Problem #12: US Health Insurance Reform
Lest anyone think that the Patient Protection and Affordable Care Act- aka ObamaCare- is the final answer to health care reform in the US, I would strongly beg to differ. There's a central problem to the US health care system: it's a for-profit system.
This should not be interpreted as meaning that all for-profit systems are wrong; far from it. To paraphrase Winston Churchill, capitalism is the worst economic system... except for all the other ones. From a very, very cynical perspective, here's how capitalism works for society:
- Mr. X decides that he wants to make money (and, yes, this could be Mrs. X or Ms. X, etc.).
- Mr. X decides that a good way to make money is by making and selling widgets. Popular things, widgets, even if nobody actually knows that they are.
- While Mr. X can make a little money by making and selling his own widgets, he decides that he could make still more money by getting other people to make them for him. Therefore, he hires employees to make more widgets. He also invests in a factory in which to make the widgets.
- In order to attract good widget makers, Mr. X has to pay them decently. He also decides to give his widget makers fringe benefits, such as health insurance coverage.
- In the end, society as a whole benefits from high-quality widgets, whatever they are, plus you have people who are paid to make them.
All good, right? Unfortunately, this whole system boils down to one motivation: Mr. X wants to make money. If he decided that it would be more profitable to burn down the factory and collect insurance money, well, he'd have a strong financial motive to do so. That's the main problem with the profit motive: profit drives out all other motivations. In this case- and in most cases- the side effects of the creation of profit are good for society. Unfortunately, when you apply this to health care, you wind up with a health care system in which healthy people are a side effect. You may be braver than I, but the idea of a health care system where health people aren't the intended goal scares me. To take it to an extreme, if a for-profit health insurance company were to decide that it could make more money by simply allowing all of its customers to die- or even to kill them- then it would have a fiduciary duty to do so. Not good.
Leaving all this aside, there's a more practical problem with a for-profit health care system: it doesn't work. Ever since the mid 1960s, the US has actually had 3 parallel health care systems running at once: single-payer (Medicare), socialised (the Veterans' Administration, where all providers are paid by the VA), and for-profit. And the results are in: the for-profit system is far and away the worst of the three. It's the most expensive, and provides the worst results (15.7% of Americans uninsured1, despite spending 17.6% of our GDP on health care).
The PPACA chooses to bend the cost curve by forcing all Americans to either receive coverage through their employer or on their own (the Individual Mandate). Despite the round condemnation of this plan coming from the Republican Party, the PPACA strongly resembles one promoted by the arch-conservative Heritage Foundation as an alternative to the Clinton health plan in the early 1990s3, as well as the MassCare plan passed by former Massachusetts Governor Mitt Romney4.
Unfortunately, this was the result of President Obama, whatever his personal motivations, being a miserable negotiator. The second he proposed as his opening bid RomneyCare + a public option- effectively Medicare into which you could buy5- that guaranteed that it wouldn’t be the end result of negotiations. As anyone who’s ever bought a house, or car, will agree, your opening offer isn’t what you expect to pay- it’s what you’d dream of paying. You offer 75% of what the seller wants- then you negotiate, and meet in the middle.
In this case, President Obama should have opened bidding with Medicare for All. This would have had 3 main effects: it would have thrilled his liberal supporters, it would have been the most economically defensible solution (Medicare’s overhead is as low as 5%, compared to private insurers, who often have 25%+ administrative costs- due in part to profit-taking6), and it would have guaranteed that the final result of negotiations would be a lot more progressive than RomneyCare without a public option.
Fortunately, the current state of the PPACA is no more the final state of health care reform than Social Security was a finished product in 19357. Just as Social Security was expanded to include cost of living increases, with changes in retirement age, it can be expected that changes to the US health insurance system haven’t finished either.
Endnotes:
1. "Income, Poverty, and Health Insurance Coverage in the United States: 2009." U.S. Census Bureau. p. 22. Issued September 2010.
I don't claim to have the answers to health care reform (although I know the answer *isn't* the PPACA).
ReplyDeleteI will comment on a few "facts" you cite above.
-> The VA system looks great to anyone who hasn't actually participated in it. Those who have know that it's actually pretty awful. Long waits for shoddy care in mediocre facilities. I'll add that military medicine is only marginally better...for the most part, the providers are of higher quality, but the problem of access to care is still substantial. As but one example, my wife and her siblings were all military dependents living in Bethesda, MD as children/teenagers. They did not get orthodontia because the *only* military orthodontia care was available in southern Alexandria, VA...an essentially impossible trip.
-> Medicare is sustained on a falsehood, the sustainable growth rate (SGR). This is intended to limit increases in Medicare payments, but it's been pushed off year after year after year. Right now, to get the SGR to where it's supposed to be, physicians would have to take a >25% cut in payments. If that happens, look for lots of docs to drop Medicare participation. If THAT happens, well, see "access to care" above.