Friday, June 26, 2009
Fannie-Mae Healthcare?
This article examines the logic behind instituting a public plan, and some of the drawbacks to doing so.
Tuesday, June 23, 2009
Even Obama Agrees
WASHINGTON (CNN) – President Barack Obama said Tuesday that there is a "legitimate concern" about the ability of private insurers to compete with a public plan "if the public plan is simply eating (from) the taxpayer trough."
If that's the case, it'd be tough for private insurers to compete, Obama said. If, on the other hand, the "public plan must collect premiums and provide (good) services" like private insurers, then private insurers should have no problem competing with a public option.
Obama said he was hopeful that an efficiently-run public plan could help push private insurers to make similar cost-cutting moves.
The president made his remarks during a news conference at the White House.
Saturday, June 20, 2009
Health Care Reform
I know it has been a while since I posted something here, but I wanted to give my take on the current health care reform as well as to link to a couple of good articles.
First, I thought this article and this article are very informative and contain some good points about health care reform and the public option in particular.
Here is my take: there must be some way that health care services are rationed. We live in a world of finite resources, so not everybody can get every treatment that they want or even need. In most markets, rationing takes place through pricing. If you cannot afford a particular good or service, you will not receive it. In the public school system, rationing takes place through local Board of Education decisions that dictate school budgets. There are pros and cons to both ways. The pricing mechanism is generally a very efficient rationing system, but it can be inequitable to the extent that somebody with very limited resources will have very limited access to these goods. The public committee rationing method can in principle be more equitable (though this is no guarantee), but tends to be inefficient, and leaves individuals powerless to alter their circumstances so as to obtain more of the particular good or service in question.
Personally, I believe that is very important that medical decisions be left in the hands of doctors and patients. Liberals will argue that such a worry is a red herring, and that their plans will not change this. Yet, as advocates of a single-payer system (including certain Democrats in Congress who secretly hope the "public plan" will turn into this) will readily admit, under a single-payer system some government body would be responsible for determining "global budgets" for hospitals, as well as what types of equipment they can purchase.
Translation: a government body would determine the total budget for a hospital, even if the hospital could effectively be using more resources, or if the hospital believed-- in disagreement with the authorities-- that a particular capital equipment purchase was justified. This is a very important feature of the health care system: the ability to dissent. Dissent is what gives rise to innovation, and enforced conformity squelches that. Therefore, while it may be true that the government might not (at least initially) tell doctors exactly what procedures they can do, it will determine the total budget that doctors have to work with, as well as the equipment available to them. That seems mighty limiting to me.
In addition, any public plan that relies on taxpayer dollars is thoroughly anticompetitive. For starters, even though Democrats like to portray such a public plan as an "option," it is hardly an option if your tax dollars are being spent on the plan regardless of whether or not you sign up. Secondly, if the public plan is the only plan that has access to taxpayer dollars, then it is competing on a very unfair playing field, which would likely lead to private insurers being pushed out of the market. Note that this would NOT occur because the public plan was so superior that everybody would flock to it. This would occur because EVERYBODY would have to pay the taxes to sustain the public plan, but those who chose not to join would also be paying the full premiums for their private health insurance? Who would like to do both? Nobody.
The question that arises, then, is what sort of system would I like?
I don't favor a complete laissez-faire pricing rationing system. Everybody should have access to at least basic medical care, independent of financial means. However, above and beyond this, individuals should be able to choose more expensive doctors or treatments if they can muster up the financial means to do so. We are far from having a competitive medical marketplace-- with third-party payers, asymmetric information, and a mind-boggling array of subsidies and mandates-- and I believe that moving more in that direction would significantly improve our medical system.
What might a competitive marketplace for health care look like? For starters, medical histories should be a private matter, and should not need to be disclosed in order for somebody to obtain insurance. Secondly, insurance companies should not be able to turn down any applicants for any insurance plans they offer. Thirdly, doctors and hospitals should have complete autonomy regarding what procedures they administer and how much they charge. Like it or not, medical care is an industry, and hospitals are a form of business. Just because an enterprise operates with money does not make it some lowly money-grubbing entity. Services are rendered, and mutually beneficial transactions take place. Just as every other business decides the prices of its services, so should medical institutions. Of course, just because they can do that does not mean they will get customers.
But wait. This is where a common criticism comes up: when somebody is sick (or especially if they are experiencing a medical emergency) they are not going to go shopping around for the hospital with the best price-quality combination. Similarly, when a doctor recommends a treatment, the patient cannot reasonably expect to do some sort of internal cost-benefit analysis to determine if the procedure is more cost-effective than other treatments. I AGREE.
Of course, the same could be said for people seeking out financial analysts or any other expert who knows more than they do. There is nothing inherent about price competition that says that patients would have to seek price information on every single procedure. I have an alternative. Let patients join (or become "members" of) a health network (namely, a doctor, connected to a hospital, and possibly other out-patient providers) to whom they would pay monthly premiums (or "membership fees"). The health network would then be responsible for providing medical services to you, with you making minimal additional payments. This way the true experts are in charge of what procedures to give you, and they compete in order to attract your membership. As with insurance companies, they would not be able to turn people away because of checkered medical histories.
Of course, there would be many details to work out. The role of insurance companies would be changed (and probably reduced) in such a system, probably relegated primarily to being a financial backstop in case you develop cancer or some other incredibly expensive-to-treat condition. Regulations would probably have to be put in place to ensure that the health networks would not unethically hoard your money (though competitive pressures would likely alleviate almost all of this). Etc.
First, I thought this article and this article are very informative and contain some good points about health care reform and the public option in particular.
Here is my take: there must be some way that health care services are rationed. We live in a world of finite resources, so not everybody can get every treatment that they want or even need. In most markets, rationing takes place through pricing. If you cannot afford a particular good or service, you will not receive it. In the public school system, rationing takes place through local Board of Education decisions that dictate school budgets. There are pros and cons to both ways. The pricing mechanism is generally a very efficient rationing system, but it can be inequitable to the extent that somebody with very limited resources will have very limited access to these goods. The public committee rationing method can in principle be more equitable (though this is no guarantee), but tends to be inefficient, and leaves individuals powerless to alter their circumstances so as to obtain more of the particular good or service in question.
Personally, I believe that is very important that medical decisions be left in the hands of doctors and patients. Liberals will argue that such a worry is a red herring, and that their plans will not change this. Yet, as advocates of a single-payer system (including certain Democrats in Congress who secretly hope the "public plan" will turn into this) will readily admit, under a single-payer system some government body would be responsible for determining "global budgets" for hospitals, as well as what types of equipment they can purchase.
Translation: a government body would determine the total budget for a hospital, even if the hospital could effectively be using more resources, or if the hospital believed-- in disagreement with the authorities-- that a particular capital equipment purchase was justified. This is a very important feature of the health care system: the ability to dissent. Dissent is what gives rise to innovation, and enforced conformity squelches that. Therefore, while it may be true that the government might not (at least initially) tell doctors exactly what procedures they can do, it will determine the total budget that doctors have to work with, as well as the equipment available to them. That seems mighty limiting to me.
In addition, any public plan that relies on taxpayer dollars is thoroughly anticompetitive. For starters, even though Democrats like to portray such a public plan as an "option," it is hardly an option if your tax dollars are being spent on the plan regardless of whether or not you sign up. Secondly, if the public plan is the only plan that has access to taxpayer dollars, then it is competing on a very unfair playing field, which would likely lead to private insurers being pushed out of the market. Note that this would NOT occur because the public plan was so superior that everybody would flock to it. This would occur because EVERYBODY would have to pay the taxes to sustain the public plan, but those who chose not to join would also be paying the full premiums for their private health insurance? Who would like to do both? Nobody.
The question that arises, then, is what sort of system would I like?
I don't favor a complete laissez-faire pricing rationing system. Everybody should have access to at least basic medical care, independent of financial means. However, above and beyond this, individuals should be able to choose more expensive doctors or treatments if they can muster up the financial means to do so. We are far from having a competitive medical marketplace-- with third-party payers, asymmetric information, and a mind-boggling array of subsidies and mandates-- and I believe that moving more in that direction would significantly improve our medical system.
What might a competitive marketplace for health care look like? For starters, medical histories should be a private matter, and should not need to be disclosed in order for somebody to obtain insurance. Secondly, insurance companies should not be able to turn down any applicants for any insurance plans they offer. Thirdly, doctors and hospitals should have complete autonomy regarding what procedures they administer and how much they charge. Like it or not, medical care is an industry, and hospitals are a form of business. Just because an enterprise operates with money does not make it some lowly money-grubbing entity. Services are rendered, and mutually beneficial transactions take place. Just as every other business decides the prices of its services, so should medical institutions. Of course, just because they can do that does not mean they will get customers.
But wait. This is where a common criticism comes up: when somebody is sick (or especially if they are experiencing a medical emergency) they are not going to go shopping around for the hospital with the best price-quality combination. Similarly, when a doctor recommends a treatment, the patient cannot reasonably expect to do some sort of internal cost-benefit analysis to determine if the procedure is more cost-effective than other treatments. I AGREE.
Of course, the same could be said for people seeking out financial analysts or any other expert who knows more than they do. There is nothing inherent about price competition that says that patients would have to seek price information on every single procedure. I have an alternative. Let patients join (or become "members" of) a health network (namely, a doctor, connected to a hospital, and possibly other out-patient providers) to whom they would pay monthly premiums (or "membership fees"). The health network would then be responsible for providing medical services to you, with you making minimal additional payments. This way the true experts are in charge of what procedures to give you, and they compete in order to attract your membership. As with insurance companies, they would not be able to turn people away because of checkered medical histories.
Of course, there would be many details to work out. The role of insurance companies would be changed (and probably reduced) in such a system, probably relegated primarily to being a financial backstop in case you develop cancer or some other incredibly expensive-to-treat condition. Regulations would probably have to be put in place to ensure that the health networks would not unethically hoard your money (though competitive pressures would likely alleviate almost all of this). Etc.
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