The debate in Washington today is focused on whether Government needs to take control of healthcare. From listening to our politicians you would think that individuals can’t manage their own healthcare choices. But I would argue that we have not been given the chance to make our own healthcare decisions.
Today’s health insurance system is primarily an employer provided system where the individual is removed from choices over his or her healthcare decisions. This employer provided system reduces competition within the health insurance market which allows the cost of medical care to increase year after year. If people do not have any control over the amount of money that they pay for health insurance or medical procedures, there is no free market system to restrain inflation. In other words, people need to choose whether they are willing to pay for a procedure at the stated price. If demand at current prices is too low, prices will fall. If demand is too high at current prices, then prices will go up.
Put The Individual Back Into Healthcare
I am for healthcare reform, but I want reform that empowers individuals rather than the government. There are free market solutions to our healthcare problems. We need government to pave the way for these free market solutions.
As you know, I am a strong believer in the free market. Millions of individuals making millions of independent decisions and purchases is the best way to reduce the cost of health insurance. If people have no economic decision to make when deciding whether to undergo a medical procedure or test, there is no restraint on demand. We need a to create a system that allows individuals to make these types of choices. For most goods in our economy, the price is set by the market which is comprised of the millions of individuals making decisions on whether to purchase those goods that their stated prices. If people decide that goods cost too much, they will not buy them and the price will drop until demand meets the supply. We need the healthcare market to operate under that same free market system.
In order to do this we need our government to enact laws that empower the individual, not empower government. Government has not done a good job managing the cost of Medicare, so why do we think it will be able to manage the cost of the entire healthcare industry? The truth is that it will not be able to control these costs and therefore it will either have to raise taxes or dictate what medical treatments people can get.
However, there are other options.
Here are 7 ways to reform healthcare that empower individuals:
- Tax Credits For Individuals Purchasing Health Insurance – Most Americans get their health insurance through their employers and this benefit is not taxed by the Federal government. However, if people purchase health insurance on their own, they do not get a tax break. Let’s encourage them to buy insurance by giving them the same benefits as those getting health insurance through their employers.
- Move Away From The Employer Provided Health Insurance Model – In order to contain the rising cost of healthcare, we need people to make financial decisions concerning their health. One of the best ways to do that is to move away from the employer provided health insurance model. This will allow individuals to decide exactly what type of health insurance plan they should buy. For example, I know that I will never use a chiropractor, but my health insurance policy pays for me to see one. If I could choose a policy that does not include chiropractor coverage, my insurance premiums would be lower.
- Allow Individuals to Use Health Savings Accounts to Purchase Health Insurance – This reform provides a tax benefit like reform #1 above. If individuals can use pre-tax dollars to buy health insurance, more people will be able to afford it.
- Allow Individuals to Purchase Health Insurance from Across State Lines – Did you ever wonder why there was a Pennsylvania Blue Cross and Blue Shield and a Delaware Blue Cross and Blue Shield? It is because people can’t purchase health insurance policies from entities in other states. Therefore, individuals are limited to the health insurance companies located in their state. We could immediately increase the competition in the health insurance market by allowing individuals to purchase policies across state lines.
- Medical Malpractice Litigation Reform – I am not one who believes that people should waive their rights to pain and suffering damages and lost wages in cases of medical malpractice. However, we do need to reform medical malpractice litigation so that doctors can stop practicing defensive medicine. Ordering unnecessary tests or procedures costs Americans a ton of money. Doctors order these tests and procedures to avoid medical malpractice claims. We need medical malpractice litigation reform that discourages the overuse of medical tests and procedures.
- Don’t Require Health Insurance Plans To Cover Specific Benefits – Government today requires that health insurance companies offer specific benefits as part of their policies. These mandated benefits increase the cost of everyone’s health insurance premiums even if the purchaser has no intention of using such mandated benefit. Let’s allow health insurance companies to design insurance policies based on market requirements, not government mandates.
- Convert Medicaid and Medicare Spending Into Vouchers For Lower Cost Private Health Insurance – Most Americans are happy with their insurance plans and medical providers, so why don’t we help the poorest in our nation purchase private health insurance policies? The Medicaid and Medicare programs have a huge overhead cost associated with the bureaucracies needed for these programs. Let’s privatize this system by giving money to the poor and elderly to purchase private insurance plans instead of government controlled plans.
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{ 10 comments… read them below or add one }
What I have found very interesting in this debate is that the loudest screaming is not being done by people in the medical profession.
Having worked in the ophthalmology field and run large medical practices I can assure you that a tremendous amount of time and resources are wasted playing the medical insurance game, and that’s exactly what it is.
I just spent two years living in the UK and covered by the National Health Service. Despite the hype and scare stories you might hear brought up about government run health care, it ran well overall and there was never a bill. Both Canada and France have well running systems as well.
What is for certain is that in the greatest nation on earth we still have not been able to find a way to provide for the medical care of people in this country. Care today is rationed and people die due to insurance company discrimination.
I think the most ironic statement that I’ve heard is that government run health care should be avoided but the government has a tremendous track record of delivering healthcare already. And if you ask senior citizens if they would like to give up their government run insurance, Medicare, I think you will find the vast majority do not.
My speciality these days is helping people get better with their finances. And year after year I see weekly, if not daily, examples of people that have had their financial lives ruined due to one pre-existing, non-covered, unexpected illness, or no affordable insurance.
Now that’s a tragedy.
Steve
@Steve – As we discussed recently on Twitter, I’m not sure that universal government-run healthcare will work here in the U.S.
Medicare does seem to work, but that is only for a segment of our population. According to what I could find, there are less than 50 million Americans enrolled in Medicare which is only about one-sixth of the population. What is going to happen when that number explodes to 300 million plus? It seems to me that then it becomes like the IRS. Do we really want an agency like the IRS running our health care?
You cite the U.K., Canada and France as examples of where this works, but their populations aren’t any match for ours. The U.K. and France boast about 60 million and Canada only has around 35 million. The population of California alone exceeds that of Canada.
A national system in the U.S. would be HUGE and would seem to me to be very difficult to manage. Also, the costs of such a system would be immense. Working Americans are going to pay for such a system. No thanks!
I’m all for health care reform to reduce the cost and make it more affordable for more Americans, but it would take a lot of convincing to get me to concede that a national health care system is the answer.
I like ideas like some of those mentioned above to empower individuals instead of the government to make their own health care choices.
Isn’t this what freedom is all about? Didn’t our forefathers come here to escape from government mandates and bureaucracy? Why recreate systems similar to those instituted by countries that we revolted against to win our freedom?
I don’t think it makes financial or practical sense to pursue such things.
This article may be of interest: http://www.oftwominds.com/blogjuly09/healthcare07-09.html
I also recommend that Steve take a look at it as well.
I have not heard any arguments or presentations that suggested that all medical care in the U.S. should be switched to a government run program. Dumping an entire population into such a program at once would be, ah, problematic.
But that leaves lots of room for an insurance carrier that is run by the government to be a provider for people that are either excluded from health care by current insurance companies, opt-in to the government program, or who can’t afford current insurance but are not poor enough for Medicaid. In my medical days I’ve actually had patients that would go broke to qualify for Medicaid just to get access to some care.
People that are happy with their current health insurance system could stick with what they’ve got. No problem. But having been in the field, lived overseas and now living back in the U.S. I can see a tremendous advantage of providing such an option for people that want or need it.
In NC where I am now I happen to be close to major medical care centers but the option for health insurance is more limited here than in the DC area where I used to live. Back in DC I was a long standing patient in a managed care HMO and my doctor was always focused on delivering the best health care in a managed system.
In NC now there is little competition among health insurance providers, the rates are huge, and my current medical practice is a large group but my doctors are more focused on billing me for multiple procedures than providing the same quality of care that I got before. These days, if I go to my doctor and talk about more than one issue I get billed for two office visits. They are simply playing the insurance game with separate claims for individual CPT codes.
Since I have major insurance most of it gets written off but for the people that are not insured either by exclusion or cost, I can’t imagine how they could to afford to get quality care today. And therein lies a major problem with the current system.
People without insurance are routinely charged much more for the same procedure or care than people with medical insurance. Because they can’t afford insurance they are penalized and setup for bankruptcy.
The bottom line for me is that we live in the greatest country in the world and can’t see to provide basic access to affordable health care for all citizens. That, is shameful, especially when an option is available to do so.
So maybe it would help to look at the issue from a different POV. How would you suggest that we provide access to medical care for people that either have a pre-existing condition and/or excluded by insurance companies or can’t afford the high cost of health insurance?
Just my two cents.
Steve
I find it funny that no one is actually discussing the options that I suggested. There are plenty of things that can be done to our current system to would bring meaningful changes to the health insurance market in the United States.
With respect to poor people getting good medical care in this country, I do not think that we actually have a problem. I rarely hear about people not getting medical care. The problem that I hear is that they can’t afford the medical bill that follows the care.
There are lots of programs already to help poor people pay their doctor bills. Medicaid is one such program. But there are also programs run by almost every hospital in the nation.
Most hospitals in America are non-for-profit entities that set asides charitable funds every year to help poor people pay for their hospital visits. These charitable programs cover millions of people nationwide whenever people have trouble paying their bills.
With respect to us living in the greatest country in the world I couldn’t agree more. My concern is that government run health care will hurt the quality of the medical care most Americans receive today. The government is not known for running things very well, e.g. the United States Post Office does not come close to running at the same efficiency as FedEx.
I am not saying that the status quo is good enough. I want reform. But, we don’t need a government takeover of health care. I don’t want a Cash For Kidneys Program initiated when money is needed for the government run health centers. I don’t want a Cash for Colonoscopies Program when the government decides that everyone must go for a colonoscopy.
The bottom line for me is that I am not convinced that the current government-option that is being proposed will either lower the cost of health insurance or raise the quality of medical care. If the program can’t do this, then there is no reason to pass this legislation.
Of the options you suggested I think option 4 is the most attractive to increase competition among providers. Hell, if that was allowed I enroll in a managed care system, tomorrow.
What I find curious is that many of the conversations about health care reform wind up in heated political debates by people who have never run medical practices or know the problems of the current system on a first-hand basis.
I would invite anyone passionate about this topic and who wants to learn more about the major problems facing the American healthcare system today to either go interview a local medical practice administrator or a bankruptcy lawyer. Both see the consequences. One on the front-end, one on the back.
I’m not sure I understand how a proposed government run healthcare system would change the care that people are getting today if the people that it is targeted at are the ones currently not being served by the current system.
As far as people not getting care or access to care, while you might not be aware of it, it has been a chronic problem for a long time. I routinely had patients that either would opt not to take medications or not return for the care they needed due to cost.
Not sure if you saw it on the news or not but http://www.ramusa.org/ recently held a free clinic in LA and the director was quoted as saying that even in three months of seeing 1,000 patients each and every day they would not be able to meet demand. See also http://www.associatedcontent.com/article/2076387/remote_area_medical_keeps_hope_alive.html?cat=5
Steve
Steve,
Here are a few thoughts in response to your most recent comment:
1. I too think that allowing people to buy health insurance across state lines would dramatically increase competition. This would be great for lowering the price of health insurance.
2. While I know that you comment about experience with these types of issues was not directed at me, I thought that I better explain my experience.
I do have first hand experience with these issues. One, I am an attorney. While not specifically a bankruptcy attorney, I do have a lot of experience with these types of issues. Two, my sister is manages collections for a local hospital. She deals with these issues every day.
No one is turned down from
3. You state, “I’m not sure I understand how a proposed government run healthcare system would change the care that people are getting today if the people that it is targeted at are the ones currently not being served by the current system.”
The fear is that this “government-option” will eventually drive out competition within the insurance market and then everyone will have to sign up for the “government-option”. If more people just need assistance, why don’t we address that problem.
4. You mention the Ramusa study. I think that this highlights the problem that most fear. If no one has to pay for health care (except for the middle class and rich through taxes), demand will be so high that the government will have to ration care for everyone. That is the fear, and it is a very real fear.
Glad to hear of your experience.
I’m seeing more doctors that are suing for unpaid bills. While it is true that some care is delivered in community hospitals for free, not all care for uninsured people is. While some hospitals may simply write it off, more and more are sending it out to collections.
Please help me to understand your position better. Arre you saying that if a government run option existed the majority of people would opt for a less expensive health plan and dump their current health insurance companies?
Isn’t that somewhat of a Walmart argument that because Walmart exists that other providers of retail goods would be put out of business? I think there is wide room for options and choices.
If anything, competition is desperately needed. What incentive is their today to fight down prices? In my NC market there are few options other than the very expensive BCBS insurance, already. If a government offered health insurance system can provide a level of care that is affordable for more people and fills a void that is not being met, isn’t that simply a good thing?
Steve
Steve remarked, “In my NC market there are few options other than the very expensive BCBS insurance, already. If a government offered health insurance system can provide a level of care that is affordable for more people and fills a void that is not being met, isn’t that simply a good thing?”
If your argument is true and the current options are prohibitively expensive, wouldn’t that drive most people to the government option? If so, then wouldn’t we by default have basically a single-payer system or universal government-run health care or close to it?
It seems that very quickly the numbers of those enrolled in the government “option” would skyrocket. Therefore, I think my original point about the issues and cost surrounding this type of system in the U.S. are still valid and concerning.
I know this has been said before, but the government can’t even run the “Cash for Clunkers” program successfully. Check out this article about how hundreds of dealers in NY are pulling out of the program because they aren’t getting their money. Couldn’t a similar reimbursement issue cause doctors and hospitals a lot of cash flow trouble?
Also, Walmart has put a lot of mom and pop shops out of business over the years. They have reduced our buying choices. I’m glad you brought them up because they are exactly what I fear will happen. Consumers will flock to the cheaper option that will ultimately overburden the system and create a nightmare that costs a fortune in tax dollars.
Let’s reform health care and reduce the cost, but why does the government have to run it and pay for it?
Here’s one problem with health care insurance today..
http://www.wgpeters.com/home/wordpress/?p=10
Bill