
difference between our system and those of Germany and France is
that our insurance companies are profit making. This is why I
ambivalent on the Massachusetts law; I haven't read it carefully,
but I'm not sure how it's going to work if insurance companies are
still profit making. I have included OECD data on healthcare
expenditure from the OECD (these numbers were tabulated last in
2003).
My thesis relates to the fact that, contrary to popular belief, the
decentralized provision of social programs like healthcare and
education in the US is totally inefficient. Furthermore, the
decentralized provision of programs leads to greater discrimination
in program implementation (e.g. blacks don't get the same access to
welfare that whites do).
