Some thoughts on health care

(Previous posts worth checking out are here and here.)

Health-care costs -- and whether to go to a government-run payment system -- is an issue that could dominate the 2008 elections. But as always, the debate could benefit from some decluttering.

First, let's be clear on what we're talking about. Opponents of any sort of national health care deride it as "socialized medicine". In fact, they use that label to describe any government involvement in the health-care system, however small.

But true socialized medicine is when the government is the health-care system -- it owns the hospitals, employs the doctors, and decides what procedures are included and what are not.

That's not generally what is under discussion here in the States. We're mostly talking about a "single-payer" system -- wherein the government pays for medical care, but it is provided by private hospitals, doctors and clinics.

But that's just the beginning.

Proponents of the current system warn of rationing -- as if care isn't rationed now, by ability to pay. Nor do they mention all the personal bankruptcies related to medical costs.

They warn about bureaucracy -- as if there isn't plenty of bureaucracy involved right now. The only advantage is that you get to choose among several private bureaucracies instead of being stuck with one big government bureaucracy.

They warn about lack of choice -- as if workers have much choice now. At a good-sized company, an employer might offer two or three health plans. But most workers are lucky to have health insurance at all -- and often, even when it's offered, it's expensive or has big coverage gaps.

They warn that people will stop trying to become doctors if salaries are squeezed. But doctor pay actually isn't a big factor in rising health-care costs, and so shouldn't be the primary focus of cost-control efforts. Even under a single-payer system, doctors should still be well-paid.

(And never mind that one of the reasons for high medical salaries is the staggering cost of medical school. If those costs could somehow be ameliorated -- say, by hospitals agreeing to shoulder some of that debt when they hire new MDs -- we could have lower salaries without discouraging new doctors).

PERVERSE INCENTIVES
The current system is also riddled with Catch-22s that might make sense individually but end up being senseless in aggregate.

My brother's a doctor. He's a family practitioner, which if you know anything about medicine means he's not primarily in it for the money. Yet for an FP he makes money hand over fist because he happens to have a patient base that is generally young and healthy -- meaning he can pack lots of appointments into an hour, the most profitable way to operate given his employer's payment system (which, in turn, is based on insurance reimbursement schedules.)

He has a colleague who is really detail-oriented, likes talking to patients and takes time with them. She ends up with all the hard cases -- and because those patients take a lot more time, she makes a lot less money. Yet the system would collapse without her -- she frees up the other doctors to see more patients.

Does that compensation system make sense?

Then there's the bureaucratic craziness caused by having to deal with dozens of different insurers, all of whom have their own coverage and reporting requirements.

My brother knows all this. He can rattle off a dozen perverse incentives caused by the current health-care system.

Would single payer solve some of those problems? Yes. Would it introduce other problems? Almost certainly. Whether the tradeoff is acceptable depends on how its structured.

COMPARING THE TWO
The biggest advantage of the current system is that if you've got the money you can get the care you want, when you want it.

The biggest advantages of a single-payer system would be universal coverage (no more "preexisting condition" exclusions) and an end to medical-related bankruptcy. It would also relieve businesses of the burden of providing health insurance, making them more competitive in the global marketplace.

One of the remaining big issues -- quality and availability of care -- comes down to details in the design and administration of the single-payer program.

The remaining big issue would be cost. It would make no sense to move to single-payer if, after subtracting the cost of providing universal coverage, it cost more than the system it was replacing, or provided far worse outcomes for the same price. But that, again, depends on the specific structure of the single-payer program.

I still think the simplest thing to do would be one of the following:

1. A mandatory insurance system like that being tried by Massachussetts;

2. Pass a law requiring insurance companies to treat the entire country as one giant risk pool, with discounts or surcharges allowed for measurable health risks like age, obesity, smoking, skydiving, etc. Then let individuals buy insurance themselves. It would take the burden off of businesses and let the market work while giving everyone access to group rates. One could combine this with a "must buy health insurance" law in order to avoid free-riders. Or one could simply let people take their chances.

If I were going to introduce a single-payer system of universal coverage, I'd simply introduce it without banning other systems -- an extension of Medicare, say but with higher compensation. Then I'd let employers choose whether to keep providing private insurance or offload their employees into the government system.

Or maybe they'd keep it as a cheap option. That would result in a health-system structured in tiers: basic coverage for everyone, with consumers having the option of buying private insurance to supplement it if they so desired. Providers, in turn, could charge what they wanted. If they charged more than the government plan paid, patients would have to pay the difference -- either out of pocket or through the supplemental private insurance they bought.

All these things should be on the table. If we were to approach this pragmatically we should try the more market-based approaches first, in order to avoid creating a self-sustaining government program that would be hard to kill if it proved a disaster. But a full-fledged single-payer system shouldn't be dismissed out of hand. If the middle paths fail, it remains the logical next step.

health care, politics, midtopia