Federal Advisory Panel Warns of a Crisis in Health Care

The New York Times ^ | November 19, 2002 | ROBERT PEAR

[joonbug]

How about looking at an HMO? If you are young and healthy, they want you as you will probably not comsume many health care $$. Or get a policy with a high copay or deductible which won't matter unless you get really sick, which is not very likely.

[FITZ]

I think it's a Socialism crisis. There aren't enough people paying in and too many taking out.

[Spyder]

Here's a good thread on waits for emergency room care in the UK Waits up to 3 days not uncommon.

[laurav]

Even some of the catastrophic ones are pretty pricey these days. I had a decent catastrophic policy, but then I moved to a different state and it turns out that policy can't be purchased in my new state (NY). I wonder if this is because of some regulation.

I think this is going to be more of a political crisis than anything else. There are a lot of people out there like me but who, unlike me, aren't alarmed by the prospect of government-controlled health care. All they'll see is "free" healthcare, or at least that they'll be guaranteed treatment.

When you're talking about 40 million people and rising, that's a big voting bloc if they get mad enough.

If we don't want socialized medicine, we need to come up with a better plan.

[LurkerNoMore!]

It is a Socialism Boom! I just think the term health care crisis implies that there is something wrong with health care in this country.

[jwalsh07]

If you want "free" health care, move to Canada.

But when you get sick and need an MRI, a Cat Scan or a heart cath, high tail it back to the states because the waiting list in Canada is longer than there life expectancy when they are seriously ill. Its one of those conundrums of socialized medecine.

[LurkerNoMore!]

Paying doctors directly for routine visits would be a start...

[laurav]

I agree that an HMO would seem to be the way to go. I looked into the ones which enroll individuals not affiliated with a major corporation, and the minimum per month payment was $250, which is $3,000 a year. My previous policy was only $800 a year, so I'm seeing if I can do better.

At this point, high health insurance premiums are actually skewing the labor market. I know people who have kept horrible jobs because of the benefits packages, or taken ones that their skills didn't match because of benefits packages. It's driving people into 9-5 jobs when they might be better suited to other things.

[laurav]

Paying doctors directly for routine visits would be a start...

I think this is a good idea - cut out the overhead, and the doctors might charge less too. Maybe you pay $80/visit instead of a $20 co-pay, but if you only go once a year (or less) the savings in premiums might make it worthwhile.

Any others?

[LurkerNoMore!]

Well, how about Medical Savings Accounts? (Personally, I love the free market aspect.)

[laurav]

I agree, but the problem is others aren't going to see it that way. They'll say "Well, in the US we spend much of our health care money on the last few months of life. In Canada, they're smarter and spend it on kids and young adults who have more years ahead of them." You can point to MRI waiting lists, but most people aren't going to experience an MRI until they're old and falling apart.

Now pointing out the 3 day wait in UK emergency rooms might give people pause.

[FITZ]

I go with a very high deductible and put the money saved on high premiums into a separate account in case I ever need to use it.

[LurkerNoMore!]

Laurav, the price will always be less if You (the patient) is the one who pays the bill. Free market forces will be in effect, as opposed to the current system.

[laurav]

The appeal of MSA's is that they are tax free, right? You save money tax free and then use it for medical treatments?

But most of the uninsured who will be pushing for major reforms do not itemize their taxes because they earn under $50k a year, or else are in brackets where payroll taxes are stiffer than income tax. They're not poor, but they're not rich enough where tax incentives really make or break the case.

[LurkerNoMore!]

Nope, the incentive is not just tax related.

Even those in the lowest brackets would be given an allocated amount.... Think of it as something similar to the Earned Income Tax Credit. It would be theirs, to spend as they wish on health care. The savings to the government would far outweigh the price of this program, all due to the individuals actually "shopping" for the best prices. (Which will make health care prices much more competititve, btw)

[Nick Danger]

The National Academy of Sciences said today that the health care system in the United States was in crisis and that the Bush administration should immediately test possible solutions, including universal insurance coverage and no-fault payment for medical malpractice in a handful of states.

Other than the fact that it has a fancy name, how is the National Academy of Sciences qualified to make recommendations on the subjects of insurance financing and tort reform?

If they were talking about better procedures for performing heart surgery, I would be happy to hear that they were being listened to. However, I do not care what a bunch of medical practitioners has to say about how to run the business side of things, or the legal system.

In fact this whole thing sounds to me like a bunch of liberal professor types trying to use their seats on a science advisory board to promote their political beliefs. I am really tired of that act.

If I understand Bush, he will happily adopt some of the recommendations, and postpone consideration of others. In other words, he will use the NAS report as cover to stick it to the tort lawyers, while accidentally forgetting to implement any of the other stuff. It is good to be king.

[LurkerNoMore!]

I meant competitive.

[Alberta's Child]

Tort reform will certainly reduce malpractice insurance premiums, which will likely result in lower health care insurence premiums. That, however, does not address the primary cause of skyrocketing health care costs.

The real problem here is that any product or service that is paid for through an insurance claim is what I call an "impure" economic transaction. The fundamental laws of economics don't apply because there are too many players in the mix. Most transactions have a "buyer" and a "seller," and normal market forces will lead to natural fluctuations in price depending on supply and demand. If something costs too much, the potential buyer won't buy; and if something doesn't cost enough, many sellers will leave the market.

The problem with a health care procedure is that there is one "seller" (the doctor, for example) but two "buyers" with distinct objectives. The patient is the one who is the recipient of the service, but the insurance company is the one who pays the cost. The end result is that the patient isn't going to care about the cost because he isn't paying it, and the insurance company isn't going to care about the quality of the service because it doesn't have to live with the results. And this doesn't even factor in the expected increase in costs due to the inherent "moral hazard" of insurance in general (that is, the fact that a person is insured may cause him to do things that he would not do if he were uninsured -- the saga of George Bailey in "It's a Wonderful Life" is a perfect example).

Now you might say that health care is different than any other economic transaction because people will "pay any price" to live a longer, healthier life. There may be some truth to that, but you'll find that there are striking similarities between the underlying causes of increasing health care costs and of increasing auto insurance costs. If I am involved in a car accident and I file an insurance claim, I want the body shop to use all the best parts and make my car look like brand spanking new. Who cares if it costs the insurance company $2,500 for the repairs? If, on the other hand, I was paying for the repairs myself, I would certainly consider accepting 90% of the "best" result at 75% of the "full" price. In other words, I would consider the various cost and benefit combinations like I would with any other purchase I might make.

[Alberta's Child]

At this point, high health insurance premiums are actually skewing the labor market. I know people who have kept horrible jobs because of the benefits packages, or taken ones that their skills didn't match because of benefits packages. It's driving people into 9-5 jobs when they might be better suited to other things.

That's a very good point. I've always said that one of the best things we can do to "fix" the health care system is to completely remove the employer from the insurance picture. The whole concept of employer-paid health premiums is nothing more than a relic from World War II, when employers began paying these costs because there was a wartime wage freeze in place that prohibited them from paying higher salaries.