If you listen to the Democrats, they'll tell you that capitalism doesn't work when it comes to health care: government inherently has economies of scale, is quicker to accept technological solutions including digitization of medical records, etc. You'll then hear a couple of solutions to the health care problem: Expand the access of Medicare to everyone; enroll all comers to the same program that federal employees have access to.
Let's point out the obvious: there are real problems: Medical bills are a major motivation for declaring bankruptcy. Costs are rising. Primary care physicians in health care networks are increasingly reluctant to take on new patients. Hospitals are having to pass on the costs of non-paying patients to other patients or health care plans. Primary care doctors are finding it more difficult to match patients with preferred specialists that operate within the patient's network plan. Many people are not being diagnosed in early stages of serious health problems (e.g., diabetes, heart disease, and cancer) when it's more cost-effective and in the best interests of the patient.
Dr. Mark Siegal discussed some of these key issue in his April 17 WSJ column, "When Doctors Opt Out". He succinctly points out, "The Obama administration [promises] that universal health insurance will avoid all these problems. But how is that possible when you consider that the medical turnstiles will be the same as they are now, only they will be clogged with more and more patients? The doctors that remain in this expanded system will be even more overwhelmed than we are now." Amen.
My first information technology job was as a computer programmer/analyst in the property casualty division of a major insurance company. I remember talking to one of the actuaries about various legislative proposals going around at the time and was dumbfounded to learn that she actually opposed mandatory insurance legislation: how could that be when you're guaranteed paying customers? She explained that existing coverages reached something like, say, 75% of the target population, but mandatory insurance effectively only added a few percentage points above that--at an exorbitant price.
Mitt Romney, who probably should have been McCain's running mate last year and is the probable frontrunner for the 2012 nomination, may very well find that his embrace of the grand health care experiment in Massachusetts will be a political issue, at least in the GOP prmaries. The Massachusetts program costs are spiraling out of control, and that's with hardship exemptions for people not qualifying for government subsidies and with difficult budget constraints.
To be sure, there are philosophical differences between conservatives and libertarians over the very concept of government mandating health care: what place is it of government to tell citizens they must purchase health care insurance? For example, why should an in-shape young man, with low health risks, essentially subsidize the bad health decisions of older Americans? What will the government do next: arrest a fat man buying a Twinkie, a woman carrying a Down syndrome child, or a middle-aged person putting off his colonoscopy?
My own view is that a mandate of some kind is in order in the sense that catastrophic costs must be spread across all Americans and life isn't fair (e.g., young people, even children, sometimes contract fatal diseases or suffer debilitating accidents). I am an advocate of catastrophic health insurance which would limit the amount of out-of-pocket expenses in a year. I am also in favor of tax-advantaged health savings plans which provide an incentive for consumers to spend health care products and services more efficiently and improved web-accessible product and service databases (an extension, for instance, of what former Governor Jeb Bush did in Florida).
I also believe that we need to address health care provider issues, particularly, on the government side, with long-overdue malpractice insurance reform, onerous paperwork requirements, and fairer, more timely compensation. On the consumer side, we need to deregulate health insurance providers facing a byzantine patchwork of idiosyncratic state benefit mandates and enrollment policies, and we must provide equal protection of tax-advantaged health care benefits to remedy the status quo whereby those consumers without employer health care benefits must pay for insurance, good or services with after-tax dollars. This is a point former President Bush and Republican nominee John McCain both explicitly addressed.
The Obamaian solution is incompatible with the vision I've just outlines. There are a couple of recent Wall Street Journal op-ed's which should be mandatory reading for the American citizen and voter.
Kerry Weems, a former head of Medicare and Medicaid, and Benjamin Sasse wrote an April 14 column entitled "Is Government Health Care Cheap?" They correctly maintain that the liberals' favorable comparison between government and private sector administrative costs is intentionally misleading, because the government sector involves benefit payments, while private health care is in the managed care business. The government basically sets a take-it-or-leave-it schedule of payments, typically below market rates and requiring paperwork which often isn't even worth the physician's while to complete, while the private sector must negotiate rates with groups of providers. The authors make a compelling argument that private sector players are subsidizing whatever government (Medicare or Medicaid) business doctors are accepting. This is a critical point when you consider that shifting the primary provider to the government would change the dynamics because the shrinking private sector cannot subsidize government participants at a higher scale. Second, the government essentially allows all doctors to participate (beyond, say, rudimentary criteria like a criminal record check), while the private sector is more selective. Third, the government underinvests in anti-fraud measures, which the private sector cannot afford to do. The authors contend that the Medicare payment fraud results in over $10B of losses each year, and Medicaid-related fraud in 2007 amounted to over $30B! They say that despite some evidence of a 13-to-1 payback for anti-fraud investment, our Congressmen, in their infinite political wisdom, saw it as a zero-sum game with cancer research and anti-obesity campaigns. Yes, the very same geniuses whom insist we must rush to judgment in passing reform in the middle of a recession, involving a growing portion of our GNP; making the wrong decisions could create massive losses compounded annually... Finally, the private sector has certain marketing and other (e.g., regulatory compliance) expenses that the public sector doesn't have and has certain scale advantages, e.g., inserting Medicare notices with social security checks.
The April 12 WSJ editorial, entitled "The End of Private Health Insurance", points out the inevitable conclusion from the government essentially competing against private sector carriers. It argues that the government will compete unfairly, heavily subsidizing costs for rates susceptible to political vs. actuarially-sound considerations, using the printing presses of the US Treasury to back up operational losses. For example, on average, Medicare pays 71% of what hospitals charge the private sector and 81% of customary physician charges. As the government begins to dominate the market, it becomes the price maker and can basically cripple the industry by adding benefit mandates. Many companies will likely dump their health care plans, one of the highest rising labor costs to which they are exposed. The private sector hence will have fewer policyholders to cover their fixed costs. The natural response of businesses under these circumstances would be to consolidate, leaving the American consumer with even fewer choices.
There is no doubt that the status quo needs reform: as Dr. Siegal described above, he is finding it harder and harder to match specialists he recommends whom are acceptable under a patient's health plan network. Too many citizens are not getting proactive health care that can limit the costs of catastrophic illness that ultimately all of us must cover. Too many private health plans look to cherrypick policyholders, for example, refusing to cover and manage the costs of preexisting conditions. Too many doctors find that they must spend more time processing paperwork and working around constraints of patients' health care carriers than on doctoring.
The solution is NOT to do with health care what the Democrats did in supporting the expansion of Fannie Mae and Freddie Mac, with an unfair competitive funding advantage of the US Treasury against private players in the secondary market. In fact, I believe that government is largely responsible for the current state of affairs, which had its genesis in giving businesses a tax-advantaged workaround to wage/price controls and to the present stiffing doctors with overdue underpayments and voluminous paperwork and saddling private sector with having to subsidize uninsured patients and Medicare/Medicaid--and the American taxpayer for failing to invest in anti-fraud. Does the American taxpayer really want the same people responsible for the mess we're in to be trusted with monopoly control over the US health care system? That's the Obama vision and solution, one which we cannot afford.
