Wednesday, February 27, 2013

Modern Health Care And An Idea To Improve It

I have been reading this very intersting article, which is not only long, but also detailed and on top of that in a publication that nobody in the world would call "libertarian", but clearly leftist. His diagnosis hits the root of one of the biggest problem in centralized health care with insurance companies. His solutions are to just complicate it even more with regulations and anti-profit laws. None of them will help much, but rather make the problem more complex and a solution less possible.

It is similar to the real estate bubble, where it was only possible to cheat because the whole system was so complex that almost nobody understood it anymore. They knew how it worked superficially and how they could game it to create huge gains, but they didn't understand the risks involved because the fundamentals got lost.

What he proposes is along the same line and thus not a solution in my opinion. But lets just do a small recap, if you didn't read the whole thing. Basically he identifies a dischotomy between the three actors in the health care market: Health Care Facilities (Doctors, Hospitals etc.), Insurance Companies and Patients.
Insurance companies want regulated bulk prices that are not too high, but don't need a lot of micromanagement. The health care facilities want to maximize earnings while the patients want to reduce costs for themselves, while getting high quality care.
Now due to the information mismatch and time constraints of insurance companies, the price lists are compiled like a fashion catalogue and the prices are given by the health care facility. Since the facility has every incentive to arrive at prices that are significantly higher than what is actually a fair price considering demand and supply, they overcharge patients, while insurance companies don't complain. They will complain even less under Obama, because they basically have an unlimited insurer base that won't much change anymore. The result are hospitals that grow rich and insurers that limit care, while the consumer has no say in it whatsoever. If you go to Europe, it goes so far that he doesn't even have a clue about prices (except in the rare cases of dental care, plastic surgery and eye laser surgery, which are mostly PRIVATELY insured cases).

You might wonder what I would change without redoing the whole system. Well, I would reduce it to the one word that is paramount in all of the discussion and yet woefully misunderstood: Insurance.
If you do know what car insurance is, you also know how it usually works. You go to a car repair shop and ask for a price and a diagnosis. You get both, you decide whether to pay for it in cash or per credit card or whether you will submit it to your insurance company.
You do it only in cases of high costs, when you know you can't take on the financial burden (mostly higher than 1000 bucks).
This has many advantages. It protects you from financial disaster, that would ruin your life (as a life-long illness with high running-costs would do). It allows you to shop around and to look for the most trustworthy mechanic (like looking for a doctor and getting different quotes on the prices and recommended procedures). And it would mean prices that are closer to supply and demand and where they are tailored to individuals.
For example, insurance companies' price catalogs usually have set prices for one up to 8 warts removals. Even if you don't need the full 8 removals, you still pay for them. Why does a blood test cost up to 300 $, when the costs of the procedure itself costs about 14 $.

This doesn't mean that prices will drop, but they will most certainly reflect the actual supply and demand market more clearly than the process today does. And it will reduce over-charging by hospitals and doctors. It will remove excess gains and probably get better care to a wider range of people.
This wouldn't even need a repeal of Obamacare, but would be a sensible synopsis you could arrive at after watching the European health care markets.

Does this mean that I endorse Obamacare, certainly not, but if it is there to stay, you could at least learn from the mistakes in Europe. Intelligent Design doesn't have to be a Christian thing.

No comments: