How Should Americans' Health Care be Paid For?

[samclem]

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Originally Posted by Independent It seems to me that this is a great deal different from your earlier post Quote: I had in mind the type of things we associate with a competitive marketplace: Price transparency, many sellers, an incentive for buyers to seek lower prices, an incentive for sellers to attract buyers with better value (better service, lower prices), solid information for consumers regarding the relative quality of the services provided by various sellers, etc. Texas Blue Cross didn't use any of these to get its better results, just one big insurer that puts a lid on treatments that it believes are excessive.

You're right, Blue Cross of Texas didn't need any of that stuff to reduce expenses. While I was specifically thinking about consumer's direct purchase of medical services when I mentioned those "market attributes", the same thing applies to the (more fundamental and promising) scenario of consumers making choices about their health care insurer. If all those same attributes applied to the insurance market, we'd see lower costs and better care. As it is now (and as it remain under the new legislation--maybe) folks younger than 65 have little choice in their insurer, because their employer buys their insurance. I'm sure the employer's interests are not the same as the patient's interests. The choices/impact of market forces further decline when we reach 65. And then we have McAllens, or the wheelchairs that can't be purchased but must be rented at higher cost, etc.

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Originally Posted by Independent So Medicare should be able to do the same thing. The question is why not?

Blue Cross of Texas is owned by Health Care Service Corporation. It is a private company interested in making a profit, and I'm sure they care about reducing waste. Medicare, on the other hand . . .

Another thing: There are some clear advantages to keeping the government in the pure "regulate and insure a fair marketplace" role. When they start providing services to citizens directly, that role is compromised.

[GregLee]

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Originally Posted by samclem There was no indication of a difference in health outcomes.

Was there any comparison of health outcomes at all? I must have missed that.

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So, what's your explanation for the higher costs in McAllen?

I have no opinion about that. I'm just expressing doubt that this comparison between McAllen and El Paso counties can lead us to the conclusion that extending the Medicare system is not our best alternative.

[GregLee]

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Originally Posted by samclem As it is now (and as it remain under the new legislation--maybe) folks younger than 65 have little choice in their insurer, because their employer buys their insurance.

They may have some choice. Before I retired last summer, the state of Hawaii gave me a choice among several insurance plans, including at least a Kaiser Foundation HMO and two variants of a PPO, charging me different premiums and offering different benefits.

[Texas Proud]

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Originally Posted by GregLee They may have some choice. Before I retired last summer, the state of Hawaii gave me a choice among several insurance plans, including at least a Kaiser Foundation HMO and two variants of a PPO, charging me different premiums and offering different benefits.

You probably have some choice if you are in a mega.... I think we had 6 at my last mega...

At my current company... we have one... it is expensive... it is not that great... but the company chips in $3500 toward your $5000 deductible...


There were a couple of our younger employees who opted to buy insurance for their spouse in the open market... even without the tax savings it is cheaper....

[Independent]

Quote:

Originally Posted by samclem You're right, Blue Cross of Texas didn't need any of that stuff to reduce expenses. While I was specifically thinking about consumer's direct purchase of medical services when I mentioned those "market attributes", the same thing applies to the (more fundamental and promising) scenario of consumers making choices about their health care insurer. If all those same attributes applied to the insurance market, we'd see lower costs and better care. As it is now (and as it remain under the new legislation--maybe) folks younger than 65 have little choice in their insurer, because their employer buys their insurance. I'm sure the employer's interests are not the same as the patient's interests. The choices/impact of market forces further decline when we reach 65. And then we have McAllens, or the wheelchairs that can't be purchased but must be rented at higher cost, etc. Blue Cross of Texas is owned by Health Care Service Corporation. It is a private company interested in making a profit, and I'm sure they care about reducing waste. Medicare, on the other hand . . . Another thing: There are some clear advantages to keeping the government in the pure "regulate and insure a fair marketplace" role. When they start providing services to citizens directly, that role is compromised.

I believe that all the things you listed for markets (price transparency, multiple providers, etc.) already exist in the group health insurance market. My former employer looks at various providers and tries to get the best mix of price and quality. I think the interests of the company and the employees are pretty well aligned. The people assembling the info in HR are looking for the best combination of rates and employee satisfaction. They know their families will be using the group plan that gets chosen, and all their co-workers will be using it.

My comment on Medicare vs. Blue Cross was that much of the difference in incentives could be eliminated with some transparency in government. If voters could see the actual dollars they are spending on Medicare, I think we'd see much more voter support for controlling Medicare costs. "Reducing taxes" could be a motivation as strong as "increasing profits".

[samclem]

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Originally Posted by Independent If voters could see the actual dollars they are spending on Medicare, I think we'd see much more voter support for controlling Medicare costs. "Reducing taxes" could be a motivation as strong as "increasing profits".

Bringing more focus on the problem of Medicare taxes and costs would be good. But the direct and rapid cost limiting features of a market will be more effective than actions dependent on political or regulatory action. People are more motivated to act by things that immediately impact them individually than they are to act about things that might later eventually impact them because they are part of a larger group.

Medical Insurance as Groceries:

Option A: A government grocery store system, with prices set by the government. People can go online and see why bread costs $6 per loaf. The mechanism to reduce costs is that we hope people write their legislators and force action when they think bread prices are too high, quality is too low, bread is unavailable, there's a 5 month wait for coffee, etc. These people will be motivated by hopes that they may eventually enjoy lower grocery prices and better bread.

Option B: There are many independent grocery stores. People buy the bread that they believe is the best value, though all the bread has to pass government standards for safety and content labeling.

I'm far more confident that Option B will keep bread prices in check, that bread will be more readily available and of higher quality, and that there will be less political wrangling to bestow products on favored constituencies at the expense of others.

[M Paquette]

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Originally Posted by samclem Medical Insurance as Groceries: Option A: A government grocery store system, with prices set by the government. People can go online and see why bread costs $6 per loaf. The mechanism to reduce costs is that we hope people write their legislators and force action when they think bread prices are too high, quality is too low, bread is unavailable, there's a 5 month wait for coffee, etc. These people will be motivated by hopes that they may eventually enjoy lower grocery prices and better bread. Option B: There are many independent grocery stores. People buy the bread that they believe is the best value, though all the bread has to pass government standards for safety and content labeling. I'm far more confident that Option B will keep bread prices in check, that bread will be more readily available and of higher quality, and that there will be less political wrangling to bestow products on favored constituencies at the expense of others.

Anything beats the current state of affairs:

Option C: There are many grocery stores, but in each of them the prices are not posted, or don't reflect the per-raisin fee on raisin bread. The clerk insists that you give him a blank check for the bread. You'll find out how much it cost on your next bank statement. The price you pay varies wildly, depending on which club card you have, and may be ten times higher without a club card.

[samclem]

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Originally Posted by M Paquette Anything beats the current state of affairs: Option C: There are many grocery stores, but in each of them the prices are not posted, or don't reflect the per-raisin fee on raisin bread. The clerk insists that you give him a blank check for the bread. You'll find out how much it cost on your next bank statement. The price you pay varies wildly, depending on which club card you have, and may be ten times higher without a club card.

Yes. And your employer will tell you which stores you can use, but he pays for most of your groceries. But his payment is ultimately of no benefit to you, because if he didn't pay for the groceries you'd get cash instead from him--and you could use it to shop wherever you want and buy bread without those d*mn raisins!

[M Paquette]

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Originally Posted by samclem Yes. And your employer will tell you which stores you can use, but he pays for most of your groceries. But his payment is ultimately of no benefit to you, because if he didn't pay for the groceries you'd get cash instead from him--and you could use it to shop wherever you want and buy bread without those d*mn raisins!

[Independent]

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Originally Posted by samclem Bringing more focus on the problem of Medicare taxes and costs would be good. But the direct and rapid cost limiting features of a market will be more effective than actions dependent on political or regulatory action. People are more motivated to act by things that immediately impact them individually than they are to act about things that might later eventually impact them because they are part of a larger group. Medical Insurance as Groceries: Option A: A government grocery store system, with prices set by the government. People can go online and see why bread costs $6 per loaf. The mechanism to reduce costs is that we hope people write their legislators and force action when they think bread prices are too high, quality is too low, bread is unavailable, there's a 5 month wait for coffee, etc. These people will be motivated by hopes that they may eventually enjoy lower grocery prices and better bread. Option B: There are many independent grocery stores. People buy the bread that they believe is the best value, though all the bread has to pass government standards for safety and content labeling. I'm far more confident that Option B will keep bread prices in check, that bread will be more readily available and of higher quality, and that there will be less political wrangling to bestow products on favored constituencies at the expense of others.

So you're saying we should eliminate all health insurance so that people have to the cost of medical care directly?
Or, are you saying we should eliminate group insurance so that everyone has to pay the insurance premium out of their own pocket?

[samclem]

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Originally Posted by Independent So you're saying we should eliminate all health insurance so that people have to the cost of medical care directly? Or, are you saying we should eliminate group insurance so that everyone has to pay the insurance premium out of their own pocket?

I don't think I'm following you, but then again my "grocery store" analogy isn't very precise.

People should be allowed to buy insurance. I think it works much better if they buy the policy directly in a controlled, regulated marketplace where they can choose their insurance provider. (Whether the employer cuts the check or the individual does, the individual is the one paying. Without doubt. This money is already computed into the market price of his compensation.)

This insurance will be lower in cost if various insurers compete with each other for this business, just as businesses compete with each other in every other part of our economy, resulting in lower costs and higher quality. We can accomplish ancillary social goals through government subsidies for the purchase of qualifying policies, through restrictions on underwriting ("all sellers must accept all applicants at the same price" or some variant perhaps based only on age, etc).

Some insurers might use a capitated or HMO model, some might reimburse providers on a fee-for-service basis, etc. People will vote with their dollars (and the poor will have some dollars provided by the rest of us).

We'd have to have a national discussion about what goes into this "basic" insurance. Mandatory co-pay levels reduce costs for everyone. Free immunizations and some checkups reduce costs for everyone. Since the level pricing forces all of us to subsidize everyone, we'll probably decide that private hospital rooms and expensive chemo for 90YO patients aren't something everyone should be forced to pay for, but that those who want it can buy their own individual policies at market rates.

[ERD50]

RE:

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Originally Posted by M Paquette the lobbyists working to block the creation of the OIG Medicare Inspector and Auditor positions.

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Originally Posted by ERD50 I guess I may need to re-read the Constitution, but I was unaware that lobbyists had the authority to either create or block the creation of those positions. I thought that authority was ultimately with Congress.

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Originally Posted by M Paquette It's remarkably simple, actually. The 'authority' is with Congress, as the designated sock puppets. "So, Congressman, you like doze big checks we keeps writing youse? You wanna keep getting doze checks? Here's what ya gotta do..."

Oh I'm well aware that is how it 'works'. It just grates me when it appears the 'blame' is put on the lobbyists alone. They are powerless if our reps 'just say no'.

-ERD50

[donheff]

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Originally Posted by ERD50 Oh I'm well aware that is how it 'works'. It just grates me when it appears the 'blame' is put on the lobbyists alone. They are powerless if our reps 'just say no'. -ERD50

My brother has been a lobbyist for more than 40 years and has drafted many pieces of legislation. It was greatly to his clients' advantage that he do so but he was never putting something over on someone. The staff he worked with fully understood what he was doing and always had the final word. It saved them the time and hassle of drafting something a member or chairman had already agreed should be included or (more commonly) was something they agreed he could "write it up so they could take a look."

[ERD50]

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Originally Posted by donheff My brother has been a lobbyist for more than 40 years and has drafted many pieces of legislation. It was greatly to his clients' advantage that he do so but he was never putting something over on someone. The staff he worked with fully understood what he was doing and always had the final word. It saved them the time and hassle of drafting something a member or chairman had already agreed should be included or (more commonly) was something they agreed he could "write it up so they could take a look."

Yes, some lobbying efforts are a positive. A staff scientist I worked with at MegaCorp was interfacing with lobbyists on an issue, there was some legislation that was going to get passed one way or the other, and he was getting info to the lobbyist on how we could accomplish the goals of the legislation (reduce potential harmful materials in our products), but lessen the financial, bureaucratic and quality impact on our MegaCorp and our products (customers really, as all suppliers would be held to these standards, so the cost would be passed onto the customer).

Of course, anything we provided should be taken with a major grain of salt, as we had a built in conflict of interest. But it makes sense for them to listen to input from those experts who are affected by the legislation. It wasn't "don't do this", it was " we think option B is better than option A for all involved, and the end result is the same".

So as you say, the legislator's staff always had the final word - so all I'm saying is hold them accountable, not the lobbyists. We agree, right?

-ERD50

[frank]

I do not understand the obama healthcare plan. it is too big and too complicated for the average person. I do know that the plan was enacted and that I have seen no change in health care coverage and that my healthcare insurance continues to rise at an alarming rate. so what is the healthcare plan supposed to do? healthcare programs are of no use to the public if we can't afford to buy them. the older you get the higher the premium so hopefully they can starve you out and won't have to pay when and if the time comes that you have catastrophic need.

[donheff]

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Originally Posted by ERD50 So as you say, the legislator's staff always had the final word - so all I'm saying is hold them accountable, not the lobbyists. We agree, right? -ERD50

Yes, we agree on this. If we got going on the affect of money being dumped into campaigns though...

[Independent]

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Originally Posted by samclem I don't think I'm following you, but then again my "grocery store" analogy isn't very precise. People should be allowed to buy insurance. I think it works much better if they buy the policy directly in a controlled, regulated marketplace where they can choose their insurance provider. (Whether the employer cuts the check or the individual does, the individual is the one paying. Without doubt. This money is already computed into the market price of his compensation.) This insurance will be lower in cost if various insurers compete with each other for this business, just as businesses compete with each other in every other part of our economy, resulting in lower costs and higher quality. We can accomplish ancillary social goals through government subsidies for the purchase of qualifying policies, through restrictions on underwriting ("all sellers must accept all applicants at the same price" or some variant perhaps based only on age, etc). Some insurers might use a capitated or HMO model, some might reimburse providers on a fee-for-service basis, etc. People will vote with their dollars (and the poor will have some dollars provided by the rest of us). We'd have to have a national discussion about what goes into this "basic" insurance. Mandatory co-pay levels reduce costs for everyone. Free immunizations and some checkups reduce costs for everyone. Since the level pricing forces all of us to subsidize everyone, we'll probably decide that private hospital rooms and expensive chemo for 90YO patients aren't something everyone should be forced to pay for, but that those who want it can buy their own individual policies at market rates.

Okay, you're saying eliminate employer subsidies, essentially my second choice. I'm fine with that idea (I'd consistently said we should eliminate the tax preference for employer paid health insurance).

But, I don't see how "all sellers must accept all applicants at the same price" would work. Some people are going to avoid paying premiums until they know they're sick. If they have an accident, emergency rooms will treat them. Others will buy high-deductible, restricted benefit plans while they're healthy, then switch to low deductible, high benefit plans when they get sick.

This forces insurers to raise premiums to cover anti-selection, higher premiums increase the incentive to defer buying, which sets off another round of anti-selection, etc. (The jargon for this is "assessment spiral".) I see a disaster.

[GregLee]

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Originally Posted by frank I do know that the plan was enacted and that I have seen no change in health care coverage and that my healthcare insurance continues to rise at an alarming rate. so what is the healthcare plan supposed to do? healthcare programs are of no use to the public if we can't afford to buy them.

Who is "we"? You already had healthcare, probably. My idea of the new plan's main point is that it will achieve universal coverage. It's not for you and the others on this board. Yes, when the Dems were trying to increase support, the claim was made that the cost of healthcare would go down, but that was just politicians' lies. We obviously can't extend the system to many others, maintain quality, and magically reduce the cost. Somebody has to pay. If not you, who would it be?

[samclem]

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Originally Posted by Independent But, I don't see how "all sellers must accept all applicants at the same price" would work. Some people are going to avoid paying premiums until they know they're sick. If they have an accident, emergency rooms will treat them. Others will buy high-deductible, restricted benefit plans while they're healthy, then switch to low deductible, high benefit plans when they get sick. This forces insurers to raise premiums to cover anti-selection, higher premiums increase the incentive to defer buying, which sets off another round of anti-selection, etc. (The jargon for this is "assessment spiral".) I see a disaster.

Right. Lets first recognize that all these "challenges" occur because we, as a society, don't want to live with the results of an entirely free market (where insurers would only sell policies to people after a medical exam and assessment of risk, etc). We want everyone, sick and healthy, poor and rich, to have basic medical care. So, we need to interfere to achieve these results. That interference could take many forms. There are ways to spread the high costs of providing basic insurance to the sick and elderly (by eliminating all physical exams/medical history reviews and making everyone pay the same thing. There are other ways, too.). There are ways to prevent people from getting insurance at the last minute or after they need it (the present law does this by making insurance mandatory, with fines for those who don't buy it. This may be unconstitutional, we'll see. There are plenty of other ways to accomplish this with waiting periods, mandatory durations before switching insurers, etc). All of this is do-able, and necessary if we want to achieve some of the social objectives that an entirely unfettered free market fails to achieve. If we do it right, we get many of the benefits of a market based system (competition, with attendant lower costs and higher quality). If, instead, we go with a command-driven centralized government model, I think we all know what we'll get.

[Texas Proud]

Sam... good points there...


I was thinking about the problem of people buying cheap policies that have high deductibles and then switching once they have major problem... This can be fixed by not paying for the pre-existing condition at the new level, but at the old policy level... sure, lots of small print etc. and maybe it can be abused... but I think that having a waiting period is not all bad...

Now, if you are healthy and switch... then if something happens you are fully covered.. again, gvmt regs and all the other problems here... but it is a thought...