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On Sunday, July 5, Paul Krugamn laid out his argument that affordable health care for everyone was an achievable goal.[quote] Many people would be surprised to learn that I agree with him on that. He correctly argues that we already cover the bulk of the most expensive health care patients by covering the elderly under Medicare. He also argues that the uninsured already receive much care that we are already paying for so we are already paying much of the costs for their care. Finally he argues (as a corollary to the first point) that many of the uninsured are generally young and healthy so that insuring them would cost less per person than our current per-person cost of public insurance (bringing down the average cost per person and increasing the overall cost only slightly).
His conclusion is that “extending coverage to most or all of the 45 million people in America without health insurance — should, in the end, add only a few percent to our overall national health bill.” He would be right at the beginning but eventually the nightmare spiral of skyrocketing costs would take over because the fundamental problem in our health care system would not be addressed – overuse and the disconnect between the source of payment and the subject of care.
I agree with Krugman that the system can be reformed and that it is possible to provide necessary health care for essentially everyone (some people will always fall through the cracks no matter how good the system gets) without a dramatic increase in costs. I go a step further and argue that we can do it with a substantial decrease in health care costs if we will correct the fundamental problems of our current system. My goal would be to get private insurance and government to each pay no more than 25 percent of the cost of health care (they currently pay 35% and 46% respectively) and let citizens pay for the other 50 percent or more. In order to drive the system in the direction of that goal – and correct the fundamental problem – I would propose changes such as the following:
- Tax company health benefits as income but make private health insurance premiums tax deductible.
- Make government health plans only cover emergency and preventive care (preventive care should be covered 100% without any copay for all legal residents).
- Reduce the requirements for private insurance plans so that they need not cover more than public plans.
- Have all out of pocket health expenses tax deductible (not including elective procedures like liposuction and hair removal).
[quote1]These moves would encourage people to live more healthy lifestyles and leave them responsible to pay for their own choices if they don’t. At the same time, all basic health care needs would be covered privately or publicly without an individual mandate. Private plans could be as extensive as people are willing to pay for while basic emergency and preventive care would be avalable to everyone. I’m confident that such a system would achieve a much lower cost to society than what we are currently paying.
7 replies on “An Affordable Health Care System”
Im not sure that health care is overused? Would like to know how you came to that conclusion.
To go a long with the rest of your post, Doctors need to be paid on salary and not on a per function. Doctors and hospitals need to stop being paid per surgery or test or for each patient they see, this only incentivizes doctors and hospitals to push patients through as fast as they can and to run unneeded tests and surgery’s. This will cut costs and provide a quality health care and maybe this also addresses your issue of overuse.
It sounds like you do believe that health care is overused. To answer your question – I came to that conclusion as that is frequently cited as a significant cause of rising health care costs by experts in the field (meaning doctors and hospital administrators – not senators, representatives, and pundits). Your comment illustrates one aspect of that overuse – running extra tests and conducting surgeries when they might not be necessary.
I think the pay-per-procedure structure contributes to that but so does the threat of lawsuits and the regulations by insurance companies in which they won’t pay if anything has been skipped.
Another aspect of overuse is the common attitude that we should go to extraordinary lengths to avoid death or any form of discomfort or disfigurement. The result is that end of life care is extremely expensive (it seems to me that the statistic was that well over half of all health care costs are incurred within 2 years of the end of a patient’s life). I think a proper respect for what it means to be alive might reduce the frequency of people incurring enormous costs to keep a heart beating for extended periods of time when there is no hope for a real recovery.
The whole system is set up based on business principles of efficiency and volume with a heavy reliance on specialization. I think that this is an example of our society discovering that there are limits to the benefits of an efficiency mentality. I would argue that volume and efficiency have the potential to squeeze out the possibility of rational thought in the process (that goes for more than just the health care industry).
Here is a perfect example of the overuse I was talking about.
Our health system is unaffordable and unsustainable because of waste: inefficiency in the insurance business model and poor quality. Join the discussion about this at http://www.utahpatientspac.blogspot.com (the blog for the Utah Healthcare Initiative) and help us fashion health system reform by and for Utah patients. Best, Dr. Joe Jarvis
Dr. Jarvis,
Do you think that what I have called overuse is the same as what you are calling waste? (Just to see if we are on the same page here.)
Thanks for the link to your blog – I would also like to share a link to the Utah Health Care Initiative website.
You have some good ideas, but I disagree with the subsidy altogether. Subsidies skew the market and misallocate resources based on goals chosen by political whim rather than by individuals. Besides, tax deductibility wouldn’t appeal to the half of the population that pays no income tax.
Mandating coverage for emergency treatment would result in an expansion of what is considered an emergency.
How about allowing people to buy personal health insurance from any company that is honest and offers insurance, much as we do now with auto and homeowner insurance? How about letting people buy health insurance across state lines? Letting people buy as much or as little as they want? Nothing would help this market more than competition.
I still agree with your earlier Downsize DC quote that said that health care costs will be lower and satisfaction will be higher when the care providers work for us rather than for some public or private bureaucracy, and when we deal with our health insurance companies as infrequently as we deal with our auto and homeowner insurance companies.
Brad B’s comments about doctors being paid by salary as opposed to by procedure make for a good populist sound bite, but they make no real economic sense. We have many complex areas of life where providers are paid by piece of work as opposed to being paid by salary, and yet these areas of the market seem to function reasonably well. Some unscrupulous vendors gouge their customers, but these vendors soon have trouble attracting customers. The real problem is not being paid per procedure, but external encumberments that incentivize overproviding certain services.
What I had in mind was more along the lines of what we already have – hospitals are required to treat people in emergencies regardless of their ability to pay. I did not mean to suggest that government should pay for all emergency care, only that people should have access to that care – anyone who gets emergency care without insurance should be expected to pay all that they can toward the resulting expenses.
I agree that people should be allowed to buy insurance from any company – including across state lines – that’s why I proposed making insurance premiums for privately purchased insurance plans tax deductible, why I said that insurance companies should have all requirements of what they cover reduced to covering preventive care and emergency care and then allow them to offer more expansive plans as they feel said plans would be marketable, and why I suggested that individuals should be responsible for the bulk of health care costs.
The problem with paying doctors by salary is that I don’t see how you could determine their proper salary – is it per patient (punishing those who have less healthy clients), or by a standard base salary (encouraging doctors to get a degree and each take on few patients to get their salary with little work required). I think you correctly identify the real problem.