Health Care In America: How Do We Fix It?

[How to fix health care? When it comes to the current state of heath care services in the United States, there are no easy answers. However, most people I've spoken to — both within and without the industry — agree that the way we are providing health care services in America now just isn't working, and that something must be done. Both Democrat presidential candidates are touting a public/private system of universal health care; the Republican candidate favors tinkering with the current system. Other proposals include getting rid of all government involvement in the health care industry, full-on British/Canadian-style socialized medicine, and the unique quasi-public "social security" mode of healthcare provision as practiced in France. (Ref: Brookings report on the relative merits of the French and U.S. health care service models, and a Business Week article from last year on the French system.)

Which system is right for America? I don't know. It's a complex subject — and one we all need to understand better. Bearing this in mind, I have set out my understanding of how the health care industry in America works, and outlined the most commonly proposed methods of improving it. I urge you all to do your own research on this topic and draw your own conclusions. — BL]

Health care services are expensive. In every country, a static supply of providers has coupled with an exploding demand for services and the constant rise of new technologies available for diagnosis and treatment to drive the cost of health care services into the stratosphere.

Yet health care is different than other high-priced products. In a civilized nation, it is unwise to allow most of the population to go without health care services, lest civil unrest and/or plague result. A nation that allows the sick and injured to "die in a ditch" will not long survive — nor does it deserve to. Therefore, to stay on a "going concern" basis, each civilization must implement some way of forcing those with the means to pay for health care services to cover the costs of those without those means. Historically, this has been accomplished by three institutions: the Church, the State, and the Market.

In Judeo-Christian society, servitude is seen as a duty. In a country with a Judeo-Christian culture, it is unthinkable to allow human beings to suffer illness or injury without caring for them. In pre-modern times, the Church was seen as the guarantor of the human right to health care. To this end, the institution known as the hospital was created by the Church — a charitable organization operated by the Church which provided health care services to those too poor to afford them. This worked so long as the Church was a recognized Estate within the society at large — an Estate with its own lands and other sources of income — and as long as the limitations of pre-industrial food production (and other factors) kept populations small.

Over time, however, the number of poor and indigent patients began to exceed the number than the various religious charities could afford to care for. In modern times, the Church — now stripped of its status and incomes — has neither the resources nor the support to continue in this role. Our world is now secular; the Church has no fixed place among our society's institutions. The Revolution would never tolerate a Church rich and powerful enough to provide for the needs of today's poor.

As the Industrial Age dawned, the State and private industry therefore began to take on this responsibility — the State, with an interest in keeping the peace; private industry, with a eye toward making a profit. Proponents of State-provded "socialized" health care argue that the right to heath care is among the rights of any citizen in a modern society, and that the State should guarantee this right as it guarantees others. In countries with State-run health care systems, the usual form this took was the enactment of some sort of "national insurance" scheme, with the State collecting premiums in the form of taxes or other levies on employers and employees, and rationing health care services to citizens through State-funded (and often State-owned) hospitals and providers. Under national health insurance, the State is generally required by law to provide health care services to all, regardless of their current or potential health status. Sadly, the failure of socialism to guarantee citizens their rights in any form is a matter of historical fact.

The Church no longer has the power and income to provide for the health care of the indigent. State-run health care systems suffer from the same flaws which bedevil all enterprises of the State: mass inefficiencies, thick and cumbersome bureaucracies, impersonal service, and lack of personal vested interest by providers. On the face of things, then, it would seem that the free-market, private-insurance form of health care service is superior. Let us therefore examine how health care services are provided in a market economy.

In a liberal society, servitude is slavery — an intolerable affront to the rights of the atomistic Free Man. In our liberal society, where all forms of coercion are anathema, the free and unregulated exchange of goods and services by independent agents trading in an open market is seen as the only moral form of exchange. Proponents of free-market, cash-and-carry medical care argue that, left to itself, competition between providers in the market for health care services would in time provide everyone services that they could afford. It would therefore seem that the free market should be left to provide health care services the same way it provides soap and toothpaste: by unrestrained competition. Theoretically, medical care providers in a free-market system can compete for customer dollars on a fee-for-service basis until the cost of a given unit of health care service reaches its natural price.

Unfortunately, in the real world, there are costs associated with health care (physicians’ and nurses’ salaries, medical equipment, the costs of providing full-time care to invalid patients, and the ever-increasing price of medicines, et al) that are already at a natural price — a bottom, below which they cannot go. No amount of competition is going to reduce the costs of services, increasingly advanced technology, and new medicines. Due to these fixed costs, the price of medical care has been, is and will continue to be extremely high.

The institution of mutual insurance was extended to the heath care field by private industry as a means of spreading these high costs (and the associated risks) among as many people as possible. In a typical private insurance scheme, the insurer collects money in the form of premiums from subscribers; in return, it pays a certain portion of their health care costs (in the form of claims). Since those who pay premiums without filing claims pay for the care of those who file claims, the insurers must guarantee that those likely to file claims are kept out of the system. By restricting coverage to those groups least likely to file claims, private insurers guarantee that the amount of money gathered from premiums each year exceeds the amount paid out in claims plus operating expenses and taxes; this profit is reinvested, producing income for the owners of the company.

The problem with free-market, private insurance in countries with such a system is that not everyone can get insurance. In the United States, for example, most people are covered by group insurance purchased at bargain-basement group rates through their employer. However, those who are not employed (or who are self-employed) often cannot qualify for insurance coverage at any price — nor can they afford to pay the required premiums.

(Saving for medical care is futile; a person making $50K annually with a realistic savings rate of 20% can save at most $10K per year — the cost of a day or two in a hospital.)

Likewise, many persons who have serious chronic illnesses (e.g. cancer, kidney failure, HIV etc.) or are otherwise high risks (e.g. the aged) cannot get coverage at any price in a private-insurance regime due to the high costs of their care. In the U.S., some people in this situation are provided for by a piecemeal system of socialized medicine (Social Security, Medicare, Medicaid), but not everyone is covered by these programs, and those that are covered often experience lackadaisical care, impersonal treatment, and the other typical problems of socialized medicine when they present for treatment.

For the rest — those outside the world of employer-provided private health insurance and/or the Social Security system — the only health care system to which they have access is the emergency room at the local hospital — an institution spectacularly ill-suited to the task of providing basic health care services. Due to the flood of uninsured patients using the ER as their sole health care provider, the costs of providing emergency room care to the indigent and uninsured — which care is mandated by Federal law — are ballooning out of control, forcing hospitals around the nation into insolvency and closure.

And these problems exist in a society where most people have insurance. What can we expect in a world where most people are without it? As costs rise, the number of employers offering health insurance as a benefit to employees is certain to drop; employers will be faced with the choice of going out of business, eliminating jobs, or cutting insurance benefits. In a situation where most people are without health insurance (whether national or private) to help patients pay these costs, health care would become something like owning a share of a private jet is today — a luxury service available only to those with the means to pay for it. The resulting society would greatly resemble the nineteenth century; like something out of a Charles Dickens novel, top-quality private care would be available for middle-class Lady Estella Havisham, while spotty and inadequate charity care would be the lot of working-class Bob Cratchit and Tiny Tim. Oliver Twist would receive no care at all, and would be reduced to obtaining health care services from unlicensed practitioners, quacks, cuaranderas, and witch doctors. Those with communicable diseases would be imprisoned, quietly murdered, or left to spead their sicknesses among the public; those with chronic illnesses and serious injuries would be left to suffer and/or die in the gutter. A revolution would soon follow, after which Soviet-style State-provided “care” would be implemented by force.

To avoid this grim scenario, therefore, we as a society are going to have to figure out a way to make sure everyone has access to health care services. And, since the private insurance companies have proved themselves unable to do this, it is likely that (barring a revival of Christendom) we as a nation will have to ration health care through some form of private/public national health insurance program.

With this in mind, I think that the only prudent course of action a citizen can take is to make a thorough examination of the various national health insurance systems extant, and compare their various strengths and weaknesses. Only in this way will each of us be able to have an informed opinion on the subject when the time comes for the U.S. to consider such a system of its own.

Bring back traditional indemnity plans, and get them away from the employer provided concept where premium costs are hidden. Allow people to band together to form small groups to purchase insurance. Make ALL health care related spending a TAX CREDIT. Provide incentives to faith communities to help the indigent. Establish means testing for Medicare eligibility, and create means-tested free clinics in low income communities.

I agree with all except the means-testing for Medicare. If all are forced to pay into it their entire lives, it should be given to all. This sounds too close to what the Dems will try to do: means testing for SS.

Time and sweat are worth something. Germany many have more doctors per capita it's the quality that I'm worried about. The best and brightest wouldn't be the brightest if they didn't think about making a living long term. And no thanks on the loan forgiveness. I don't want to pay for my neighbor's health care so I sure don't want to pay for his education. I don't want to pay more than I already do, via higher taxes, for someone else to get an education.

How about this: you pay for your education and the market decides what you can make when you get done. Brain surgeons are going to and SHOULD make more than a store clerk or school teacher. Get government and 3rd party payers out of it. Have insurance for catastrophic and personal responsibility for the rest. Government messed up the system in the first place (info that is glaringly missing from this article) why turn to them to "fix" it?!

2. how can illegals affect the stats of legals?

The statistics are not broken down by nationality, only by residency (legal or illegal.)

3. Europeans take lots of drugs too.

Not nearly so much, in general, although a few European countries may beat us in selected categories of drug abuse. Even Holland, where marijuana is legal and hard drugs are mostly ignored, has lower rates of drug abuse than the US.

4. interesting. I never heard that one.

Here's more: Infant Mortality Myths.

-ccm

Carter, and the family were often described as peanut farmers. Kind of gives them earthy, farm type halo.

The real story. Back in the Depression in the 1930’s a bunch of laws were passed to protect farmer incomes. Naturally this raised food prices in a time of labor income depression, so yet another set of laws were needed to raise more taxes to subsidize urban food prices from the raised costs of food. So in a typical lefty way it was a three-fer of bad laws.

Anyways, one of them was that it was A. Illegal to import peanuts. B. You could not grow or sell them as a grower without a federal permit.

These laws are still on the books and the Carters have had a federal permit since the 1930’s. It's a license to print money and thus even a idiots like the Carters could not go broke. In a way the family has been on welfare since the 1930s.

A lot of the points you adress are actually answered in the opening post. And here's my argument: One of the main reasons for health care is that most governments, also that of the US, will not leave people to die in the street. They will offer an emergency service. But it is pretty easy to calculate that if you only offer help in the direst of circumstances, people who can not pay will all come in these circumstances, and treating them wll be much, much more expensive.

Also, the market will decide what you can earn. How do you think that is not the case in Germany?

It sounds as if Germany has socialized the insurance industry....health insurance is not health care. As you have said everyone will become someone in the direst of circumstances and will "need" government insurance (what % of Germans actually buy private insurance?) The end result for the US is the same...high cost,via taxes, for small number of people and "fair" care for all.

The only way the market can decide what a worker (this case = doctor) can make is if the worker is paid directly (not by a third party of insurance or government) by the consumer. Is that the case in Germany?

Around 10% of Germans buy private insurance, due to faster treatment and more options covered. The Government does only set the socialized health care rates and a base list of services, which still produces some competition between the providers.

It is far more expensive to treat someone as soon as he needs stationary treatment. Prevention is usually cheaper.

Yes, the market can not decide exclusively, but he can still decide. And how does it matter who pays, as long as the doctor can set the price himself (and government/insurances just won't pay it)?

And how does it matter who pays, as long as the doctor can set the price himself (and government/insurances just won't pay it)?

It actually matters a lot here in the US b/c the doctor sets the prices knowing he won't get paid what he asks so he/she sets the prices high and then begins negotiations with insurers who tell him what he will be paid....the government doesn't negotiate. It becomes a problem b/c it is insurance fraud to charge insurance one price and an individual another. For example: Let's say a doctor charges $15 to do a procedure hoping that insurance will give him his true costs of $10 and knowing Medicare/Medicaid will only give $8. He charges more than the procedure costs b/c he is playing a game, he knows if he really charges the true costs of $10 then insurance will negotiate to pay him $7 so he charges a high cost of $15. Then patient Joe comes into the office and wants to pay out of pocket. The doctor is not allowed, by law, to charge Joe the true cost of $10! He has to charge the same that he charges insurance (Hillary Clinton was instrumental in getting that law passed). He has to charge the patient the inflated cost of $15, so you see the costs of health care go up b/c the doctor plays money games with insurance in order to get paid and b/c the individual does not feel the sting unless they are paying out of pocket. Also health insurance here in the US is paid for by employers so the individual does NOT feel the costs directly and often believes (wrongly) that he/she doesn't to pay for health insurance.

10% is what I've read too. That's not very high. So most Germans are covered under Socialized Medicine...they may have the "choice" to pay for their own health insurance but they choose to have someone else do it instead. Socialism is insidious. I hate socialism b/c I am the one who ends up paying and most importantly I like my freedom. Being allowed by government to buy private insurance is not what I consider freedom. Being forced to pay for 90% of my countryman's health insurance via high taxes is not what I consider freedom either.

The way you describe the American health system, I'm getting the impression that the problem rather lies with the fact that relations between insurances and doctors are not regulated enough :) yes I know, that view will be insanely popular with you.

I actually like socialized medicine out of a number of reasons. The one that you might accept are the favourable economies of scale. I admit that I barely know anything about the US health care system, but it seems to me that the main profiteer from upholding the status quo are the insurance companies, and also that a lot of the problems the US health market has to deal with are related to the intransparencies on the health insurance market.

Another argument for a more socialized system (or at least a base tarif or something) are the problems with asymmetric information and adverse selection. As long as insurers will systematically filter out those people with a high risk of illness by demanding insanely high rates, these people will mostly not be able to afford insurance. Ignoring the samaritan view it may still be said that these people with tendency to chronic or genetic illnesses will without help often develop very expensive problems which will then periodically be fought at emergency hospitals (which will normally be more expensive than constant treatment and prevention running on a lower scale, with prescribed medication or therapy for example) and they will possibly also become unable to work, drawing yet more money from your taxes.

Thanks for replying to such an old post. In the current economic and political climate, the whole question seems rather quaint now.

I myself have no health insurance and no prospect of ever having any. (Few professional writers have health insurance!) Even if I could afford $1200 per month in premiums for a basic private policy, no insurance company will accept me; I’m 43, fat, and a diagnosed depressive (depression = pre-existing condition = no way). Thank God I’m in fine health — my blood pressure, blood sugar, cholesterol levels, and so forth are all at healthy levels, I rarely catch colds or other diseases, and I’m too old and doughy to skydive or play hockey.

I pay cash for care. Happily, I have a doctor who is liberal with pharmaceutical samples and who offers steep discounts in exchange for cash payment at the time of service. If not for him, I would have no drugs to control my asthma and mood disorder. His generosity with the samples he receives means my asthma and depression are fully controlled — but I’d be in deep, deep trouble without him. I could probably scrape up enough for a bottle of generic Paxil every month, but my asthma inhaler (that lasts one month) costs over $300 without an RX card!

Should an accident or catastrophic illness occur, however, I’m boned. The county hospital ER would be my only health care option.

I suppose the Ayn Rand fans would argue that if I can’t afford medical care I should just go off somewhere and die. I doubt my 2-year-old son would agree, however.

And when I get old? I must admit, the prospects of having a comfortable final decade are looking pretty dim. If current trends continue, by the time I’m too old to clean myself they’ll probably have drop-off euthanasia centers for useless eaters like me.

Although I don’t know much about the Swiss system, I know a former Swiss citizen who had nothing but good to say about it. She and her family plan on moving back to CH at some point in the future, which (I assume) she wouldn’t be doing if the health care delivery system in Switzerland wasn’t up to scratch.

For the record, I think the French system is probably the one that works best.

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