• Political Jousting

    Posted over 6 years ago
    by pnblog}

    The election sure is increasing the spotlight on various health reform options -- unfortunately I am less confident that the spotlight is illuminating the fundamental drivers or choices.   The last Presidential debate sure wasn't helpful in educating or informing the viewers.

    Zeke Emanuel -- a very smart and informed physician/researcher has been blogging over at the NY Times.   Given his slant towards increased government involvement in health delivery -- (and the fact there are more readers at nytimes.com) -- I decided to post my comments to his latest post there.

    The policy debates like to blast "for profit" companies and the insurance companies in particular.   Since most of the people writing the debates are not business people - they either forget or ignore the fact - -that even NON-PROFIT companies (including government run enterprises) have to balance 'sources of revenue' with 'expenses'.    I heard this most eloquently from the CEO of a Catholic hospital in Melbourne Australia -- "no margin, no mission".    The only real economic difference between a 'for profit' hospital and a 'non-profit' one -- is that one pays taxes and the other doesn't.    They both have to live with the laws of economics -- which means that prices of inputs matter (wages, supplies, real estate, capital etc), productivity matters, economies of scale matter - and revenues matter.   Getting rid of 'private' companies changes non of the economic drivers.  See a note just posted by Instapundit about British Health Service and economic drivers affecting care decisions.

    The other missing element in the debate is the role of the individual in impacting their own total cost of healthcare.    Let me say up front -- I acknowledge that genes matter and that some, if not many, can't control the fact they get cancer or have a heart attack and that I believe said folks should have the option to buy insurance that spreads the risk of these health outcomes around to all.  But reality is also -- that individuals CAN and DO dramatically impact their healthcare burden on society -- they don't eat right, don't exercise, don't get preventive screenings for early detection of problems, don't comply with prescribed therapy, don't stay compliant with drug regimen and so on.    Do we simply ignore this fact?     Or do we build a 'reform' plan around this fact as a central element?    A simple analogy to me is  what happens regarding home insurance against hurricanes.   Should the rest of the country 'pay' for folks building their homes in regions with a high probability of hurricane damage (no individual accountability) -- or should those folks pay higher insurance premiums for the benefits they receive?    Frankly, I don't believe I should have to subsidize folks who take high risks by building in less safe areas....just like I should not have to subsidize folks who take real risks (this they could do better) with their health.

    This is where I see insurance companies playing a major role....if they could be motivated to innovate.   The insurance companies can design benefits that educate and motivate consumers to be smarter consumers of health care services.    There is a chance - that insurer and consumer could have aligned interests (if done properly over a long time frame -- say a decade, certainly not annual renewals).   This kind of innovation could happen -- if reform separates health insurance from employment.

    To 'reform' health -- we need innovation....in lots of areas -- in discovery of diagnostics and therapies, in the delivery of health services, in the understanding of how consumers interact with the health delivery system and much more.    When we have debates about reform -- we have to acknowledge that CMS (our largest government program) doesn't really stimulate innovation.   We need a 'system' that does -- and this should be a central focus of any reform debate.   Most of the other countries that have large government funded systems -- have already learned this lesson -- seems like we don't need to repeat this mistake.

  • The language of rights applied to health in the U.S.

    Posted over 6 years ago
    by pnblog}

    Last night there was a question in the Presidential Debate on whether healthcare should be a privilege, a right or a responsibility in the U.S.    McCain gave a nuanced answer -- but said it was a responsibility and Obama said he considers it a right for U.S. residents since we are a wealthy society.    It is a really interesting question -- especially if you are like me -- a wanna be economist/philosopher.   For those that want a long but illuminating blog post on the topic of rights and obligations -- see Maggie Mahar over at THCB.

    Before we get to the question of rights however - we need to take a short detour into the world of economics.      During the debate and throughout the policy community there is a conversation about employer paid health insurance, vs. universal government paid health insurance vs. individual paid health care (or insurance) along with the entitlement programs we already have -- Medicare and Medicaid, SCHIP and not to mention disability payments and other programs.    People -- there is no free lunch here!  One way or the other,  individuals/citizens/consumers are paying for health care, period.   There is no other funding source.    YOU are paying for health care...maybe not when you consume the service -- but you ARE paying for health care.   Here is how we pay for health care:

    • Lower wages so employers can pay the premium on health insurance
    • Medicare tax on wages
    • Partial payment of premiums, co-pays and other out of pocket expenses
    • Other taxes (income or real estate) so the States can fund their portion of health benefits for employees and for their entitlement programs
    • higher prices on goods/services from businesses -- so that the businesses can pay their taxes
    • and so on

    So the individual citizen is paying for health care today -- whether directly or indirectly.   It is too bad politicians or journalists  don't make this point more often.    So the question really comes down to one of who pays for whose health care?   As a taxpayer and citizen -- in addition to being accountable for my families health needs -- how many additional folks should one be accountable for?    The looming Medicare funding crisis is precisely this -- in the future the folks paying into the system won't be enough to cover the folks taking services out.   (there should be a whole sidebar discussion of insurance here -- but later).

    The economic detour was necessary to frame the philosophical question properly.   Talking about healthcare as a right -- without understanding that it is an economic good that has to be provided and paid for -- is wrong.   It is not like "free speech" or freedom of religion...which may have economic implications as 'rights' benefits of a better more transparent society) ...but certainly don't require specific resources to have the right or to compete for economic resources the way healthcare does.

    I like to think I am as compassionate or more so than most people.   I would love for everyone to have more economic goods -- more healthcare, more health, more economic security, more food, lower gas prices, lower house prices (well maybe not) -- but you get the idea.   But the system of incentives you choose to deliver these goods (capitalist or socialist or communist) matters and matters a lot -- to the quality, quantity and prices of the goods available to share.  We have learned that the form of economic incentives matters to the outcomes for society -- and directly to what society can invest in redistributing.   While the concept of capitalism may be taking a beating in the popular press today -- I have yet to see evidence of system that works better -- and we should better remember that when we try to learn the real lessons from today's crisis.

    More importantly -- healthcare is really complicated as an economic good in lots of ways.   But the one that matters for this argument is that -- many of the behavioral choices an individual may make -- like smoking or not being compliant taking your drugs -- can dramatically increase the healthcare economic goods required over one's life.    If healthcare is a right -- do I have the right to ALL the healthcare I can consume and NO accountabilities to society on how I consume it?    If not, who decides?    Hopefully you can see where this leads.

    I may continue this thread at a later time -- so comment if you have something to add.

    Calling healthcare either a right or a moral obligation -- won't help us think clearly about the path to reforming the system to deliver more value nor will it help us understand the harsh economic realities and incentives required to build a better, healthier society.    We really aren't learning any good lessons -- economic lessons -- from the current financial crisis.