Look folks, I don't want to become an economics blogger! Stop sending me economics questions. I hate to disappoint my readers and not answer their questions, but this economics stuff is almost terminally dull to me.
The mortgage posts have gotten an insane amount of traffic, which has in turn brought in a huge number of questions. Most of them are about details of the whole mortgage situation - and honestly, I can't answer those. I don't know the details, only the basics, and I can't explain what I don't know.
On the other hand, a lot of people have used my down-to-earth explanation of the mortgages as a springboard to ask for a similar explanation of another issue that's been getting a lot of attention in America - insurance. Why is health insurance such a big problem?
I'm going to focus specifically on the insurance part. There are plenty of things wrong with the American medical care system. But I'm going to focus specifically on how insurance works, and how simple min/max calculations led to the current situation.
Once again, it pays to look at things from a historical point of view - that is, to look at how the insurance system developed in an informal sinse - because like the mortgage fiasco, insurance starts out with a simple, sensible idea, which gets turned into a giant disaster when financial speculation gets involved. I'm going to explain using some examples with made-up numbers. The real numbers are, obviously, quite different, but the made-up numbers are good enough to illustrate.
The original idea behind health insurance is very simple. An average person pays some relatively small amount of money every year for medical care. Let's say that, on average, each person pays $500 for doctors visits and medicine each year. But for one person in a thousand, something awful happens, and they end up with medical bills of $100,000, which they can't afford to pay.
The idea of insurance is that a thousand people get together, and each pay $600 per year into a pool. Then instead of paying their medical bills by themselves, they use money from the pool. So everyone pays a little more than they really expect to need, but if an emergency happens, they'll be able to pay for it.
So now you've got a thousand people creating a pool of $600,000 to pay their medical bills. That's a lot of money! If you invest that money really carefully, then you can make it grow. So instead of everyone needing to pay an extra $100 every year, they only need to pay an extra $50 each year. And everyone is happy. The problem is, you need to have someone to figure out how to invest the money. So, you hire an investment person to take care of the money, and you pay him a salary. You've got some overhead now - the money needs to cover peoples medical costs, and the cost of the investment guy. So you put him on commission - he earns a cut of however much he makes by investing the money for you. If he loses money, he doesn't get paid, and if he makes money, you're guaranteed that the pool gets to keep most of it. On a very rough level, this is what a non-profit insurance company does. They take money from people, invest it, and use it to pay the people's medical bills. Their employees are paid from a cut of however much money gets made from the investments. The organization as a whole doesn't make anything. So now, you've got people putting in $550 dollars per year, of which about $525 is really going to the insurance pool, and the extra $25 is paying an investment guy.
Now, here's where the trouble starts. You've got investment people taking care of the money. You've got lots and lots of people putting money in to get covered. It's very complicated. So now you need to have accountants and people like that to take care of paying the bills. You hire people to do that. So now you're looking at a pool of 50,000 people instead of 1000 people. They're each paying in $550; only $500 of that is really going into the medical care fund. $25 is being paid to the investment guy, and another $25 is going to pay for the costs of managing everything.
Here's the first problem. You've created a layer of bureaucracy, who get paid for doing stuff - so it's in their interest to create stuff to do. Bureaucracy starts to develop. Paperwork starts to multiply - because they can charge more if they need to handle two pieces of paper than if they need one. So the overhead increases. This is the start of the pain, but it can't go too far: if they create too much overhead, you can just hire someone else. So there's a subtle balance, where they're trying to maximize the amount of paying work for themselves, while not getting to the point where you'll fire them. So you tend to see the bureacratic costs increase. So you wind up paying $575 for the insurance, and $50 of it is going to bureaucratic costs.
By now, it's become a huge hassle, and you're spending a lot of money on the paper pushers, and on the investment commissions, and so on. And some clever guy comes along, and offers to take care of it for you. He'll take care of all of the bureaucracy. He'll hire the investment people. He'll hire the paper-pushers. Sounds great, right? Only, what's in it for him? Well, he tells you, if he saves any money, then he'll take a cut of it. In fact, he'll guarantee that he'll save you money. In fact, he'll set it up so that you only pay him $400 per year per person. If he can make the investments work out so that there's anything left over after paying the bills, he gets to keep it. If not, then he'll cover the shortfall. Sounds like a great deal!
So how does your new insurance guy make money? Two ways. One is by choosing investments that make money. But there's a major limit there: he can't take too many chances. He's going to be left holding the bucket if his investments don't pan out. Now he's got a lot of money to invest, which means that he's got lots of great stuff available to him. But he's got to play it safe, so he's not going to be investing in anything risky that might have a huge payoff. The other way that he can make more money is by making sure that there's more money left over - by paying less for the medical care of the insurance customers. This is the crux of the problem. You've now got a situation where the insurance guy takes your money, pays the bills, and keeps what's left over. His primary interest is in making money for himself. He makes money by not paying medical bills. It is in his interest to find excuses to not pay bills - or at least to pay as few bills as possible without losing customers. So he's going to want to try to make sure that his customers are, as much as possible, people who don't need much medical care; and when they do, he's going to try to find excuses to cover as little as possible. Every time one of his customers goes to the doctor, the insurance company is losing money.
That's how things pretty much work now. You've got a lot of people interested in finding ways to make you pay as much as possible for paper pushing, and a lot of people interested in finding excuses to not cover your medical care.
The way that the system developed is perfectly logical. It makes sense. And the actions of the insurers make sense from their point of view. They are, after all, businesses. Their primary obligation, legally, is towards their shareholders, who want them to maximize profits - which means that they're primary obligation is to deny medical care whenever possible.
In my opinion, all of this ultimately means that "for-profit" medical insurance is a formula for disaster. There is a fundamental conflict in a for-profit medical insurance company, which I don't think can really be fixed. The insurance company is a middleman, who isn't really necessary to the system, but who introduces a set of interests that are fundamentally opposed to the original goals of the system. (It's a lot like what's happened in mortgages. When the person who issued a loan was the person responsible for losses in the loans, they were responsible for making sure that the loan was safe. When they became middlemen, their main interest became selling loans, not making loans, and the safety of the loan was someone elses problem. The middleman, by introducing a new goal into the system changes the whole balance.)
The usual objection to this whole line of reasoning comes from libertarians, who insist that the invisible hand of the market should make this all work out. After all, if an insurance company doesn't pay the medical bills of its subscribers, then people will simply take their premiums, and go to someone who will. So while the companies will want to cut expenditures, they won't want to cut any necessary care, because that will cause them to lose business.
As usual with arguments about the invisible hand of the market, it's a load of rubbish. In this case, there's a simple reason why. The whole market based argument assumes that the people choosing and purchasing insurance are the same as the people consuming insurance services. They're not. Insurance companies mainly provide insurance through peoples employers. In fact, as it currently stands, unless you're buying insurance as part of a large group, it's almost impossible to get insurance for a remotely reasonable cost. So it's the employers who choose the insurance. The employees, who are the consumers of the insurance services, have very little (if any) choice.
For example, at my former employer, when I started working there, I had terrific insurance. Over the course of the 11 years that I was there, my insurance changed in some way nearly every single year. And in every case, the changes were not to my benefit. But I had no real choice: they provided me with three options, which ranged from bad to worse. The "invisible hand of the market" had no opportunity to work on my behalf: my employer wanted to minimize their costs for providing me with insurance; the insurance company wanted to maximize their profits. Keeping me just healthy enough to work was all my employer really wanted - the fact that the insurance provided me with rotten care didn't matter to them. (Naturally, the upper management of the company, the people who make the decisions about how much to pay and what plan to purchase for the employees, are not on the same plans as the lowly peons. So the decision makers are totally disconnected from the effects of the decisions.) My only choice would be to go and buy insurance privately; but the system is set up to discourage that. Buying insurance privately would have cost me more than four times what the policy (both my contribution and the companies contribution) cost at work.
Is there a solution to all this? Sure. Get the middleman out of the picture. Unfortunately, the current politics of America make that pretty close to impossible. The insurance companies are so powerful and have so much to lose that it's likely impossible to get anything past the congress. In the current election cycle, every proposal for insurance reform is built on having the middlemen involved.
Politics
Medicine & Health
Comments
What do you mean by get rid of the middleman. Are you saying that nobody should get health insurance.
Also, market mechanisms still work in the case of employee provided health insurance, just not quite as efficiently. Companies want to attract the best employees and a good way to do that is to offer the best benefits, including the best health insurance.
I might also add that a central libertarian critique of the insurance industry is the amount of government regulation of the industry creates a dearth of real competition so insurance companies don't really have to compete with one another all that much
Posted by: Dan | December 21, 2007 1:49 PM
Dan:
I thought that what I mean by "get rid of the middleman" was clear. It's "get rid of the for-profit insurance companies". Go back to the simple risk-pooling non-profit insurance.
Personally, I favor a national health plan: one pool of money, everyone pays in, and everyone gets benefits. That minimizes bureaucracy, and makes a uniform system for everyone. But even without a national plan, a variety of non-profit insurance providers - the basic risk-pool mechanism that's the origin of insurance - would be a vast improvement over what we have today.
And with respect to the idea of "Free market does too work, you can always get a different job if your employer offers shitty insurance"... Well, that assumes that you can afford to get another job - and that the other jobs you can get don't offer equally shitty insurance. People aren't infinitely mobile, and there isn't an infinite supply of jobs out there. Saying that you have a choice because you can pick employers that offer better insurance just doesn't apply to the real world.
And as for the regulation claim... Do you really, honestly believe that if the government *weren't* regulating insurance at all, that insurance companies would be providing the kinds of care that they deny right now? Or that they'd be charging *less* fees for the bureaucratic nonsense that they do?
Posted by: Mark C. Chu-Carroll | December 21, 2007 2:19 PM
Ah, but if you get rid of the middle-men, you still have the same problem: every dollar spent by somebody _else_ in the plan increases _my_ cost. So, ideally, I should find a plan that pays exactly what I want it to -- I'm male and single, so forget paying for maternity care, for example.
And, in a larger sense, this limiting of services provided is exactly what _must_ be done. If I don't have insurance, I'm not going to get annual physicals, but once I have insurance, I darn well want coverage for not just the annual physical, but the stress test and whole-body MRI too. If there isn't any method of rationing care, then no matter what the system, it fails. National health care systems like the UK's ration by queue: it makes you wait. Private pay insurance here rations by hassle: co-pays, forms, second opinions, etc. A totally free market system like we had before insurance rationed by money: if you couldn't pay cash, you didn't get it.
Perhaps the problem is that health care insurance has evolved to not be really insurance, but pre-payment of health care costs. Employer plans generally pay for regular care, as opposed to something like homeowners insurance, which only pays for large claims (over a deductible). If we made all health insurance have a $5,000 annual deductible, we'd have a lot less of the itty-bitty claims that cost so much to process. But, on the other hand, we might wind up with people skipping preventive services that save money over time (cancer screenings, hypertension meds, etc.)
There really is no perfect answer, since people's expectations (everything should be covered all the time) are just not feasible. Hence, the enduring difficulty.
(P.S.: As an ex-actuary, I've seen this from both sides. Look up "assessment spiral" sometime.)
Posted by: spudbeach | December 21, 2007 2:38 PM
Question for the libertarians that want to remove the "insurance" from "health insurance":
Do you understand and allow that many people don't have a tolerance for people becoming debilitated or dying from preventable or curable illness?
You have such a tolerance. Many people do not. The degree to which you demand all people develop such a tolerance, is the degree we forgive ourselves from listening to you.
If your personal callousness works best in a world that is infinitely and universally callous, that does not _imply_ that callousness _should_ be infinite and universal.
I have found it is practically impossible to get libertarians to agree with the logical consequences of this trivial truth. They assume the entitlement that the world should never dare to reveal their smallness, even by contrast.
Posted by: mgarcia | December 21, 2007 3:05 PM
A nice post, but it deals with only half of the problem. The other half is on the doctors' side. You have a bad knee. Not live threatening, but it hurts a lot. Doctor A in South-Dakota says "I can't help you, you'll have to live with the pain." Fortunately for you, doctor B at Johns Hopkins has developed something new. The unfortunate thing is that it'll cost $200,000. Does the (national) health insurance have to pay for it if you are 20? If you are 90 and have Alzheimer? If you ruined your knee by sporting, while your doctor said you shouldn't?
Posted by: Martijn ter Haar | December 21, 2007 3:33 PM
I darn well want coverage for not just the annual physical, but the stress test and whole-body MRI too
Lot's of people want Oxycontin too, that doensn't mean they can get it from their doctor (for the most part). Presumable in a non-profit insurance system, there would still be someone making sure that medical procedures are necessary and hopefully doing a good enough job that insurance costs stay reasonable and everyone gets the care they need.
Posted by: Drekab | December 21, 2007 3:38 PM
The other reason the market doesn't work is the principal consumer, the one with the $100,000 expense, is only one of the hundreds paying for it. The insurer then tries to keep the hundreds happy and paying while shortchanging that principal customer. As long as they can delude most of them in thinking they have good insurance, they can continue to profit handsomely. Eventually the insurance function disappears entirely.
Posted by: Lord | December 21, 2007 3:38 PM
Slightly off topic, but you might like to see economics explained in simple language.
http://www.idkwtf.com/videos/latest-videos/principles-of-economics-translated
Posted by: Chris' Wills | December 21, 2007 3:47 PM
Send people with mortgage questions to Calculated Risk. Tanta's ubernerd posts should handle them for a while.
Posted by: Walker | December 21, 2007 3:52 PM
Whoops. Forgot the http in the link. Here is the link to Calculated Risk.
Posted by: Walker | December 21, 2007 3:54 PM
mgarcia,
I think you are missing the point of the libertarian critique of health insurance in particular and, indeed, libertarianism in general. It is not neccessarily that a libertarian is saying "I'm going to take care of myself and everyone else can go to hell" (although to be fair, some actually do say that), it is saying basically that letting the market function with minimal interference is what ultimately leads to the best overall outcome and that interference in the markets almost always is counter-productive, causing more problems than it solves.
Mark CC:
"People aren't infinitely mobile, and there isn't an infinite supply of jobs out there"
This is certainly true. And, yes, you are correct that market forces do not cure inefficiencies (such as our valuation of health insurance) overnight. But the market does create selection pressures that lead to more efficient outcomes.
Also, my main concern about a single-payer system is the free-rider problem. Basically, in such a system the marginal cost to person for seeing a doctor unneccesarily is very small, relative to the perceived benefit to them. As such, costs for such a system can quickly spiral out of control (just look at the NHS in Britain). The only apparent solution then is to have the government start making decisions about what medical care is neccesary and which is not. Now, couple this fact with the fact that single-payer systems (at least, in every implementation that we've seen so far) must neccesarily private insurance (or even in some cases, individuals paying out of pocket for medical care) and you are now allowing the federal government to make your medical decisions for you. This is more of a philosophical point, but something to think about nonetheless.
Posted by: Dan | December 21, 2007 4:13 PM
mgarcia, libertarianism is a lot more humane than current socialistic system we have in this country (and I should know how Socialism looks and smells, because I grew up in Soviet Union). What it argues is that if you take government out of the equation - businesses lose any sort of protection, there are more of them on the market - people have more choice, companies are actually forced to start acting a lot more responsible to survive - everyone wins. Finally, because government is smaller and collects less taxes, people have more money left for charity and for themselves and their relatives.
Posted by: Anonymous | December 21, 2007 4:24 PM
spudbeach wrote: 'Ah, but if you get rid of the middle-men, you still have the same problem: every dollar spent by somebody _else_ in the plan increases _my_ cost. So, ideally, I should find a plan that pays exactly what I want it to[.]' There is such a plan! Don't buy any insurance at all. Then you only pay for what you spend.
While I agree with MarkCC in principle, I'm not quite sure that for-profit insurance companies are always bad. I think it's probably a matter of finding the right balance and right incentives for insurance companies to act nice. Many European nations don't seem to suffer from similar problems as USA and they do have their share of insurance business.
Posted by: Flaky | December 21, 2007 4:24 PM
Anonymous: '[I]f you take government out of the equation - businesses lose any sort of protection, there are more of them on the market - people have more choice, companies are actually forced to start acting a lot more responsible to survive - everyone wins.'
That argument only works, if you can demonstrate that government regulation is actually impeding competition in a way that hurts the consumer. It's not good enough to just say so and wave your hands. (Incidentally, I've no trouble believing that such regulation exists, since political lobbying for more favourable legislation is a form of an investment.) Actually, your argument implies that regulation always has a negative effect on the consumer, which is even harder to support.
Posted by: Flaky | December 21, 2007 4:34 PM
Your theory of why insurance sucks, although filled w/ great inductive theory, is like a moon shot hitting mars. Nice try, great technique, but thank god I did not go for the ride. Some folks just need to stick to what they know best, and not lead other thru fields never walked upon before.
Posted by: John Karavas | December 21, 2007 5:27 PM
Dan,
And the alternates to "government" limiting care are 1) insurers (Murder by Spreadsheet) or 2) self-selection due to inability to pay? Thanks, I'd prefer to take my chances with the government limits. It can hardly be worse that the current system (like say going in for pre-approved, covered surgery and getting a thousand dollar bill from an "out of network" anesthesiologist who practices in a member hospital).
Posted by: usagi | December 21, 2007 5:28 PM
Regarding job mobility and the free hand of the market. This does not exist for someone with a preexisting medical condition.
These people have two choices: stay at their current job and accept insurance that degrades each year by the process Mark CC has already pointed out, or get a different job where the insurance specifically won't cover the exact medical needs they have.
These are the people, as Lord suggests above, who are marginalized out of the insurance coverage pool.
And yet, these few with expensive medical needs are the very reason for having insurance in the first place.
My thanks to Mark CC for laying out the historical background so clearly.
Posted by: Tom | December 21, 2007 5:32 PM
Hi Mark,
Actuarial science, the most difficult mathematics that I have personally envountered, is one benefit of "insurance".
Posted by: Anonymous | December 21, 2007 5:34 PM
Flaky: 'if you can demonstrate that government regulation is actually impeding competition in a way that hurts the consumer'.
Fair point! But it was demonstrated time and time again. I don't have any references on hand at the moment, but you can write to me privately (first name AT last name DOTCOM).
(I don't know why I appeared as Anonymous in my previous comment, I am logged in via TypeKey as George Sudarkoff.)
Posted by: Anonymous | December 21, 2007 5:35 PM
Unfortunately, my wife and I have personal knowledge of insurance an insurance company doing exactly what was described, overtly and without embarrassment on their part. And we're not talking about pittance here, but hundreds of thousands of dollars worth, for a single patient. I've written a couple of blog entries about it:
http://ekzept.livejournal.com/156175.html
Worse, what that story does *not* include, is how this insurer can manipulation categorization and coordination of benefits so to also churn payments back and forth from health care providers to them, inducing confusion and *any* ability on the part of the patient's family to responsibly determine whether they can afford it or not. We're lookin' at a $60,000 bill because of this kind of thing, well over a year since the costs were incurred, costs which at the time were estimated to us at $2,000. All approvals and clearances through the insurer were obtained.
To me, it matters not if the "single payer" is a single large corporation or a government agency. (And government agencies *can* do this right. HHS might not be a model, but VA is.) If it's a corporation, they need to be limited by statute to a certain profit fraction, very much like defense contractors are.
Anyway, there are indirect costs incurred by the "free market" system which some of the commentators above so embrace. A lot of the trouble with assessments is that accounting procedures and rules don't count a lot of these costs. The accountants believe that if something is too complicated to model, they value it at zero, or they make some specious argument it's unimportant. This happens whether the valuation is a process, like medical insurance, or corporate book value. Valuation is always accompanied by a point of view and a purpose. It is not "objective".
Posted by: ekzept | December 21, 2007 5:37 PM
If the problem with the "invisible hand of the market" is that employers are buying insurance, but employees are consuming it, wouldn't the middleman you should fight to remove be the employers, not the insurance companies?
Instead of having employers buy employees insurance, why not just pay everyone an extra $500 and let people buy their own insurance?
Of course the likely reaction of corporations would probably be to not give people insurance and to not pay them an extra $500, but at least in theory, corporations that weren't allowed to give insurance and an incentive would be forced to pay a higher salary to attract high-quality workers. For low-quality workers, you could even mandate that corporations either give their workers insurance or pay an extra $500/year (comes out to like $.25/hour, but we're using fictional numbers of course) over minimum wage and then gradually phase out the option to give them insurance.
If you see a market inefficiency, the solution should be to fix the incentives creating the inefficiency in the market, not government intervention. As a general rule, governments are even more inefficient than markets.
Posted by: L Zoel | December 21, 2007 5:49 PM
Something that Mark leaves out, I think, is that health insurance isn't really a distributed risk system in the same sense that, say, auto insurance is.
A person's odds of being involved in a catastrophic car accident, even on the scale of his or her entire life, are very, very low. That same person's probability of suffering a catastrophic health problem, on the other hand, is 100% (death), and his or her health-care related expenses are highly likely to increase dramatically not only as a function of age but also as a function of the continual creation of new health-care for him/her to consume.
In that way, then, the health insurance industry starts to function alot like a huge pyramid scheme and becomes reliant on an ever-expanding base to cover the rapidly increasing expense of caring for those at the "top," whereas with auto insurance (for example), the population of insured simply doesn't segregate itself into wildly disparate risk categories like that, not to mention that the overall level of risk (potential per-customer (adjusted) expense) involved is relatively stable over time.
It's a pretty intractable problem, honestly, and meaningfully addressing it probably is, in the long term, going to require a bit more effort than simply abolishing Blue Cross/Blue Shield.
Posted by: Nobody Important | December 21, 2007 6:04 PM
Apropos of this thread, attached is an article about a case in Los Angeles where an insurance company allegedly procrastinated approving a procedure until just before the insured died. The physicians were overruled by a bean counter at the insurance company and it doesn't make any difference whether the bean counter worked for a private company or the Government. A 17 year old girl is dead. Now of course, the anti-regulation folks who believe in every man for himself and the devil take the hindmost will defend the insurance company and insist that a single payer system would have done the same thing.
http://ap.google.com/article/ALeqM5hFp8DsNC_gJwb9q72kNfDiZCioSwD8TM2SAO1
Posted by: SLC | December 21, 2007 6:18 PM
Well, I think it's important for everyone to understand which sets of assumptions contribute to that "intractability", no matter what decision is made. Many of the arguments are oft' heard straw men with no actual legs.
I think it would also help to publicize in Web form contributions made by institutions to various political interests, notably contributions from insurance companies and from health care provider groups. There's nothing wrong with them doing that, of course, but there's equally nothing right about it being secretive.
I think a lot of this happens "in the dark", because the people with interests in the present system don't want the public to see choices framed for them in a clear manner. I mean, the general public cares about jobs and things, but it doesn't really care about capital formation. So, how much would it care if tax rates went to 60% across the board in order to pay for cradle-to-grave medical insurance?
Also, the idea of portable medical insurance is certainly appealing, often to companies who have to pay people to administer these things.
I fear the absence of distributed risk, like Nobody Important cites, means these systems don't work well if "half privitized". Many people I know simply don't want to get involved with the intricacies of picking their insurances, health care plans, etc. They simply want to know if they get sick they'll be taken care of. What would they give up to have that? What would they have to give up?
Posted by: ekzept | December 21, 2007 6:19 PM
L Zoel wrote: "Instead of having employers buy employees insurance, why not just pay everyone an extra $500 and let people buy their own insurance?"
Because that doesn't solve, and in fact exacerbates, the biggest problem for the would-be-insured: any preexisting medical condition which pushes their risk above $500 worth of cost will make them uninsurable. Group plans allow employees who have PeCs to get coverage as part of the group.
A big problem, and one of the biggest reasons that I don't like insurance companies any more, is that even collective bargaining doesn't necessarily result in good insurance. At the university I work at, some bureaucrats nearly got lynched at employee orientation, because their was only one university insurance plan, and it sucked. The problem? Even though the university has thousands of employees, we've got "too many old people."
Posted by: gg | December 21, 2007 6:21 PM
Mark, I'm surprised at your jab at libertarians. You say that cutting out the middle man is the problem, but don't you think that the government is responsible for implementing a middle-man? Why can't individuals buy insurance for themselves as they can buy car insurance for themselves? I'm not an expert but I'm betting it has to do with government intervention (tax incentives for employers paying their employees health insurance, privacy regulations limiting what sorts of info the insurance companies can ask for from their customers etc).
And I think you ignore a problem with the current system, individuals have little incentive to stay healthy, under a free market system healthier individuals would have lower premiums than non-healthy individuals, but under the current system that effect is limited (companies do give lower rates to younger people, but I'm not aware of any rate cuts for showing you are in shape or not smoking) and under a national system it would be completely gone.
Posted by: Robin | December 21, 2007 6:24 PM
There are several additional effects that can be important. Go back to your original pool of 1000. Then we discover one of the members is a hypochondriac, always panicing and running to the doctor. The other 999 don't think it is fair to pay more because of him. Then a seriously fat person with an expensive recurring cost in treatment of diabetes joins. The solution, try to kick him out, -or trick another plan into taking him.
So with multiple payers, there exists all kinds of incentives to avoid insuring riskier persons, and/or restricting the services.
Even with a single payer system, there still needs to be some system to determine what constitutes a covered proceedure, let too many expensive but medically marginal proceedures through and the cost will become too high.
Posted by: bigTom | December 21, 2007 6:26 PM
EDIT: I meant why can't people buy affordable health insurance.
Posted by: Robin | December 21, 2007 6:28 PM
As usual, the glibertarians simply ignore the real world (what else is new), specifically in this case the fact that MANY other countries- via heavy government involvement- do a far better job than the US with quite a bit less expenditure. The problem is not government, but the expensive, parasitic overhead of the "insurance" companies. Which inherently CANNOT work efficiently because of the fact, ably explained by Mark, that in actual fact there is no such thing as health insurance. The "insurers" are actually running a highly inefficient system of prepaid healthcare, in which they play an almost purely parasitic role. Don't even bother listening to the divagations of doctrinaires who cannot or will not understand this- they're wasting your time.
Posted by: Steve LaBonne | December 21, 2007 6:29 PM
Robin wrote: "Why can't individuals buy insurance for themselves as they can buy car insurance for themselves?"
Um, see my post above. Only if you're in perfect health, with no family risk factors, can you expect to get a reasonable rate as an individual. And as an individual, you're much more likely to get cut once you do have a costly problem. Individuals have no bargaining power in the health insurance market.
"And I think you ignore a problem with the current system, individuals have little incentive to stay healthy..."
Um, except maybe the incentive to not die? If that's not a strong enough incentive to keep people healthy, why do you think that a slightly lower premium would be effective?
Posted by: gg | December 21, 2007 6:31 PM
@bigTom:
It's odd how some proposals for a more centralized health care funding system are met, in some quarters, with accusations that they amount to "rationing health care" and "letting old people suffer and die", despite the "utilization reviews" under the current system which essentially do the same thing.
Since distribution of maladies is likely, like many other phenomena, likely to follow a power law, there will always be people with expensive-to-treat and rare ailments. It isn't just a question of people abusing the system, like hypochondriacs. A system which overtly limits costs per patient also censors the part of the density which is a population who are simply unusual.
I also think the debate suffers from a diminishment in our collective interest in the common good. I don't mean socialism or communism at all. I mean simply that there is some notion that, like the common defense, citizens of a country have some stake in joint wellbeing, and if that is not there, their quality of life suffers. I think we have gone way too much in the direction of personal empowerment, part of that done by certain folks claiming anything which diminishes it amounts to some kind of totalitarianism.
Posted by: ekzept | December 21, 2007 6:36 PM
Another problem with the insurance system that we have currently is the fact that you are not insured by the same company throughout your life. Company A gets your premiums while you are young, healthy, and don't cost anything. Company B gets your premiums when you are older, mostly healthy, but cost a bit more. And Company C, if you can find someone to insure you at this age, gets your premiums at the most expensive point in your health care life.
Company C has some really strong incentives to turn down procedures, while maybe they'd have less incentive to do so if they'd been collecting from you all along.
Posted by: gex | December 21, 2007 8:16 PM
My personal view is the Australian, where I live, system is best.
Everyone gets Medicare. This will cover you for normal things - doctor visits, optometry, dentist (I think) etc. etc. You won't die on Medicare. You also get cheaper drugs.
If you want, you can pay and get private health cover. Now, the PHC won't screw with you because they know if they try and frig with you, you'll go back to the free medicare.
Posted by: Tom | December 21, 2007 8:24 PM
Anyone who seriously thinks buying individual health insurance is like buying individual car insurance has either been very healthy, or has never attempted to buy individual health insurance. I've been there, and to be honest, I was lucky that I and my family were all young and healthy at the time.
Making a higher profit by dropping the most expensive users of health insurance, or refusing to offer it to them, is understandable at the individual-business level. At a higher level, it's a perverse incentive -- precisely the kind of incentive that makes a market intrinsically inefficient, by encouraging it to serve fewer people, and to refuse selling to the buyers who most desire to buy. Car insurance has this sort of incentive as well, of course, but the impact is much lower: it's far more likely that a person will be deemed uninsurable for health than that they will be in multiple expensive car accidents.
Posted by: ColoRambler | December 21, 2007 8:26 PM
For full disclosure, I'm a Libertarian and I oppose nationalizing health insurance. I'm also a member of the armed forces and so I'm covered under the largest single-payer insurance system in the country (TRICARE).
That having been said:
1. I disagree with your assessment of the purpose of insurance. You oversimplified the historical background and implied (intentionally or otherwise) that insurance was originally intended as some sort of altruistic system where people willingly paid more into a risk pool than they expected to pay in a given year for health care so as to enable the pool of people to pay for the rare catastrophic medical condition by one of the pool members. Please correct me if I am misinterpreting your intent. The truth is that every business enters a given market with the express purpose of maximizing profit, as I'm sure you know. It's rather ridiculous to suggest anything to the contrary. This self-interest is neither inherently good nor inherently bad. In general, so long as all parties behave responsibly and ethically (that's _both_ the insurer and the insured), then it's a matter of coming to an agreement on cost for services rendered. This is the basic principle of the free market and requires no one but the buyer and the seller to agree on terms. Now, I only said all of that, not to insult your intelligence, but in the hopes that we agree on the basic principles.
2. Where things can go (have gone) awry is when those on the margins--the ones who cannot find what they consider to be satisfactory service at what they consider to be a reasonable price; the ones who have a pre-existing medical condition--must fend for themselves. Is it acceptable to have people on the margins is really the question, isn't it? After all, the vast majority of Americans actually _do_ have health insurance (using conservative estimates, we're at 84% coverage). What about that 16%? Why are they there? I think it'd be fair to say that they all fall into one of the two categories I outlined above. Government estimates are that over half of that 16% either can afford insurance but choose not to purchase it or they qualify for current government programs but don't use them. How great is the government's burden here? Is there any acceptable level of non-coverage? We already know that no one gets turned away from emergent care so the only issue is non-emergent care. Is there a line in the sand to draw?
(I know this is long, I apologize)
3. Any government program for universal health care necessitates cost control. This is because budgets are law and they are pre-approved for the upcoming fiscal year. As such, Congress must anticipate costs and establish the appropriation for each budget area. They currently do this under Medicare/Medicaid and Social Security as well as every other budget line item. In order to exceed those pre-established spending limits, a new law must be written (this is why President Bush keeps going back to Congress for "emergency spending resolutions" for continuing the war in Iraq). The point is that there _must_ be a limit. One can quibble about what that limit should be all day and what percentage of total government revenues that limit should represent, but the limit _still_ exists. That cap on spending necessitates that everyone that receives funding under that appropriation must budget accordingly. That means a set amount of equipment and services that can be provided. There is no way around that. This is where those waiting times Conservatives love to point out in countries with universal health care come from. If you only have 100 OB-GYNs, you can only handle so many patients at any given time. Also, those OB-GYNs will be paid according to some calculation that is necessarily capped by the amount of money the system allows. Where's the incentive for that OB-GYN to innovate? Some will do it because they are wonderful people. Do you think that's the majority of doctors? Even among those wonderful people, wouldn't they work that much harder if they knew that their hard work would be rewarded not just intrinsically, but also financially?
Having been a part of the military health care system, I can say with absolute certainty that the quality of the health care you receive is a crap-shoot. Some doctors are fantastic; others are uncaring. This is true in the civilian sector as well, but I do not have a means to address poor service within my single-payer system. If I complain, it goes through it's bureaucratic process which will ultimately lead to nothing (you'd be amazed what it takes to get rid of a "bad" doctor--not that different from getting rid of a "bad" teacher).
Now, that all being said, I'm not suggesting that the current system is perfect--far from it. What I _am_ suggesting is that a universal health care system is not the answer. Furthermore, you mentioned in a response to a poster that Libertarians should acknowledge that other people have lower tolerances for the marginalized (I'm paraphrasing). I 100% agree. 8% of the population is acceptable to me. It might not be for you. I also ask you to recognize that Libertarians tend to rankle at the idea that you would use the coercive power of the government to force me to accept your take on things. That is fundamentally what this boils down to. A consequence of freedom is that there is less security (in this case, you're less secure in your health care). While it isn't completely a zero-sum game, you can't deny that, in general, obtaining more security necessitates sacrificing freedom.
To paraphrase Ben Franklin, they who would give up freedom for security deserve neither.
Sorry for the (too) long post.
~Brian Souder
Posted by: Brian Souder | December 21, 2007 9:40 PM
@Brian Souder:
There is also a non-trivial category of people who have and pay handsomely for medical insurance, but who either cannot get insurance companies to pay for procedures their physicians say they need, or who accept procedures and, even after following all the rules and getting assurances about coverage and payment, discover the insurance companies won't honor the commitments they have made.
There is an additional assumption in your comment unrelated to this observation. That is that profit is the only motivation for people ("companies") going into business. That is false. It is profit, and "animal spirits", and the latter goes as far back as Adam Smith.
Posted by: ekzept | December 21, 2007 9:57 PM
#18: Actually, having passed all the exams to become an FSA, I didn't find the math all that tough. Once you got the feel of it, it was actually kind of boring. Not nearly as hard as the math in the physics I did later.
#13: Yep, agreed -- no insurance coverage at all makes it cheaper for me, until I have a heart attack. Then, of course, I want _you_ to pay for it.
#6: And that just restates the problem: who decides what is reasonable and necessary? I assure you that if everybody in the US would get a whole body MRI every year, we would most assuredly catch at least 2 cancers early and get at least a dozen extra life years. So why not? Oh, because we can't afford it! Hence, the scarce good (medical care) must be rationed. Whether it's by an elected body, a panel of "experts", seeing who yells the loudest, or some other means, it's got to be done. Unlike you, I have less than full confidence in how well any group can do the job. Just look at how well vaccines are covered. If we haven't done a good job yet, what makes us think we can do a good job in the future?
Yes, I'm a pessimist.
Posted by: spudbeach | December 21, 2007 10:07 PM
New report on medical insurance in relation to treatment for colorectal cancer. It's got some great numbers and, while addressing colorectal cancer, gives a detailed sketch of the American medical system, including addressing the matter of privately obtained (non-employer-provided) medical insurance.
Posted by: ekzept | December 21, 2007 10:09 PM
EDIT: Sorry, that article I just cited addresses all cancers, not just colorectal.
Posted by: ekzept | December 21, 2007 10:17 PM
"There is also a non-trivial category of people who have and pay handsomely for medical insurance, but who either cannot get insurance companies to pay for procedures their physicians say they need, or who accept procedures and, even after following all the rules and getting assurances about coverage and payment, discover the insurance companies won't honor the commitments they have made."
Sure. But "non-trivial" is a relative term, is it not? How much is "non-trivial". The same point stands. Is there a line to be drawn in the sand somewhere? The current amount is too high. What amount would be acceptable. Surely you understand the law of diminishing returns...
"There is an additional assumption in your comment unrelated to this observation. That is that profit is the only motivation for people ("companies") going into business. That is false. It is profit, and "animal spirits", and the latter goes as far back as Adam Smith."
I didn't say profit is the "only" motivation. It is, however, the primary one. That being said, motivations in and of themselves are not inherently bad objectively. One puts a value judgment (subjective) on that. And what relevance does that have on the rest of my admittedly too-long post?
Posted by: Brian Souder | December 21, 2007 10:58 PM
The thing about the "invisible hand of the market" is that is usually works remarkably well, and without anyone participating having to have extensive knowledge of the entire system.
There's a reason planned economies don't work very well.
Posted by: Caledonian | December 21, 2007 11:28 PM
@Caledonian:
While planned economies may not, based upon historical experience, work very well, that observation or fact neither disproves that some planned economy might not work superbly, nor precludes a planned segment of an otherwise unplanned or "free" economy from working excellently. No doubt, such planning has its costs, but all policy choices do, and it is simply a question of whether, on balance, the participating public consider them worth the benefits.
Energy resources in France and in Saudi Arabia are nationalized, and there is no private ownership of them, merely a kind of renting. The French have no problems introducing nuclear power on a major scale. We do. And we have the "invisible hand of the market" in our favor.
And even if it were true that ...
... that wouldn't mean there aren't critically important things for which it fails.Posted by: ekzept | December 22, 2007 1:11 AM
Your terms, of budget, and accounting, and of limited resources are contrived. Noone thinks of limits or efficiency when weapons systems are bought, or wars are engaged. There is no accountability. There is only accountability when interests wrapped in some fake conservativism don't like a government taking from those weapons makers and applying the funds to the health of U.S. citizens.
Posted by: ekzept | December 22, 2007 1:23 AM
"You oversimplified the historical background and implied (intentionally or otherwise) that insurance was originally intended as some sort of altruistic system where people willingly paid more into a risk pool than they expected to pay in a given year for health care so as to enable the pool of people to pay for the rare catastrophic medical condition by one of the pool members."
The non-profit health plan isn't altruistic on the part of the payers -- the key point is that payers don't know in advance which one among them will lose the health lottery. In MarkCC's scenario, they pay an extra $100 not out of the goodness of their hearts, but as a kind of protection against bad luck; I believe the technical term for this is "insurance".
Posted by: Canuckistani | December 22, 2007 2:29 AM
Just a few comments based on the UK NHS:
(apoligies for the length of this comment)
1) It was originally set up as a national system because of atruism and a sense of having a duty to care for ones fellow man. Devil take the hindmost, the previous system, was seen as bad.
2) The doctors and private hospitals said that it wouldn't work, they'ld all resign. It did work and they didn't all resign.
3) It was set up to provide, free at point of service to anyone who turned up, basic and emergency medical care.
4) It created an enormous arguement, similar to the discussion above. Now try suggesting doing away with it, everyone (well most everyone) in the UK sees the benefits of it even those who don't use it. They also moan about the parasites, freeloaders (non-UK citizens getting free health care), political interference, wasted money etc
5) The NHS has gone bad recently, last few decades for a number of reasons:
a) Politicians trying to apply business rational to it (it has become top heavy with overpaid business consultants/analysist and administrators). This has, eventually been recognised I think.
b) The definition of basic care has expanded to include things most people don't consider basic. This seems to be being addressed very slowly.
It is not perfect and some people object to not having their boob jobs paid by the NHS (boob jobs recommended by phsychologists, or because of induced back pain are done) and there are cost limits due to limited funds but it does serve the whole populace.
There is also private medical insurance, I have some, but that is for minor things that would keep me off work. Worth my while to pay to have it done quickly and let me get back to work. It doesn't exempt me from paying into the common pool. It is also required when I'm overseas, though explicitly excludes the USA (think about that, I am covered for every country in the world except the USA. Reason, USA medical care is so damned costly. It isn't any better).
Like all goverment departments, there is a tendency for bloat (more forms, paper pushers etc) and being a goverment department all attempts at standardisation, simplification and computerisation tend to fail and overrun budget, but at least these costs can be seen in the public audits and questioned.
There is also the problem of goverments stealing from the National Insurance (treating it as part of the general tax) and robbing the future to pay for todays political stunt, but this can also be seen in the public audits.
Most European (not just the EU) countries have some form of NHS, some superb and very costly (France, Sweden) some not as good and some that define what basic means and stick to it.
They are all facing a financial problem, but no-one wants to see them fail (except for some medical insurance companies perhaps).
Oh, almost forgot :o)
Nationalised health care is less expensive and wasteful than the private system.
Patients are more likely to be thought of as people, not commodities/profit centres, within the system by the nurses and doctors.
In closing, adopting such a system takes brave politicians willing to forgo the bribes/threats from the vested interests and do what is good for the people and the future of the country.
Posted by: Chris' Wills | December 22, 2007 5:29 AM
A story, from California, some ten years or more ago:
I had work health insurance through a big Blue for-profit-type. That company bought a pharmacy, to start filling prescriptions themselves.
They cancelled everyone's prescriptions and made them all get reauthorized under a new list of allowed drugs, and my pharmacist said were disallowing everything for months during the transition, for everyone he had with them.
Tried the 800 number. Repeatedly. Finally got a woman who refused to give me a last name, refused to give me a direct dial phone, refused to give me her boss's last name or any help at all, and barely spoke English.
("My boss? His name is Tom." "No, he doesn't have a last name." "No, he doesn't have a phone number." "No, I can't find him, he doesn't have an office." "If I want to see him I see him in the hall." "I don't understand you." "No, I can't write it down.")
I eventually tried the State of California 800 number instead, and got promptly forwarded to an agency that regulates health care providers in the state. No, they would not give me their direct dial number. They said they were not allowed to give it out to individuals, they usually only dealt with the insurance companies. But I got a nice person who did have a last name and took _my_ number and my story and said she'd check into it for me.
Half an hour later my phone rang. It was a Blue Cross manager. She only had a first name too. She said she'd gotten a call from the California regulator (by first name) and that she had checked, she had straightened out all the problems I'd called Blue Cross about, and had found a number of other problems I hadn't yet discovered with getting prescriptions renewed and doctors and pharmacists paid what they were owed on my account, and she was really glad to help me, and I didn't really think I needed to file a written complaint now, did I?
I said, send me the papework to file the written complaint, and I'll think it over.
Then I called the State of California 800 number back, got switched to the agency that regulates health care, asked for the helpful person there by name (no, they'd connect me, they didn't give out her number).
And I asked her --- how did you do that? Thank you, I apprecate that you did it, please tell me how.
And she said --- if you'd filed a written complaint with the State agency about your health insurer's behavior, it would have cost them $20,000 in paperwork to respond to it. They will do almost anything to avoid having to deal with a formal written complaint, including pay for your health care.
I told her I'd asked for the paperwork anyhow, and asked how I was supposed to know it was even possible to file a written complaint with the State, since there was no mention of it anywhere in the Blue Cross website or my healthcare docs that I could find. She said, isn't that interesting?
Blue Cross never sent me anything in the mail, and had no record I'd ever contacted them about any of this.
But the prescriptions were authorized and the medical bills paid the next day.
So I guess they figured I had no reason to complain.
I wish I could tell you how to contact your State agency regulating health insurance. I can't -- but dig for it.
I did tell this story to my then medical group's billing department -- _they_ had never heard of the agency. They told me later they did find it, and it was helping a lot getting paperwork done between doctors and insurers.
Posted by: Hank Roberts | December 22, 2007 7:15 AM
Tom #33: Dental is not covered by Medicare Australia. It's for entirely stupid reasons (something to do with a dispute between the doctor fraternity and the dentist fraternity at the time it was being set up) and it's supposedly going to be fixed Real Soon Now.
Incidentally, one thing that I haven't seen come up yet is the general topic of the government and wider society's relationship to public health.
When the government is responsible for a lot of health care, it also has an incentive to reduce costs. However, it can take a big-picture view. For example, a government with nationalised health care has a greater interest in promoting general health issues, or investing in preventative medicine.
Here's an example. It constantly shocks me that abortion, for example, is seen in the US as an issue of "choice" vs "life". In pretty much every other developed country, while these terms do come up, it's much more likely to be seen as a public health issue. When it's the government that pays for (medically indicated) termination, then the government has a stronger interest in developing good sex education programmes.
Same with substance abuse. The fiasco that is the "war on drugs" is, IMO, partly due to the fact that the US government simply does not understand that substance abuse is a public health issue.
Posted by: Pseudonym | December 22, 2007 8:06 AM
In response to ezkept:
"I cannot imagine a single Republican -- or Democrat -- who ever practiced such a faith, especially with respect to their support of the wholly socialistic (IMO) defense budget and its wanton and excessive procurement practices."
You won't get an argument from me on that one.
"If that can be tolerated under some specious set of assumptions and reasons, why cannot national health insurance? If unprofitable and non-competitive corporations can be bailed out by federal intervention -- actions justified as being part of a "free market" -- why can't a commitment to people's health be honored?"
Oh. I see now. You're suggesting that since we spend taxpayer dollars like drunken sailors in the defense budget, we should do the same with National Health care as well? Sure. Why not? We have an unlimited supply of money, right?
Ok. Seriously. A lot of the excess in the defense budget (about 10-20% give or take on any given year) is the pork barrel spending. The excesses you're (legitimately) complaining about have everything to do with our budget process and the bill rider system.
"Your terms, of budget, and accounting, and of limited resources are contrived. Noone thinks of limits or efficiency when weapons systems are bought, or wars are engaged."
What? Budget, accounting, and Limited resources" are contrived because we don't think of limits or efficiency when weapons systems are bought? The logical fallacy here is astounding. One has nothing to do with the other. The limits are there for the DoD too, my friend, I assure you. You'd be amazed at how much of the military is cut from previous years. It is because of this that the President keeps asking for emergency spending bills. DoD gets a certain amount of money at the beginning of the year, we eventually run out of money (as is bound to happen when you're fighting a war) and then the President asks for more (new law). There's a limit there and the military _can't_ spend more that they are budgeted for. It's a violation of the law. And there's plenty of accountability. Feel free to drop me an email and we can discuss it in gory detail (assuming you're interested in expanding your knowledge-base rather than accepting pre-conceived notions).
~Brian Souder
Posted by: Brian Souder | December 22, 2007 8:23 AM
Ignoring, for a moment, the practical details of the matter (though they always make such a difference), the benefit of nationalizing health care is clear.
The market is wonderful. It's efficient, it's innovative, it's faster-growing than government can ever be. But it gains these abilities by targetting itself, by ignoring opportunities that are not profitable. The market functions under a system similar to biological evolution. One of the hallmarks of biological evolution is the end-state of it - extinction. In the pursuit of the best, the lesser organisms die.
This is generally fine when the lesser organisms are businesses. Businesses don't have civil rights, don't have identity. They can be revived, repackaged, restarted with new management. We don't care very much about that. Sure, I might shed a tear for the passing of Coca-Cola, but there are plenty of other sodas that will quench my thirst equally well and be just as tasty to boot.
But when the lesser organisms are people, well then that's a different story. The market, to be efficient, must ignore the parts which are unprofitable. Translated from theory-speak, this means that it must let people die who are too expensive. And the definition of 'expensive' can be pretty shocking at times.
This is the fundamental failing of the market. It grows in leaps and bounds and is the best form of economy we've ever dreamed up, but almost by definition there are sectors where it will not adequately serve the needs of all people. When that need is iPods, we don't care. When that need is critical operations and medicine, we do.
Brian Souder says that 8% of the population being uninsured is acceptable to him. I say that's 24 million people. That's the combined population of America's 10 largest cities (according to Wikipedia and a spreadsheet that took *entirely* too much effort to assemble). It's also the combined population of America's 18 smallest states. He's willing to accept 18 states full of uninsured people. I'm not.
This is where government steps in. It can, without overly much effort, serve *everyone*. That's the benefit there. Use the market for as much as humanly possible, but when you absolutely need to get a product to everyone, use government. The alternative is dreaming up some perfect incentive plan (implemented by the government, in an interesting quirk that almost renders this sidequest irrelevant) that will encourage the market to serve everyone, but which the market will instead grow around and coopt to its own purposes (which is exactly what it's supposed to do).
Added benefit of a government-run program is less bureaucracy. I can hear you laughing now, but honestly, it's true. The government doesn't need advertising - everyone already receives its product. The government doesn't need to partition people into risk groups and decide whether or not to cover them - everyone already receives its product, and at the same price. Both the market and government need to decide which procedures and medications are approved, but it's centralized. Rather than a separate group in every company deciding the same things, you have a single government board doing so, which means less people. Both the market and the government need to have people personally served and managed, which will be rather equal between the two. The only cost which the government intrinsically requires above the market is oversight, and the current oversight model that government requires on the insurance companies is at least the equal to what government will require on itself.
In broad overview, health care is one of the products which seem to be perfectly fitted for government to run. The devil is always in the details, of course, but there's no way to simply sweep it under the rug with a quick "Of course the market will do better" comment. All things being equal, government will do *much* better. Things are never equal, but at least then any failing of the government plan are due to implementation, not theory.
Posted by: Xanthir, FCD | December 22, 2007 9:43 AM
Having been a part of the military health care system, I can say with absolute certainty that the quality of the health care you receive is a crap-shoot. Some doctors are fantastic; others are uncaring. This is true in the civilian sector as well, but I do not have a means to address poor service within my single-payer system. If I complain, it goes through it's bureaucratic process which will ultimately lead to nothing
Posted by: sex shop | December 22, 2007 10:56 AM
The reason that individually purchased insurance is only available at high expense is that the insurance industry has been highly regulated by concerned liberal types to the point where anyone offering medical insurance has to pay for vast amounts of mundane stuff that would be better treated in a simple free market - dental checkups, optical prescriptions, etc etc.
Personally, I would much prefer a system where I can buy the mundane stuff myself, and pay for a relatively cheap insurance in case of disaster.
Coming from the UK originally, I do have to say that state run health care is, empirically, the worst option of all. Assuming you "hate Bush" or "hate Clinton", do you really want to see the next Bush or Clinton having control of funding of health care for the vast majority of the population? That model has been a disaster in the UK, and would assuredly also be so in the US.
Posted by: Steve Massey | December 22, 2007 1:15 PM
Steve Massey: I've no idea whether or not nationalized health care has been a 'disaster' in the UK, but from what I've heard it hasn't been too bad.
Let's not just look at the UK, though - it's far from the only country to do this. What about France? Germany? The Nordic countries?
Afaik, they've all done quite well with public insurance.
Posted by: Xanthir, FCD | December 22, 2007 1:37 PM
two observations.
1. there is no such thing as non-profit. if you want to provide medical care to millions of people, you need staff, secretaries, businessmen, etc. they will always care more about their own payments, work environment, and outsource something to friends and relatives. the question pretty much can be distilled to this: who will decide what is the acceptable cost? it is not easy. that's why market is a good thing. it works out the price for us.
2. you can't that easily reduce overhead with taking out the middle man, and having the government doing healthcare. even the greediest, biggest insurrance company is an efficient machine compared to a government. if the government touches something, the expenses are multiplied tenfold, and the time to do something likewise.
however, there is a possiblity to consider.
in Sweden (if i'm not mistaken) there is a smart system. there are multiple insurrance companies. but they can't select members! they have to accept anyone who wants to join. people pays a percent of their payment to a common pool, and this pool is divided between companies based on number of members.
i think this construct offers the advantages of the competition without introducing the problems of it.