First, there is an elephant (or at least a pig) in the room that nobody seems to talk about (and I have yet to find out what Mass. does about it): uninsurable people.

If you go out and try to buy health insurance, you had better be healthy. If not, you either aren’t gonna get it, it’s going to be exceedingly expensive, or it won’t cover anything that might be a result of your “pre-existing condition.”

At one time (and maybe still), the local Blue Cross would not cover anyone who had ever taken Prozac! Think about that!

There are a whole lot of people (with the number to expand dramatically) who are going to fall into this category but don’t know it yet – boomers who retire early or try to start their own businesses. A lot will have a medical problem (high blood pressure, diabetes type II, some sort of psychiatric history – perhaps very minor, etc). And they are going to discover, when they leave the cocoon of their employers, that they won’t be able to get insurance.

I’m not talking about the pay-everything plans so popular today, which are really a combination of insurance and pre-paid health care – a really dumb idea. I’m talking about insurance that prevents them from loosing all their savings to one medical event.

This issue is almost invisible in almost every policy discussion or plan I have ever seen. And it is a real problem!

—————

Here’s a bit about the industry (which I used to be in)…

Health insurance makes money by balancing risk and premiums. Employers (of a large enough size) tend to have a lot of healthy people working for them. Hence the risk is relatively low (and many will lay off older workers because they know that insurance costs are lower if they do so).

Insurers are loath to insure sick people because it often is a case of reverse cherry picking (they call it “adverse selection”). People want to wait until they get sick (which they don’t expect) before they shell out the dough for insurance. Obviously you cannot have an insurance market that works this way.

Hence the private (as opposed to corporate or government) health insurance market is basically dead – of market failure. Medical underwriting means a whole lot of people don’t qualify, and those who do are more likely to not bother. This is a case of serious market failure.

So our current system takes people who should be able to afford insurance, and leaves them with none. It doesn’t make any difference if you want a PPO co-pay type of policy or a $10,000 deductible one – you just can’t buy it.

So these people either have to work until they die (with the everpresent threat of age-discrimination and “lasering”), or put their savings at great risk. This is hardly conducive to a sound capitalist system. If people knew what risk they were running, they’d either buy insurance when healthy (and hope they NEVER miss a month of payments) or just not bother to save.

Does the Mass. system help with this? Or does it penalize people for not buying insurance, when in fact they cannot get it due to pre-existing conditions? I have yet to see an article that says.

——————————–

Moving on… as a long-time computer systems designer, I am sure that our medical care and medical payments systems are woefully under-automated. This significantly increases costs while significantly reducing the quality of care. If you want to see high quality care, go to Mayo and watch how well automated they are. It means prescription errors are way down. It means that the providers and patients both avoid wasted time. It means that insurance overhead is greatly reduced.

Now go to your family doctor’s office and ask how they submit insurance claims. Probably by hand. How do they create prescriptions? They either scribble them illegibly on a pad, or call a pharmacy where again there is a waste of time a higher probability of error. How about medical records? When New Zealand introduced a centralized medical records system, they discovered that the rate of Munschausen Syndrom (people who fake illness or make themselves sick due to psychopathology) was much higher than previously thought. The records system made it visible. You can imagine what other things this could do.

————————-

As to increasing supply, I must disagree with the usually very wise Jamie Irons on this one. The medical schools are so tight at rationing positions that their selection process uses hidden randomizing in the MCAT to screen out qualified people. Some of the sections of that test would defeat a prodigy in the field they are testing – they are clearly designed to cause random score variation. As a mathematician with a good background in physics, I looked at some of these (which are given under extreme time pressure) and was amazed.

No, there are LOTS of qualified people. When you have a population of 300,000,000 and you also allow people from all over the world to compete, the number of qualified people is extremely large. Hence the med schools are very arbitrary in their selection – because it IS a guild system and is designed to reduce competition. The numbmer of newly accredited med schools in the last 50 years is nowhere near equivalent to the population growth.

——————-

For those who feel save with their employer provided insurance, you need to know about “lasering.” This is a relatively new practice, but I already have a friend (in the health insurance industry, ironically) who was nailed by it.

No longer satisfied with the statistics of employer groups, insurers will now identify, to employers, those employees who have very high costs, and tell the employers that if those people are removed from the pool, their costs will go down significantly.

Anybody care to guess what this results in?

===============

Employer provided health care is an artifact. It is unreasonable and has all sorts of externalities. It is one of the reasons that the individual health insurance markets don’t work at all. It resulted from demands for increased compensation during World War II when price controls were in effect.

It should be illegal.

——————-

Finally, people need to understand, and accept that the only workable health insurance system involves generational transfer. Young people need to buy insurance to subsidize older people with higher expected medical costs.

At first glance, this would seem unfair. After all, why should the young subsidize the old, in yet one more way.

But consider…

1) The young will be old someday. How are they going to get health care.

2) Historically, the young have cared for their elders. They didn’t do it using complex bureaucracies, but they did (if they were responsible) take care of parents, elderly aunts, etc.

Right. And when someone faces those facts squarely, as you are in those later posts, the discussion is useful.

“Re: your LE&GH examples above, that’s basically what we’re doing constantly.”

Yes. And as the old saying goes, once we agree that X can be bought, the quibble is merely over the price. Rationing of some kind *will* happen, if only by individual market and quality of life decisions. A person proposing a plan that assumes rationing will not occur hasn’t considered the basic immutable facts.

“Get rid of the tax distortions that make health care an employment perk, and a lot of common sense reform will happen.”

This would indeed help a lot.

Well, that’s what I meant to say, but you put it better than I did.

And that indeed does describe our “health insurance” as it stands.

My gripes with this are two. First, I am obviously paying more for my routine exams because I am also supporting the insurance company, not just my doctor. Second, and more importantly, this system prevents the market from having a say, because the agents paying the costs are not the same as the consumers incurring the costs.

I hear that more companies are offering catastrophic-only coverage to those who want it. (The open question is whether the same companies offer higher wages to those who choose this.) I do not know how much this is catching on, but it ought to, unless I’m all wrong.

***
And I am not saying that switching to a true insurance model will get us all out of the water either. But it would go some ways to making health care competitive, which it manifestly is not.

http://www.lasikathome.com

Y’all mention Roger to get a 10% discount!

Semi-seriously, I think it would be great to test market-driven health care sometime. We’re certainly not doing it in the U.S., where the government heavily regulates every aspect of health care in collusion with big pharma and the AMA.

On top of that, our sense of “I should get health care for free” noted by others here is heavily fueled by our messed up tax system. Bonus foul-up: anybody who survives a serious illness becomes unemployable for life. Get rid of the tax distortions that make health care an employment perk, and a lot of common sense reform will happen.

Re: your LE&GH examples above, that’s basically what we’re doing constantly. It is more in the GH than the LE right now. LE is creeping higher and higher (provided you ain’t in Russia!) but what we define as GH, especially in the later parts of LE, is MUCH higher. A lot of the wildly rising costs we are seeing are in that GH bit at the tail end of LE and a lot of them are in squeezing out a few moments more from LE regardless of GH.

Except for big injury and unusual illness, between about 15 and 55 or so people – taken as a whole – aren’t really all that expensive as far as medical care goes. I don’t believe the huge and expanding costs are being incurred by that segment of the population. Yeah, there are diseases that get treated now that had no treatement once upon a time but there are also diseases that don’t afflict people that were once common. We aren’t incurring the costs of polio or malaria or yellow fever or smallpox and such anymore either. I don’t know if any data exists to look at how that washes out but I suspect there’s some equaling out in there. We aren’t dealing with nearly as many auto accident injuries per passenger mile as we once were. There are costs that seem to disappear. At some point some of what the enviro-whackos and public health activists have wrought will start paying some dividends. Eventually there’ll be no more asbestosis, fewer smokers will eventually mean retreats in the number of lungers, etc.

Oh, and yeah, let’s not forget that the rat in the snake’s belly – the aging baby-boomers – isn’t gonna be there forever. Some of what we’re seeing and screaming about is going to settle down a bit just with the passing of time. Of course just about then 10 or 12 million illegal aliens will start getting old on us…

It looks like we may be the only ones left playing in this thread

I don’t think there is any magic bullet for any of the things we’re talking about. As far as I can figure it we need some serious rethinking and restructuting in several areas of “health care”.

- insurance. We need to stop “insuring” small and normal costs. Insurance is supposed to protect against the big and, hopefully, unusual stuff. When it comes to health the big stuff is nearly inevitable but more on that later.

- liability. If we as a nation ever decide that we want whatever portion of medical/health care costs removed from the individual and placed upon society then we need to deal with where we place the liabilty for non-negligence/incompetence types of mistakes. Medical care is not a precise type of science and the human body is not a thoroughly known machine – it ain’t mechanics and it ain’t perfect. We cannot continue to try and rectify people’s misfortune wrt their health and treatment thereof by awarding them large sums of money from somebody else’s pockets. “We’re so sorry, Uncle Albert, that you had some medical problem that qualified and non-negligent medical service providers failed to detect and treat until you suffered permanent damage. That doesn’t entitle you to $15M from some doctor’s insurance company.”

- services delivery: not everything we need needs to cost as much as it does. We’ve covered some of this above but there’s some room for some other stuff such as lab work. Do we really need physicians involved in the periodic dropping off of poop, piss, and blood to be run through some analysis equipment? I don’t think so. I’m going to come back to this later.

- prevention and rehabilitation: our “health care system” is downright dumb when it comes to some of this. I have no idea how to deal with prevention in any way that isn’t going to have the general populaton blowing gaskets about government interference into life choices. Perhaps some sort of “rewards” for “good behavior” rather than penalties for bad or whatever. Particularly in the rehabilitation areas there’s tons of room for costs savings over time by outlays now. There is so much room for improving the health (and reducing the health care needs) of people through rehabilitation and therapy that it is astonishing. People with Chronic Obstructive Pulminary Disease, for example, often require hospitializaton roughly once per year at costs that quickly run to thousands of dollars. Half or more of those people, when put into rehab training, can be taught to manage their disease and avoid at least half of their hospitalizations. Insurance companies refuse to pay the $1000/yr cost of the rehab and, instead, wind up paying several times that much for the hospitalizations. That just one example.

If such things were made a standard and accepted form of care we’d be able to switch some of that cost onto people as per the first point above. I know of a doctor who tried to go this route and set up a program where COPD patients came in every other week for breathing rehab training at a cost of ~$30/session. The results were apparently very good. Not only were the patients being hospitalized significantly less frequently but they were marveling at how much more they could do in the daily course of their lives. But – my lord people can be absurd! – the insurance companies and medicaire (or whatever it is) stopped paying for the rehab and the people wouldn’t pay for it themselves. They’d rather wind up in the freakin’ hospital and pay those costs! Whassupwitdat?

If somebody wrecks a leg or a hip or whatever, spend the money to teach them how to live with that WITHOUT wrecking their other freakin’ leg or hip and needing MORE expensive care later. We don’t do that stuff and its just dumb not to.

- end of life care: anybody who works in or around intensive care facilities can vouch for the enormous costs incurred to keep people alive (if we want to call it “alive”) for a few more weeks, or days, or even hours. At what point do we just say no and tell the sons and daughters and spouses that no amount of heroic effort is going to anything but cost a ton of money? Unfortunately doctors and hospitals make a lot of money here. Keeping Grandma on that respirator with the morphine drip and a half-dozen 10 second dropins from specialists is profitable business.

None of us are getting out of this alive. Sooner or later something fatal is going to get every one of us.

What about stuff that costs a fortune that people can’t pay for? Well, I sure don’t know what to do about that. But let’s just say that the next time you jump into your auto to go somewhere you get blasted by some truck with failed brakes. Some bunch of people is going to jump to it to try and get you to a trauma center pronto. They’ll close the road and get a helicopter in there if they need to. When you get to the emergency room they’re going to do everything they can to save your life and Humpty Dumpty back together again. And nobody is going to demand your insurance card. If you can’t pay those thousands of dollars in services, well… nobody is going to remove the services. You’re going to get at least the immediate medical attention you need and nobody is going to force you to sell your home or whatever to pay for it.

Somehow, someway, those costs are covered. The reality is that those who can pay are covering the costs for those who can’t. The people with insurance are paying inflated prices to cover the emergency services of those without insurance.

Now take a different example. By some method you discover you’ve got cancer. It is a treatable form with excellent success and prognosis following treatment but the treatment but the treatment is expensive and you can’t afford it. How does this really, fundamentally differ from the accident scenario? The only real difference, at least as far as getting the services you need, is that everyone in the chain now has the time to stop and think about who is going to pay for it. Now the “luxury” exists to withold services.

Now take our two examples and, instead of a middle-aged or young victim make it an old person. Your not 30 or 40 or 50 but, instead, 75 or 80 or 85. Now what? I’m aware of a study done by a trauma center that showed that for people over 65 years old the success for dealing with the typical traumas starts dropping off the cliff and the costs start climbing. (The study wasn’t able, I don’t know why, to look at what the differences are in even managing to get the older patients to the trauma center alive in the first place, but that would seem material to me.) I don’t doubt for a minute that this is similarly true for other medical situations – cancers or whatever. Do we start withholding services based upon age?

There’s a lot of nasty little questions running around in this “health care” business.

I’d say my expectations for saving with idea #3 (government transfer) are about in line with your expectations for idea #2 (reduce health care costs). I don’t think there is much there that can be done, short of getting the government more out of the loop.

I agree that we can’t really expect GNP to outgrow health care at the current rate. What we can do is bring health care costs down enough that we are at least in the ballpark.

“On the other hand, we are far too wealthy a society to demand that people chose between death and bankruptcy or penury.”

We are all gonna die someday. Let’s assume (making all kinds of generalizations), that there are procedures/meds available that will do the following: A. $1 to expand life expectancy and general health (LE&GH) by 1 year. (Never mind the difficulty of such a measurement, we are assuming.) B. $10 to expand LE&GH by six months. C. $100 to expand LE&GH by 18 months. D. $1000 to expand LE&GH by 2 year, but only works on 50% of the population. And so on. Since those are just made up examples, feel free to add any additional ones you want.

Now, let us further assume that there is broad agreement to make certain procedures universially available; others only if people want to pay out of pocket; and the rest not worth it. (Or assume that Roger has been made dictator for life, if that makes more sense in the example. Either way, the politics are settled. Furthermore, assume that the prices above (and in any that you add yourself) already reflect the volume.

Problem is, there is *always* another procedure. If your chances of heart disease go way down, and you avoid the heart attack, your chances of living long enough to get cancer are much greater. Find a cure for cancer, there will be something else. No matter what, a society *will* demand that people chose between death and bankruptcy or penury, unless that society removes the choice altogether by saying that no one gets the procedure. This will remain true until someone finds a cure for all diseases and old age. I’m not holding my breathe.

As long as one talks about health care in particular, or “rights” to basic health care, one runs into this issue. As soon as one drops talk about “rights”, moral issues, etc. and focuses on a particular procedure, then you can get on much more solid ground. For example, even the most rabid libertarian will seldom insist that we relax government mandated treatments of tuberculosis. The costs of not treating it are simply too great, regardless of what you think about the patient. Likewise, I think most people are unwilling to say that injured people can be denied blood replacement, regardless of ability to pay.

IMO we, the people, need to get over our expectation of paying some amount awful close to $0 for basic medical services. Getting the wart or mole or whatever removed costs $200, you’re just gonna have to pay for that the same as if some part in your auto needed replacing. Nobody expects the rest of us to pay for a new set of tires or an oil-change and expecting the rest of us to pay for a flu-shot or Viagra strikes me as unreasonable. We need to stop believing we have some right to dig into each other’s pockets to pay for that kind of service.

On the other hand, we are far too wealthy a society to demand that people chose between death and bankruptcy or penury.

I have a friend who works for Sage Products in IL — believe it or not, brushing teeth more often seems to help – you’re not letting the bacteria stay in your mouth and get in your lungs. Or something like that.

In the meantime, for those with the time or interest to wade through a long article, Krugman here sums up the liberal view on “the health care crisis”, and also tries to address most of the standard conservative objections: http://www.nybooks.com/articles/18802