A Healthcare Proposal

Healthcare reform. It’s all the rage—except for the fascinating revolt of the middle class playing out in Iran. But I digress.

It’s easy to digress when you’re talking about healthcare, because it’s hard to understand, miserable to confront, and there are so many vested interests filling the airwaves with misinformation, you can almost feel the magnetic radiation bouncing off your skin.

But I’m going to attempt to identify some of the main problems and propose one or two possible solutions.

First, what are the problems? The conservative pundits would have you believe that we have a wonderful field of competition out there—one of the most common statistics I’ve heard George Will, Michael Steele, Lindsey Graham and others on the right cite is that there are “1300 competing providers of health care” out there—as though the sheer number proves 1) competition exists, and 2) that it’s working.

Neither proposition is true. Anyone who has ever had any sort of medical procedure beyond an annual check-up and has received a bill knows that the care they got wasn’t worth what they’ve been charged. Not that the care is bad, but--$500 for 1 hour in a hospital room? $2,000 for a simple ER visit with an xray? There is a hidden cost that is being surcharged to all persons who receive healthcare, especially hospital care, which is directly related to those who cannot afford to pay their bills—usually, the uninsured. This cost is passed on to others who can pay or have insurance. This is not the market in action. This is some kind of strange dance between insurance companies and hospitals and other healthcare providers. And we get caught in the middle. And oh, by the way, insurance companies reap a healthy profit. (At least they did operating in their own industry. Once they started speculating in exotic financial vehicles (insuring credit swaps, e.g.), they started losing money.)

So, regardless of whether we have some sort of faux competition among health insurance companies, the market itself is not currently working. Not existent, actually, because we have this weighty anchor pulling us down, inflating our costs threefold or more.

What’s more, we have moved to a strange confused view of health insurance versus health care. Insurance is a contract for money payable upon the occurrence of certain events. Perhaps one of the purest examples of insurance is auto insurance. You don’t think you will get in an accident (your fault or otherwise) but you better have insurance to cover the risk that you will, otherwise you will end up with a large sum out of pocket. In fact, states require auto insurance, because too many people were causing accidents and did not have the means to reimburse the damages of the person they injured—medical bills or automobile repairs.

Compare this to health insurance. You have a plan that has certain benefits. You pay a premium, as with auto insurance, but certain in-network procedures and certain medications are completely “free,” while others aren’t. Certain coded procedures are allowable, while others are not. These days, you’re not really buying insurance, but a health plan with insurance-like features (like a total pay-out limit). And, because it’s insurance and not a health plan, meaning you have to make a claim against the contract you’re paying for and the insurance company has the right and does carefully scrutinize the treatment (and carefully crafts the language of its policies to limit payouts), it’s a crappy health plan.

The current state of things, then, is that (1) we have a broken market for healthcare “insurance” (or healthcare plans) with (2) a hidden and uncontrollable variable linked to the uninsured, and (3) plans that are full of holes and inevitably create an antagonistic process between the claimant (the patient) and the insurance company. Meanwhile, hospitals, and to a lesser extent doctors, are caught in the middle.

How do we fix this morass? Here are some ideas, none of which are mutually exclusive:

1. Government mandate for healthcare insurance. We all hate government mandates, right? Here’s one that would instantly fix a lot of problems: Require all persons in this country to obtain catastrophic health care insurance. That’s right, I’m asking for this invasion in our lives, but for our own good. Much like the requirement for liability insurance for automobiles (which is required in almost every state in the union), the cost protection we all gain from not having to subsidize someone’s $1 million treatment far outweighs the impairment of our liberty. Catastrophic health care insurance is pretty self-explanatory: it insures against high-cost medical events. Essentially, it is very high deductible health insurance. The mandate I would be looking for is something on the order of requiring all persons to obtain a health insurance plan with a $25,000 (or less) annual deductible. It should be very cheap, because a person rarely spends more than that amount in a year. Proviso—I’m not sure where the number should be exactly; we might be a little high or a little low here. But I think an optimal number could be reached. Also, we will still have to have Medicare, because as people age, the cost of even a catastrophic health care insurance policy becomes prohibitive; this is not a unifying healthcare reform effort in the sense that all pieces line up under this one piece of legislation.

A corollary to this idea is that either the government would have to offer insurance alongside competitors to “uninsurable” people; e.g., people like my mother who have had breast cancer or some other kind of disease, probably as an extension of Medicare. Or, the government would have to impose on the insurance industry a requirement that such persons cannot have preexisting conditions held against them. The insurance industry has actually offered this carrot to prevent the current overhaul of healthcare that we’re seeing.

2. Preventive healthcare. A lot of folks are not going to like this one, but we can tamp down a lot of health care costs by providing for free to every person legally in this country (perhaps even illegally, since illegals go to the hospital, too, and drive up all of our costs) preventive care, including annual checkups, vaccines, and routine procedures. This would cause some cost for the government, but I believe that the savings would be greater. These people would also presumably contribute income rather than being sick, and generate tax revenue. Obviously, this is hard to gauge, but I think it’s a fair risk to benefit us economically, and allows us to feel good about ourselves as a society from a moral perspective, because we are taking care of our own.

3. Bar healthcare providers from discriminating against single payers. A lot of small business owners and independent contractors cannot afford a group policy that offers discounted rates. When we go to the hospital, doctor, etc., we sometimes don’t get the negotiated rate. Prevent healthcare providers from engaging in these practices. It unfairly punishes those people who need the most help and create the most jobs in this country.

These are just a few ideas. But the goal should be to get everyone covered, at least for the big stuff, and to control health care costs by engaging in preventive medicine and restoring true market prices. There are many other approaches, including a full-on national health insurance plan. I leave discussion of that for another day, mainly because I have no idea what it would look like in the United States at this point in time. But there is no doubt—none—that we cannot continue to skate along this increasingly steep slope of skyrocketing health care costs and arbitrary (and occasionally immoral) healthcare treatment.