Jun
13
2019

Affordable Health Care Is Better for You

I often buck orthodoxy… on markets and specific investment plays, for example.

I fit that mode well, especially when it comes to public policy issues. For example, I’m a contrarian on health care.

Personal liberty? We’re no freer to choose our own doctors under most private insurance plans than we would be under a single-payer system.

Unaccountable bureaucracy? Insurance company administrators are just as horrible as the government variety.

Costly subsidies? If you get your insurance from your employer, you get a massive tax subsidy. Your insurance benefit isn’t taxed even though it’s every bit as much a part of your compensation as your paycheck.

But the big issue for me is this: The economy-wide benefits of having affordable health care outweigh the costs.

Here’s my case… and I want to know if it’s a convincing one to you.

How Did We Get Here?

The U.S. doesn’t have a health care “system.”

What we have evolved from a deal between the United Automobile Workers and Detroit automakers in the late 1940s. Workers would accept lower pay if they got cheap health coverage on the company’s tab.

But nobody expected that deal to be permanent. They assumed that the postwar U.S. citizens, so many of whom had just sacrificed to preserve their country’s freedoms, would eventually get government-sponsored health care to support the private system.

But that didn’t happen. Instead, the company-based insurance system expanded until it covered all industries. Eventually, government-sponsored programs like Medicare and Medicaid emerged to fill in the gaps for those without jobs: the unemployed (Medicaid) and retired (Medicare).

Then both the company and government systems became entrenched by special interests.

For a variety of reasons – basically, employers, employees, insurers and the health care industry had no incentive to rein in costs and premiums – the system got to the point where the U.S. has one of the worst health outcomes of any developed country.

And the highest rate of bankruptcy due to medical bills.

In other words, our health care “system” is a hodgepodge of temporary fixes and counterfixes that became permanent because nobody could agree on anything else.

It damages our economy enormously.

The U.S. spends more of its gross domestic product (GDP) on health care than any other country – 16%. But other economy-wide effects of our employer-based insurance system lower our GDP below its potential. Let’s consider three.

Job lock: Many people take and keep jobs because they get health coverage. They stay in those jobs longer than they would otherwise. That means overall job mobility in the U.S. economy is lower, which undermines labor market efficiency.
Lower rates of entrepreneurship: The U.S. has one of the lowest rates of new company formation in the developed world, and it’s getting worse. That’s because starting a business here is riskier than in other countries… because until it turns a good profit, you can’t afford health insurance. Young people in the prime of their lives don’t start businesses for that reason, which hurts job creation.
Delayed retirement and a weak job market: Older workers tend to stay in their jobs longer in the U.S. to keep access to company insurance. That means less space for younger workers, keeping them underemployed and damaging their long-term career prospects.

In addition to $4 trillion of annual direct costs, by some estimates these dysfunctional aspects of our health care system cost the U.S. economy 3 to 5% of GDP every year.

Could You Afford a Private Highway?

So, is favoring some form of public support for health care “socialist”? Hardly.

Here’s how I see it: Health care has similar economy-wide effects to the highway system, the justice system and national defense.

Each one is more than the sum of its parts. If done right, such “public goods” contribute more to economic activity than they cost. If you try to do these things individually, you sacrifice a lot of economic dynamism.

The typical argument, of course, is that public health care ends up rationed. We hear horror stories of Canadians or Britons in endless queues for medical procedures. (Of course, under a private system, there’s also rationing… if you can’t afford it, you’re not in the queue at all.)

But a U.K.-style National Health Service isn’t the only option.

Many countries, including most of the Latin American nations favored by U.S. retirees, have hybrid systems. The most common is to have a public system for primary and preventive care – neighborhood clinics where you can take your kid with the sniffles or get a vaccination – and a private system for more advanced health needs. If you want to obtain private insurance and go to a private hospital for surgery, nothing stops you. If you can’t afford it, you might have to wait in line for public care.

But there are considerable advantages. First, we’d avoid job lock, low rates of entrepreneurship and delayed retirement. Second, the availability of low-cost primary and preventive care would reduce the incidence of chronic long-term conditions that end up costing us all a lot of money when uninsured people show up at the emergency room – diabetes, heart disease and so on.

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Jun
06
2019

Reorganize the Health Care System

All citizens of our country deserve the security of universal health care that guarantees access based on needs rather than income.

It is a fundamental human right and an important measure of social justice. The government should play the central role of regulating, financing, and providing health care. Everyone faces the possibility of poor health.

The risk should be shared broadly to ensure fair treatment and equitable rates, and everyone should share responsibility for contributing to the system through progressive financing.

The cost of health care is rising. Over the past years its expenditure have risen faster than the cost increases reported in other sectors of the economy. As a matter of fact, the free market doesn’t work for the health care system.

* * *

There are two ways of financing health care:

The first is a private method of financing, by means of using workers’ and corporations’ money as premiums for acquisition of private insurance, which provides medical care. The established order leaves far behind 47 million people without health insurance.

The second way, which is used by all developed countries of the world, is by taxing the workers for health care, which generates a pool of money, financing it through the budgets of the countries. The people of our country prefer private medical insurance and private health care. Getting accustomed, in the course of time to the existing system, our people reject all other proposals independent of their merits.

An analysis of the acting system of private health insurance shows that this in essence is a social method of distribution of collected premiums. The insurance companies collect premiums from all insured workers and spend a part of them for health care of needy patients. As we see, private stays only the misappropriation of profits. Social distribution is carried out not on the scale of the full country, but is only limited by every medical insurance company.

Medical insurance companies use as the basis of their operations an unfair practice. They select for medical insurance only relatively young, healthy, working people, which rarely are sick. They constantly increase the premium rates, excluding retirees who need substantially more care. Thus, the health insurance companies established for themselves hothouse conditions. They make billions of dollars in profits, which in essence is a simple misappropriation of unused means of healthy people, that don’t need medical services. Justifiably these means should be set aside in a special fund and used for care when these workers retire.

Under the existing system, medical insurance companies have every reason to limit our care and increase our co-payments and deductibles. HMOs are famous for refusing to cover necessary hospital stay, denying people coverage for emergency room visits and balking at medically necessary procedures and therapy. The main reason our system is so expensive is that it has to support profit-hungry HMOs. In the U.S. thirty percent of each premium dollar goes to pay for administrative expenses and profits.

HMOs stand as a useless obstacle in between doctors and their patients. A question occurs. It is necessary to have HMOs in the system?The answer is clear. There is no need for HMOs. This is an unnecessary link and it need to be abolished. It is necessary to establish a system that allows providers to concentrate on care, not on profit margins.

* * *

The health care system needs a fundamental change and improvement. It consists precisely that is necessary to decide a ripe task about improvement of medical care, simultaneous lowering the expenditures and providing all citizens of our country with goo care. This major problem brooks no further delay. It is generally known that health care in our country equates with small business, and all participants are interested, like every business, in receiving the highest possible profits.

Breaking up the medical care into small medical offices don’t favor the development in this field and the fundamental medical tasks of lowering the cost of medical care by following reasons:

advanced medical technology can’t be used in these offices;conditions don’t exist for a high level of organized health services;doctors prefer to minimize the time for medical examination of patients;fee for service is not the best idea in this field.

The enumerated shortcomings in its turn lead to:

the growth of serving medical staff and administrative expenses;deterioration of efficacy of outpatient treatment, increases visits of patients and needless referrals to hospitals;aggregate increase of expenditures on medical care.

* * *

Under existing circumstances of irrational organization of medical care in our country, it is necessary to look for new structures to satisfy the requirements of contemporary reality.

Inevitably comes to mind a conclusion of advisability to reorganize the whole structure of medical care. Instead of great numbers of small unproductive medical offices it is preferable to organize large-scale multi profile medical clinics, each of them to be attached to a near hospital and working in two shifts.

These outpatients’ clinics should be equipped with modern medical and information – computer technology, as well as contemporary laboratories, and carry out in them all necessary medical examinations, tests, procedures etc., considerably raising the quality of medical care and labor productivity of all medical staff.

Another important measure – fundamental change of existing payment system for medical doctors care. We offer the introduction of pay by the hour remuneration system in the form of rate of salaries. Salaries for doctors should be established in dependence with the qualification, confirmed every five years, exemplary 150-200-250 thousand dollars yearly. Besides that should be established a distribution of bonuses for successfully carried out surgeries and excellent medical treatments of patients. This undoubtedly will switch over the attention of medical doctors to quality health services for patients. In essence, only such radical changes can be called medical care reform.

* * *

It is advisable to set up a public, non-profit organization for medical care of the population of the whole country, with branches in all states. The leadership of the non-profit organization should be carried out by the best experts in medicine, science, economics, finances and public relationship. They must take full responsibility for the medical care of the entire population and the use of means for financing it. It must include effective mechanisms for controlling costs of medical care. All controversial questions should be decided between medical doctors-experts from this organization and treating doctors. This will be a managed health care system. Managed care reflects the country’s distinctive approach to a universal human challenge. The cost of medical care must be contained. The rational for limit setting policies must be explicit and readily available to the public. The rational must show how the policy promotes good care for individuals and optimal use of available resources for the large population.

It is advisable to free the medical doctors from the necessity of insurance against cases of committing medical errors, lifting of them the heavy burden of unnecessary wasted expenses. Medical doctors, undoubted should carry the responsibility for committing criminal negligence in the performance of their duties, causing irreparable harm to the health of treating patients.

* * *

It arises a question. How to carry out the financing of health care in the new term?

The main thing and the only source of financing should be the use of a special tax for these purposes. It should be worked out a scientifically grounded percent of tax for the income of workers and profits of corporations and businesses, generating a fund, which should defray expenses on health care. To this fund should be directed the means from Medicare and Medicaid. Thus, all the means for financing medical care should be directed from the budgets to the public non-profit organization. This organization, in a proper way, should work out in detail an estimate expenditure of its budget. Within reasonable limits of this budget will be maintained the full medical care system.

A scientific institution of appropriate profile should work out such a budget. If one may put it that way, undoubtedly we can assume that the maintenance cost of medical care under the new favorable conditions will be considerably lower than at present time. It seems to us, that the proposed perfected system sets a shield to uncontrolled expenditures of medical care, which under the system of unlimited presentation of bills to Insurance companies, Medicare and Medicaid becomes similar to a snowball, uninterruptedly going downhill on the verge of disaster.

The system of medical care and financing of a new type should decide the topical problems of contemporary health care.

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