Health care: Is it rationally possible?

The US health care “system” has been carefully designed to produce the lowest possible health care at the highest possible cost, and as a sideline drive many businesses into bankruptcy while undermining our competitive position with respect to the rest of the world. It is an interesting question that should be studied by psychologists and political scientists why we insist on such a “system”. There are much better ways but these are politically impossible. Here we consider a better system. Since it is designed to deliver the highest possible care at the lowest cost there is no possibility that it can be adopted. But hopefully it will stimulate thinking.

There are two parts: how care should be paid for and how should it be delivered.

The present “system” is designed so that people can fool themselves into thinking that someone else is paying for their health care: the government, insurance, their employers, anyone but themselves. When we were little mommy and daddy paid for our food, our clothes, our health care. But we are big boys and girls now. We pay for our food, our clothes, our health care. The government collects taxes from us to pay, insurance collects premiums, our employers reduce our wages. Or they raise prices (most likely affecting the poor more than the middle class; thus this accomplishes a standard US policy aim: getting the poor to subsidize the middle class). A major problem is a disconnect between costs and benefits. Everything must be done to keep people alive, even after they die, no matter how great the suffering. Why not, it’s free. Insurance pays for it. If the great god Insurance were more generous it would provide us with even more benefits (intravenous medication to keep us alive even after burial?). Of course it is only the nasty insurance companies that keep premiums so high.

If we have a national plan should we also be putting more money into it? Of course. Let’s cut defense, foreign aid, agriculture, food stamps, …, and on and on. But this cannot easily be done. Health insurance is uniquely an individual matter. We can’t allocate to each person the costs for his, hers or its share of national defense. But we can for health care. Each person should be charged an individual health insurance premium, based on taxable income and number of dependents. The trivial, costless way would be the tax return. On the tax return the line “total tax” would be replaced by three, “total tax”, “health premium” and total. This would have zero additional enforcement costs and essentially no extra work or red tape. It is too simple to be acceptable.

How should health care be provided? One way is pay for service. How many people would be comfortable going to a surgeon who recommends surgery, knowing that he will be paid $10,000 for it? The surgeon could be paid a salary. But then there would be no economic incentive to provide proper service, especially efficiently and economically.

Competition is the way.

There should be HMOs set up, with several hundred thousand patients each (so that any procedure would be only a small fraction of the total cost of a plan). These could be commercial, non-profit, confederation of doctors and so on, whatever they wished. Large cities would have several, which would set standards. Doing this in rural communities would be harder. Each person would pick a plan. The plan would then be paid a premium for that person based on what, on average, the cost of caring for the patient is. This probably can be based on three variables, (obviously) age, sex and also place of residence (census tract). That would be a proxy for socioeconomic status. Also NY say is costly so this would be factored in. There are districts where AIDS, for example, is prevalent and this would be included. The Bureau of Labor Statistics and other agencies can estimate the number of doctors needed per thousand patients, the number of nurses, and so on, and what the costs are. Thus they can compute the average cost per average patient, then modified for such particular characteristics of each patient. Young people would cost little but they would not be more desirable since the premium for them would be correspondingly less. The Social Security Administration has the information about people so enrollment would be done by computer. A person would just fill out a card with name (and address) and SS# and a check showing the group desired and the rest would be done by computer. Groups would compete for patients. Those that were more attractive, and more efficient, would be more profitable (or doctors would have a higher income). This provides incentives. Information about each plan would be collected (including disciplinary actions) and patients’ opinions of their plan, and this would be organized and then can easily be provided so people would have the information needed to decide which plan they want.

The transition period from the present disorganization to a reasonable system would be somewhat messy, but necessary whatever is done. Companies would no longer pay for health insurance so they should be required to increase wages by an equivalent amount.

There should be some oversight and requirements, for example emphasizing preventive care. But these requirements hopefully would be minimal. If a plan does not cover some illness and a patient went to the emergency room, he, she or it would be taken care of, but the plan would be charged. It would lose control, which it would not like.

There should also be a governing board (to prevent Congress from getting too involved and bogged down). It would decide what people want and set standards. Do we want to pump blood through dead bodies? If so we will pay for it. If not we will let people die in peace. What new, and costly, surgeries and drugs do we want? By tying costs to what people pay on their tax returns we will make more rational, and more humane, decisions. The government’s involvement will be small (appealing to those who fear governmental intervention in medical care). Most of it can be computerized. Decisions will be made by the market. Competition will spur efficiencies and improvements.
With this everyone will have reasonable care, something we should want, businesses will be relieved of a potentially fatal burden, the government will largely stay out. That should appeal to conservatives. What can anyone object to (except those who profit from the fatal illnesses of the current mess)?

This is a plan everyone can rally around. It is time to start moving.

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