On 9/28/06, Todd Walton <[EMAIL PROTECTED]> wrote:
On 9/26/06, Stewart Stremler <[EMAIL PROTECTED]> wrote: > Let private industry "solve the problem"? Well, the problem they solve > is how to part people from their money, not how to keep 'em from getting > sick. One would think that a person wouldn't part with their money unless it was having the desired effect. I currently work for a health insurance company, and I don't remember anyone ever telling me that sick subscribers are good for the bottom line. In fact, the company has instituted programs to help people quit smoking, programs to help people get on a fitness program and stay there, support for generic drugs, a phone number you can call and talk to a nurse about any little problem (*before* it turns into a doctor visit), and they've just recently contracted with a third party company (My Health IQ or something) to give subscribers access to personalized health information on the Internet. This isn't a company that wants sick customers, and this *is* a company with a lot of money and a lot of clout. -todd
This actually illustrates one of the bigest problems with bad policy begetting bad policy ad infinitem. During WW2, the federal government imposed wage and price controls to prevent "war profiteering" while printing money to finance war expenses. This exacerbated the shortages caused by the war effort by reducing profits in the production of many common goods and services, labor among them. This prompted many businesses, who were forced to pay government controlled wages, to start offering medical care as a fringe benefit to workers who could demonstrate sufficient skills at various jobs. This benefit was particularly attractive to workers and spread fast. These benefits were not reported by employers as part of employee wages for tax purposes at first. It took the IRS a few years to figure out what they were doing(IRS is always the last to know about this stuff.). When it did, it began requiring emplpoyers to include the value of the in-kind payments of healthcare benefits as part of empoloyee wages, making it too expensive for employers to continue offering them. In response, employers began to withdraw these benefits. Workers, by now thoroughly addicted to employer-provided healthcare, made a big stink, which resulted in congress making employer-provided healtcare tax-exempt. This created a market for a new class of very lucrative employee health insurance products, which offered the insurance companies the chance to sell a single policy to a business for millions of dollars in premiums as opposed to selling several far less profitable individual policies to emplyees. Later, they expanded this sort of coverage to hospitals, doctors, and government agencies. Thus was started a vicious cycle which still exists today. Because employer-provided health insurance is tax-exempt and individual health insurance is not, about 85% of heatlthcare expenses in the US are paid for by a third party, either an employer, and insurer, or a government body. This causes three bad things to happen. 1) Employees are conditioned to rely on their employers, not themselves, to provide health insurance coverage. More importantly, they are conditioned to rely on the employer to monitor healthcare providers to keep costs down. It is a long-established economic fact that individuals, in this case, the employees, tend to do a far better job of monitoring expenses they must pay themselves than those that somebody else pays for them. If you went into a doctor's office and had to pay the cost of an ACE bandage and of having your sprained ankle wrapped, if the doctor charged you $70 you'd hit him with a bed pan until the price came down or the orderlies dragged you out on your sore foot. But if you have a 30% co-pay($15), and your employer covers the rest, you're far less likely to care about where the other $35 comes from. It becomes the employer's or the insurer's problem. Thus, the price goes up over time. 2) It makes employees more willing to take a larger fraction of their wages in the form of in-kind healthcare benefits rather than cash, and employers less willing to pay higher cash wages. Employees don't get taxed on health benefits, and employers get a deduction, making employees more and more dependent on the employer over time. This increased willingnes to provide wages in the form of healthcare benefits reduces the incentive for empolyers to keep costs down so long as the employees are happy(er .. not too unhappy?) with their healthcare coverage. 3) As healthcare costs continue to rise, insurers are forced to become gatekeepers to keep the cost of any one area of insured health benefits from swamping the others. This causes onerous oversite of doctors and slower payments of claims in portions as each cost is approved, which doctors respond to by increasing prices to get bigger portions paid to them. This additional bureaucracy require the hiring of additional clerical workers to make sure the payments are approved the cost of which is passed on in the form of higher healthcare prices to insurers, and insurance premiums to employers. This is why companies are now spending money to prevent illness to keep insurance costs down that were run up in the first place by the very system they're trying to prevent the over use of. What this all amounts to is the creation of a massive incentive for employers, doctors, and insurers to underserve, deliver less service, to the customer rather than to deliver more. In short we have a vicious cycle of doctor, hospitals, and patients all competing for insurance money, which creates incentives to raise prices for insurers and healthcare providers and reduces or removes incentives to keep prices down for employers and employees(patients). So, how do we get out of this mess? I don't advocate the nationalized healthcare system, granted, the Canadian healthcare system is cheaper for most routine illnesses, but like many HMOs in the US, you don't want to make the mistake of getting too sick. At that point, they start rationing by queue as we ration by price. I am also not sure the Canadian system, which covers a population less than the size of the state of California, will scale to the size of the US population without hitting a wall cost-benefit wise due to the huge bureaucracy that would inevitably be created to manage it. The biggest problem I see with nationalizing healthcare is that instead of a system of doctors hospitals and patients competing for insurance money, you wind up with a system of doctors, hospitals, insurance companies, and patients competing for tax money. If that happens, take all the problems above and consider how much worse they would be if they were institutionalized into the federal government. What we need to do is get from the curent arrangement of doctors, hospitals, and patients competing for insurance money to doctors hospitals and insurance companies competing for the patient's money. To do that, do three things, remove the tax exemption for employer provided health benefits and replace it with an equal tax exempt status for higher wages to get employees demanding higher cash wages to buy their own healthcare, and make ANY third-party payer health benefits from employer to employee illegal, period. If employers want to provide healthcare as a perk, they should be required to negotiate a group deal on individual policies that employees may buy. There would also need to be a provison that neither the employer nor the insurer could make any kind of exclusive deal between each other or the employees for this coverage. If an employee wants to shop around down the street for a better policy, they can do so with no restrictions or penalty. This means that insurer must constantly prove to the employee(patient) that they are getting the best deal at a given price or the customer will walk. Hmm, I haven't gone off like this since the flat tax discussion some time back, guess this is a hot button issue for me. Robert Donovan. -- [email protected] http://www.kernel-panic.org/cgi-bin/mailman/listinfo/kplug-list
