January 17, 2011

Why New Healthcare Lacks Feel Great..

...Even As it makes the Old More Bearable

The American healthcare-'insurance' monstrosity has many dimensions.
For reasons outlined in this post, this blogger feels that the best next foot forward on healthcare would be to take off the individual and corporate mandates, direct companies to payout their current healthcare spending on each employee as addition to their compensation, and to introduce a vanilla "catastrophic health only" public insurance option with no Gov budgetary support.
For one healthcare is an essential item. So it's not like buying apples where the buyer has the full freedom of not buying at all if the price is not right. So healthcare is a bit of seller's market, what with a very strict control over who can practice medicine in America. The entry barriers for practicing as a being a doctor are very high (and I am not questioning its intent or justification, just observing the As Is)
Then, you have TWO, not one, players extracting rent for the essentialness of health services. No wonder American spend on healthcare is TWICE that of most of the Western developed nations as a % of income.

The health "insurance" provider covers everything from cough to common cold, so it has become like a billpayer service for which we pay as much as the bill itself!

The New Healthcare that just came into effect has introduced several constraints on the rent extraction by our billpayers (oops, the "insurers") - introducing out-of-pocket maximums, to minimum medical loss ratios, so on and so forth. (2011 being the very first year of the Changed system) I have no doubt that the healthcare in 2012 will be much better in terms of our finances than the one we are leaving behind in 2010.

But is mere better enough?

I think just better than before is not good enough. ALL 'better' means is that there is no point in going back to the old, does not mean the right spot has arrived to rest. The following are the reasons why I am NOT EXCITED about the New Healthcare, even though I wouldn't shoot myself in the foot by asking for the old setup back.

New Healthcare is in the nature of a fix to the Old. It's not a new paradigm of healthcare as an economic exchange between the patient and the care provider. Now, In itself, that's no reason to complain. Fixing an existing system is less disruptive than installing a new one. We prefer the former all the time!

The uncontentments are in the characteristics of the fixes and what they have fallen short of eradicating.

Constant Administration by Govt
The new system basically imposes rent-control over the tyrranical health insurance industry via combination of insured's out-of-pocket maximum, minimum medical loss ratio, and similar devices. The Government will probably end up having to constantly monitor and refine these, as the insurance industry will soon game the system to take pricing of care prices where it's own profits are maxed. The Govt of the day will need to perpetually ensure that the insurance company can max its profits by negotiating LOWER not higher care prices for its plan participants. This is sorta like being one up on hackers! I'd rather that the Govt stays one up on terrorists, than spend its energy on trying to stay one up on health "insurers". I would be confortable with a system that can be installed and put on autopilot.

Individual Mandate
It's ideogically opposed by many, although I feel it's like the mandate around safety gear when riding automobiles or in an airplane. But then, wait a minute...
The mandate is not to do but to BUY....and not even to buy an essential medical service -- rather buy medical "insurance". Ostensibly, the idea is that when everybody is covered the price of insurance can be driven down. But price of insurance is as artificial as the prices of medical services. The very pretense of out of the world prices of medical services had been spun (under old healthcare) to force people into the arms of "insurance" and get milked in an orderly way.

In a hospital treatment, I once got a bill for the room I used at $8,000 for 3 nights. This was merely the room rent for 3 days, all nurse, doctor, water, etc. were separate!!! Even the best hotels charge $200/night for a room 2.5 times as big as that hospital room. Under the insurance plan, the rent was shown down to $5,300. Finally I paid "out of pocket" (as if the insurance premium we pay comes from someone else's pocket!) about $500 for the 3 nights. Really, this $500 IS the real price of that room (actually, i'm being generous. If there is no insurance monkey in between, i'm pretty sure it would be more like $300 for three nights, no more per sq ft than JW Marriott) !

The only reason to accept the individual mandate must have been as a trade for coverage of preexisting conditions. But again, these preexisting conditions like diabetes etc. are expensive to treat precisely because the insurance complex has fictionalized ALL medical pricing.

So there might truly be no negotiational justification to have the individual mandate at all....unless we believe that we have no way to shake off the fictionalized prices. Yet a direct market mechanism will finish off this BS. But it would mean removal of "insurer" from the mix. Which would imply a quantum shrinkage of an entire industry that is a significant proportion of the GDP. So an addition to unemployment. But a strengthening of austere Unemoyment support will be much more efficient for the public budget compared to Corporate maintenance (see next section on "Corporate Mandate").

But GDP shrinkage is blasphemy in the indoctrined economic thinking of today, so we let the cancer grow because the body is not allowed to lose any tissue! As if maintaining the Dow and the GDP is the Be All & End All of Economic and Industrial policy.
This position needs to be discarded...if the atrocity in healthcare is to be eradicated, that is.

Corporate Mandate
Pushing healthcare via corporations is a regressive step towards Corporate Welfare. This spins another mutation of the "Too Big to Fail" and "Too Interconnected to Fail". Now, we get a "Too Healthloaded to Fail". A big corporation now cannot be allowed to fail because too many people derive their health insurance from it, while the problem of fictionalized health pricing stays put. All the more situation for Corporate welfare by Govt by this and that means, and If nothing else, then explicit bailout. The corporate entities are supposed to be self sustaining, not running on public doles and concessions, while public having no control over what part of the dole is maintaining/generating employment in there, and what part going to redo designer CEO commodes.

I feel the best deal in healthcare would be to remove both individual and corpirate mandates, and instead legislate that companies payout the amount they spent on employee health insurance in 2010 as addition to employee health savings account and salary. Encourage "Catastrophic Only" Insurance plans with tax breaks, while take them away from plans that cover common cold to corrective eyewear. Let people buy health insurance in open competitive market. In fact, if most people choose to go without insurance for regular ailments, including "preexisting" conditions, the direct market between care providers and consumers will establish the true price of these services. THEN we shall also get genuine health insurance pricing. It is only appropriate that the event/remedy that is being covered is priced arm's-length from the entity insuring the event. Just like Auto Insurance - if my car gets totalled in an accident, insurance pays me to buy a new car, but the price of the new car is determined by a market independent of the insurance.

Therefore, it should further be a legal requirement for healthcare providers to publish their prices (and keep them independent of whether a patient comes via insurance or direct). Today, if you go to buy a frame and corrective glasses, there are two prices: one price if you buy via insurance and 50% discount when you buy direct!

Another needed feature would be to require health insurers to granularize their coverage. That is, let the potential customer choose features s/he wants and price that combination, again like Auto Insurance.

But simply throwing us at the wolves (aka health "insurance" industry) would be rather risky. Without collective bargaining under the Corporate umbrella, they will milk us even 'better'. So some sort of a rudimentary fallback would be needed. To seed this new paradigm with no mandates, there needs to be a Public Option that is chartered to offer ONLY plain vanilla catastrophic illness insurance, and with no budgetary support from the Govt, only the Capital to commence business.

A program to provide access for the patently poor via some sort of "health stamps" can be run separately.

Though not healthcare itself, but at some point, malpractice insurance needs to be completely socialized. That is, if you win a malpractice case, the court awards the compensation, which is paid by the Govt, and the Court also rules on the penance for the doctor involved - fine, suspension, permanent revoke of medical license, as fits the bill.
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