diet coke for breakfast

Monday, April 19, 2004

Posted by Tanstaafl
Healthcare Debate

I tried to put this in the comments section at RFTR, but it was almost 2000 characters too long:

1) I sorta remember that conversation, butI don't think I was the one who made the house analogy... maybe I was, who knows.

2) Universal healthcare is not usually criticized on equal opportunity grounds. That's a new one to me... The problem with goverment management of the healthcare system is that it will create more perverse incentives than it already does. Right now, the fee for service system provides an incentive for lots of tests, medicines, and treatments even if they're not particularly necessary because doctor's get paid for what they provide whereas patients only pay their flat copay fee. A government system that ignores economics would only exacerbate this problem. Now as it turns out a better system might be the much reviled HMOs. With the HMO, the doctors are on salary, not a fee for service system. So, they get paid regardless of what treatment they provide. But, as they compete with other HMOs they have an incentive to keep you as healthy as they can for the least amount of cost to you. If someone other HMO does it better, you'd switch. As a result HMOs stress prevention over more costly after-the-fact treatment. Comparison studies in Oregon have shown that HMO patients are just as healthy (if not healthier) than their counterparts in the typical co-pay insurance programs, at a fraction of the cost.

2) Yes the British system is slow... and in medicine that can mean life or death. There are numerous examples of cancer patients, for instance, dying while waiting six months for an appointment. Don't marginalize that important aspect.

3) If the concern is to get people with less income access to healthcare, then purhaps what needs to happen is to decrease the cost of healthcare. That's no small feat however. One way is to institute what some economists call "Managed Choice". Right now the California State Employees system (and I think federal employees system) works this way, and it has gone a long way toward restraining costs. The way it would work is that your employer (or the govt. if you're discussing medicare/caid) would approve a list of 10 or so insurance providors that cover at least a base level of care (ER visits, OB-GYN, etc). The employer pays the cost of the median provider in this list. If the employee wants more, they can chose to pay the difference for one of the more expensive plans. If they don't need all of the services the median provides (eye-glasses for instance) then they can choose one of the less expensive providors and get the difference back in their pay-check. This way you turn employees into educated health-care consumers, and you provide an incentive for insurance companies to restrain costs. In the 1970s when oil crises raised the price of gasoline, Honda and Toyota brought cheap, gas-efficient engines to the market, and beat the pants off of the gas-guzzling Caddies and Lincolns. The consumer won, because the Hondas ended up being, for a long time, better cars for less money. Right now, there are few Honda of health-care, and the cost of the system will continue to spiral upwards until govt regulations allow more to be introduced.

4) The other major reason that healthcare costs are so high is that malpractice insurance is extremely expensive. Until that's brough under control, this whole debate may be academic. If doctor's can't make any money because their insurance costs are higher than what they can get paid for their services, then they'll find other lines of work. If you don't think that's a problem, try having a solid healthcare system with sub-standard doctors.

Brian -- 1) You didn't come up with the house analogy, you were the one that pointed out the first two assumptions were false. You came up with the "I want my house to be the best it can possibly be, independent of my neighbor."
2)I have posted your comments (minus the dispute about the house conversation) over at RFTR.

Thanks for your help in making my case. I figured you'd know more about this than I.


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