United Liberty
How Can We Get Cheaper Health Care?
Tue, 04/14/2009 - 11:57am | posted by Alina Stefanescu Coryell
My former colleague, Maxwell Borders, knows exactly why American health care is so expensive. He gives a list of ten reasons (hint: the first has something to do with the tax code).
For those who prefer visual stimluation, Max is not the sort of fellow to let anyone down. I’ve added a videos produced by Max on the topic of health care reform below. You can watch the follow-up video here.
This is interesting, but more than a little clueless.
While I agree that the patchwork of regulation is a component to the problem, saying that one thing does not effectively describe the situation. What’s even better is that they don’t really offer any solutions.
First of all there’s the problem of profit. Private insurance companies tack on a profit margin to the cost of premiums. Meaning that every year a percentage of GDP is bled off to line the pockets of insurance company execs. If insurance companies were required to be run as non profits (there is a long tradition of this actually working well) funds we could instantly reduce healthcare costs. By some estimates as much as 35%.
Second, there’s the overhead of private insurance. Even the most conservative “rebuttals” that move medicare overhead from 2% to 5.2% and drop private insurance overhead from 30% down to 8.0% can’t quite make medicare overhead cost more than private insurance. Personally I’m inclined to believe the high figures on both sides and give medicate 5-6% overhead costs vs 12-30% for private insurance. Neither of these figures takes into account additional overhead by doctors and hospitals who have to manage payments from a multitude of providers and run collection agencies to collect from individual payers.
So we can identify the reasons for the costs but what about the solution? I still can fin NO examples of a “free market” healthcare system that comes close to the efficiency and effectiveness of systems found in countries like France, Germany, and Australia. Can someone PLEASE show the real world examples here?
Oh, I forgot. Conservatives and libertarians don’t live in the real world. They live in a utopian fantasy land where everything will work out just fine if we can get “the man” off our backs.
Let’s get this over with and get a national health insurance system up an running NOW. We have government run police and fire departments. We have socialist school systems, and we have a fairly effective national military system. We have government run and controlled utilities and irrigation districts. Socialist freeway systems and libraries. It’s time we sucked it up and got a good healthcare system too.
First, there is no free market health care any where in the world. But there are health care systems way better than France’s (which doesn’t calculate its rationing problems) — Singapore’s being a good one. The Swiss model isn’t bad, though one might prefer the former due to their MSAs - medical savings accounts - which are expanded, more flexible versions of our HSAs. HSAs would go very far in solving our healthcare problems. But do you want solutions?
1. Change the tax code so that people aren’t subsidized to get their insurance through their employers. This is a massive, terrible distortion. And very costly.
2. Expand HSAs. You can even subsidize the poor and lower middle class and let them choose market options like HSAs which cause people to stop and think about their purchases.
3. Let people buy health insurance in other states. I forgot to put this into my post, above. It would be much more competitive if I could by a cheaper policy in Idaho.
4. Replace Medicaid with a refundable tax credit.
5. a) Stop mandating what people have to buy in their plans and b) stop letting people get insurance after they’re sick (New Jersey, New York) and stop “community rating” which drives young people onto Medicaid (causing crowdout). This is insanity.
There you go. None of this is fantasyland. What is fantasyland is your belief that bureaucrats making people’s decisions is going to give a system that doesn’t ration care. And there is NOTHING universal about that. Oh and stop winging about profit. The company that made the computer you typed this on makes a profit, but that didn’t stop you from buying it. (The only people who are profiting right now are doctors and insurers — because nobody knows how much anything actually costs. Think this would change under socialist care? Nope. It only changes when we adopt consumer driven care.)
What Max said with cherries on top!
“Original Socialism is not a way of life, it’s a tool to use in the circumstance of war!” Mr M.R. Godden M.E
Interesting that you choose Singapore as your example of a good system. One that has a tax… oh sorry, government mandated purchase of a health savings account and government coverage of 80% of basic healthcare. That’s your standard of free market forces and limited government control?
You can argue with me about weather the French system is the best or not, that’s okay. What’s abundantly clear is the those “cheese eating surrender monkeys” do a better job at keeping people from dying of preventable diseases and keep more infants alive than we do. I grew up believing that America is the greatest country in the world. Apparently I was wrong. Singapore appears to be much better.
I digress.
So lets take a close look at your “solutions.”
1. You want to change the tax code. Great. Are you going to extend the tax break for insurance costs across the board so that all insurance is non-taxable? Or are you going to raise my personal tax liability by $1,800/year? (That would be the 15% tax on the $1000/month premiums that are being paid out by me and my employer now). Still don’t see how this is a real solution. Just more of a wake up call.
2. HSAs are nice & all, and I’m a huge proponent of personal savings, but they totally suck if you are A) poor or B) already sick. As a close analogy, compare your 401k to a company sponsored pension fund. In the pension fund you got your wages and the company set aside extra money for your pension. In the 401k system you get your wages and you have to set your wages aside. Now I know that folks like you and me are diligent and responsible. I put off buying tires for the car and braces for my kids so that I can save the 19% of my income that the experts tell me the average American need to be saving, but for those poor folks out there, it just doesn’t happen. So if you’re poor, or even lower middle class, where does this money come from? Government subsidy? Congratulations! you just created a large government program that takes money from people who can afford savings plans and gives it to those who can’t. Personally I’m totally okay with that but it is kind of antithetical to your “principles.”
For people who are already sick or have been sick and need followup care, the HSA is just plain stupid. Hmmm… should I pay off the medical bills I charged to my credit card? Or should I put some more money away in my HSA so that I can empty it out six months from now for that MRI the crazy doctor thinks I “need” to have?
3. Let people buy healthcare in other states. Okay fine. I still don’t see how that’s really going to help, and you’re creating a system that can only be governed on a Federal level rather than a state level, but okay, it’s worth a shot.
4. OMFG! Look. I pay 15% in Federal income tax. I DON’T NEED TAX CREDITS! Tax credits DO NOT CREATE CASH! People on this blog complain constantly about how 1/3 - 1/2 of our country doesn’t pay any federal income tax at all. How does another tax credit give them more money? Are you going to give them money back like the earned income tax credit? Again, so much for libertarian/conservative principle. What is it you guys actually believe in?
5. You are correct in that the mandates and community rating, and letting people wait until they are sick to purchase care all drive up cost. Your “solution” though is to create a system where only those who can afford to purchase health insurance will get it. Sure it will be cheaper, but as someone once said, “the poor you will always have with you” and your system doesn’t offer a solution for them. You also don’t address what happens to people who do have insurance and lose it because they get sick.
What this amounts to is, “don’t give people healthcare and it won’t cost so much.” You know by that logic, if we just tore down all the hospitals then the cost of hospitalization would drop like a rock.
6. Rationing! Don’t you realize that in our current system people who have insurance and are solidly middle class are choosing to put off healthcare because they can’t afford it? At least in a crappy system like Canada’s the procedure would be scheduled. In our system we ration care all the time. We just happen to ration it based on income and a small amount of random chance not weather a procedure is actually necessary or not.
Look at how many of our poor use the emergency room as their primary medical treatment. They wait until the problem is too big and nasty to ignore and then they get the most expensive and rushed treatment they can get. No followup. No after care.
You DO live in a fantasy land if you think we don’t have rationed care right now.
7. Did you really say “winging”? WTF? Which English do you speak? Are you from this country?
8. I’m all for profit. When the buyer has a choice. When it comes to healthcare, very few people go out & buy it because they think it’s fun or fashionable. People purchase healthcare because they MUST. And in our current economy we purchase insurance because we MUST. Supply and demand. Demand is infinite so supply can NEVER catch up. Another way to put this is that it’s not a free market if the buyer can’t choose not to buy. Would you want your police and fire departments to be run on a for profit basis? How about the military?
9. You don’t know any doctors if you think doctors are profiting from the system we have.
I’m in favor of a government mandated (tax) purchase of healthcare where those in the bottom 1/3 of the economic scale would be subsidized, but every person in the us would be REQUIRED to purchase basic insurance. Insurance companies would be allowed to continue as non-profit “mutual” companies and be required to provide the basic insurance plan to everyone who wants it. In addition to basic coverage you would have the option to purchase additional insurance as you see fit. Kind of like how auto insurance is today.
That system has worked in Germany since around 1880-ish. It’s outlasted 2 world wars and the chaos in between. Germany has lower infant mortality, longer life expectancy, and shorter wait times to see a doctor.
You have to face the facts that socialist healthcare systems get more health services to more people for less cost than any other system in the history of the world. That doesn’t make them perfect but I have yet to see the libertarian approach or “market based” approach that beats it.
All you’ve given for examples are large state run systems that levy taxes to provide coverage and have massive government control and regulation (Singapore & Switzerland). Then you turn around and propose a system based on pure faith that it will all work out just fine.
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