Fallacious accusations set aside, I can definitely state two things. First of all, ObamaCare, whether in the form of a government option or insurance reform, is nothing more than a Trojan Horse for a single-payer system, something that he has promised since the campaign trail. This would unquestionably cause rationing, politicizing, long wait lines, and a significant decrease of quality in health care. I don't care how good of an orator the President was last night; this false Messiah doesn't have the ability to suspend the laws of economics.
Second, one of the bigger myths surrounding this debate is that conservatives or libertarians don't provide alternatives. This is patently false! After about an hour of research and talking to one of my fellow libertarian friends, this a compilation of alternatives I came up with:
1) Personal responsibility! This is my personal favorite, no pun intended. Sometimes, I'm truly surprised at how unhealthy the "American Way of Life" can be. You know the percentage of health-care spending linked to bad diet, lack of exercise, and other risky behavior, such as excessive smoking and drinking? 70%! This should be no shock to people. Two-thirds of America are overweight, half of which are obese. One in six Americans smoke. Half of Americans don't exercise enough to have an impact on their health. Instead of focusing on treatment (rather than prevention), how about encouraging healthy behavior instead? If people are taught how to eat healthily, learn how to exercise, and embrace preventative health care as a part of their daily life, the demand for health care would be considerably less. So I provided a simple, but nevertheless nifty formula:
Healthier lifestyle = Less health care bills
2) Tort reform! America is a sue-happy country, mostly because if you can get a whole lot of money for doing virtually nothing, why not? But guess what? This causes doctors to be scared to practice without a lawsuit, which leads to higher insurance premiums and overtesting. 3) End the distortion of the supply of the doctor labor market: The AMA limits how many doctors can be certified, thus altering the medical labor market. With less doctors, the AMA creates a shortage of doctors and a net diminution of overall care, not to mention $40 billion spent. Instead of the government condoning this action, maybe the government should help increase the amount of doctors admitted by the AMA. That way, there are more doctors in this country. More doctors in the labor market means they don't have the ability to make outrageous charges anymore.
4) Stop employer-mandated insurance: The reason why health care has become a hot-button issue in the first place is because our unemployment rate is high. What exacerbates this fact is the fact that the costs of health care are hidden. How much does an office visit cost? Or double-bypass surgery? Nobody knows! "Who cares what it costs? My insurance company covers it," says Joe Schmo. No wonder we have an over-consumption in health-care services. It's easier to spend other peoples' money than spending your own. If we ended employer-based insurance, a few things would happen. One, over-consumption of health care would desist. Two, there would be transparency of health care costs. Three, health care could be bought like any other good, and it wouldn't matter if you're employed or not. That means, like any other good, health care will be more competitive. Competition creates incentive to offer better health care at a lower cost. A win-win for everybody!
5) Allow insurance to be carried across state lines: This would be feasible once we stop employer-mandated insurance. If we permit this interstate exchange, not only would this bring about the advantages inherent within [interstate] competition, but it would also cover 17 million uninsured, and here's the catch--it wouldn't cost a penny!
6) Stop discriminating against workers without employer-provided health insurance. Provide workers with the same tax breaks as those with employer-based insurance. In this day in age, less taxation is a good thing.
7) Health Savings Accounts (HSAs). An HSA is a high-deductible medical savings account in which the savings are drafted before taxation. Not only is the premium much lower (simply because you're not paying for preventative health care), but the other advantage to this program is that whatever you do not use for the current year rolls over into the next year. This concept works together very well with my next proposition, which is.....
8) Less health insurance. Yes, I know this concept seems foreign to you. "Health care" and "health insurance" have become interchangeable terms in everyday vernacular, although history tells a different story. Until the designing of Medicare in 1965, only a small minority of Americans even had health insurance. On average, it costs $500 a year just to administer health insurance, which comes out to about $1.6 billion. On top of that, insurance comes with filing claims. Guess how much this costs? About $210 billion! We use health care to cover just about everything. Insurance plans have many procedures that most Americans don't use, and we have to pay for it. If you walk into a hospital and have insurance, it's essentially applied that someone else is footing the bill. I recently watched a John Stossel special where he talked about the hypothetical, but nevertheless ridiculous notion of what would happen if groceries had their own insurance. Remember the aforementioned Joe Schmo? If Joe had grocery insurance, he'd go with a $300 bottle of wine. But if it were his own money he were spending, maybe he'd go with the $8 bottle of wine, or better yet, realize that he doesn't need the wine at all. With less health insurance, there is less needless consumption, which ultimately leads to, you guessed it, lower health care prices.
9) Cut out federal and state level benefits. Here's another example of "government is the problem" rather than "government is the solution." Programs such as acupuncture, alcohol treatment, pastoral counseling, massage therapy, marriage therapy, and even breast reductions, are government mandates. Although the 2,100 benefit mandates are small unto themselves, when they're added up, they raise premiums up 20-50%. Although some of these benefits have good intentions behind them, I couldn't care less about good intentions if it cranks up the cost of health care. By eliminating these mandates, we're one step closer to lowering costs and empowering people with their own health care decisions.
10) Transparency in health care costs. If the government isn't going to totally self-deregulate, the least it should do is deliver consumer-oriented data that informs Americans the costs of health care services. As I brought up in my fourth point, nobody knows the costs of health care. If Americans know how much a given procedure costs, at least they would know if they're being ripped off or not. That way, they could look at other practices that offer cheaper prices, thereby encouraging competition, and ultimately, lower prices.
Many of these suggestions don't cost anything, some cost a bit, but nothing compared to what ObamaCare would cost. Either way, in the end, it leads to a substantial net gain. Financial empowerment leads to competition. Competition leads to provide doctors with an incentive to deliver better health care for less. Less money spent on health care expenditures makes Americans happy and free. Now isn't that what we all want?
Two problems Steve, now I know you would never advocate this but you ought at least point out that although personal responsibility is desirable the government should attempt to promote it with higher vice taxes, which our home state has just done. The government of course should not shield people from personal irresponsibility, however if it does choose to provide some care via medicaid/medicare it should not subsequently advocate some asinine pay to play legislation to pass higher vice taxes on everyone since everyone will eventually be eligible for medicare.
ReplyDeleteSecond, tort reform should be a move to a loser pays system or some sort of alternative adjudication system; not damages caps. Doctors that do commit malpractice should be fined punitive damages based upon the simple concept of deterrence, which means that the fine multiplied by the chance of getting caught must outweigh the benefit of shoddy practices. Whilst patients harmed are entitled to due compensation for their losses physical, lost wages, and emotional. The goal should be a tort system that deters malpractice and compensates victims from harm but is least vulnerable to lawsuit abuse; and a loser pays system best accomplishes this.
Tim Cullen
Steve,
ReplyDeleteLongtime fan here, though we've never met. Love the blog, and was using this post in a discussion with some friends. They asked about specifics on your #2 assertion that tort reform was linked to $500 billion worth of saving. Could you provide a link or at least point me in the right direction? Thanks in advance.
kol tov,
Zac
Dear Zac,
DeleteI thank you kindly for your compliments. I do have to admit that during the early days of my blogging, I was unaware of the hyperlink feature on Blogger. Once I became aware of said feature, I progressively implemented it more in my blogging. That being said, it has been over four years since I last wrote the blog entry. With Passover coming up and whatnot, it's a tad difficult to find free time. However, if you can give me a week or two, what I can try to do is write a blog entry specifically to the issue of tort reform in the health care industry.
Steve,
DeleteNo worries, man. Thank you for replying, and take all the time you need. I knew it was a long shot since it was an old post, but figured I'd ask. Thanks again, and Chag Sameach. :)
Dear Zac,
DeleteI took a look at the issue further. When I came up with the figure of $500B, what I did was a) took a number from the higher end of the range of estimates for the costs of defensive medicine, and b) I incorrectly assumed that tort reform would be 100% effective, which in hindsight were not realistic assumptions to work with. As such, here is what I found. I found a study in the NBER showing that premiums would drop 1-2 percent, but that seems to be on the high end. Some professors at Harvard found the savings at savings to be at 0.132 percent, which is on the low end. The best estimates were at the Congressional Budget Office, which puts the cost savings at $54B over ten years (They published this about a month after my blog entry. Go figure). I hope this helps. Chag sameach!