A final necessary step in healthcare reform is to devise and enable new forms of healthcare financing. Health insurance is not a health-related but a financial issue. Generally speaking, the quality of healthcare in America is quite good. Although there are certainly instances where it could be more efficiently provided, few Americans question the available technological level of American health services or the requisite knowledge and skill of American doctors.
Under the American model, personal financial decisions are left to the individual (or family) to manage. While some base level social-safety nets are provided by the government, the majority of an individual’s financial decisions are left to one’s own planning. Individuals are responsible for saving and spending within their means, as well as preparing for their futures.
Insurance is one model that allows people to remove the financial risk of large, unforeseen circumstances. This is why millions of Americans purchase a wide range of insurance products – from auto, to natural disaster, to life. All of these are financial decisions based on an individual’s relative probability of some event happening, the perceived cost, and ability to pay. In any rational model, insurance should only be purchased if the math indicates that it is financially cheaper.
Health insurance should be no different. It should be one tool, out of many, that Americans can choose to rely upon if financially sensible. A number of new, financial tools should be developed to facilitate an individual’s access to affordable healthcare. All of these can and should be established in the private markets.
One of the current problems with health care provision is nonpaying emergency room patrons. This has sparked calls for a legislative individual mandate, where all Americans are required to purchase healthcare. The mandate, while undoubtedly unconstitutional, is a gross misappropriation of government power. Not only does it invade on the fundamental liberties of American citizens, but it drastically distorts the market. It forces individuals to make unwise financial decisions.
Without a mandate, proponents argue that hospitals have to unjustly bear the cost of these freeloading individuals. Ultimately, these costs get passed on to consumers via higher hospital bills and insurance premiums. This is undeniably a correct assessment of the current system; however, the mandate does little to allocate the costs of health to the appropriate recipient.
This is precisely where new financial instruments can alleviate some healthcare cost issues. Arguably, every individual (except for maybe the most indigent) should be responsible for paying for their own healthcare. This is particularly true for those who, under the current system, can afford health insurance but for personal reasons decide not to purchase any. If some do not buy private health insurance, due to poverty or personal decision, the burden of their health care should not fall on those who made the financially astute decision to invest in insurance.
However, under the current system there are few, if any, methods for those who gambled and lost to pay for expensive procedures. Providing new methods would not only benefit willing financiers (and the economy) but those who decide to opt out of the health insurance path.
First of all, private hospitals need to have greater say in how their emergency rooms treat patients. Within limits, private hospitals should be able to refuse care to individuals who cannot pay. [For instance, I don’t necessarily think hospitals should be able to refuse care if such refusal would lead to imminent death.] Hospitals should have the ability to decide whether they will open their doors to everyone and eat the costs or refuse care to the non-paying. From the hospital’s perspective there would be a tradeoff between cost savings and image. Like many environmentalists who pay a premium to ‘save the environment’, some individuals may feel comfortable paying higher prices to use the services of hospitals that cater to the common good.
Much of this tradeoff, however, could be erased with new financial mechanisms. Hospitals, for instance, should be encouraged to accept credit cards in lieu of health insurance [imagine the frequent flier miles!]. Likewise, hospitals could establish on-site financing departments that provide emergency care funding. Such funding could come in the forms of loans – like mortgage loans – that allow individuals to pay their hospital bills with interest over time.
This would enable individuals to take personal responsibility for their health care and prevent freeloaders from weighing down the rest of the system. It would allow individuals to design financially responsible systems for providing for their own health care. People would be able to choose what the most sensible way of covering potential expenditures, given their health and ability to pay. For instance, young, healthy individuals who want to save or invest extra disposable income could purchase minimalist health insurance policies given the low probability of needing coverage. They would be able to supplement this risky decision with on-site funding in the rare case of disaster.
Naturally, such credit related solutions could have significant impacts on individual’s debt situations. Bankruptcy laws would need to be reworked in order to make financing opportunities appealable to lenders. Alternatively, payment systems can be designed that move away from the fee-for-service model. For instance, rather than purchasing health insurance individuals could buy access to unlimited care at specific full-service facilities. Monthly membership dues – like a gym membership – would give individuals access to healthcare whether they use every specialist or just an internist.
While such proposals will not be a complete panacea, they will help to alleviate some of the issues. More importantly they may encourage people to be more proactive in planning and managing their health and finances. Ultimately, the goal is for each American to be able to pay for and afford healthcare, not necessarily health insurance.
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Thursday, December 10, 2009
Thursday, October 29, 2009
Back from the Dead - Harry Reid's Public Option
Just in time for Halloween, Harry Reid has raised the dead. Like a zombie from a cheesy horror flick, the public option is now once again roaming the halls of Congress. In a recent announcement, Senate Majority leader Reid stated the newest version of health care legislation would be heading to a vote in the Senate with a government-run public option included.
Setting aside for a moment the foolishness of a public option, Reid’s insistence on including this provision in a plan is utterly baffling. The public option was killed over the summer when Democrats realized the political infeasibility of the concept. The Democrats simply did not have the votes in the Senate to avoid a Republican-led filibuster. The Democrats need every single member of their caucus (58 Democrats and 2 Independents) to agree with the plan in order to push it through without Republican support. The political reality indicated that this just was not possible. If one Democrat wavered the entire plan would fail. And so, wisely the Democrats seemed to move on from the public option. After all, they profess that their real goal is to achieve much needed health-care reform.
Reid’s move to bring back the discussion on the public-option is a step backwards. Nothing has changed to indicate a different political environment. In fact, shortly after his announcement Olympia Snowe, the sole Republican to have voted with Democrats on some health-care related issues, backed off from her cross aisle move. She indicated she would work with Republicans to quash any health care reform that included a public option. Snowe’s rebuke was quickly followed by one from Joe Lieberman – one of the two Independents who caucuses with the Democrats. With Lieberman’s defection a public option is undoable.
So what are the left-wing Democrats trying to accomplish? The inclusion of a public option will sink any reform bill. If the Democrats truly want to reform healthcare, they need to face the reality that it cannot (nor should not – see a prior post on ANR) include a public option. Reid’s gambit seems to lead to nothing but a dead end – torpedoing the Democrats’ and Obama’s crown jewel.
Ironically, it appears that Reid is sabotaging any chance at Democrat-led healthcare reform. One possible explanation is that the Democrats are in such internal disagreement that they cannot design any plan that is amenable to all wings of the party. The tensions between the leftists and the centrists are running high. In order to avoid a failure based on the Democrats’ inability to compromise, Reid is setting up a surefire way to fail that can be pegged on supposed Republican obstructionism. At the end of the day, Democrats will point to the ‘anti-reform’ Republicans who successfully filibustered their plan, rather than their own ranks for the political failure to pass a reform bill. If one is going to fail, at least make it look like it is someone else’s fault.
The Wall Street Journal offers another relatively plausible explanation for Reid’s maneuver. Reid might be offering the plan knowing full well that he will have to drop the public option. The WSJ writes;
Setting aside for a moment the foolishness of a public option, Reid’s insistence on including this provision in a plan is utterly baffling. The public option was killed over the summer when Democrats realized the political infeasibility of the concept. The Democrats simply did not have the votes in the Senate to avoid a Republican-led filibuster. The Democrats need every single member of their caucus (58 Democrats and 2 Independents) to agree with the plan in order to push it through without Republican support. The political reality indicated that this just was not possible. If one Democrat wavered the entire plan would fail. And so, wisely the Democrats seemed to move on from the public option. After all, they profess that their real goal is to achieve much needed health-care reform.
Reid’s move to bring back the discussion on the public-option is a step backwards. Nothing has changed to indicate a different political environment. In fact, shortly after his announcement Olympia Snowe, the sole Republican to have voted with Democrats on some health-care related issues, backed off from her cross aisle move. She indicated she would work with Republicans to quash any health care reform that included a public option. Snowe’s rebuke was quickly followed by one from Joe Lieberman – one of the two Independents who caucuses with the Democrats. With Lieberman’s defection a public option is undoable.
So what are the left-wing Democrats trying to accomplish? The inclusion of a public option will sink any reform bill. If the Democrats truly want to reform healthcare, they need to face the reality that it cannot (nor should not – see a prior post on ANR) include a public option. Reid’s gambit seems to lead to nothing but a dead end – torpedoing the Democrats’ and Obama’s crown jewel.
Ironically, it appears that Reid is sabotaging any chance at Democrat-led healthcare reform. One possible explanation is that the Democrats are in such internal disagreement that they cannot design any plan that is amenable to all wings of the party. The tensions between the leftists and the centrists are running high. In order to avoid a failure based on the Democrats’ inability to compromise, Reid is setting up a surefire way to fail that can be pegged on supposed Republican obstructionism. At the end of the day, Democrats will point to the ‘anti-reform’ Republicans who successfully filibustered their plan, rather than their own ranks for the political failure to pass a reform bill. If one is going to fail, at least make it look like it is someone else’s fault.
The Wall Street Journal offers another relatively plausible explanation for Reid’s maneuver. Reid might be offering the plan knowing full well that he will have to drop the public option. The WSJ writes;
He could then tell the left that he did his best, only to have been beaten back to the unreliable likes of Mr. Lieberman….Meanwhile, such endangered swing-state Democrats as Blanche Lincoln of Arkansas could claim they won a great concession if the public option fails, making it easier for them to vote for a final bill that would still do enormous harm to private insurance and the federal fisc.Reid and his cronies could be trying to push the negotiating grounds leftward in order to achieve a more Democrat-friendly outcome. This is a risky move, but opens an opportunity for Republicans. Senate Republicans should point out the foolishness of Reid’s insistence for a public option. They can easily turn the tables on the Democrats, by branding them obstructionist. How can the Democrats claim to be solving our health care problem if they are offering proposals that clearly are not passable? However, such a strategy necessitates a counter-proposal – something the Republicans have been lacking. A successful Republican-led reform will offer America the right kind of health care fix and deal the final deathblow to the leftist Democrats’ socialist ambitions. Let’s put a nail in this coffin for good.
Tuesday, June 2, 2009
Give Me Healthcare, Or Give Me Death?
The state of US healthcare system is atrocious. It is in need of desperate reform. Unfortunately, the Republican Party lacks any coherent proposals to fix the broken system. This leaves the American people with a choice between the current unwieldy system or the big government, nationalized, nearly Socialist plan of the Left.
For years, the Democrats have been proposing state control of the healthcare system. They want to offer universal healthcare to every American on the taxpayers’ dime. While seemingly noble in aim, this is absolutely foolish. Not only will a government system crowd out the private industry, but it will be vastly inferior. As most know, the government does a substandard job at providing services, particularly services that can be supplied by the private sector.
Unfortunately, this is where the discussion stops for most Republicans. The criticisms of the Democrats’ model of universal healthcare are solid and well thought out. However, the Republican’s offer little in terms of a solution to the obvious problems in the healthcare industry.
A relatively clear-cut answer is to fall back on the free-market principles that form the base of American conservatism. While unquestioning defense of the healthcare industry often comes hand-in-hand with criticism of universal healthcare, this need not be the case. One of the bases of free market capitalism is the notion of competition. However, the current structure of the health insurance industry limits competition.
Contrary to other, non-health, insurance industries, the health insurance system is an employer-based system. This severely reduces the number of buyers of health insurance. A health insurance company only needs to pitch its product to a few large companies in order to capture a substantial portion of the market. This forces the insurance company to structure products that will appeal to HR representatives, not the insurance consumer. This limits the diversity of the products offered and gives the insurance companies greater market control. Health insurance consumers can veto bad insurance plans only by leaving their jobs. Certainly, this puts some limits on the downward movement of insurance quality- as competition remains at the firm level. However, it drastically reduces the specialization that would occur if each consumer were responsible for his or her own insurance.
The easy solution is to end the employer based health insurance system. Individuals would be responsible for finding their own health insurance. Companies, since they no longer have to pay for insurance, would increase salaries accordingly. This would leave individuals with the same amount of money as they previously had to purchase health care on the free market. Naturally, many new, specialized products would develop. This would allow individuals to spend more or less based on the type of care and services they want. Insurance companies would have to compete rigorously with each other to capture new, separate segments of the market. All this would lead to greater competition, lower prices, and increased services. Insurance companies that fail to deliver would find a swift exit from the market, thereby creating a marketplace of higher quality companies.
Critics of such a proposal argue that health insurance is far too complicated for the average American to purchase on their own. This, however, unfairly diminishes Joe Six-Pack’s ability to obtain the appropriate information that he would need. The average American is capable of doing their own taxes and finding homeowner’s or car insurance. For those that cannot, or do not want to be bothered, there are a myriad of brokerage services available. It is quite likely that insurance brokers would expand in scope as they aided individuals in searching for the right health insurance plan.
The answer to the health insurance issue is not increased consolidation and government regulation, but a move towards greater free market competition. Government controlled, universal healthcare will only deepen the systemic problems that already exist. A greater number of differentiated healthcare providers will facilitate cheaper, more universal healthcare, without sacrificing the quality of healthcare in America.
For years, the Democrats have been proposing state control of the healthcare system. They want to offer universal healthcare to every American on the taxpayers’ dime. While seemingly noble in aim, this is absolutely foolish. Not only will a government system crowd out the private industry, but it will be vastly inferior. As most know, the government does a substandard job at providing services, particularly services that can be supplied by the private sector.
Unfortunately, this is where the discussion stops for most Republicans. The criticisms of the Democrats’ model of universal healthcare are solid and well thought out. However, the Republican’s offer little in terms of a solution to the obvious problems in the healthcare industry.
A relatively clear-cut answer is to fall back on the free-market principles that form the base of American conservatism. While unquestioning defense of the healthcare industry often comes hand-in-hand with criticism of universal healthcare, this need not be the case. One of the bases of free market capitalism is the notion of competition. However, the current structure of the health insurance industry limits competition.
Contrary to other, non-health, insurance industries, the health insurance system is an employer-based system. This severely reduces the number of buyers of health insurance. A health insurance company only needs to pitch its product to a few large companies in order to capture a substantial portion of the market. This forces the insurance company to structure products that will appeal to HR representatives, not the insurance consumer. This limits the diversity of the products offered and gives the insurance companies greater market control. Health insurance consumers can veto bad insurance plans only by leaving their jobs. Certainly, this puts some limits on the downward movement of insurance quality- as competition remains at the firm level. However, it drastically reduces the specialization that would occur if each consumer were responsible for his or her own insurance.
The easy solution is to end the employer based health insurance system. Individuals would be responsible for finding their own health insurance. Companies, since they no longer have to pay for insurance, would increase salaries accordingly. This would leave individuals with the same amount of money as they previously had to purchase health care on the free market. Naturally, many new, specialized products would develop. This would allow individuals to spend more or less based on the type of care and services they want. Insurance companies would have to compete rigorously with each other to capture new, separate segments of the market. All this would lead to greater competition, lower prices, and increased services. Insurance companies that fail to deliver would find a swift exit from the market, thereby creating a marketplace of higher quality companies.
Critics of such a proposal argue that health insurance is far too complicated for the average American to purchase on their own. This, however, unfairly diminishes Joe Six-Pack’s ability to obtain the appropriate information that he would need. The average American is capable of doing their own taxes and finding homeowner’s or car insurance. For those that cannot, or do not want to be bothered, there are a myriad of brokerage services available. It is quite likely that insurance brokers would expand in scope as they aided individuals in searching for the right health insurance plan.
The answer to the health insurance issue is not increased consolidation and government regulation, but a move towards greater free market competition. Government controlled, universal healthcare will only deepen the systemic problems that already exist. A greater number of differentiated healthcare providers will facilitate cheaper, more universal healthcare, without sacrificing the quality of healthcare in America.
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