Blog of Author Paul S. Kemp - More on Health Care

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Health care reform debate

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I agree with you that the "for-profit" aspect of insurance companies is a detriment to overall health care. I also agree that something has to be done or health-care costs will further cripple the country. I further agree that honest, hard-working people that contribute their fair share should not be a diagnosis away from financial ruin and that to allow such a thing to happen in our great country is nothing short of shameful. But, with respect, I suggest that the issue is not so one-sided as some people seem to think.

In my opinion, the concern that a gov't offered plan will drive the private carriers out of business and create socialized/universal/entitlement health care is a legitimate concern. That is something that I dread. Both my wife and I have gone through the military medical system, which is quite similar to what I think we would get w/a purely-gov't run plan. The only good thing that one can say about health care in the military is that it is better, albeit marginally, than not having care at all. The crushing number of patients compared to available providers, the lack of financial disincentive to get treatment or go to the hospital, and the lack of personal responsibilty all lead to results in military health care that would be unbearable to most Americans. Want to meet the doctor before a surgery? Forget about it. Want to get your gall bladder removed immediately because you are in terrible pain? Too bad, the docs are full-up for two months so take some hydrocodone and deal with it. This happened to my wife even though the docs told her that the gall bladder needed to come out--it just wasn't enough of an "emergency." It reminds me of the piece I recently saw on the news about a Canadian woman that went into debt $100K to get a brain tumor removed at the Mayo Clinic b/c the Candian system was going to force her to wait MONTHS to see the necessary specialists. She did not seem to think that the fact that the surgery, when she ultimately got it, would be free was worth it.

I would like to see more talk of everyone having the type of option that I now have as a civilian federal employee. The gov't (or an employer with compensation via tax breaks) picks up most of the monthly premiums but the individual is still responsible for enough to make him/her personally motivated to live a healthy lifestyle and make responsible decisions. I don't know, however, how this would work for folks in this country that can't afford monthly premiums, co-payments, and that sort of thing. Hopefully, somebody smarter than me can figure it out because, as I said earlier, I agree with you 100% that something needs to be done.

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From:	paulskemp
Date:	July 9th, 2009 04:38 pm (UTC)

Re: Health care reform debate

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I take your point, but continue to find the crowding out argument unpersuasive. If a public option crowds out private insurance, that's because it's superior in the marketplace. That's a *good* thing for consumers. Those who worry about a gov't option winning-out in the market rely on a speculative premise -- that after "winning," the gov't option, once good enough to drive private industry out of business, will get fat, bloated, and terrible. I don't buy it (nor, for the record, do I think that a public option will "win" at all; I think private insurers will suddenly and remarkably become vastly more efficient and less bloated than they are and compete effectively thereby).

On another subject: The care received by active duty military is not through the VA, is it? I ask because the VA consistently scores higher than privately provided care in virtually every measurable category when it comes to delivering quality care at a low cost, and I've always thought that active duty military get different care than discharged military. I actually have some experience with this. My brother was horribly injured while in the Army and was not expected to live (he did, thankfully). His care was not what I would call top notch, but it was at a military installation, and not through a VA hospital. Long story short, I think the issues you raise may be not so much problems with government run healthcare (after all, the VA and Medicare and Medicaid do quite well), as much as they are problems with care provided through the active duty military.

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From:	9341chris
Date:	July 9th, 2009 06:05 pm (UTC)

Re: Health care reform debate

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Let me take on the role of devils advocate just for the sake of trying to tackle this issue from different sides. I'm generally in favor of the public option, but the opponents do make interesting arguments.

I take your point, but continue to find the crowding out argument unpersuasive. If a public option crowds out private insurance, that's because it's superior in the marketplace. That's a *good* thing for consumers.

But doesn't the government have much deeper pockets than most private companies? Perhaps there is validity in the concern that the government can succeed in providing lower cost health insurance because they are utilizing more resources than private companies? (Some may conjure up an image of Walmart crushing the smaller grocery stores due to its buying power). Just because the government can beat out the competition doesn't necessarily mean that it's a good thing, does it?

Would it be fair for the government to start offering legal services to those who can't afford civil attorneys for wills and trusts, contract reviews, etc? Instead of paying $100 for a will from a lawyer in your city, you can have a government service do one for $60.

(There's probably a better example than lawyer, but I can't think of one right now)

Also, I had read anecdotal evidence that NASA use to lowball bids for companies that needed to send communications satellites into space. They'd end up spending more money than what they bid, but it was the taxpayers that foot the expenses. It was a way to keep a corner on the market to stymy private ventures into space.

The point that some bring up is that it's not fair for the government to compete in the free-market because they play by an entirely different set of rules. The government can go into debt. The government can receive loans from just about anyone. So the question that critics of the public option states: Is it fair?

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From:	paulskemp
Date:	July 9th, 2009 07:48 pm (UTC)

Re: Health care reform debate

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Would it be fair for the government to start offering legal services to those who can't afford civil attorneys for wills and trusts, contract reviews, etc? Instead of paying $100 for a will from a lawyer in your city, you can have a government service do one for $60.

Fair to whom? The lawyers? Why should I care, if I'm a consumer? The point is simply this: if an entity can provide the same good/services at a cheaper price, then that benefits the consumers of the good/service and is therefore superior for the consumer. That the lawyers may not like it (or the insurance companies) is quite beside the point. We might as well think it unfair that Southwest provides cheaper fares to the same locations than its competitors.

The point about subsidized operations is a different one. Setting aside whether or not I think it's a valid point, it's probably a moot one. Almost all of the likely iterations of the public option involve competition "on a level playing field." True, we don't know exactly what that means until we see the proposal, but in concept it's an attempt to address the issue of a subsidized operations competing with non-subsidized private operations.

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From:	9341chris
Date:	July 10th, 2009 01:32 am (UTC)

Re: Health care reform debate

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Again, just playing devils advocate here (trying to raise the arguments that opponents of a public option would say)....

Why should I care, if I'm a consumer? The point is simply this: if an entity can provide the same good/services at a cheaper price, then that benefits the consumers of the good/service and is therefore superior for the consumer.

Then let me ask you this, why do people become concerned about entities like Walmart and the big chain companies that come into a community and drive out the (smaller) competition?

The distinction here is the private insurance companies are the big bad monster here because of nefarious operations. Which is why some feel that more regulation and laws that reform private insurers could help the issue more than the government starting their own health providing department.

But, it's the financial advantage that gets critics' pants in a bunch. Proponents of a public option claim that the government can offer lower cost insurance because they have the ability to take on and cover millions of people who want a policy (due to their fiscal powers). And that is the part of the issue that many opponents find troublesome. Theoretically, couldn't the government just about do anything that a private sector company does now for a lower cost? They'd have the same access to infrastructure, endless supply of capital, and be able to charge less to the customer and make it up in volume?

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From:	paulskemp
Date:	July 10th, 2009 01:26 pm (UTC)

Re: Health care reform debate

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Chris,

Anti-Walmart sentiment doesn't strike me as relevant to this discussion. People are upset when Walmart moves into an area for a whole host of reasons -- they treat employees shabbily, use sweatshop suppliers, have a huge geographical footprint, not to mention putting local businesses out of businesses. People don't like that last because they think that having neighborhood businesses is a good in and of itself, even if their prices are higher than Walmart. I don't imagine you're comparing the situation of a local grocer facing competition with Walmart to the enormous insurance companies facing competition from the gov't.

So, moving on....

Theoretically, couldn't the government just about do anything that a private sector company does now for a lower cost?

Chris,

Let's distinguish a couple things, because the terminology is getting sloppy. "Cost" is the cost of the inputs used to produce a good/service by the producer. "Price" is the amount at which the good/service is sold by the producer to consumers.

Your concern seems to be that the gov't may be able to offer health insurance at a price that is lower than its cost because the gov't can rely on additional tax dollars/reserves to eat what would otherwise be a loss to a private company and that this is therefore unfair.

But recall the point I raise above. In an effort to "level the playing field," the public option will probably be financed out of premiums paid by the insured, and this is exactly the same model used by the insurance companies against which the public option will compete. Given that,the issue you raised disappears. To the extent the public option has a financial advantage in this context, it's because it won't have 20%+ administrative costs, enormous executive salaries, and the need for 30%+ margins. That's a good thing, as far as I'm concerned. Insurance companies are fat, happy, and bloated. They need competition to pop that balloon (just for the record, though, I don't find any of the concerns you raised concerning even where a public option was not obliged to be funded out of premiums and the gov't could fall back on additional tax dollars; but that's because I think there are other values at stake).

I look at it this way -- the market for health insurance isn't a market for insurance at all. Instead, three or four megacorps (Cigna, United Health, Wellpoint) are in the business of collecting as much as they can in premiums, while denying or limiting coverage as much as they can to drive profits and cover their absurdly high administrative costs. To the extent market forces drive innovation among the insurers, they don't drive better and more inexpensive coverage (which is what happens in a functioning market, and is why Walmart is so successful). Instead, they drive better ways to collect ever more in premiums, to segment risk, and to deny coverage. I think that's incredibly dysfunctional. If a public option enters the marketplace and its business model is to, you know, actually provide health insurance, the private companies will be forced to adjust their practices or get driven out of business. Again, as far as I'm concerned, that's a good thing.

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From:	9341chris
Date:	July 10th, 2009 03:41 pm (UTC)

Re: Health care reform debate

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I only bring up the anti-Walmart sentiment as a response to what you said here...

Why should I care, if I'm a consumer? The point is simply this: if an entity can provide the same good/services at a cheaper price, then that benefits the consumers of the good/service and is therefore superior for the consumer.

...which seemed like a universal truth as opposed to a specific conclusion about the public option. I don't believe it to be a universal truth, but I do agree with you that the public option would be a good thing if it offers quality health insurance at lower premiums.

I like the public option because it can take those that have pre-existing conditions and because it will (hopefully) pay for coverages without resorting to nefarious tactics like recission. Like I said before though, it's really a shame that this kind of stuff was never addressed via regulations and reform, and we had to get to this point. Especially recission. If an insurance company deposits my check, then it should have to cover me no matter what.

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From:	paulskemp
Date:	July 10th, 2009 04:59 pm (UTC)

Re: Health care reform debate

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Ah. That makes sense then.

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From:	poisoned_blade
Date:	July 10th, 2009 08:10 am (UTC)

The system is screwed.

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Last year, I went into the hospital for 2 days for some tests on my heart.
Treadmill + Scan.

Aside from 1 nitro pill, I had no medication.

I also had NO FOOD! I missed all of my meals because I was being tested at those times. Apparently, if you aren't awake in your bed the minute they come by, you don't get fed. I survived on a Coke and a bag of peanut M&M's from the vending machine.

My bill was $80,000.00.
After Insurance, my bill was $6,000.00.

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