Thursday, September 03, 2009

The Incentives Are Wrong

In The Atlantic David Goldhill says there are things in the American health care system that need fixing.

I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.
I pretty much agree with all that except the bit about reducing the role of insurance. I think the role of insurance needs to be changed. And that may mean an increase or a reduction.

So what reforms would I like to see?

1. Sever health insurance from employment. A few things have to be done to accomplish this.
   a. The Health Care Deduction goes to the individual.
   b. A national market for insurance (see below)

2. Allow Medical Savings Accounts (MSAs) to roll over so dollars can be accumulated. Over time most lower cost procedures (under $10K or $20K) will come under consumer pressure because insurance doesn't kick in until your MSA is spent.

3. Catastrophic insurance coverage only. No coverage for minor or regular procedures. Those are handled by MSAs.

4. Limit damage awards to identifiable costs. Lost work. Reduced capacity for work. Medicines. "Pain and suffering" awards should be limited to a small amount.

There may be some other things. I'm open to suggestions.

12 comments:

rumcrook said...

I think a large percent of the problems of cost would be ameliorated by national portability giving competition across state lines,

and secondly insurance going thru the individual which would break the cycle of insurance only thru work and again no portability if you change or lose a job.

Tom said...

I have been wondering why no one is talking about increasing the SUPPLY of health care. In a capitalist system increases in supply tend to drive prices down.

Specifically, increase the number of doctors. There are plenty of bright people who simply cannot get a license because the number is strictly regulated to inflate doctors' incomes. Medical schools are only allowed to graduate fixed numbers of candidates each year.

If the government wants to spend boodles of our bucks, why not build a whole bunch of new hospitals? A much better use of the stimulus money than whatever it was they did spend it on.

When I see Medicare, Medicaid and the VA well run, efficient and providing top quality care I will believe the government competent to run the whole show. I expect to have a long wait.

RavingDave said...

Tom makes a point (which I share) that I seldom see mentioned. It is the fact that the Government controls so heavily medical education and licensing that causes some of the problem. If the government loosened the reins a bit and allowed more people to practice medicine, (such as Nurse/Practitioners etc.) then perhaps a lot of more minor problems could be dealt with without necessitating the intervention of a Doctor.

Geeze, doesn't anybody remember just how qualified and knowledgeable doctors used to be a hundred years ago ? Today's nurses have more and more useful knowledge.


David

BaldnForty said...

I think Tom hit the nail on the head.

Also, I'd like to point out that all of that required schooling does not necessarily equate to competence as a doctor. Rather it does equate to competence at getting through medical school.

They also need to get rid of the slave labor internship program. I'm not saying that doctor's shouldn't start out as interns, but the whole system of forcing new in-experienced doctors to make life and death medical decisions while sleep deprived because of 100+ hour work weeks boggles the mind.

Barry Kirk

M. Simon said...

the whole system of forcing new in-experienced doctors to make life and death medical decisions while sleep deprived because of 100+ hour work weeks boggles the mind.

Except that is what doctoring during a disaster looks like.

ZenDraken said...

I agree with insurance portability, and add that co-payments should be increased.

I currently pay $5.00 a visit, which seems kind of pointless. It should be more like $30 or $50. That would reduce frivolous visits and make co-payments a somewhat significant cost offset for insurance companies.

gas28man said...

Tom and RavingDave are misinformed. "The government" does not control the volume of medical school openings -- the AMA does.

Also, neither Medicare nor Congress determine the rates that Medicare pays doctors and hospitals for their work. The CPT codes are chosen by a 17-member committee, consisting of 11 AMA members (mostly specialists), with the remaining slots filled by the Blue Cross Blue Shield association, the health insurance lobby AHIP, CMS (Medicare), and the hospital lobby AHA.

The valuation on each CPT code is then determined and constantly updated by the RBRVS (Resource-based Relative Value Scale) Update Committee, which is a 29-member panel, 23 slots filled by the largest medical specialty societies, and the remaining six slots filled by two AMA appointees (one of which must be the chair), a representative of the American Osteopathic Association, and members of three other committees (including the one that determines CPT codes).

And by the way, this process is all copyrighted by the AMA, which collects $70 million annually from Medicare and all the private insurers who use it.

Is it any wonder that specialist care is so much more highly valued than primary care? Look at how many seats at the table specialists have, compared to everyone else (including Medicare itself!).

But more to the point, why are doctors getting to, essentially, write their own paychecks? There isn't too much bureaucracy, there's not enough, in my book!

BaldnForty said...

Sounds to me like the end consumer, the patient, has absolutely no say in how much they pay for a doctor's visit unless they don't have insurance.

Sounds like a broken system to me.

RavingDave said...

I agree with insurance portability, and add that co-payments should be increased.

I currently pay $5.00 a visit, which seems kind of pointless. It should be more like $30 or $50. That would reduce frivolous visits and make co-payments a somewhat significant cost offset for insurance companies.

Friday, September 4, 2009 5:36:00 PM UTC
Blogger gas28man said...

Tom and RavingDave are misinformed. "The government" does not control the volume of medical school openings -- the AMA does.



Who issues the licenses ? And how is THAT not control ?



David

RavingDave said...

Something went wrong on that last post.


Oh well.

David

Tom said...

Gas28man is right about the AMA. The doctors' union gets to say how many new doctors there are to compete with. Funny that.

But Congress could change that easily enough. Pass a law, write a regulation. Most medical schools are public institutions, or accept public money. Congress has a lot of clout.

It was (and may still be) easier for an aspiring doctor to go to school overseas, get licensed there, then return to the US. I don't know if that round-about is still possible.

Anyway, the doctor license idea was simply an example of a simple way to increase medical care quantity.

My suggestion that the gov build lots of hospitals with the stimulus mmoney was somewhat tongue-in-cheek. I am a libertarian, so would prefer the gov to simply not take that money away from us in the first place.

If we all had our own money to spend there would be plenty to go around for medical needs, building new facilities or whatever. But we don't live in that world. Since the government IS taking our money, well I guess building hospitals is as good a way to spend it as any.

Which brings us back to the doctor shortage. No point in building lots of new hospitals if there aren't any doctors to staff them.

M. Simon said...

gas28man,

What you describe is called regulatory capture. It is inevitable. Which is why the truth is: Too Much Regulation.