Health Insurance Policy Wonkery
Sep. 16th, 2009 10:58 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
drscottThe problem with the health insurance debate is the vast ignorance on both sides. Meanwhile, the people who have been studying this for years have been shut out in Congress in favor of lobbyists for the AMA, Big Pharma, Big Insurance, Big Labor, etc., with little thought to long-term consequences. As it is, the proposals will tend to increase spending and decrease choice on healthcare, with possible efficiencies coming much later if at all.
WaPo reports (and see comments here) on the issue I brought up previously -- current proposals' tendency to slap what amounts to a stiff tax on younger people to subsidize older people who might not need any subsidy.
One key problem is that health insurance as we now know it fails to insure. If I have paid premiums for years and in one year receive a diagnosis of Type II diabetes or heart disease, I will be vulnerable to a huge increase in premiums or no insurance at all since it is now likely my future healthcare will cost much more. This is like an auto insurance system where, if my car is totalled, they pay for a rental until the month my policy runs out and then I'm stuck with the loss. Reforming insurance so that it truly insures against long-term diseases would be difficult, requiring the insurance company at the time of diagnosis to cover the difference between my previous premium and my post-diagnosis premium.
Another issue is the confusion between basic healthcare needs and catastrophic care. Under our current system where most people under 65 are covered by employer-provided insurance, people are conditioned to receive basic care under a very expensive and bureaucratic system; for example, I can buy OTC medications at a fraction of the costs of even similar off-patent medications provided through a prescription-pharmacy regulated setup. Many basic healthcare needs can be cheaply provided by low-cost public or private clinics, but our system tends to prevent this by the ease with which state legislatures are lobbied into outlawing services outside the doctor-Big Medical system. Many states require provision of services of questionable efficacy and necessity (massage, chiropractic, in vitro fertilization, etc.) be covered by every insurance policy, driving up the cost of the basic policy to the point where it becomes unaffordable.
One meme I have heard (promoted by George McGovern, for example) is just opening up Medicare to everyone. Old people are happy with the unrestricted fee-for-service care they get under Medicare, so why not let the rest of us in? The problem with this seemingly attractive idea is that Medicare is on the way to bankrupting the US in the next few decades, since Congress has been unable to find a way to control its costs and the covered population is increasing rapidly. One of the reasons why reform is so urgent is that Medicare itself is not sustainable, and while politicians soft-pedal it, current proposals intend to start restricting Medicare spending to pay for covering the uninsured.
A plan very similar to current proposals has been underway in Massachusetts for two years. It has succeeded in reducing the ranks of the uninsured, but is rapidly becoming unaffordable for the state, and is heavily subsidized by additional federal money -- while of course the feds cannot seek funding from a higher level of government.
The logic of current plans is this: while insurance companies are often accused of doing their best to insure only the most healthy people, consumers also game the system by choosing not to insure themselves until something is wrong, then signing up to get care on the backs of those who have paid all along. Even under the Mass. plan, HMOs report people signing up for short terms, having lots of service needs, then cancelling. If insurance companies are going to be forced to take on everyone regardless of health status or age, the policies would end up unaffordable and a death spiral of loss of healthier premium payers and ever-higher premiums would occur. Thus the logic of forcing everyone to pay for coverage.
But then current proposals go several steps beyond, including a cap on older people's premiums financed by higher premiums on younger people. While all the plans subsidize the poor, the lower middle and middle class would bear a larger burden, essentially a large tax, to keep costs lower for older voters who might well be able to afford their premiums.
Because Congress is a creature of special interest lobbyists and campaign contributors, it should be the President's role to defend the interests of the people as a whole, yet the President has taken the Devil's bargain to get something through Congress by indulging their tendency to steal from the less powerful to give to the powerful (in this case, doctors, insurance companies, Big Pharma, and unions.) It is natural to worry when influences are being peddled and compulsory insurance is on the table. As Mark Twain said, "No man's life, liberty, or property are safe while the legislature is in session."
That said, changes are necessary. But the emotion-driven excesses of both sides aren't shedding much light on the best policy choices.
WaPo reports (and see comments here) on the issue I brought up previously -- current proposals' tendency to slap what amounts to a stiff tax on younger people to subsidize older people who might not need any subsidy.
One key problem is that health insurance as we now know it fails to insure. If I have paid premiums for years and in one year receive a diagnosis of Type II diabetes or heart disease, I will be vulnerable to a huge increase in premiums or no insurance at all since it is now likely my future healthcare will cost much more. This is like an auto insurance system where, if my car is totalled, they pay for a rental until the month my policy runs out and then I'm stuck with the loss. Reforming insurance so that it truly insures against long-term diseases would be difficult, requiring the insurance company at the time of diagnosis to cover the difference between my previous premium and my post-diagnosis premium.
Another issue is the confusion between basic healthcare needs and catastrophic care. Under our current system where most people under 65 are covered by employer-provided insurance, people are conditioned to receive basic care under a very expensive and bureaucratic system; for example, I can buy OTC medications at a fraction of the costs of even similar off-patent medications provided through a prescription-pharmacy regulated setup. Many basic healthcare needs can be cheaply provided by low-cost public or private clinics, but our system tends to prevent this by the ease with which state legislatures are lobbied into outlawing services outside the doctor-Big Medical system. Many states require provision of services of questionable efficacy and necessity (massage, chiropractic, in vitro fertilization, etc.) be covered by every insurance policy, driving up the cost of the basic policy to the point where it becomes unaffordable.
One meme I have heard (promoted by George McGovern, for example) is just opening up Medicare to everyone. Old people are happy with the unrestricted fee-for-service care they get under Medicare, so why not let the rest of us in? The problem with this seemingly attractive idea is that Medicare is on the way to bankrupting the US in the next few decades, since Congress has been unable to find a way to control its costs and the covered population is increasing rapidly. One of the reasons why reform is so urgent is that Medicare itself is not sustainable, and while politicians soft-pedal it, current proposals intend to start restricting Medicare spending to pay for covering the uninsured.
A plan very similar to current proposals has been underway in Massachusetts for two years. It has succeeded in reducing the ranks of the uninsured, but is rapidly becoming unaffordable for the state, and is heavily subsidized by additional federal money -- while of course the feds cannot seek funding from a higher level of government.
The logic of current plans is this: while insurance companies are often accused of doing their best to insure only the most healthy people, consumers also game the system by choosing not to insure themselves until something is wrong, then signing up to get care on the backs of those who have paid all along. Even under the Mass. plan, HMOs report people signing up for short terms, having lots of service needs, then cancelling. If insurance companies are going to be forced to take on everyone regardless of health status or age, the policies would end up unaffordable and a death spiral of loss of healthier premium payers and ever-higher premiums would occur. Thus the logic of forcing everyone to pay for coverage.
But then current proposals go several steps beyond, including a cap on older people's premiums financed by higher premiums on younger people. While all the plans subsidize the poor, the lower middle and middle class would bear a larger burden, essentially a large tax, to keep costs lower for older voters who might well be able to afford their premiums.
Because Congress is a creature of special interest lobbyists and campaign contributors, it should be the President's role to defend the interests of the people as a whole, yet the President has taken the Devil's bargain to get something through Congress by indulging their tendency to steal from the less powerful to give to the powerful (in this case, doctors, insurance companies, Big Pharma, and unions.) It is natural to worry when influences are being peddled and compulsory insurance is on the table. As Mark Twain said, "No man's life, liberty, or property are safe while the legislature is in session."
That said, changes are necessary. But the emotion-driven excesses of both sides aren't shedding much light on the best policy choices.
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no subject
Date: 2009-09-16 07:43 pm (UTC)The key point being that the medical care was provided for everyone based on urgency; but the healthcare industry could still make money on top-up policies.
While I would favor a single-payer system here, I recognize the economic impossibility. This would greatly reduce the for-profit healthcare industry, and damage the economy over all.
no subject
Date: 2009-09-16 10:18 pm (UTC)I'm not saying I have all of the answers, but a single payer system, not attached to employment can work. I've experienced it in Canada, Germany and Norway. I've never heard so many lies as I have by government types as to when it comes to their systems.
I still maintain that all of congress and their families should have paid healthcare taken from them, until they can provide it to all Americans. With that protection taken away, I bet there would be more reasonable solutions on the table pretty quick.
I don't know if you read
Hugs, my friend!
no subject
Date: 2009-09-16 11:34 pm (UTC)Market economics is at its core, about the efficient allocation of resources.
While - yes - some companies, employees, shareholders and overpaid CEOs would suffer financial setbacks if the U.S. adopted a single-payer systwm, the $100s of billions now being spent to to "health industry" work that has nothing to do w/healthcare - and is part of the "gaming" consumers now do - would find another (hopefully more constructive) use.