Health Care Reform

[rowyn]

Yesterday's Wall Street Journal had an opinion column on health care reform.  The WSJ has had many many way too many columns on health care reform lately, some of which have good ideas and many of which are about how President's Obama's proposals will RUIN US ALL and also KILL BABIES.  No, no, they're not nearly that bad, and I am being grossly unfair.  I'm sorry.  I don't actually like the proposals being tossed around in Congress either, but I still get tired of hearing the same points harped on over and over again.

Anyway, the linked essay does some of that harping, but it also had eight  ideas to offer for health care reform.  The interesting thing about these ideas is that they aren't necessarily incompatible with a government option for covering the uninsured. Five didn't even seem controversial to me, either; I'm quoting those below and adding my thoughts.

Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.
Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

This is one of my favorite options for healthcare reform. I hate the way my insurance company is involved in every single bloody transaction involving a physician.  I don't want to contact my health insurance company every time I need stitches for a cut or a tetanus shot, any more than I want to call my home insurance provider every time I break a window.  It just adds a layer of bureaucracy, expense, and inefficiency to the process.  Current tax policy doesn't subsidize home insurance or home repairs (well, in general), so it doesn't affect my decision to have a high deductible or a low deductible.

But current tax policy does subsidize employer-provided health plans with low deductibles, and makes it a pain in the butt if you want the same subsidy for an HSA/high deductible combo.  So it's trying to corral me down a low-deductible path that I dislike, and I don't see why the government should care whether I pay for my health care by paying $4000 a year for a low-deductible policy, or by paying $1200 for a high deductible one and covering the deductible with cash when I use services.  OK, the former is better for insurance companies, but I didn't think the point of this exercise was to make insurance companies happier.

Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

This is another thing area of tax law that I don't get.  Why does the government want to subsidize my health care if I get it as a benefit from my employer, but not want to subsidize it if I buy it on my own?  I'm guessing that it's based on an argument that goes something like this: "People are short-sighted, so they won't buy health insurance if left to their own devices.  So we want to encourage employers to provide it for them by subsidizing employers-only.  We can't offer the same subsidy to individuals, because then employers would lose the ability to tout insurance coverage as a better benefit than offering additional salary."

I guess that argument makes some sense.  I don't agree with it, but it's not as nonsensical as "high-deductible policies combined with HSAs should be hard to get compared to low-deductible policies."

Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

I'm sure there is some reason to force insurance companies to offer policies in only their own state, but I don't know what it is.  Anyone?

Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

This goes with "I like high-deductible policies so neither I nor my doctor has to deal with insurance companies as much"; insofar as government legislates such policies out of existence, I'm annoyed by it.  But here I can see counter-arguments of "insurance can be insanely complicated if you let companies offer whatever they want, and then people won't understand what they want".  So I'm happy to see government regulation (no, really!) that forces standardization on insurance companies, especially standardizing the way benefits are explained.  I'm not wild about legislating products out of existence, though.  "No, you're not allowed to buy an insurance policy that doesn't cover X, even if you want to." OTOH, some products are especially pernicious (to use a facetious example: insurance that is automatically terminated if you get sick).  Loans charging 100% annual interest were legislated out of existence in the US*, not noticeably to the detriment of either consumers or lending institutions, so I'm not willing to say "no, never ever do that it's always bad".  It isn't always bad.  But I do think it should be done sensibly; if a type of insurance could be purchased by a rational person in a given situation, even if such people only make up a small fraction of the population, it ought to be legal.

* Yes, yes, some payday loans have effective annual interest rates of more than 100% when considering the fees and the short duration of the loans.  You know what I meant.

Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor's visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

This is another area where some government regulation to standardize forms would probably be for the best.  I mean, it would be ideal if doctors and insurance companies would voluntarily form a board to set standards of how they're going to explain costs and what's covered by insurance and what isn't on any given bill.  For that matter, it'd be nice if insurance companies would set a standard amongst themselves for how medical providers filed claims, because that is a total nightmare for providers of every kind.  But if they're not going to do it on their own, maybe the government needs to threaten to do it to for them.

None of these seem particularly earth-shaking or partisan to me. Any given person might not think they'd help much, but it doesn't seem like anyone would accuse them of KILLING BABIES or RUINING US ALL, or even having the potential of doing much damage to the existing industry.

I also don't expect any of them to happen.  I'm not entirely sure why they won't.  Maybe it's that they're not earth-shaking enough: the people who want a change want a SOLUTION, not an incremental thing that they think will only help a little if at all.  And if you want a solution to all the country's health care problems, maybe an incremental benefit looks like a bad thing, because they fear if the system gets to "good enough" then people will lose their will to get it to "perfect".

Maybe it's that they're too time-consuming to implement. "Repeal laws" is pretty easy, but standardizing thousands of individual bureaucracies is ... um ... daunting.  And expensive. Not only to create a good standard, but also to implement that standard across so many different companies.

Or maybe there are downsides to these ideas that I'm not thinking of.  What do you think?  Are there controversial aspects to these changes that I've missed, beyond the difficulties of political backing and setting standards?

Comments

[terrycloth.livejournal.com]

(1) A high-deductible plan is okay as long as it covers routine health maintenance stuff without that high deductible, which is a huge cost savings overall (catch stuff early so you don't end up with an expensive operation). It's hard enough convincing me to take the time to go get checked to see if X symptom is actually something dangerous without adding on the extra barrier of making me *pay* for it.

Your example also seems a bit rigged -- getting rid of a $2500 deductible costs an extra $2800? Um...

(2) The big problem here is that individual health insurance is... awful. The tax is the least of the problems with it -- the main problem is that the insurance companies can pick and choose individuals who are actually less likely to get sick. This is also where they 'get you' by rescinding the coverage if you get sick -- they require you to disclose anything medical that ever happened to you, and no one can actually do that. People have had coverage denied after the fact because they didn't list the case of acne they had when they were 12.

'Group' coverage (eg, 'everyone who works at this company') helps avoid all that crap.

Of course, linking it to employment (a) fucks the unemployed, and (b) fucks the companies that want to employ people in the USA. It's a big reason jobs get shipped overseas.

I don't see a real way to actually solve this problem without universal health care -- even a government option for health care wouldn't work much because the for-profit companies would just offload all the unprofitable people onto it. I mean, I guess it could *work*, but it'd be a huge money-loser, far worse than universal coverage.

Maybe you could mandate that insurance companies could charge whatever they wanted, but they had to cover absolutely everyone who applied for insurance at the same rate, even if they were currently in the middle of an expensive cancer treatment or whatever. THEN you could mandate that everyone had to buy health insurance. That'd take the pick-and-choose nonsense out of the picture on both sides, while still leaving room for free-market competition over things like efficiency and administration overhead.

(4) So you're in favor of privately run Death Panels? >:)

(5) Yeah, this kind of sucks, and combines with (4) to let hospitals soak the insurance companies and/or the consumer depending on whether the insurance actually manages to rescind the coverage. It's like the tow trucks who tow your car for someone else at your expense.

#1

[rowyn]

* First and most important: I am not saying you should have to get a particular type of insurance policy! I am delighted for your policy to cover routine check-ups and preventative care! I just want to be able to buy a policy for me that doesn't, and I don't want the government to decide that your way of paying for health care should have tax advantages and mine shouldn't (or that my preferred way shouldn't be legal at all. It's currently legal in most but not all states, IIRC.)
* Sorry on the number confusion: those were pulled out of my head, based on my guesstimate of the full cost of my current low-deductible policy (which is 80% covered by my employer) vs the cost of high-deductible policies that I researched briefly for John. My guess was wrong -- the full annual cost of my current policy is $5,700. I might be misremembering the cost of the high-deductible policies, but I think they ran between $900 and $1800 or so. But it's not a simple thing like home insurance, where you pay up to the deductible and then the insurer pays the rest. It's a byzantine tangle of what's covered and what's not and how much your co-pay is plus your deductible plus your annual maximum plus the selection of providers in the area plus the alignment of Jupiter and the sacrifices made to the appropriate agency. For every type of insurance. I really don't know what the differences between the two are, exactly. O_o The $2500 figure was from the link, and I didn't mean to say my off-the-cuff example was using it.
* My basic philosophy on insurance is this: Only buy insurance for things that are (a) unlikely to happen in your lifetime and (b) that would cause financial devastation they did happen. I (please note I'm speaking for myself, not saying "everyone else absolutely must live by this standard'") don't need a policy that will cover me if I break my leg and need $5000 worth of treatment, because that's an amount of money that I could reasonably save, or borrow and pay back in a reasonable period of time. I need insurance that will cover me if I get bone marrow cancer and need $500,000 in treatment, because that'd be, like, 15 years of savings or something.

The reason I don't want insurance that covers everything is that insurance comes with a bureaucracy that needs to be paid, and commissions, and profits, and audits, and so forth. If it's feasible to pay the costs myself (either by savings or by borrowing) I'd prefer to do that, both because I think it'll be cheaper in the long run, and because I don't like having to check with my insurance company about which doctors they cover, and which clinics and hospitals. Or having to wait for bills to see if I over- or under-paid my portion at the time of treatment. It's annoying. I find dealing with bureaucracies more of a deterrent than paying cash. Lots of people aren't me, so I'm not saying everyone should do this, it's just what I'd prefer.

But the tax code deters me from doing this: they subsidize my company for paying for 80% of my full coverage, and subsidize the 20% I pay, and it just doesn't make economic sense for me to get anything but the policy choices my company provides. All I want here is for the government to say that they won't give preferential treatment to one way of paying for health care over another.

Whoa, really rambly here. I'll try to be more concise on the others. O_o

Re: #1

[terrycloth.livejournal.com]

The thing is, it's bad for society in general for people not to get routine health care, and one very basic economic principle is that if you add a marginal cost to something, even if the marginal cost is small, consumption goes *way* down, out of proportion to the total cost.

It doesn't have to be covered by health insurance per se ('insurance' on something you *know* is going to happen is a misnomer, like you say), but there's a clear public good in making certain basic medical tests freely (or at least, 'at no additional charge') available by one means or another.

Re: #1

[rowyn]

* The cost at the cash register is not the only cost. For example, if there's a doctor down the street from me that isn't covered by my HMO, and the nearest PCP I can get is 10 miles away, I would be much less likely to go to the doctor than if I had no insurance. Because with insurance, I think "oh, I should see my $10 PCP but it's such a pain to get out there during the workday, never mind". Without it, I'd pay $90 to see the doctor at the clinic I walk past every day and not think twice. That's me. It's not everyone. But I don't think I'm the only person in the country who'd generally prefer to pay extra than have to deal with the hassles of getting a 'free' product. And probably not the only one who'd be detered from paying by the existence of a 'free' version BUT still not going through the hassle of getting the free one.

... and yes, the physician example is more-or-less true to my life. 'Inconvenient' is much, much, MUCH by like an order of magnitude at least more of a deterent to me than 'expensive'.

* The point to a Health Savings Account is to make the patient set aside money in advance that's dedicated to health care. So, say instead of my $5700 full-coverage policy, I have a $2000 annually policy and put $3000 annually into my HSA. Yes, it's true that my preventative care visits are now paid by me, not by my insurer. But I pay them out of the HSA. So it's not like I'm deciding to go to the doctor instead of buying a new Sidekick; I'm deciding to go to the doctor instead of letting my $3000 roll over to next year and accumulate interest that I won't be able to spend on anything but health care either. I don't think the deterrent to paying for health care is that great in those situations. (Correspondingly, the "rah-rah people will be more careful with how they spend their own money than they would with an insurer's/the government's" argument isn't as compelling, either.)

* Semi-irrelevant: I've actually heard that it's not clear preventive care saves money over the life of the patient. Yes, treating, say, breast cancer in the early stages is much cheaper than in later stages and has much better outcomes in length and quality of life. But most people still eventually get sick of something that requires extensive and expensive medical care. Whether that hits you at 60 or 100, it's still costly. Obviously, I still think people should get preventative care! But I'm not sure we should assume that we'll spend less money on health care overall if everyone lives longer and per-year-lived healthier lives.

Re: #1

[terrycloth.livejournal.com]

Well, yes -- what I really want is hovering robots to float down the street scanning everyone they pass and setting off an alarm if they detect any infectious diseases. A peaceful use for predator drone technology!

#2

[rowyn]

Yes, the market for individual insurance sucks. I've known people for whom it was OK when they bought coverage when they were healthy, but it totally screws unhealthy people who are uninsured when they get sick. And kind of screws them even if they are covered.

Just mandating the same rate for everyone and requiring insurers to take everyone is a complete disaster, because then people only buy insurance when they're sick and cancel it when they're well. New York & New Jersey tried this and (a) it killed most of the insurance providers for individuals and (b) those left charged obscene rates.

Mandating that insurance companies take everyone as the same rate AND mandating everyone buy insurance more-or-less works, though. Charles Murray, in In Our Hands, suggested ditching all social-welfare programs in favor of a annual $10,000 grant to everyone over 21, and mandating $3000 of that go towards insurance and/or HSA-style plans. I kinda like that, actually.

Anyway, yes, not letting individuals deduct the cost of insurance is hardly the biggest problem. But it's like saying a broken toe is the least of a cancer patient's worries -- yes, it is, but it'd still be nice to fix it. :P

Re: #2

[terrycloth.livejournal.com]

OUCH. Someone actually tried the first half without the second? That seems pretty obviously disastrous, yeah. x.x

#4 & #5

[rowyn]

4) Sure. Somebody's gotta run the Death Panels. I favor letting people shop around and pick the Death Panel that suits their dying needs best. So lots of little Death Panels run by insurers is better than just one run by the government in that respect.

Also, I think the chance that charities and individuals to be able to buy services that a Death Panel has decided to deny are better if the country has hundreds of Death Panels with different standards than if there's no competition. Because the services your death panel denied might be subsidized by someone else's, so they exist and even if you can't get them subsidized you can still pay full price.
5) Pricing for health services is soooo screwed up. v.v

Re: #4 & #5

[pyat.livejournal.com]

One thing, BTW... healthcare in Canada and Britain and whatever isn't run by the government, per se. It's funded by the goverment, and in Canada the funding administration is not even at the federal level.

Short version - if I don't like the "Death Panel" (whatever the hell that is) at St. Joes, I can go down the street to the General. There isn't a "Federal Ministry of Death Panels Municipal Office."

Re: #4 & #5

[rowyn]

The death panel business is, obviously, quite silly. As I understand it, the specific original context was that the US Senate bill included a clause about "Advance Care Planning Consultations", which would consist of "people talking to their doctors about writing a living will specifying what treatments they do and don't want if they become legally incompetent". Which seems pretty innocuous to me, but there's a lot of concern among some people that counseling people about why they might not want to receive life-prolonging treatments could encourage the idea that life isn't sacred, or that people who want life-prolonging measures are being selfish and should let those dollars be spent on someone else instead of "wasted" on someone who's "just going to die anyway". I don't agree that the one necessarily leads to the other, but I don't think it's a wholly irrational notion either.

The other concern, and what I was thinking of specifically in my comment, is that under a single-payer system, a national board would define what treatments were and were not covered. There is nothing remotely evil or wrong about an agency, government or otherwise, deciding what treatments will and will not be covered under a health plan. It has to be done by someone, whether that someone is an insurer, or an individual, or a doctor, or a government agency, or whomever. Ideally it's decided on the basis of factors like "is this treatment effective?" and "are better treatments available?" and "is this treatment appropriate to the individual's condition?" In the real world, it's also controlled by "is this cost-effective?" and "can I afford it/will we have to raise taxes to cover it/would we be able to raise rates to cover it or would our other customers just leave for another insurer if we did?" There's no getting around that issue. As I said, I prefer having a bunch of groups reaching their own conclusions on it because I think a variety of options is useful in this instance.

So who decides in Canada whether or not a given treatment is covered? Is it purely up to the physician and you can go see another physician if you don't like the recommendation from a given doctor?

Re: #4 & #5

[pyat.livejournal.com]

So who decides in Canada whether or not a given treatment is covered? Is
it purely up to the physician and you can go see another physician if you
don't like the recommendation from a given doctor?

Yup! velvetpage, for example, changed her obstetrician 8 months into her 2nd pregnancy, because the first one was not willing to let her try for a vaginal birth. You might want to touch base with doc_mystery on my friend's list. He and his wife are both doctors, and he worked for Pfizer in the US, IIRC.

Re: #4 & #5

[pyat.livejournal.com]

I should also add that hospitals in Canada are, in fact, a sort of non-profit business that are typically founded by organizations (the Catholic Church, a university, etc.) and municipalities. As I'm sure you know, "non-profit" is not the same as "charity," and a Canadian hospital is actually a fairly capitalist endeavour.

Community Rating

[telnar.livejournal.com]

I'm not feeling energetic enough to tackle the main question, so instead, I'll comment on a small area.

The debate on community rating is being framed by both sides in ways that make it difficult to see what's really going on.

The primary point of community rating of individual policies is to create hidden cross subsidies within a state (for now, it's being implemented only on the state level). This allows politicians to divert money in the direction of currently uninsured unhealthy people without making that process as visible to the young healthy people whose premiums will go up.

This approach is completely incompatible with allowing interstate competition in health insurance. Insurers from states without community rating will offer much lower prices to those without preexisting conditions and the vast majority of them will choose plans which aren't community rated, eliminating the hidden subsidy.

Arguably, both sides are hiding their true agenda.

My solution to this problem is to open the US health insurance market to worldwide (not just interstate) competition and to decide what we want to subsidize and then do it explicitly. If the government subsidized the insurance of everyone who is currently uninsured and unable to afford insurance due to some combination of preexisting conditions and poverty and then imposed an individual mandate, the effect on coverage would be the same as community rating + public insurance for the poor + an individual mandate, without needing to foul up price signals in the individual insurance market. Of course, it would also require honestly accounting for what that approach costs, which is why politicians seem allergic to it.

Re: Community Rating

[rowyn]

Ahhhh that's why the interstate barriers.

... and yeah, trying to extend subsidized coverage to only the sick & uninsured sounds ... expensive. And like insurers would be incentivized to abuse it by trying to get people into the subsidy as soon as they get sick, which defeats the whole point. :/

Re: Community Rating

[telnar.livejournal.com]

It's very expensive, but it's not quite as bad as that.

Forcing everyone to buy insurance (and subsidizing it if they can't afford it) would eliminate the problem of insurers trying to get people into the group which is subsidized because it's made up of people with pre-existing conditions. That group would only exist one time, since after that everyone who wasn't sick when the program began would already have started an insurance policy when healthy (and gotten subsidies to keep it if too poor to pay).

[jurann.livejournal.com]

I think the role of government is to protect and serve the best interest of it's people, and that as a model democracy we should also at least embrace the spirit of Egalitarianism and attempt to maximize free choice in as much of life as possible. And at the same time - part of serving the populace, I think, means streamlining and optimizing some parts of living in such a way as to remove burden from individuals at the cost of the money to do so. I guess what I'm saying in a roundabout way is that it's about fucking time we became a socialist country. =D And realized that there are simple solutions, regardless of whether or not people like them. =)

[rowyn]

I kinda think socialism creates more problems than it solves. >:)

[jordangreywolf.livejournal.com]

I thought the big threat to life as we know it was stuff like global warming (e.g., glaciers melting, the north pole being free of ice by next summer, photographs of sad-looking polar bears on little icebergs), the fact that we drive cars too much and throw away too much stuff and burn too much oil and don't recycle enough, etc. Or maybe those wars going on. Or maybe something to do with the economy, joblessness, etc. It's not like I honestly thought that the government was going to do anything right about such issues, but somehow I feel like I misheard just what I was supposed to be alarmed about. I didn't have any idea, say, a year ago, that the really pressing issue facing our time - the one that was going to get so trumpeted up as "we need to do something RIGHT NOW" - was health care. It just kind of caught me off guard that this is the issue that has everyone up in arms (rhetorically, anyway). Maybe I'm just getting my news from the wrong circles.

[rowyn]

Umm ... I guess the government's rationale is "we fixed the economy with the stimulus bill, and we've got a bill working its way through on cap-and-trade to fix global warming, and we fixed Afghanistan by sending more troops, soooo ... what's next? Health care! Right."

...

I'm not sure why Congress has to deal with both health care and cap-and-trade at the same time, though. You'd think one of those would be enough to keep them busy.