healthcare

Don't feel bad about not reading this post if you don't want to. It's really only for policy wonks who care about minutia of this specific political issue, and there's nothing wrong with not being a wonk.

Over the last year-and-a-half I have been intrigued with the healthcare debate that has taken place in the country. I am about as close to middle-of-the-road as a person can get on the topic, which mostly means that I don't think any of the available options are ideal. Given the reading and rationalization I have done, I think I could blow holes in almost any plan anyone could conceive of (including the one that is currently in place) as not having enough of the desired effect, having horrific unintended results, or simply not being realistically feasible to implement.

I have also wanted to comment on the state of healthcare for a while but because it is an inherently complicated issue I have not known a real way to do it without making one of two mistakes. First, I could speak in ill-informed platitudes. That is what most of the dialogue I have heard regarding healthcare from both sides has involved. Second, and more likely for me, I could go into such detail about certain aspects of the issue that few would be able to make it to the end of the post, and it would take hours to write properly. Given how long this post is you may believe that I took this exhaustive option, but I truly didn't. Rather than taking either of those two approaches, I decided to talk about two things that pretty much every informed person from any side of the issue agrees are causes for the extraordinarily high cost of medical care in the U.S. I also have some closing thoughts.

1. The seller has far more information about the product than the consumer

First, unlike almost any other industry, consumers of this product are almost completely shut out of the price negotiation process and have almost no information on what good cost or quality is. How do you know whether the doctor you go to charges a reasonable price or does not. How do you know whether your doctor is actually right about the tests he or she recommends are the best ones under the circumstances. How do you know what the differences are between the name brand and generic drugs? How do you know which issues should be addressed and which ones are best left alone? Finally, and most important to my point, how do you know what addressing a specific issue should cost and what addressing your issue did cost?

Imagine for a moment that you wanted to buy a car and all of the information you had was recommendations from friends talking about how nice this or that car salesperson was and the fact that any car you bought would cost you the same amount of money. In this scenario you would have a "car purchase" insurance where some third party would have to pick up the tab for the difference between the price you pay and the actual cost of the car. You just have to pay a monthly fee. What I would do in this situation is find the friendliest salesperson (since I have no way of knowing who is the most knowledgeable salesperson) and buy the nicest car he had. The logical end result of this system would be that the car purchase insurance would be ridiculously expensive just like health insurance is today. The only car purchase insurance companies who would survive would be those who either found some way to encourage customers to price shop (very, very difficult) or who found loopholes in the insurance policies that kept them from having to pay on specific purchases (unpalatable, but much easier). A lot of people see insurance companies as evil, but frankly they are a product of the system within which they exist. They have to tell people that the price of a Bentley isn't worth the quality-of-life improvement that they will see. The insurance companies that do not do this die.

There are a few ways get people to make wiser purchasing decisions, but in the current system they almost all have to come from the government or some entrepreneur who can do something no one has been successful at on a large scale yet. The most effective solution is to require high deductibles, but that only works well for upper-middle class and upper class consumers. Lower class consumers would decide that they could not afford to visit the doctor and would just not go, or they would go and would not pay (that touches on my second reason healthcare costs are so high, but I'll get to that in a bit).

Another way to control costs is something that the state of Maryland does. The prices for certain procedures are standardized so that doctors and surgeons cannot charge more or less than a certain price for a given procedure. That sort of government control may be prone to manipulation, though, and goes against the free-market nature of the country as a whole.

Another solution that eventually got added to the healthcare bill in a very watered-down form that McCain first supported then didn't and that Obama first opposed then didn't is taxing healthcare plans from employers. Since the government does not tax employer-provided health plans but does tax income used to purchase insurance on the open market there is a significant incentive to go with whatever the best employer-provided insurance plan is regardless of cost. Then, since you are paying for a good insurance plan, there is an incentive to over-use that insurance. On the flip side, there is an incentive for the self-insured to under-use their insurance. This specific change is not politically popular because it has an immediate negative affect on almost everyone who is employed and the positive effects are mostly in the long-term. As an example, my healthcare plan almost certainly would deteriorate in quality due to extra taxes involved, so I would have to make a higher salary to compensate for that. I know what the benefits of such a tax would be and I still don't like the idea. Imagine the person who does not understand the benefits. He or she would be livid at any politician who supported it. That is why in the final version of the healthcare bill the actual healthcare plan tax was set to only apply to the most extremely expensive plans conceivable and only goes into effect in 2018 when a new president will be coming into office.

The only non-government options are to hope that someone can use technology to help consumers make wise decisions. One argument could be that websites like WebMD.com, MedicineNet.com, and MayoClinic.com answer questions so that people do not have to go to a doctor to get the same answers. I personally think that they cause people to get nervous that they have some condition and make them more likely to visit a doctor. Other possibilities are technologies that collect price and quality information regarding doctors and procedures and use that to make recommendations. Up to this point, that data has been near impossible to accurately collect. Also, this is something that whoever buys their insurance has to be encouraged to use and so far that has not happened on a large scale.

2. Healthcare choices involve tough decisions where involving cost is unpalatable

I am not officially taking a position on any side in these scenarios, but they have to be considered by anyone who wants to be serious about taking a position in the healthcare debate. President Obama had many opportunities to directly address this, but the problem he had was that doing so would have killed the whole legislative process for his bill. He really could only say that many of the decisions are already being made based on quality of health insurance, but that really did not address the issue in whole. His argument was for the devil you don't know rather than the one you do. One specific doctor asked him in an early televised discussion who would make the decisions about what procedures were acceptable to save someone's life, if they were exorbitantly expensive, and unfortunately the president deflected (again, because I think he felt he had to). Reading the scenarios below, hopefully you will see how difficult this is.

For those who unequivocally disapprove of expanding government-sponsored healthcare, I would like to pose a question that I have not been able to address myself. If a person who is too poor to afford health insurance (high-deductible or not) goes to the ER, should they be treated? If so, who should pay? The current system requires that ERs provide service, inefficiently so. You could say that they should only be required to treat someone if their injury is life-threatening, but who gets to decide what is life-threatening. If an uninsured poor someone comes in with a shallow stab wound that doesn't appear likely to bleed out, should the ER just send that person home until he or she develops something that is more life-threatening like and infection or until the bleeding worsens? There is no doubt that the uninsured using ER services they cannot or will not pay for costs the system at large billions and billions of dollars. The government current subsidizes some of these costs, but who really wants that? Most of the rational solutions to this problem result in a system like what we have now with government subsidization of people using the ER for questionable issues, a system where the extremely poor are automatically insured, or a system where people die on the front steps of the ER because the hospital cannot afford to treat everyone who visits the ER and who cannot pay.

The ER is just one problem where discussing cost is unpalatable. A huge percentage of medical spending is done near the end of life. Let's say you are 60 and you have a terminal type of cancer that responds positively to chemotherapy 2% of the time (not an unreal figure from what I've read). Are the thousands of dollars it is going to cost (Let's say $50K or $100K), if insurance is going to cover most of it, even going to enter into the conversation? Would cost enter the conversation if, as a result of choosing chemotherapy, your kids and grandkids had to pay a few extra thousand dollars every year for their insurance? Without thinking about the impact on others, and frankly who is when they've been told their best chance at survival is an unpleasant procedure that has a one in fifty shot at working, money is not going to be a factor at all in the decision. That fact is a major cause of high health insurance costs.

Almost all of the solutions to bring down the cost of end-of-life medical care are unpalatable. You could just allow insurance companies to refuse to pay for the procedure. You could try to encourage the person to decide that a one-in-fifty chance is not worth the fight and live out the rest of their life in hospice, but that introduces many moral (and political) dilemmas. You could require that doctors/hospitals explain the costs to patients, but that would be largely ineffective and very politically unpopular. You could have the government decide what is an acceptable end-of-life procedure for specific situations like the system that exists in the United Kingdom, but that is uncomfortably close to the concept of death panels.

Finally, what is going to drive research that will find cures? People demonize pharmaceutical companies, and sometimes rightly so, but it is fair to allow them some profit if they have spent billions (or at least hundreds of millions) researching a particular drug and getting it through the FDA approval process. If the market is removed or reduced from the process who decides where finite medical research dollars should go? If you have a disease that only occurs in one out of a million people are you out of luck because the process requires that pharmaceuticals sell medicine for a price less than the research would cost? Would dollars be divvied out by what disease happens to be more in the popular eye (would colon cancer dollars go to breast cancer research)?

Final thoughts about tort reform and personal care

Unfortunately, for too long tort reform was the capstone and main substance of the Republican plan. It is fine as a side item, but tort reform alone is not even a partial solution and would eventually be repealed if the end result were too draconian. Most of the proposals seemed to just say, "There is a monetary limit to what you can sue your doctor for and that limit is X." That seems a bit simplistic in my view. Tort reform should happen, but it should be precisely targeted. If it were it could have a beneficial secondary effect. Standard medical processes should be set for specific symptoms and scenarios (I actually think they are, but I can't remember what it is called), and if the lawsuit is filed complaining that the doctor decided to follow those processes rather than what the patient wanted, that lawsuit should be invalidated. This would encourage standard operating procedures such that the recommendations you get at one doctor for treatment would match what you would get at another doctor. This would hopefully also reduce doctors ordering procedures to cover their butts (which is probably more expensive to the system as a whole than the payouts on lawsuits). Regarding lawsuits where a doctor is truly negligent, I am more on the fence regarding how that could or should be reformed.

Beyond tort reform, Republicans needed to focus on streamlining inefficiencies inherent in the system. There were later proposals that did this to an extent, but they did not properly address most of the issues that I have mentioned above. It's hard to say if the Democrat's bill properly addressed any of the issues I have raised, because they left most of the difficult decisions to the Department of Health and Human Services rather than spelling out distasteful details.

Finally, I think we as a nation need to be realistic about what kind of personal care we can receive. There are a lot of things we need to visit an actual doctor for, however there are some things that we should be able to address with less educated and less experienced people. As an example, when H1N1 testing and vaccination was popular a lot of people went to doctor's offices for that. Isn't that something that a nurse, a nurse practitioner, or a pharmacist should be able to handle? If we care about efficiency in the system (and we should if we want to lower health costs) we should consider reserving doctors for the issues that require the education and knowledge that a doctor would have over someone with a lesser medical degree (forgive me being a pharmacist requires the same level degree as being a doctor, for I do not know).

If you have views on this you can share them if you want, but I am not really looking for a healthcare debate. I would request that any posted opinions be deeply thought out. Simply taking the step to consider the unintended consequences of implementing the system you think should be in place (and there are unintended consequences in almost every system) is really all I am asking for.