May 18, 2006
Rx for American Health Care Posted by John Steele Gordon at 12:30 PM EST I wrote on Tuesday that I would outline my ideas for improving the country’s health care system. Please note that the operative word in that last sentence is “outline.” Numerous full-length books have been—and doubtless will be—written on this subject. This post is but the merest pencil sketch on the back of an envelope, not an oil painting.
It will come as no surprise to the readers of this blog that I am a capitalist to my fingertips. I believe that the private enterprise system can do a much better job of providing health care to Americans than can any alternative. But that said, any system of health care in the richest country the world has ever known must provide adequate care to everyone without exception. If someone cannot fund his own care, for whatever reason, then it must be funded for him by society. Period.
It should also be noted that the total cost of health care is going to increase in the long term for three ineluctable reasons. (1) The average age of the American population is increasing and will continue to do so as the baby-boom generation begins to move into old age. Obviously, old people require more medical care than young people. (2) The population is continuing to expand. (3) The amount of medical care available is increasing rapidly and saving ever more lives, which then, of course, must get medical care in the future. The number of drugs available has increased dramatically, and many more are to come in the near future. The number of medical procedures is likewise increasing rapidly. Just consider the major technologies that today save lives and reduce suffering that were not available 30 years ago: laparoscopic surgery, PET scans, CAT scans, MRIs, etc., etc. All these technologies are expensive.
And I do not consider the politics involved. Many if not all of these suggestions, if formally proposed, would set off firestorms of political opposition as bureaucrats moved to protect turf, special interests (such as hospitals, insurance companies, doctors, drug companies, health-worker unions, etc.) tried to protect an often lucrative status quo, and politicians and editorialists tried to protect their own cherished notions about how to reform health care that differ from these ideas.
So here goes.
1) Make insurance regulation a federal responsibility. We have had national insurance markets for generations; we should have national regulation. State
insurance departments and state legislatures are notorious for looking out for the interests of special interests, which greatly increases the cost of insurance policies, rather than insurance consumers. Heaven knows Washington is hardly immune to the blandishments of lobbyists, but the glare of publicity is much greater there than in Albany, Springfield, Tallahassee and Boise.
2) Require insurance companies to offer a specific menu of policies that range from a bare-bones, catastrophic coverage at the low-cost end to an all-the-bells-and-whistles policy at the high end. The purpose here is to make it easy to compare one company’s policies with another, greatly increasing price competition among them.
3) Require them as well to offer medical savings-account policies. These are policies with a high deductible that is deposited in an account. If it is not spent on heath care, the money is rolled over into the person’s retirement account tax-free. The purpose here is to encourage consumers of medical care to ask the question that today is hardly ever asked: How much is this going to cost? Obviously that question can’t be asked in an emergency situation, but emergency medicine is only about 15 percent of all medical care. The rest is chronic care, such as dealing with my high blood pressure and overenthusiastic gastric-acid glands. As it is today, I simply do what the doctor tells me (the odd pepperoni pizza aside) and take what pills he tells me to take. The insurance company pays for it, so I don’t care. I should be encouraged to care by making it in my self-interest to do so.
The argument against this idea is that some people might skimp on needed care in order to keep the money. Undoubtedly some people will. Some people fight bulls, take drugs that will make them high in the short term and kill them in the long term, and chase tornadoes. But the vast majority of people want to lead long, healthy lives. These people, in their millions, all asking “what is the cheapest way we can do what needs to be done?” would have a dramatic effect on medical costs. So would requiring hospitals and clinics to post prices for standard procedures. They vary now by factors of often two or three in the same city, an economic situation only possible because few people ask the magic question, what will this cost?
4) Encourage—or better yet require—companies that now provide health insurance to their employees to instead convert the cost into increased salaries and wages so that the employees can buy their own instead of having no rational choice but to take what is offered, however unsuitable to their needs (a healthy woman aged 25 has very different insurance needs from a 60-year-old woman in delicate health). This again increases the number of people asking “How much?,” this time about the cost of insurance.
5) Make the cost of health insurance tax deductible, at least up to a certain limit (barebones fully deductible, bells-and-whistles less than fully).
6) Abolish Medicare and Medicaid. Both programs are incredibly badly run and rife with waste and fraud. Billions upon billions of dollars a year are lost
(literally lost—they can’t be accounted for) in these bureaucratic monstrosities.
7) Require everyone to have medical insurance. Of the 44 million now without medical insurance in this country, about a third have incomes over $50,000 a year, about 10 percent (if memory serves) have incomes over $75,000. These people are often young and healthy and therefore highly unlikely to need serious medical care in the near future. They are playing Russian roulette, knowing they will be cared for if they fall ill and can, in most states, buy insurance after they fall sick.
For those whose incomes are below a certain level, a refundable tax credit would lower the cost. For those still poorer (those now on Medicaid), the federal government would simply pay for the person’s private insurance. For those now on Medicare, the government would do likewise and the individual could pay for any additional coverage wanted, as they do now.
8) Make hospital regulation a federal responsibility. We have far too many hospital beds in this country because local governments often make it impossible to shut down unneeded facilities, due to constituent pressure (everyone wants to shut down unneeded hospitals, as long as they are located in other people’s neighborhoods) and the influence of health care workers’ unions (Dennis Rivera, head of the Hospital Workers Union in New York, is widely regarded as the most powerful politician in the state, with elected officials, Democrat and Republican alike, doing all they can to please him).
The federal government would be less subject to this pressure and could more easily move to convert the present system of largely general hospitals into a new system of local emergency rooms and specialized hospitals and outpatient facilities. The savings would be in the billions.
9) Reform tort law. Tort lawyers are economic parasites, plain and simple, siphoning off billions while contributing nothing, and driving up costs in unneeded tests, etc., to protect against lawsuits. They greatly increase the cost of medicine for everyone. The evidence of this is irrefutable. Malpractice insurance in states with reformed tort law and caps on pain-and-suffering awards (such as California) are much lower than in unreformed states.
10) Immunize drug companies against lawsuits involving drugs that have been approved by the Food and Drug Administration (as long as no fraud or deception was involved in the application process, of course). It is an only-in-America spectacle to have Merck defending tens of thousands of lawsuits in which juries of average citizens are asked to decide a question (Did Vioxx cause the plaintiff’s heart attack?) that the greatest cardiologist on the planet could not answer for sure.
11) Establish a federal trust fund, funded by a minuscule tax on prescription drugs, to compensate people injured by a failure of the FDA approval process to uncover dangers in new drugs.
Once these suggestions have been turned into legislation and enacted into law (Congress can do that by the July 4 recess, right?) and enough time has passed to assess the results, we can then see where we need to go further to assure that everyone gets the medical care they need at a cost they can afford.
But I have no doubt that these reforms would both save lives and save billions of dollars, enough, I bet, to fund the medical insurance of everyone not now covered.
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