24 Aug 2009

A Few (More) Thoughts on Health Care

I posted on this a few months ago, but some people didn't appear to notice.

(That's why we still have a broken system... :)

During the interim, I:
  • experienced the Dutch healthcare system: Yes, single-payer mandatory universal coverage with competing private health plans works.
  • reflected on our system: We are not just afraid of dying in hospitals, we are afraid of going bankrupt.
  • experienced our system: My insurer put a mediator on the phone to help me get an appointment; this system is BEYOND complex if you need someone to represent you for a doctor's appointment!
  • got good care from the doctors. Unfortunately, the situation with medical records, appointments, payments, etc. is a complete disaster!
  • chatted with a very cute, passionate and ill-informed CALPIRG organizer. (Never knock on a PhD's door and ask them to sign a policy document!) I told her I was unwilling to consider government insurance before we restored decision-making to patients.
Here are my additional thoughts:
  1. If we do not go to single-payer (unlikely), we are going to have competing insurance companies.
  2. Since private companies do not compete that much right now, we need more competition.
  3. People are more afraid of losing their jobs because they may lose coverage.
  4. We can fix both (2) and (3) by separating insurance from work -- your salary goes up, but you have to buy insurance.
So, I've just found more reasons to support my initial idea: get employers OUT of the healthcare loop! (My preference is similar to a Dutch system -- see above -- that works better.) [For more fun, read The Economist's view or watch Barney Frank slapdown an Obama-as-Nazi protester.] Bottom Line: We will not (or cannot) fix our healthcare system without strengthening patient-doctor relationships. Single payer would do that, but it can also work with multiple payers (government or private insurance) and providers, e.g., as car insurance does.


Anonymous said...

I remember reading General Motors was a healthcare and pension management company that also built some cars on the side. I suppose it'd be better for companies' competitiveness to let go of non-core activities and focus on what is their business - or am I missing a point here by a mile? I know it can be used to depress wages, but what are the costs?

Umlud said...

@ enviroecon,

AFAIK, the change will not be pareto efficient - but these things rarely are. There will be people who will have to pay more (and the press will likely cover them ad nauseum), but there will be tens of thousands of people who will have basic health insurance.

Not only that, there will (if things go well) be better options for preventative care, meaning that there will be better health management, rather than health repair.

Who it WILL hurt in the short term is the pharmaceutical industry. However, pharma will be hurt more and more under the current system as people become unable to pay privately for their own medicines.

Who it will hurt in the long term are the people making big money off of the butt-hole raping of the current system. (Sorry, that should have said "wallet pilfering", not "butt-hole raping".)

Again, though, this is AFAIK.

Dave - I get to run in to PIRGIM ("PIRG in Michigan") volunteers. They are very passionate, and (unlike PhD students) will work for less than free food and beer. Of course, they are usually trying to get people to sign petitions for better environmental issues, and ask if I can spare some time for the environment. My answer is that I am already spending a LOT of time for the environment getting my PhD in water management. (and then go off to lunch.)

jwetmore said...

Your bottom line in the original post is right on. Incentives do matter.

Why does the debate avoid discussion of mechanisms, incentives, trade-offs, moral hazard, rent seeking, etc. The answer is the self interest of the advocates on each side of the debate.

Bottom Line: Our (society's) general ignorance of mechanism design allows unconstructive discussion to dominate productive reasoning.

Mister Kurtz said...

I generally agree with you, David, although I am not as sanguine as you about the merits of single-payer. In a for-profit model, someone cares about costs, waste, and fraud. In the same manner, divorcing care from employment, and involving consumers in competitive searches for the best deals, attacks those same things from the consumer side. Liberal intellectuals will claim that the lumpen are too witless to do this for themselves; but the little people manage to perform very complex tasks like getting married, raising kids and choosing a career without having Very Smart People direct them.

We'd all better hope that Big Pharma makes big profits in the years to come. Pharmaceuticals are by far the cheapest way to deliver health care to millions. Drugs like Zoloft and Lipitor have saved countless lives and prevented countless hospitalizations. If Pharma becomes just low-margin chemical manufacture and distribution, who will innovate? When folks complain about drug company profits, I ask them how life would be better is they were losing lots of money, or just breaking even.

Anonymous said...

@ Umlud

As an European that's been following the argument by reading The Economist, I find most of the arguments being used over there simply ludicrous; but then I would, because I've lived in countries where there's universal healthcare all my life. It doesn't make sense to me that 15% or whatever of the population don't have healthcare and have to rely on expensive and substandard urgency treatment.

On incentives, I've read that a lot of the problem is with the way incentives exist for doctors to prescribe bucket loads of exams to willing (capable) to pay patients. No wonder doctors, like pharmaceutical companies oppose reform. I imagine they're probably astroturfing a lot of the protests.

Almost no changes are ever Pareto efficiency, but maybe what you need to consider is the Kaldor-Hicks criteria: that the worse-off are made enough better-off to compensate for the losses of the others. Either way, I reckon something must be done.

Anonymous said...

" My insurer put a mediator on the phone to help me get an appointment; this system is BEYOND complex if you need someone to represent you for a doctor's appointment!"

This is not a flaw in the system, it is a flaw with your insurance company. You are free to buy insurance from someone else. (I understand that your employer may limit your choices and that such a limitation may mean choosing an alternate supplier is not cost effective for you. This is a flaw in the system and one of the reasons I thought Mr. McCain was the better choice for President.)

I have seen reports that "Big Pharma" is actually behind the plan being pushed by President Obama, because it stands to make big profits.

Enviroecon's comments were a bit cryptic to me, but (virtually) no one in the United States is without healthcare.

David Zetland said...

@Mr Kurtz -- I don't need a single payer. My gripe is the disconnect between costs and benefits.

@Anon -- Yes, I could switch companies (maybe), but that's something I'd need to negotiate with my employer. UC Berkeley does not offer a high deductible plan . Even worse, there's no incentive ($$ savings/higher wages) for me to switch to one.

George said...

Speaking of costs...how about this?

Health Care Costs WAY MORE in the U.S. Why?

Gayle said...

Know what makes me nervous and uneasy about the current proposed reforms? The fact that insurance companies are already licking their chops over the profiteering opportunities they've already lobbied in. If it's good for them, it can't be good for the rest of us. Detailed nicely in this LA Times article...


Mister Kurtz said...

Gayle, how would we be better off if the insurers were losing money?

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