This is actually a response I wrote in a discussion about health care, but I spent enough time writing it that I figured I should post it. (there are several edits from the original, and may be a few more)
So for me it's mostly a practical matter, which is why I am on the fence (but leaning toward supporting some form of public coverage). For me the question is too polarized in that it's mostly just yes or no. The difference between the possible public options is more important to me than the public(and private) vs private question.
There are so many aspects to cover it's difficult to know where to start. But I suppose I would start with the growth of options. As far as I can tell the exploding growth in costs is coming from nothing other than exploding options.
For almost everyone health is near the top of the list on things that are important. For many people it is THE top. So if there is an option, you want it. From the perspective of an investor this is GREAT. It's like selling crack, but legal.
In the past there were fewer options. If you had heart problems you went on a diet that was it. The most you could be responsible for paying was a doctor's visit and hospital stays if you had an attack.
Then came along blood pressure medications. It's your life on the line, so add that cost. Then came along MRI's; add that. Then blood thinners to get by clogs. Add that. Then cholesterol lowering medication. Add that. Do you think there won't be more options soon?
The point is that for most of the issues, these are treatments and not cures (which is another issue completely) so we'll keep buying them. There is hardly a point at which we would refuse treatment, especially if it were free. And the pace of treatment developments is going up, and progress will probably continue to for the next century at least if not forever. As such, health-care being the legal version of crack, demand will continue and so costs will go up. Therefore if we have a public option, it *must* be rationed and an equal standard for care *cannot* exist (without outlawing private health-care). I'm ok with the rationing and un-equal standard of care, but I would be willing to be that many are not.
A related factor that keeps the costs from staying in check is the "tragedy of the commons" issue that comes from all you can eat style health care.
The problem is that we are detached from the costs. There is no deterrent from selecting the most expensive option regardless of the effectiveness. Let me give you an example. Since I am an engineer, I have "good" coverage that has a fixed co-pay. In the past I had some problem with heart-burn. Now I went to the doctor, told them the problem, and he prescribed me some prescription medicine(PPI) that was the most effective on the market. Now as a patient that pays the same no matter what, that's exactly what I want. So I go to the pharmacy, pass the $20 month's supply of Prolisec OTC and head to the counter to pick up my $15 co-pay PPI. From my perspective that's great. I payed less for a more effective drug. Now if I look closely on the paper work I can find out that my prescription PPI actually costs $200 for a months supply! 10 x the OTC option. It's supposedly better, but 10x better? From the perspective of the drug company, this is GREAT. They just got someone to pay 10x for some thing that is only marginally better. But I was disgusted. So the next time I just bought the OTC option even though it was more expensive in the short run. And you know what? It worked just fine. I don't think I need to elaborate the implications of this. This is not an isolated anecdote. You can extrapolate on your own. It's a *huge* problem.
Another big problem is that health "insurance" is not insurance. If it were, half of our problems would suddenly disappear. You get a $1MM policy on let's say cancer. And if you get cancer, boom: it pays out, and there is no question as to what can and can't be covered. This could be offered to everyone who cannot afford other coverage and the costs would be well defined, and we would be incentivized to use the money wisely. But it's not. If an insurance company(especially smaller one) has someone covered who gets a blood cancer there are *millions* of dollars worth of treatment available, and the worst thing is, is that it still probably wont prevent the cancer from killing them. I know it's a harsh thing to say, but a life is *not* priceless. The spending has to stop somewhere.
But that's the point. This country is spending more than 15%[1] of it's GDP on health care and that is *not* acceptable. We can say that spending gave our grandmothers a few years and those few years were precious, but that spending also prevented our nephews and nieces from having a world-class competitive education. For me this is where the public option comes in. The research I have read says we are WAY overpaying for health-care, and the market is failing us here. (The market failures in regards to health care are an entirely discussion apart, but) If that is correct and if we can do it as well, publicly, as the next worst country out there, we are saving GDP (%50 of current HC expenditure) to spend on other things such as education, research, and infrastructure. Also private health insurance cripples our companies, especially small businesses, while other governments are effectively subsidizing theirs to our detriment. Not having public health-care is bad for the economy from what I can tell.
Finally there is the whole aging population thing which may be the biggest issue of all. All of the preceding issues are multipliers for this issue. Much of our current expenditures are on the oldest of our population. It seems humane, but when you look at it, it's obscene how much we are spending on the last few years of our population's lives. At some point we have to accept death. We cannot use every last option to squeak out a few more years months or days, or we will spend ourselves to death as a country and culture, but if it is in our or our family's power to do so, how can we not?
I guess my conclusion is that I think that a universal coverage option would be acceptable and desirable if: It clearly set out limits to coverage, it can be done as well or better than the next worst country out there, and patients are incentivized to chose cheaper options.
As a side note, I think the government should incentivize non-fixed cost health coverage plans in an attempt to eliminate all-you-can-eat plans, and tax private health insurance above the median. We should also invest in cure (and not treatment) research.
I will say that tort reform is important in that defensive medicine is a multiplier for the exploding options problem in that doctors will use many unnecessary test and treatment options to cover their asses to avoid being sued.
The only squishy opinion I have about health coverage is that I do believe that universal coverage is step towards more civilized culture though I don't mean that in a weak sense. I think that not worrying about health coverage allows people to live very different lives, being less concerned about the basics of survival. Being a person who doesn't like being boxed into the uninterrupted resume stream of life, this is very attractive to me, and I think it allows for more "freedom" and allows our civilization to take the next step. But this is probably much less important than any of the practical issues.
1.http://titania.sourceoecd.org/vl=5233072/cl=23/nw=1/rpsv/factbook2009/10/02/01/10-02-01-g1.htm
2.http://titania.sourceoecd.org/vl=5233072/cl=23/nw=1/rpsv/factbook2009/10/02/01/index.htm
3.http://www.federalbudget.com/
So for me it's mostly a practical matter, which is why I am on the fence (but leaning toward supporting some form of public coverage). For me the question is too polarized in that it's mostly just yes or no. The difference between the possible public options is more important to me than the public(and private) vs private question.
There are so many aspects to cover it's difficult to know where to start. But I suppose I would start with the growth of options. As far as I can tell the exploding growth in costs is coming from nothing other than exploding options.
For almost everyone health is near the top of the list on things that are important. For many people it is THE top. So if there is an option, you want it. From the perspective of an investor this is GREAT. It's like selling crack, but legal.
In the past there were fewer options. If you had heart problems you went on a diet that was it. The most you could be responsible for paying was a doctor's visit and hospital stays if you had an attack.
Then came along blood pressure medications. It's your life on the line, so add that cost. Then came along MRI's; add that. Then blood thinners to get by clogs. Add that. Then cholesterol lowering medication. Add that. Do you think there won't be more options soon?
The point is that for most of the issues, these are treatments and not cures (which is another issue completely) so we'll keep buying them. There is hardly a point at which we would refuse treatment, especially if it were free. And the pace of treatment developments is going up, and progress will probably continue to for the next century at least if not forever. As such, health-care being the legal version of crack, demand will continue and so costs will go up. Therefore if we have a public option, it *must* be rationed and an equal standard for care *cannot* exist (without outlawing private health-care). I'm ok with the rationing and un-equal standard of care, but I would be willing to be that many are not.
A related factor that keeps the costs from staying in check is the "tragedy of the commons" issue that comes from all you can eat style health care.
The problem is that we are detached from the costs. There is no deterrent from selecting the most expensive option regardless of the effectiveness. Let me give you an example. Since I am an engineer, I have "good" coverage that has a fixed co-pay. In the past I had some problem with heart-burn. Now I went to the doctor, told them the problem, and he prescribed me some prescription medicine(PPI) that was the most effective on the market. Now as a patient that pays the same no matter what, that's exactly what I want. So I go to the pharmacy, pass the $20 month's supply of Prolisec OTC and head to the counter to pick up my $15 co-pay PPI. From my perspective that's great. I payed less for a more effective drug. Now if I look closely on the paper work I can find out that my prescription PPI actually costs $200 for a months supply! 10 x the OTC option. It's supposedly better, but 10x better? From the perspective of the drug company, this is GREAT. They just got someone to pay 10x for some thing that is only marginally better. But I was disgusted. So the next time I just bought the OTC option even though it was more expensive in the short run. And you know what? It worked just fine. I don't think I need to elaborate the implications of this. This is not an isolated anecdote. You can extrapolate on your own. It's a *huge* problem.
Another big problem is that health "insurance" is not insurance. If it were, half of our problems would suddenly disappear. You get a $1MM policy on let's say cancer. And if you get cancer, boom: it pays out, and there is no question as to what can and can't be covered. This could be offered to everyone who cannot afford other coverage and the costs would be well defined, and we would be incentivized to use the money wisely. But it's not. If an insurance company(especially smaller one) has someone covered who gets a blood cancer there are *millions* of dollars worth of treatment available, and the worst thing is, is that it still probably wont prevent the cancer from killing them. I know it's a harsh thing to say, but a life is *not* priceless. The spending has to stop somewhere.
But that's the point. This country is spending more than 15%[1] of it's GDP on health care and that is *not* acceptable. We can say that spending gave our grandmothers a few years and those few years were precious, but that spending also prevented our nephews and nieces from having a world-class competitive education. For me this is where the public option comes in. The research I have read says we are WAY overpaying for health-care, and the market is failing us here. (The market failures in regards to health care are an entirely discussion apart, but) If that is correct and if we can do it as well, publicly, as the next worst country out there, we are saving GDP (%50 of current HC expenditure) to spend on other things such as education, research, and infrastructure. Also private health insurance cripples our companies, especially small businesses, while other governments are effectively subsidizing theirs to our detriment. Not having public health-care is bad for the economy from what I can tell.
Finally there is the whole aging population thing which may be the biggest issue of all. All of the preceding issues are multipliers for this issue. Much of our current expenditures are on the oldest of our population. It seems humane, but when you look at it, it's obscene how much we are spending on the last few years of our population's lives. At some point we have to accept death. We cannot use every last option to squeak out a few more years months or days, or we will spend ourselves to death as a country and culture, but if it is in our or our family's power to do so, how can we not?
I guess my conclusion is that I think that a universal coverage option would be acceptable and desirable if: It clearly set out limits to coverage, it can be done as well or better than the next worst country out there, and patients are incentivized to chose cheaper options.
As a side note, I think the government should incentivize non-fixed cost health coverage plans in an attempt to eliminate all-you-can-eat plans, and tax private health insurance above the median. We should also invest in cure (and not treatment) research.
I will say that tort reform is important in that defensive medicine is a multiplier for the exploding options problem in that doctors will use many unnecessary test and treatment options to cover their asses to avoid being sued.
The only squishy opinion I have about health coverage is that I do believe that universal coverage is step towards more civilized culture though I don't mean that in a weak sense. I think that not worrying about health coverage allows people to live very different lives, being less concerned about the basics of survival. Being a person who doesn't like being boxed into the uninterrupted resume stream of life, this is very attractive to me, and I think it allows for more "freedom" and allows our civilization to take the next step. But this is probably much less important than any of the practical issues.
1.http://titania.sourceoecd.org/vl=5233072/cl=23/nw=1/rpsv/factbook2009/10/02/01/10-02-01-g1.htm
2.http://titania.sourceoecd.org/vl=5233072/cl=23/nw=1/rpsv/factbook2009/10/02/01/index.htm
3.http://www.federalbudget.com/
Andy, I think that was very well written and I appreciate it.
ReplyDeleteI would always want to have private health insurance, however. I go to the doctor a lot and I believe the medications I take would probably not always be covered under public health care and I definitely cannot afford them without insurance. I feel like it should be my choice whether to take brand name or generic (although I always get generic). I also feel like if we had public healthcare, it could become communist-like, where doctor's pay would be more regulated so that doctors would be getting paid relatively the same so they don't do a better job than the next one because they don't have to. That would probably have to be the next step if public health care was the only option. Then people wouldn't want to put in all the work it takes to become a doctor, because there's no monetary incentive. Wasn't our country built on capitalism and the american dream of working hard to get ahead? I don't make a lot of money right now and my health insurance isn't the best, but I like to know that as I move up, I'll make more money and be able to afford better healthcare. Medicaid is already available for those who can't afford healthcare, that's why it's there, you know? Maybe they should just wident the scope of criteria one must meet to be eligible.
I don't usually like to get involved in our family's "discussions" because they can become mean-spirited, but I don't feel like your blog came across that way at all and I really appreciate your opinions.
Miss you cuz!
Rosanna
Andy, where I think you've got this wrong is this: "For almost everyone health is near the top of the list on things that are important. For many people it is THE top. So if there is an option, you want it. From the perspective of an investor this is GREAT. It's like selling crack, but legal."
ReplyDeleteI would rewrite this as follows: Most Americans say that health is important when asked in a survey or the like. However, there's a huge chasm between what people claim on surveys, and how they actually behave on a day-to-day basis. This chasm is where many health care costs originate.
While America's current addiction to big pharma can be explained rationally in the case where disease is ideopathic, inherited, or congenital, our reliance on all manner of blood pressure, Type 2 diabetes, and anti-depressant medications cannot. That is, there is a clear and large role that lifestyle factors such as diet, exercise, and work/life balance play here in concert.
I have yet to see a doctor who encourages behavior changes over medication. I myself ate, drank, and laid around for years without my doctor really suggesting otherwise once. And she's teaching medicine at Pitt. What do you think the students do? I would have easily been on target to have a heart attack by 40 (like my cousin) if I hadn't taken steps at age 38 to eat right, exercise, lose weight, and reduce stress.
While I am hopeful that the government acts to protect Americans who can't afford proper insurance or health care, I still believe the single biggest impact that anyone can have on health care is to provoke healthy lifestyle changes in all Americans. The kind of counseling that requires is neither easy, nor cheap, but the potential gains over the long term are much larger than anything else I can imagine short of a cure for cancer.
-dave
@Rosanna(BeautyJunkie):
ReplyDeleteIt seems to me that your concerns surround the hypothetical situation where public health-care was the only option. In that hypothetical I would completely agree with you. Are you worried about that?
I certainly believe that private health-care should *always* be available. That is a pretty widely held view, and there is 0 chance that anything that prevented private coverage would pass and there aren't even any bills in congress that suggest that. As such those paying for private care would not be restricted from whatever choice that was provided to them under their plan.
I think this argument also deals with your concern about pay regulation though I must say that under private health insurance, as far as I know there is very little differentiation of payment to doctors. If they accept a certain insurance plan, I'm pretty sure they have to take that plan's standard rate of pay, so that currently is, and will continue to be an issue even under private plans.
Once we agree that private plans would still be available, nothing prevents anyone from getting better care as they move up in the world.
Expanding Medicaid might be a valid option, but if costs continue to raise as they are expected to, small businesses(at the very least) are not going to be able to afford to cover their employees, and we would have many fewer small businesses, and/or lots of their employees who didn't have coverage.
In any case, something has to give. The current situation cannot continue, and I have yet to hear another solution. Have you? (I could go on as to why I don't think the free-market has solved this issue on it's own, as we might have expected, but I think it's related to the "crack"-like demand for health care, and also another discussion entirely.)
@Dave:
ReplyDeleteI think the difference is between health-care, and being healthy. For some reason health-care is more important to Americans than being healthy, and that is were the disconnect lies.
Part of that issue(and only part) is connected to the detached costs problem I talked about. Where our decisions about taking care of ourselves are not connected to the price we pay. Pharmaceutical treatment has to have a cost so that staying healthy is "worth the effort"
I agree that provoking "healthy lifestyle changes" is very important, but it's one level too far up the abstraction to compare to the current proposals. The question is *how* do you provoke "healthy lifestyle changes?". And I'm not saying I believe it, but perhaps the shared costs of the public's poor lifestyle choices would make that issue more culturally relevant to our country and provide the impetus for the change.
I don't know.