29 January 2010

Health Care Reforms

A couple of weeks ago my leftish friend JC asked the non-leftists in our group of college friends what they thought health reform out to entail. My hat's off to him for approaching this like something that reasonable people can disagree about. I'm a little tired of hearing that I must oppose the current reform package because I hate poor people and want them to die.

Before I reproduce my response, with some minor notations added, I want to say I reject the notion that anyone opposed to this or any other reform package on any issue has a responsibility to propose their own measures. If you think a legislative actions is going to do more harm than good it is perfectly acceptable to reject it without putting an alternative in place. Saying otherwise is succumbing to the "Hurry up and DO SOMETHING!" hysteria that constantly sweeps Capitol Hill. It's perfectly okay to say "I do not know what the solution is, but this is not it."

Nevertheless, I happen to have various ideas about what should be done instead of the wounded behemoth that is congress seems to be hurrying to forget. Many of these range from politically unlikely to nearly impossible, but what's the fun in being on the fringes of the political landscape if you have to stick to political reality?

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I absolutely think something needs to be done, but I think the current [now former?] plan is much more likely to make things worse than better. I won't go into why, but the short answer is that all the cost savings boil down to "we promise we'll figure out a way to cut costs later, really." You need to do that before you throw millions more people into an entitlement program, not after. Especially given Congress' track record with Medicare cost savings specifically, and really any government procurement program ever.

What would I like to see? I think the most important thing is decoupling insurance from employment. There's no more reason that we should have a system that favors employer-provided insurance than employer-provided college funds or employer-provided mortgages. It's a historical accident, and it needs to go. This would increase competition between insurers and make them more responsive to customers because they would be responsible to you and not your HR rep. You would probably need some new tax deduction for personal health care expenditures in order to balance both the financial or popularity scales.

[An accountant friend rightly pointed out that this would involve all sorts of frictions and elasticities and stickiness and various other economic terms borrowed from physics. I agree, but I think it's a bitter medicine we still need.]

In a similar vein, I'd like for people to be able to shop for insurance out of state. This also increases competition and provides more choice to consumers in terms of what they want their insurance plan to cover. It makes it harder for lobbyist groups to pressure state governments into mandating that all insurance cover whatever treatment they represent. For instance I believe all insurance plans in NJ must cover pregnancies, even if you're a single man or a post-menopausal woman. I believe detox and substance abuse coverage are required in MD, even if you're a teetotaler. This lobbying pressure from trade groups and patient groups ratchets the minimum level of insurance ever upward, and with it costs.

I think we need insurance that is actually insurance — that is, it covers unexpected, serious problems for which you can't plan. I don't see why an annual physical should be covered by insurance. I don't know how to convince people to buy such high-deductible insurance, but it is illegal or effectively so in many states. At the least, it needs to be made available for anyone to purchase.

[There was some back-and-forth over whether more GP care leads to cost savings from preventive care, and if so whether it should be incentivized by masking it's cost through including such visits in insurance. I'm less convinced on the answer to the former question is "yes" than most are, and pretty well sure the answer to the second part is "no." Of course if people want to buy insurance which covers all aspects of their medical care they can be my guest, but I don't see why I should be forced to.]

We need to remove barriers to innovation in medical business practices. For example, either Walmart or CVS tried to open up a series of low-cost, walk-in clinics in their pharmacies in Massachusetts, I believe. The idea was they could handle routine ailments and refer anything possibly complicated to a full-fledged practice. They were shut down before they even got off the ground. I don't know if that particular model is the answer, but we need people trying things besides individual and small doctor's practices, and large comprehensive hospitals. We've changed the way we supply almost everything else to consumers over the last 75 years, but that's stayed pretty much the same.

[I was informed that such clinics are now, or perhaps recently were, operating in Minnesota at some Target locations, and that they seem to be popular.]

Finally, I would like to clear the way for a lot of routine procedures to be done by non-doctors. I don't know whether this means RAs or physicians assistants or pharmacists or some new class of practitioner altogether, but the training of a lot of doctors is rather wasted on slapping a splint on a sprained wrist, etc. I've got to go see my PCP Thursday to get a referral to a dermatologist. It's rather obvious I have a rash on my arm (f*ckin' a man, I got a rash). I don't see why ten minutes of this guy's time needs to be taken up to verify that. I'd love for [two friends in med school] to weigh in on this, but my take is that proposals like this get read by the AMA as "you want to replace doctors and make them superfluous" when I really want to free them up to do more important things.

[I am further told that hospitals have been shifting more of the work-load to non-MDs, but that this trend has not happened in off-premise practices yet.]

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I didn't mention tort reform because all my friends on all sides of this debate, even our larval-stage lawyer buddy, agreed that was needed.

There was some talk later about a public program which would act as "re-insurance," kicking in if people had spent over some threshold on health care for chronic or catastrophic conditions. I think this is pretty good idea, and I wish I had mentioned it. It alleviates fears that people have of going broke staying alive. It polls well, even when you tell people how much it would cost in tax burden. It's roughly similar to the way we treat other needs like food and housing, though the mechanism is different. It maintains personal incentives to make good cost/benefit decisions. You wouldn't have to meddle with the actual business apparatus of the health care system.

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PS Edited to add — For my records, Peter Suderman on a exchange today (29 Jan) between Obama and Paul Ryan about the latter's health care proposals:
Indeed, not only did [Obama] make almost no effort to incorporate opposition ideas into his legislation, he wasn't willing to recognize the existence of legitimate opposing ideas at all. Instead, he chose to caricature his opponents as having "no solutions." That's not true now. It wasn't true then. But Obama's approach to most policy and political debates has been to reiterate the notion that his way was not simply the best way, but the only way—or at least the only legitimate, acceptable, reasonable way. His conversation today with Rep. Ryan, I think, is a tacit admission that that's just not the case.

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