Redstate

stikes again

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

60 percent of the country has healthcare insurance the dems would just portray this as the mean Republicans trying to take something away again.

Veritas magna est et praevalet.

just the forever lost party :-)

John
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Why would God create something like whiskey? To keep the Irish from ruling the world of course.

by allowing individuals to deduct their health insurance premiums, then it's certainly a very good idea, and Mr Bush should indeed have brought it out long before now. But it isn't an election winning idea. What the voters want on healthcare is something a lot bigger.

..for the free market to work out this health care thing? It's been a very serious problem for a long time now and the Market Forces have not really stepped up to the plate. Costs continue to skyrocket for both Medicare (which is not market based, I admit) and just general health insurance.

Wealth Weekly

...because the price signals are obscured. Tax policy and regulations combine to interpose employers as a de facto third party between healthcare providers and consumers. As a result we have perverse outcomes in which some consumers (the ones with tax-privileged coverage provided by their employers) overconsume healthcare because they have no exposure to its actual cost. Other consumers, meanwhile, can't afford to buy even basic coverage and face exposure to bankruptcy when catastrophic illness strikes.

Medisave accounts are another very effective possible way out of the box, but the Democrats hate that idea just as much as they will hate the President's new one, and for the same reason: because any kind of rationalization in healthcare coverage will wipe out the pressure for a government takeover of the industry.

As with welfare reform, healthcare is not a particularly difficult problem to understand, not are the solutions particularly difficult to implement. The problem is that solving this problem will cause a huge transfer of power from the government to the people.

Now to be sure, there are Progressives who disagree with private reforms of healthcare on doctrinal grounds (unlike the Democrats, who mostly want to preserve government power). Progressives have a hard time accepting that we respond rationally to the incentives that are placed before us. Ironically, these are also the people who tend to call themselves "reality based."

Different point: I recently came across a fascinating analysis that completely explains why the Left is so adamant about expanding the government's role in healthcare, even as they start acknowledging that free markets generally produce better outcomes in other spheres: it's precisely because healthcare is among the industries that will experience the largest relative growth in coming decades. The Left knows which way the power is going, and they want to be sure they're there to meet it.

As with welfare reform, healthcare is not a particularly difficult problem to understand, not are the solutions particularly difficult to implement. The problem is that solving this problem will cause a huge transfer of power from the government to the people.

So you think the only bar to fixing welfare, which I infer to mean Social Security, and healthcare is the Left's desire for power?

This sort of demagoguery serves no purpose and lessens the chance for any sort of viable change. If the Right claims that the Left is only seeking more statist power and the Left claims that the Right is only seeking to screw the poor and middle class, we will never be able to agree on anything.

True open market health care environments will not work equitably because demand, for most health care needs, is not linked to price. How do you set the price on life-saving treatment? Raise the price and you will still have the same need although demand could go down as people are simply incapable of paying.

A true open market health care environment would indeed be cheaper on average but the lower income quintile would get considerably poorer care while the upper economic quintiles would receive better.

Is that what you are looking for?

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

...you came to the wrong place. All of your objections have been answered here innumerable times. Search the archives.

If we remove the distorting effects of tax policy on healthcare-insurance purchasing, then it will be possible for many more people to buy high-deductible policies for catastrophic conditions. I'll even compromise with you and agree to a law that people must purchase such coverage if they have children, so long as they are allowed to do so with pre-tax dollars.

For normal, non-catastrophic healthcare, people should be able to spend their own money, and know to the penny what they're spending. Overnight, that will make everyone's consumption of healthcare more rational. Which will automatically make it more affordable, as providers seek ways to efficiently meet the demand.

What am I looking for? I'm looking for an outcome in which everyone can afford to buy decent, basic healthcare coverage. From your precise words, you're looking for something far different: an outcome in which no one has access to a significantly different level of care than anyone else. Given that this is your metric for success, it's no surprise that you consider healthcare-insurance reform to be a hard problem.

If we remove the distorting effects of tax policy on healthcare-insurance purchasing, then it will be possible for many more people to buy high-deductible policies for catastrophic conditions. I'll even compromise with you and agree to a law that people must purchase such coverage if they have children, so long as they are allowed to do so with pre-tax dollars.

I guess this is true. But I'm not sure how it is relevant or even that useful. So more people may be able to buy a high-deductible catastrophic illness plan. How many, who have health insurance today, don't have catastrophic illness coverage already?

For normal, non-catastrophic healthcare, people should be able to spend their own money, and know to the penny what they're spending. Overnight, that will make everyone's consumption of healthcare more rational. Which will automatically make it more affordable, as providers seek ways to efficiently meet the demand.

You think it is tax policy that is causing this problem? People will still be using insurance? The insurance plans will still be mechanisms that cloud true costs of health care, no?

rom your precise words, you're looking for something far different: an outcome in which no one has access to a significantly different level of care than anyone else. Given that this is your metric for success, it's no surprise that you consider healthcare-insurance reform to be a hard problem.

Ah fun with parsing. No, I do not believe that everyone must have equal health care coverage. Wealthy people will ALWAYS have better care. But the reason that governments get into health care in the first place is because it is not a market that functions in a morally acceptable way.

Personally my bigger problem is with health insurance. I think that the only thing it does is cloud a person's total health care costs. But it's not likely that we'll be doing away with health insurance anytime soon.

I have a question for you. Currently most employers pay somewhere between 50-75% of an employee's premium. You are suggesting that we should do away with that and have individuals manage their own health insurance because it would be cheaper. Are you suggesting that removing the tax policy distortion would cut costs but a 1/2? That seems really optimistic.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

insurance. Fundamentally, insurance seeks to measure the risk of specific (costly) events occurring in a particular population, and then to spread the cost of meeting the anticipated liability evenly across the population. It's completely senseless to do away with insurance. Even "national health care" is a form of insurance, just that it defines the whole country as the underwriting pool.

It sounds like you have a problem with the fact that some people aren't exposed to the precise cost of the healthcare they consume. If so, you're right. This usually happens because their employers purchase the healthcare for them (either directly or through insurance products, largely depending on the size of the employer). That's what needs to change, and it's driven entirely by the tax code, which privileges these purchases by employers but penalizes those undertaken directly by consumers. It's not that hard to understand. Insurance companies have an ox to gore here and will thus resist any change in the tax policy, but they'll adapt.

I'm not suggesting that individuals should pay for their own healthcare because it will be cheaper. I never said that. (What's more likely to happen is that people with employer-provided insurance today will overconsume less, and people with no insurance today will underconsume less, both good things.)

What will happen is: transferrability of insurance coverage from job to job, which is not possible today when people contract serious chronic illnesses. Also, greater availability of inexpensive catastrophic-illness plans, which everyone should have. We still need some fundamental rule changes like permitting community rating and being able to purchase healthcare with aftertax dollars.

Parsing:

I do not believe that everyone must have equal health care coverage. Wealthy people will ALWAYS have better care. But the reason that governments get into health care in the first place is because it is not a market that functions in a morally acceptable way.

So are you saying here that, although we will always have unequal outcomes due to the pestilential presence of wealth, they are somehow more moral if perpetrated by the government? Or are you trying to say that the government will make the outcomes less unequal than if people produce them by free will?

I've already said that my goal is for everyone to be able to afford decent, basic healthcare. If that is achieved, I don't care a fig if a billionaire can get access to more. I'm missing the additional moral imperative that you seem to be layering on top of this. Is there something special about healthcare, that makes it wrong for one person to get more than a different one gets? If the answer is yes, please just say so.

I'm not suggesting that individuals should pay for their own healthcare because it will be cheaper. I never said that. (What's more likely to happen is that people with employer-provided insurance today will overconsume less, and people with no insurance today will underconsume less, both good things.)

But what is your evidence that suggests that American consumers overconsume health care services? Your entire premise is based on this notion but I don't believe this is a major problem with our system. Truth be told American consumers are far more directly impact by price than any other Western nation yet we spend more per capita than any other nation in the world on health care.

So are you saying here that, although we will always have unequal outcomes due to the pestilential presence of wealth, they are somehow more moral if perpetrated by the government? Or are you trying to say that the government will make the outcomes less unequal than if people produce them by free will?

I thought I was pretty clear. Free markets are not well designed to effectively service health care because the needs of the consumer are not necessarily best served by traditional supply and demand rules. Without large group plans and government oversight health care providers would create health care plans where price is inversely proportional to need. The older you get, the more expensive your health care becomes. I did like your use of pestilential presence of wealth. Portrays me as such a class warrior.

I've already said that my goal is for everyone to be able to afford decent, basic healthcare. If that is achieved, I don't care a fig if a billionaire can get access to more. I'm missing the additional moral imperative that you seem to be layering on top of this. Is there something special about healthcare, that makes it wrong for one person to get more than a different one gets? If the answer is yes, please just say so.

I don't know. Do you think that wealthy people deserve to live longer and healthier lives? I agree that I don't care if a billionaire has better amenities or better access to facilities. I do care that a person with cancer or with hypertension is able to get the sort of health care to combat those afflictions.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

And see people coming in for unnecessary procedures that could have been avoided with preventative measures.

Veritas magna est et praevalet.

"What are you here for?"

"Me? I'm getting me an extra root canal!"

"Really? Cool! I'm here to have dentures installed because I never brushed my teeth. I would have, but hell... I've got health insurance so I figured... why bother, right?"

"Totally!"

"I so love sitting around in waiting rooms for services I don't really need."

"Like tomorrow, I'm going out to break a few bones in a car crash and go to the ER to have them set. Talk about excitement, huh?"

The overconsuming health care thieves now smile at each other...

"Thank God for employer funded health insurance!"

Isn't that already proof that we're too far along the line to Soviet-style medical care? We wait in lines for that like they'd wait for all other state-controlled products!

Run like Reagan!

...with lines at doctors?

I wait at the car mechanic and for the cable delivery and for lots of things that gots nothing to do with the government.

No more answering the rope-a-dope. I shall only give, not receive.

Run like Reagan!

of months (as in the UK) or forever (as in the USSR).

Try again

Dentists office. I'm here for a cleaning the insurance pays for it and I can take a sick day to get it done. Dentist while youre here why don't we take a set of xrays and do a gum scraping.

Primary care: Ahh your here for a headache,I see you have insurance x they cover a full range of diagnostic tests lets do them.

Primary care: I'm suffering from headaches and shortness of breath. Hmm youre 350 pounds and only move when someone puts a cattle prod to you. Well lets prescribe crestor a complete diagnostic workup and a MRI.

But then again if you were really trying to think about your point you would have thought of these.

Veritas magna est et praevalet.

"But what is your evidence that suggests that American consumers overconsume health care services?"

Childbirth. Induction of labor for the convenience of mother and doctor. Fetal monitoring, epidurals, C-Sections, etc. You would think with all of our hovering and taking control of the process would mean we have the safest outcomes on the planet. Wrong! In fact, we have the WORST infant motality rate of all of the indistrialized nations. AND it is not the poor minorities skewing the statistics.

Inducing labor is now a frivolous procedure? C-sections are an unnecessary procedure?

I find it odd that you would use other industrialized nations as a comparison to us in this context since every other western nation has a far more established socialized medicine system than we do. So I'm not really sure how you are proving your point by saying that Japan, Germany, Canada, England, and France have lower mortality rates. Can you expand on this please?

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

in which you disagree that medical services are overconsumed by Americans. I gave you the example of childbirth management. You then tried to expand the argument to claim that my rebuttal was advocating socialized medicine for all areas. When in actuality, it is probably true in the case of childbirth because this is one instance in which lack of services enhances the liklihood of a good outcome.

And yes, both C-Section and labor induction are frivolous procedures when the instances of them happening are beyond any reasonable definition of necessary.

CDC data reported a cesarean rate of 30.2% in 2005. According to WHO no nation or region is justified in having a rate over 10 - 15%.

"New York-Presbyterian Hospital/Columbia University Medical Center has begun tracking inductions — they accounted for 34.4 percent of all births in 2005." Excerpted from this article:
http://www.nytimes.com/2006/03/26/magazine/326wwln_essay.html?ex=1301029...

Anectdotal evidence at two major hospitals in Chicago reveal that more than 80% of births are by induction.

Without supporting evidence.

First off you are claiming that caesarians increase mortality without showing evidence to support the claim. You are simply saying we have a higher mortality rate and then assigning whatever reasons you want to the cause of that.

Secondly even if this is true, that doesn't support your claim because we are not talking about a overconsumption issue but rather an issue of perceived value in getting a C-section or induced child birth.

Overconsumption implies that a consumer is choosing to purchase something simply because the price is attractive. Your example is not very good because the consumer is choosing their action based on perceived value irrespective of price.

And you are ignoring that you are comparing our health care system to mostly fully socialized systems in which cost is not a determinant.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

And those of his ilk are the cause. The best thing the left ever did for healthcare was help edwards in his political career and get him out of malpractice law. Doctors chose C-sections to prevent themselves from being sued for not doing them.

Veritas magna est et praevalet.

If you want to say that malpractice suits are the reason why our costs are high then that is completely different than the argument that overconsumption is the cause.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

Most doctors are pretty decent people and they make enough money that there isn't much incentive to perform unnecessary procedures (at least surgery diagnostic tests are another matter) They do these because of fear of being sued if they don't patients don't protest because they are usually at best poorly informed and not concerned because its not their money. If you are having a kid and your insurance will pay everything except your deductible how much are you going to object to what the doctor recommends ? If you are pulling 25k out of your own rear its a different story.

Veritas magna est et praevalet.

I served in the United States Air Force for 20 years and 10 months. During that time, I used the base hospital for my entire family. I am not complaining mind you, it was a nice benefit for serving to not have to worry about paying medical bills. Otherwise, we would have had a large share of medical bills.

One thing we found, especially since I am now out and retired, is that when we were going to the base hospitals, a large number of people went to the doctor, and even the emergency room for "common cold" type ailments for themselves and their kids and they gave it no thought of it, because they weren't paying for it.

In the real world, it became obvious that was going on at the base hospital, because people can't afford to do go anytime they feel like it at civilian facilities.

That is what I call over consumption, because, "hey, I don't have to pay for it" mentality.

Wubbies World - The odds of hitting your target go up dramatically when you actually aim for it!

That is the classic example of overconsumption of services.

Since you have no incentive NOT to go to the doctor you will go to the doctor whenever you feel you MIGHT need to.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

Re: Since you have no incentive NOT to go to the doctor you will go to the doctor whenever you feel you MIGHT need to.

I don't know about other people, but I find that just taking the time and putting up with the hassle of going to the doctor is a disincentive. And there are any number of healthcare procedures which are painful, degrading (lower GI for fun, anyone?) or even dangerous. Isn't that sort of thing a pretty strong disincentive? Add to that the fact that very few people have health insurance that pays 100% of everything; there are copays and deductibles too which operate as financial disincentives. Yes, I've known a coupel of true hypochondriacs who ran to the doctor whenever they were feeling teh need for attention. But I;ve also known people (well-insured people too) who put off doctor visits when they shouldn't have and who paid for it with their lives.

HMO subscribers in emergency rooms. The plans have to cover emergency service but for other kinds of visits will require an approval.

Veritas magna est et praevalet.

That isn't an example of overconsumption.

There may be excessive costs due to fear of litigation but that does not support the claim that there is overconsumption.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

What defines overconsumption for you ? For me its consuming unnecessary goods or services.

Veritas magna est et praevalet.

Overconsumption, in economic terms, is when a good is consumed more than the market would otherwise dictate. Overconsumption occurs, usually, when a price is set artificially low usually by government regulation.

In this case the market has determined that C-sections and induced births are desirable because the consumer wants them because they feel it increases the chances of having a viable baby, the doctor wants them because he perceives that it protects him and has either a neutral or positive impact, and the insurance provider is willing to pay for them because they mitigate against greater costs from law suits.

The market does not always yield the most beneficial solution. It always yields the economically best solution.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

This is a case of such by your own definition.

Veritas magna est et praevalet.

I'm tired of spoon-feeding you. Or are you just entirely lacking in imagination? {sigh}

http://www.icpa4kids.org/research/children/birth.htm

What that link is trying to prove.

So a bunch of non-doctors have some views on how birth should occur and use statistics to further their agenda. So what?

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

The left certainly stepped up to the plate on that one.

Veritas magna est et praevalet.

The AARP stepped up to the plate on that one.

"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw

Are we talking about making health insurance more affordable OR fixing the rising cost of healthcare? If we are discussing cost of health insurance, then I agree that there is much the free market can help with. For the most part you are talking about healthy people they are not the one's breaking the bank.

BUT if we are saying solving the overall cost of health care and the coming crisis is a simple free market issue, then I agree with Flyerhawk. Price is unlinked to any other market force. What I charge is based on what insurance will pay. I just need to make sure my price is higher than the best insurance company. The balance gets written off. No market except to weed out the really crappy reimbursing insurance companies. Telling you what my price is means little because your insurance company ignores it too. Most are slaved to Medicare they will pay between 110-150% of medicare for a given procedure/visit. That's why we squeal with medicare reimbursment goes down.
Health care will not follow a free market format as long as those who cannot afford a used Ford's worth of care demand-and get-a BMW's worth. It will always be very difficult to link price to the demand. Noone wants to say "NO". Currently noone is allowed to say "no". Good way to get sued

allow insurance companies to freely compete across state lines. More competition between insurance companies and more choices for families would result in lower costs. Currently states severely limit health insurance competition with coverage mandates.

However the politicians (both parties) will fight against increased competition - the current stakeholders make alot of money with the inflated insurance rates.

====
"Enlightened statesmen will not always be at the helm." -- James Madison

I think they make insurance rise, and some people don't even need the mandated items.

I also think having insurance so closely coupled with employment was a huge mistake, and one that may be difficult to get away from.

But my ideal situation would be one much like auto insurance shopping, where you can pick a carrier and a plan that covers the things you need and not the things you don't need or won't use, and would allow for variation in deductibles.

must be decoupled from employment. This is a major drag on American business, it distorts the labor market, increases unemployment, and prevents people from trying self-employment.
However one thing to keep in mind is that if emp,oyers cease to provide insurnace there will have to be some way to duplicate the risk pooling that large employer groups creates in order to keep premiums from sky-rocketing. At the very minimum there will have to be community rating based on, maybe, geographical location or some other random factor, or anyone with any kind of health problem, and anyone middle-aged or older, will simply be priced out of the market, and their healthcare costs ultimately dumped on the taxpayers (directly through Medicaid etc., or indirectly through bankruptcies and medical inflation due to uncompensated care). But then, to keep people from taking cheating such a system by going bare until they need coverage, we will need some sort of mandate to have insurance rather like Gov Romney's program in MA.

We should allow insurance companies to freely compete across state lines. More competition between insurance companies and more choices for families would result in lower costs.

I agree, though it's not so much a case of allowing the insurance companies as it is forcing the states to allow this, via national standards for required coverages. Here in Blessed Massachusetts, the price of a simple, no frills big deductible policy is double what it is in Connecticut. This is just crazy.

I'm all for federalism, but I think health insurance is one market that warrants the heavy hand of the federal government, at least for purposes of creating a truly national market.

Re: Ever hear of anyone challenge and doctor's charges on a bill being picked up by an insurance company?

Yes. The insurance companies themselves do this all the time. The days when insurers just paid whatever charges came in without question or review are long gone. And in fact since the insurance companies are big businesses with a lot of clout they are actually quite effective at this.
Beating up on insurance companies is fun, and sometimes even the Right joins the game and, yes, sometimes insurance companies deserve a hard knock, but all in all, they are pretty effective at whittling down the costs and they shouldn't be slandered as callous, money-grubbing pirates (except of course when they are :)

Insurance companies do because it IS their money. Individuals don't because they are not spending 'their' money for health care. It's insurance money so who cares.

If individuals had a direct economic incentive to limit the costs, then overall costs would decline.

"Damnant quod non intellegunt."

Re: If individuals had a direct economic incentive to limit the costs, then overall costs would decline.

But you missed my point: the insurance companies already do whatever they can to pare down costs, and they are better able (and just as motivated) to do this than individuals since they have more clout in the marketplace and have more detailed knowledge of the industry.

If someone decides they need a checkup when they have a hangover they can go into their doctor pay their copay and the insurance company has to cover the rest.

Veritas magna est et praevalet.

No one has perfect pricing (or buying) power in any market. We are all "handcuffed" in some respect. But I think my point stands: an insurance company has far more bargaining power than an individual consummer has.

Medicare allowable. Those two words pretty much determine the cost of healthcare.

Veritas magna est et praevalet.

If someone decides they need a checkup when they have a hangover they can go into their doctor pay their copay and the insurance company has to cover the rest.

Veritas magna est et praevalet.

...and do disallow treatments.

And given their current profit margins it's hard to believe their the ones getting played.

Once a treatment is allowed under a contract with a doctor the only time they can disallow it is when they renegotiate the contract. They certainly can't disallow it on the patient side when the policy covers medically neccesesary treatment.

And of course they are making money they can explore the profit space for this as much as they like.

Veritas magna est et praevalet.

Our group policy was more expensive than a plan I had with similar benefits before I was hired. The end cost to me was less, but if you added the employer contribution it was more expensive. We had a 'consultant' look for a cheaper policy, but he couldn't find anything significantly cheaper.

====
"Enlightened statesmen will not always be at the helm." -- James Madison

It's very difficult for individuals to get any kind of community rating for purchasing healthcare insurance. And the whole point of insurance is to underwrite risk and spread it around. Small employers go to insurance companies and are able to join underwriting pools. Insurance companies have a solid business in doing this because of the tax advantages. (Your net productivity is far better as an employer if you can displace a part of your people's wages with a tax-privileged benefit.) Many large companies go a step further and self-insure. They vertically integrate the provision of healthcare insurance when their employees are numerous and diverse enough to constitute an effective underwriting pool all by themselves.

All of this needs to go away, for a whole lot of reasons. By the way, the existing insurance companies will howl because they will have to upset a lot of existing procedures and business relationships. Don't listen to them. They'll adjust. In fact their businesses will ultimately get bigger as more people become insured.

We have to wait till the SOTU to get a clearer picture of what will be proposed to Congress. Until then, we shouldn't be guessing.

Re: The former is a better idea than the latter, in my opinon, because it nudges us closer to tax code neutrality.

But the former is political non-starter and would be played as "GOP wants to take away your healthcare to give more tax breaks to the rich." And the charge would stick because the voters are upset about healthcare and will react very negatively to anything that threatens to upset their current situation without providing something guaranteed to be better. (See: Hillarycare, 1994. Also, see: voter rejection of possible changes to Social Security for a similar attitude). Moreover if such a change ended up depriving a lot of working people of their healthcare benefits, the GOP would turn into the minority party overnight and we'd be on the fast track to socialized medicine, which I think you would agree is much bigger mistake than some non-neutrality in the tax code.

But the former is political non-starter and would be played as "GOP wants to take away your healthcare to give more tax breaks to the rich."

Maybe so, though this is why I brought up the idea of a countervailing cut in tax rates. It wouldn't bother me one bit if Uncle Sam decided to tax my health insurance benefits but also cut my tax rate (or raised by personal exemption) so that my tax bill didn't increase. I suppose, because of medical inflation (which tends to rise faster than overall inflation and also rises faster, needless to say, than wages), people's tax bills eventually would increase as a result of such a change. But that might not be a bad thing when it comes to checking medical inflation, because workers would tend, in the fullness of time, to favor cash raises over more medical insurance. The former, after all, allows you to buy more stuff, while the latter would do just the opposite by increasing your tax bill. We have something of an opposite situation now, with unsurprisingly inflationary effects on healthcare.

I think perhaps the most straightforward way to effect the change the the president's proposal apparently targets (decoupling insurance from employment) is to simply make the tax writeoff to employers contingent upon adoption of a portable voucher system. Employers, in other words, would be required to give their employees a truly portable health insurance voucher in order to write off the cost of health benefits as a business expense. A voucher system would not be legally mandatory -- it would just be required if an employer wanted to write off the associated expense (which nearly 100% of private sector employers would want to do, presumably). Employees would be allowed to pocket the difference between their voucher and the premium (or top it up with their own cash to buy a more expensive plan). The change could be phased in over five years (80% allowed write off of non-voucher style health insurance after year 1; 60% after year 2; 40% after year 3, and so on). So, after five years, the vast majority of people who receive health benefits on the job would get them in a form that would require them to be consumers. Combine this with the aforementioned phaseout of the health insurance tax shelter on the employee paycheck side, and we'd be left with a saner, much more consumer-driven health insurance system.

deductibility of healthcare and insurance purchases by employers, then would you be willing to accept that individuals can buy community-rated insurance on their own, with pretax dollars?

It doesn't seem to me that you, as an employer, are really doing anything good by buying healthcare for your people, because you're giving them a perverse incentive to overconsume it.

You seem to have so many assumptions of government subsidy and regulation that I don't know where to begin. I don't want ANY deductability, "pretax dollar," or other government involvement at ALL.

How do you 'overconsume' insurance against catastrophe?

Run like Reagan!

Ever heard the expression "Politics is the art of the possible"? Whatever the practical merits of what you suggest, its a non-starter politically. We should be trying to come up with good ideas which the GOP can implement. This is not one of them.

Trying to put more government into solving a problem caused by too much government, is like digging your way out of a hole.

The last two times we tried, we got NCLB and Medicare Part D. I'm not optimistic about a third try.

Run like Reagan!

I seem to have so many assumptions of government subsidy and regulation that you don't know where to begin. Does that mean I'm assuming there are too many regulations or there aren't enough?

You're never going to get to full deregulation in healthcare. It's just too big and important an industry. By the nature of democratic politics, all of the bad outcomes which inevitably occur in such a system evoke indignant cries of "there oughta be a LAW!" And inevitably such laws come into being.

And it's not just at the federal level. No one on this thread has yet addressed the rat's nest of state and local laws that encumber health care and insurance providers. This is one evil system.

Reversing the tax mis-incentives at the Federal level could be a big step toward introducing some rationality. But as you've seen even from some of the comments on this thread, more than economic and health issues are involved here. Healthcare is one of those things that exercise a lot of people's taste for social engineering.

If you're not going to reduce the regulation and subsidy, you're not going to even make a dent in the problem of rising costs. Twiddling tax laws won't address that core problem.

Might as well give up and work on something you can actually improve, instead.

Run like Reagan!

Because of the experience of Medisave accounts. Congress has never allowed more than a few hundred thousand of these in any given year, not enough to be anything but a science project. But anecdotally (and I admit I can't give you more than that), the experience is that costs drop like a rock for both employers and employees. The basic ideas are: first, the underwriting pool still comes through the employer (it's illegal in most places, if I recall correctly, for insurance providers that are not quasi-government entities like the Blues to offer community ratings to individuals- someone please correct me if I have this wrong). Second, the employee gets a chunk of pre-tax dollars to spend on healthcare expenditures during each year (there is also a low-cost, high-deductible insurance policy for catastrophic conditions). Third, whatever is left is your account at the end of the year that you didn't spend on healthcare becomes taxable income. You pay taxes on what's left and then put the rest in your pocket to spend as you see fit.

You can see the immediate linkage of the pricing signals between the consumers and the providers. Companies that have done this found that their employees stopped going to the doctor every time they got a headcold or a hangnail. It's immediately apparent to you that these things aren't worth a $200 office visit, if you're writing the check yourself. Works like magic.

How will any of this make a difference against the freely flowing Medicare, Medicaid, and equivalent state subsidies?

Run like Reagan!

Re: If you're not going to reduce the regulation and subsidy, you're not going to even make a dent in the problem of rising costs.

Costs are rising because A) the population is aging and B) our technology is getting better. Factor A is not going to change any time soon, and we shouldn't want factor B to turn around.
Has anyone ever considered the proposition that the cost of healthcare is worth it?

No, because you have to be able to afford it in order for it to be worth anything to you.

Sure, it'd be nice if everyone could afford the cars with the safest construction, homes with the best earthquake/hurricane protection, but I don't want people to have to go carless and homeless if they can't.

People like you seem to be doing their darndest to ensure that people who can't afford top-notch medical care get el zilcho.

Run like Reagan!

when I have been pretty consistent in my support for universal coverage via market means all along.

And I'm far from decided on the question.

Your point A means that the market is growing, which means the total price we pay for healthcare is rising, but it doesn't necessarily mean that the amount we pay per individual outcome should also rise. However, both are the case.

You would have to identify the incremental benefits we're getting from this. If these are not to be found, then productivity is falling and that's a different question.

We now go to extraordinary lengths to extend the end of life, sometimes beyond any rational consideration of the quality of the extended life. This happens on a daily basis with the elderly, who are not (and whose families are not) exposed to any kind of financial pressure not to extend life by heroic means. As a result, we are expending a very large and increasing share of our total national productivity on healthcare. This is a decision being made on a daily basis without serious evaluation, because it's the law, and because the laws concerning "entitlements" are sacrosanct.

Two factors enter here: first, the "machine" model of the human body that modern medicine has embraced (meaning, "fixing disease is a simple matter of understanding and addressing the mechanism," together with "old age is a disease"); and second, the end of the old-style religious conviction that there is life after death. As a result of these factors (and others, including the exposure that healthcare providers face from the plaintiff bar), we've decided that it's immoral not to do whatever is possible to extend life heroically. We've also decided that it's immoral for heroic life extension to be available to one person and not to another, so we decided to socialize the cost of doing so.

Are we getting anything measurable in return? Well, yes. It's exceedingly valuable for people to live into their 80s and 90s, so long as they retain their health and are not a burden to themselves or others. In the presence of debilitating diseases, things get questionable fast. I don't know the answer. I do know that as a society we're not asking the question.

One could turn the question around and ask: what would we do with our national wealth if not expend it on elder care? Goooood question, since we already have just about everything else we need. It just might be that what is happening is natural and normal for the mature, low-growth economy that we have.

In either case, we're even farther away from questioning the moral basis for the way we do elder care. And here there are deep questions indeed. Since WW2, our culture has obsessively embraced any way of seeing the world that can be considered "scientific," and we've discounted centuries of moral thought in the process. I happen to be extremely dissatisfied with the "machine" model of human life. I think there is a whole lot of things wrong with how we do medicine. I know I'm in the minority on this point.

To your point B: It's true that the pharma and medical-device industries have embraced technological change and benefited strongly therefrom. Healthcare delivery is another matter entirely. I don't know what your direct exposure to it is, but healthcare delivery is perhaps the most fragmented, inefficient, and technology-averse large industry there is. (Except maybe for lawyering.) There is huge untapped potential for cost efficiencies. Darned if I can figure out why it's not happening.

Fragmentation IS more efficient than centralization, when a market functions property. If we completely centralized everything, efficiency and correctness would rise and fall with the bureaucrats in charge.

Run like Reagan!

Why is that industry so dysfunctional? It's a total disaster. From what I can see, it's because it's run by a lot of mom-and-pop shops with very uneven quality. Doctors, nurses and hospitals show some very weird inefficiencies as well. Part of this (I suspect most of it) is due to the legal and regulatory framework these people have to work in.

But didn't realize its universal. Almost all medical care is a mom and pop shop. Doctors are uniformly not good businessmen and the evaluation of business decisions by doctors usually winds up being arbitrary at best and completely capricious at worst. There also seems to be a perverse need to pay their office staffs amounts not commensurate with the job functions. Then there is the greater complication of the doctors wife. Someone who winds up running a practice on the basis of the need to do something and usually on the basis of emotional insecurity.

Veritas magna est et praevalet.

Re: Doctors, nurses and hospitals show some very weird inefficiencies as well.

Maybe this is due to the fact the medical personnel are not, by nature, businessmen, in fact my years in health IT have shown me that they are not even very technically adept outside their field. For a similar situation, most churches are run very badly and inefficiently too. In both cases the motivation of the practioners is not money, in fact there may even be an element of disdain for financial concerns.

Priests with very big egos/

Veritas magna est et praevalet.

although this one is more of a surmise, not something I know for sure. Much of the healthcare industry is ultimately driven by what Medicare pays them, which is strictly capped. So there's no way to justify capital expenditures (on infotech, for example) that would improve efficiency. If that's true, then perversely we may not be spending enough on healthcare.

Run like Reagan!

Many practices will only take medicare. They have every incentive to make capitol improvement from the standpoint of lowering their costs. They have a nearly 100 percent predictable revenue stream any investment that either increases revenue or decreases costs can be justified by discounting the new revenue stream to present value.

The problem is in the market valuation of a medical practice. Remember there is one key commodity, the physician. Without a physician the practice (a corporate entity) can't tap the market. Thus the resale value of a practice is constrained and capitol improvements have to get discounted at sale.

Veritas magna est et praevalet.

...in which the primary factor is an extremely scarce piece of talent (viz, the doctor) charging by the hour? That's the last business anyone with a brain would put capital into.

As long as Medicare (or some future national health-insurance program) is the payer, then the only avenue available for improving productivity is to shovel the patients in and out faster. (Or to unbundle each procedure or diagnostic test into a bunch of smaller ones, but that's been done already.) You can't make any more money for producing a medically better outcome or a healthier patient. So there's no rationale for the capital input.

There's also no rationale for making people any healthier, which is another big problem I have with the system in its current form.

Provided there is a sound reasoning on it. Automated check in eliminates staff, EMR frees up space in the office often providing another examining room and increasing the rate at which patients can be seen.

Any of the above significantly improve a practices profitability.

You are correct though there is no incentive to provide a quality outcome except repeat business.

Veritas magna est et praevalet.

...but I'm engaged currently in an investigation of whether medical practices in their current form can benefit from capital availability. We're not done yet. But the early signs are not good.

(To anticipate your question: my POV is that of the investor.)

The only way you could make it work would be for multi doctor practices where they are all employees and are payed salary and performance bonuses. Urgent care centers are a good model for this.

In terms of loans to existing practices, it will be hit or miss depending on the proprietor.

If you want contact me directly and I can run a breakdown of the financials for you.

Veritas magna est et praevalet.

n/t

I write accounting software for medical practices.

Veritas magna est et praevalet.

Re: This happens on a daily basis with the elderly, who are not (and whose families are not) exposed to any kind of financial pressure not to extend life by heroic means.

It would be nice to see some real numbers on this. How many people are warehoused on life support indefinitely, versus how many have living wills and other directives to "unplug the machines"? I honestly don't know (and am not necessarily challenging your words here). My own family (both sides) are firmly in the living will camp, and if I had disobeyed my father's own wishes on the matter ("Make me comfortable but don't keep me hopelessly alive at the end") the man would have come back and haunted me. Beyond this simple common sense approach though we do need to beware of a slippery slope toward Dutch-style euthanasia and Kevorkianism. Yes, I support the concept of living wills etc.; I even supported the Schiavo decision; but such decisions do need to be made by the patient himself or, in extremis, his loved ones. When we start converting a right to die into a duty to die we are stepping across the boundaries into a very dark country.

why must it be the federal government?

President Bush surely must believe that the Tenth Amendment to the Constitution ought to be repealed (which is somewhat surprising because, of course, he used to be a governor). States have been grappling with this difficult issue and have come up with various approaches. Some will work better than others, some are best suited to the needs of particular states. Why must George Bush federalize every problem in contravention of fundamental conservative philosophy?

(It would be awfully cynical of me to say that he is trying to change the topic - from Iraq - and is desperately looking for another way to have an historical legacy, so I won't say those things.)