Health Care Reform

[Dave_LF]

I don't think people are denying it, but neither have I heard any public discussion of the issue. But I guess I can't blame anyone for glossing over the sticky points when the whole subject is already so controversial.

[elfshadow]

Elsha, the insurance companies will have to adjust their business models or go under. They have been profiting from lucrative near-monopolies in many states for decades now and have been pretty much free to operate as they choose. That can't continue, nor should it. So profits will go down unless efficiency goes up.

True, but there's a difference between the inefficiency in the insurance industry and the inefficiency in the health care industry. I'm not saying that the insurance companies shouldn't change their business model, I'm saying that there's a point at which no amount of change to the business model is going to fully cover the cost of health care for every American. In order to really solve the problem, we have to look both at the insurance companies AND at inefficient health care practices. It's fine to give insurance companies mandates to lower the cost of health insurance, but Dave is right. The way the health care system works now, there's simply not enough money to pay for everything.

I just read today that the average cost of receiving a liver transplant is $500,000. Half a million dollars. The only reason that anyone is able to pay for that is because of the way the insurance companies currently operate--the vast majority of people who pay for their insurance reap few benefits. Those people are covering the cost of the liver transplant for the person who needs it. The insurance companies are trying their hardest to screw everyone to maximize profits, there's no denying that fact. But if the government mandates that the insurance companies provide insurance at lower costs, and provide more coverage for the insured, eventually the insurance companies won't be able to cover the cost of health care for their beneficiaries. Even with financial support from the government. Which leaves us in a position that's not all that much better than the insurance industry refusing to cover so many people today.

That's why it's so important to target the inefficiency in the health care system itself, and not just problems with the insurance industry.

[Primula Baggins]

I agree. But I also noted in recent years that my insurance provider pays doctors and hospitals far less than I would have to pay if I were footing the entire bill, sometimes far less than half the billed amount. It seems to me there are inflated charges and prices all through the system, from care providers and pharmaceutical companies and insurance companies. Where's it all ending up? We're going to have to find out, because it can't go on as it has been.

[Dave_LF]

Where's it all ending up? We're going to have to find out, because it can't go on as it has been.

The insurance industry was hugely invested in the dot com bubble, which is why premiums started rising exponentially after it burst. I would be shocked if the same weren't true with subprime. So the short answer is, a lot of that money is just disappearing into the ether.

[Frelga]

The insurance industry was hugely invested in the dot com bubble, which is why premiums started rising exponentially after it burst. I would be shocked if the same weren't true with subprime. So the short answer is, a lot of that money is just disappearing into the ether.

And people are MORE concerned about government being wasteful.

Which it is. But so is any sufficiently large organization. Including insurance companies.

[Voronwë the Faithful]

One potentially significant development is that the AMA has reversed course and is now supporting a public option.

AMA president: Group open to government-funded insurance

Also, Sens. Kennedy and Dodd said in a letter to other members of the Senate Health, Education, Labor and Pensions Committee that their new proposal for a plan with a public option has a price tag of "only" $600 billion (down from a trillion). This would be a purely Democratic proposal. The Finance Committee is still trying to put together a bipartisan proposal centered around Sen. Conrad's non-profit cooperative idea.

New Dem health plan has public option, lower cost

I'm still doubtful at either proposal garnering enough votes.

[Primula Baggins]

From a quick look, that new plan looks promising. And it's hard to argue with the numbers. It would also apparently result in 97% of Americans having health coverage, whereas the more conservative (and much more expensive) plan would leave tens of millions uninsured.

[Voronwë the Faithful]

It almost sounds too good to be true. Originally they were talking about the public option plan costing 1.6 trillion dollars, then a trillion, and now 0.6. Of course, we really haven't seen the details of this new plan, so it really could be too good to be true. But with the lower cost, and the support of previously opposing groups like the AMA (and an additional very liberal senator), who knows?

[Primula Baggins]

If we're thinking of the same thing, the $1 trillion figure was the CBO grading of a partial Senate plan that did not include a public option. It cost $1 trillion and covered only 9 million additional people, leaving tens of millions uninsured.

The reason the numbers look better with the public option included is that it does actually save money, offsetting the more expensive choices people can make; the $1 trillion plan included only those expensive choices.

A public option also does a better job of extending coverage to the uninsured, which costs money but also saves it. If we end up with 97% of Americans covered, there will be less money wasted on ER visits when a simple doctor visit a week earlier would have averted the problem, and on increased physician and hospital fees because those who have insurance have to offset those who don't and who can't pay their bills.

And I still think one of the greatest economic benefits is one that won't show up in any CBO analysis and never seems to get mentioned in media coverage: a public option would unshackle millions of Americans from dead-end jobs they keep only because they get insurance. It would let people contemplate starting new businesses, branching into new careers. Having, effectively, only employer-based insurance available to anyone who is not extremely young and healthy has been a drag on the economy for too long.

[Voronwë the Faithful]

The original estimate by the Obama adminsistration of the cost of a plan with a public plan was 1.6 trillion.

[yovargas]

Prim,
Wanted to say that I've really appreciated your input and opinions on this issue (one that I generally have a hard time wrapping my head around). My libertarian-leaning self still has a hard time supporting government-centric options but you've helped me understand problems the current alternatives face and it's nice to get a solid, practical perspective on viewpoints that may not necessarily align with my own.

[Primula Baggins]

Thanks, yov; it's just an issue I care about a lot.

Voronwë, I remember that. I'm talking about the two more recent CBO gradings of Senate plans, the public-option one last night and the estimate on the Kennedy-Dodd bill with no public option (yet) attached that was released June 15 (link).

So essentially adding the public option cut costs by 40% while greatly expanding coverage. If those numbers hold up, it's going to be hard to argue with them.

yov, another point that really struck me is that "the market" really can't work in healthcare. The product is "save my life" (or "my mother's life" or "my baby's life"). People don't, as a rule, say, "You want $250K to treat the cancer you just told me my 8-year-old daughter has? Well, I'm going to shop around for a better deal. There's no hurry." In my experience people don't even ask what it will cost. They just hope they end up being able to afford it. That's not a place where "free-market forces" are going to drive prices anywhere but up.

[yovargas]

yov, another point that really struck me is that "the market" really can't work in healthcare. The product is "save my life" (or "my mother's life" or "my baby's life"). People don't, as a rule, say, "You want $250K to treat the cancer you just told me my 8-year-old daughter has? Well, I'm going to shop around for a better deal. There's no hurry." In my experience people don't even ask what it will cost. They just hope they end up being able to afford it. That's not a place where "free-market forces" are going to drive prices anywhere but up.

I get what you're saying but why would a non-market solution be any different?

[Primula Baggins]

It would cost less to treat people, and people would get preventive care that can avert problems or at least detect them sooner, when treatment is easier and cheaper.

A public plan would have the advantage of not needing to pay dividends to stockholders or bonuses to executives. Administration would be simpler. Administrative costs in for-profit healthcare run much higher than for the government-run portion of Medicare. And the federal government could use its bargaining power to benefit plan members by negotiating better prescription drug prices, for example.

An interesting article

[axordil]

In my experience people don't even ask what it will cost. They just hope they end up being able to afford it. That's not a place where "free-market forces" are going to drive prices anywhere but up.

It's more complicated than that. Do people shop around for an ER when they have a gunshot would or internal injuries? No. Do people shop around for Tylenol? Yes. The more timeliness and critical care matter, the less the market model functions. But there are billboards for cancer treatment centers on the highways. Someone thinks that's a good investment, obviously.

That said, the points about administrative costs are true. A large chunk of the processing overhead for health insurance administration consists of things like paying agent commission, tracking group contracts, recording and processing premium payments, et al. Depending on the public model used, some or all of that simply goes away.

[Primula Baggins]

Yes, my example applies mainly to critical care and serious illness, but that's what costs by far the most. Those expenses have a huge effect on overall healthcare expenses. A premature baby whose early birth could have been prevented by $1000 worth of prenatal care and tests may rack up $500,000 in NICU bills.

[vison]

A few years ago a neighbourhood clinic in a poor section of Montreal began doing prenatal work with the poor/immigrant population there. They also gave the expectant mothers free oranges and milk that had been fortified with folic acid. This paid off in healthier babies and better "birth outcomes" but in the end the city of Montreal decided that the free milk and oranges were "too expensive" and the whole program was scrapped.

[Primula Baggins]

Penny wise and pound foolish. It's the disease of the times: a company or a government looks good for cutting a $100 expenditure this quarter, even if it turns out that cutting the $100 leads to a $10,000 cost a year or more down the road.

This being health care, the human cost in worry and pain and disability and grief ought to count for something, but there aren't any CBO formulas for that.

[axordil]

It's the disease of the times: a company or a government looks good for cutting a $100 expenditure this quarter, even if it turns out that cutting the $100 leads to a $10,000 cost a year or more down the road.

That's because the assumption is that the cutter will be long gone, working on his or next victim, before the costs come home to roost.

[Primula Baggins]

Yes. In some of the businesses I've seen up close, the top-level executives suck the bonus opportunities dry in a year or two and move on and up, leaving the fields sown with salt (but they saved the company a bundle on seed corn!).