A look at healthcare
I have recently been forwarded this article, and thought I'd toss in my two cents. Not that it would matter to anyone except maybe, possibly, the five (am I exaggerating?) of you reading this blog. But hey, they are my two cents, so I'll toss them as I please. So there.
Mr. Boudreaux makes a very good point - free universal healthcare is, indeed, a completely moronic notion driven by and large by people with some hidden romantic notions about Karl Marx (sorry, I had to). His analogy is entirely appropriate, but his conclusions - privatize healthcare even more - are terribly wrong.
I'll tell you why they are so wrong before I propose an alternative system that could be adopted relatively easily within the current US framework while solving the biggest issues with healthcare in this country.
Mr. Boudreaux is wrong for three simple reasons:
1) While healthcare is not a right, access to a basic level of healthcare - leaving the issue of costs aside for a moment - is, indeed, a social right. Why? because human society - at least western society - is built on the notion that communities are desirable and that compassion is a basic principle of humanity. I'll leave you with the exercise of drawing the inevitable conclusion from the last statement.
It is also important to define "basic" here - basic healthcare in the US means something completely different than in, say, Africa. Keep this in mind as you keep reading.
2) Societal health is driven in part by the overall physical health of its members and the ability to take care of them. Of course, I am referring to the "compassionate society" which I believe we prefer to live in. It is therefore a basic ingredient in the overall health of not just each individual, but society as a whole.
3) Survival cannot be driven by shareholder profit considerations, especially not in an imperfect market, where long-term societal impacts are never considered as strongly as short-term personal interest. In other words, if you let stock prices drive healthcare, you will inevitably face the "profit maximization" or "margin improvement" paradigm, which in simple terms means that the for-profit provider will always be interested in doing as little as possible while charging as much as possible. It's not evil, it's simply the way for-profit organizations work in capitalism.
OK, that was a bit long-winded, but in a nutshell I am suggesting that to leave healthcare (and education, by the way) entirely in the hands of for-profit organizations without, at the very least, societal oversight (which means government, until someone comes up with a better way to organize human society) would eventually result in great healthcare for those who don't need it, and no healthcare for those who do (sounds familiar?), due to the profit motive.
Instead, I would like to propose a different system. It is a combination of ideas from around the world, and I think it could work fairly well in the US.
Here we go:
1) Basic healthcare would be defined by a not-for-profit professional panel that is nominated by a congressional committee. It would include all elements of a basic healthcare plan, including types of services, formulary etc., just like a health insurance policy. This panel will have no political affiliation, and to insure that, members will be selected for terms longer than at least two administrations (I suggest 10 years). Panel members will have to pass stringent criteria to qualify, and will be paid (and paid well, similar to supreme court judges) through the same system that will fund basic healthcare (see below). The panel will have full authority to determine changes to the elements of this basic plan, and will be required to do so at least twice annually. Lastly, the panel will be constrained by the amount of available funds in the national health fund (see below).
2) We will set up a national health fund. This fund will be completely independent (meaning it could not be used by the budget office to cover shortages elsewhere, like social security). It will be funded by a flat tax that will amount to, say, a tax-deductible 4% of a person's annual gross income. In addition, employers will contribute a tax-deductible 2% of their payroll. I am not proposing any caps to this tax, but in order to maintain feasibility, such a cap will have to be introduced (otherwise wealthy members will justly complain of having to pay, say, over a million a year in healthcare).
3) The basic healthcare plan will still require some contributions from members; however, those will be small. For example, $10 office visits, $10 RX, 10% contribution, no deductible, annual out-of-pocket maximum of say $1000 per person, similar to the best group PPO plans out there. All such expenses will be tax deductible. Furthermore, I also propose that very low income families will receive some sort of tax credit (like a child credit) to help offset these costs.
4) The national basic healthcare plan will be available to everyone. It doesn't matter if you have cancer, you're diabetic, pregnant or what have you; you make money in this country, you are covered by virtue of paying the tax.
5) Better coverage - for example, for things that might not be covered under the basic national plan - will be available through private healthcare companies, such as today's health insurance companies. They can offer more comprehensive policies, additional coverage for non-included drugs, or whatever they want. Furthermore, they would be able to charge whatever they think the market will bear, with much less strict price controls (I am proposing a spread of 5x between top and bottom). Yes, this means they could also charge different members different prices. However, one important caveat exists - any plan they offer will have to be offered to everyone.
6) Healthcare providers - doctors, hospitals etc - will be required to accept all patients or only private patients. This means that if they accept anyone under the national plan, they must accept everyone; otherwise they can choose to only accept those patients who are covered by one or more specific private plans. However, a provider who chooses to only accept private patients will not be able to treat them for ailments that are covered through the national health plan. In effect, if you want to be a specialist in an area that isn't handled in the national plan and only work with very wealthy clients, you are free to do so, but that's all you will be doing.
7) All drug and treatment prices will be negotiated and determined by a sister panel of negotiators, who will work to establish a national pricing index for the national plan with cost-of-living adjustments (similar to, say, the CIA).
This is it, in a nutshell. I believe that the above plan will solve most of the issues we are currently facing, namely:
1) Access to healthcare will be available to everyone, sick or not.
2) Healthcare will be far more affordable than it is today (before you jump on the 4% tax thing, do yourself a favor and calculate how much money a good PPO plan will cost you today, and remember it's tax deductible).
3) Better insurance will still be available to those who wish to pay for it.
4) There will be no large-scale abuse of the system as suggested in Mr. Boudreaux's article, since there will still be a contribution element.
5) Much of the waste, carried through administrative costs and currently inherent in the healthcare system will be eliminated, allowing for better use of funds and therefore a better national plan over time.
Anyway, as I said, just my two cents.
Mr. Boudreaux makes a very good point - free universal healthcare is, indeed, a completely moronic notion driven by and large by people with some hidden romantic notions about Karl Marx (sorry, I had to). His analogy is entirely appropriate, but his conclusions - privatize healthcare even more - are terribly wrong.
I'll tell you why they are so wrong before I propose an alternative system that could be adopted relatively easily within the current US framework while solving the biggest issues with healthcare in this country.
Mr. Boudreaux is wrong for three simple reasons:
1) While healthcare is not a right, access to a basic level of healthcare - leaving the issue of costs aside for a moment - is, indeed, a social right. Why? because human society - at least western society - is built on the notion that communities are desirable and that compassion is a basic principle of humanity. I'll leave you with the exercise of drawing the inevitable conclusion from the last statement.
It is also important to define "basic" here - basic healthcare in the US means something completely different than in, say, Africa. Keep this in mind as you keep reading.
2) Societal health is driven in part by the overall physical health of its members and the ability to take care of them. Of course, I am referring to the "compassionate society" which I believe we prefer to live in. It is therefore a basic ingredient in the overall health of not just each individual, but society as a whole.
3) Survival cannot be driven by shareholder profit considerations, especially not in an imperfect market, where long-term societal impacts are never considered as strongly as short-term personal interest. In other words, if you let stock prices drive healthcare, you will inevitably face the "profit maximization" or "margin improvement" paradigm, which in simple terms means that the for-profit provider will always be interested in doing as little as possible while charging as much as possible. It's not evil, it's simply the way for-profit organizations work in capitalism.
OK, that was a bit long-winded, but in a nutshell I am suggesting that to leave healthcare (and education, by the way) entirely in the hands of for-profit organizations without, at the very least, societal oversight (which means government, until someone comes up with a better way to organize human society) would eventually result in great healthcare for those who don't need it, and no healthcare for those who do (sounds familiar?), due to the profit motive.
Instead, I would like to propose a different system. It is a combination of ideas from around the world, and I think it could work fairly well in the US.
Here we go:
1) Basic healthcare would be defined by a not-for-profit professional panel that is nominated by a congressional committee. It would include all elements of a basic healthcare plan, including types of services, formulary etc., just like a health insurance policy. This panel will have no political affiliation, and to insure that, members will be selected for terms longer than at least two administrations (I suggest 10 years). Panel members will have to pass stringent criteria to qualify, and will be paid (and paid well, similar to supreme court judges) through the same system that will fund basic healthcare (see below). The panel will have full authority to determine changes to the elements of this basic plan, and will be required to do so at least twice annually. Lastly, the panel will be constrained by the amount of available funds in the national health fund (see below).
2) We will set up a national health fund. This fund will be completely independent (meaning it could not be used by the budget office to cover shortages elsewhere, like social security). It will be funded by a flat tax that will amount to, say, a tax-deductible 4% of a person's annual gross income. In addition, employers will contribute a tax-deductible 2% of their payroll. I am not proposing any caps to this tax, but in order to maintain feasibility, such a cap will have to be introduced (otherwise wealthy members will justly complain of having to pay, say, over a million a year in healthcare).
3) The basic healthcare plan will still require some contributions from members; however, those will be small. For example, $10 office visits, $10 RX, 10% contribution, no deductible, annual out-of-pocket maximum of say $1000 per person, similar to the best group PPO plans out there. All such expenses will be tax deductible. Furthermore, I also propose that very low income families will receive some sort of tax credit (like a child credit) to help offset these costs.
4) The national basic healthcare plan will be available to everyone. It doesn't matter if you have cancer, you're diabetic, pregnant or what have you; you make money in this country, you are covered by virtue of paying the tax.
5) Better coverage - for example, for things that might not be covered under the basic national plan - will be available through private healthcare companies, such as today's health insurance companies. They can offer more comprehensive policies, additional coverage for non-included drugs, or whatever they want. Furthermore, they would be able to charge whatever they think the market will bear, with much less strict price controls (I am proposing a spread of 5x between top and bottom). Yes, this means they could also charge different members different prices. However, one important caveat exists - any plan they offer will have to be offered to everyone.
6) Healthcare providers - doctors, hospitals etc - will be required to accept all patients or only private patients. This means that if they accept anyone under the national plan, they must accept everyone; otherwise they can choose to only accept those patients who are covered by one or more specific private plans. However, a provider who chooses to only accept private patients will not be able to treat them for ailments that are covered through the national health plan. In effect, if you want to be a specialist in an area that isn't handled in the national plan and only work with very wealthy clients, you are free to do so, but that's all you will be doing.
7) All drug and treatment prices will be negotiated and determined by a sister panel of negotiators, who will work to establish a national pricing index for the national plan with cost-of-living adjustments (similar to, say, the CIA).
This is it, in a nutshell. I believe that the above plan will solve most of the issues we are currently facing, namely:
1) Access to healthcare will be available to everyone, sick or not.
2) Healthcare will be far more affordable than it is today (before you jump on the 4% tax thing, do yourself a favor and calculate how much money a good PPO plan will cost you today, and remember it's tax deductible).
3) Better insurance will still be available to those who wish to pay for it.
4) There will be no large-scale abuse of the system as suggested in Mr. Boudreaux's article, since there will still be a contribution element.
5) Much of the waste, carried through administrative costs and currently inherent in the healthcare system will be eliminated, allowing for better use of funds and therefore a better national plan over time.
Anyway, as I said, just my two cents.
posted by Blinkered at 9:54 AM
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