Thursday the House will again attempt to pass a bill to repeal and replace Obamacare. Americans have been anxiously waiting in anticipation especially since the Freedom Caucus expressed support for the GOP’s new plan. The bill does indeed rescind some Obamacare taxes and regulations while putting other measures in place, but is it really what the country needs?
I recently did my second rundown on the possibilities of public-private partnerships that could work to give the U.S. a workable universal health care system. Despite the fact that many other countries have successful universal health care systems and Medicare has been workable in the U.S., many Americans are resistant to the idea of greater government involvement and for many, the issues with the PPACA didn’t ease their concerns. Opposition to single payer has been part of the reason we ended up with Obamacare and many are still opposed to mandates and other methods of trying to attain 100% participation, even though that is an integral part of keeping costs down and is ideal from an actuarial standpoint.
We’ve been through a lot in creating the system we had prior to more recent attempts at reform and the partisan back-and-forth nonsense leading up to the passage of Obamacare. Everyone seems to believe that we should have something that facilitates access to affordable health care for everyone yet the system we’ve had both pre-and post Obamacare is a complex maze of regulations that don’t accomplish that goal. There is little doubt that a market free of counterproductive laws and free of crony capitalism would lower costs and no which direction we go, that is a top priority in regard to the sustainability of any system.
There are single-payer systems that work fairly well but while most of the civilized world has some sort of universal health care, most are not comprised of nationalized medical providers and in fact, it would surprise many advocates how few countries actually have a nationalized single-payer system. Germany, Holland and Switzerland, among others, have government-guided systems, not one run by the government.
As with so many issues, it’s important to put ideology aside. Before we talk about implementing anything here, we should look have a thorough and accurate understanding of the alternatives. Fair and open-minded analysis is imperative. As the American Physical Therapy Association noted last year:
“Few would argue against the triple aim of health care—improved health for individuals, improved health care for societies, and contained costs. Achieving those aims requires volumes of discussion, research, and proposals to identify the best approaches.”
While analyzing what other countries do, Tim Worstall noted in Forbes:
“I'm not trying to talk about whatever the US should or should not do. I'm making an observation about the economics of systems which seem to work in other places. The exemplars we're all asked to look at are not national, universal and single payer.”
An excellent market-based system doesn’t preclude additional measures to fill in the gaps and that’s likely to be necessary. For all the people who insist on keeping government out of health care, I haven’t found one who can describe how an exclusively market-based model addresses the needs of the less fortunate. While the government can’t always be counted on to do the right thing, few individuals I know haven’t had at least one run-in with an insurance company trying to squirm out of paying a large claim. I myself have experienced multiple incidents where even as a loyal customer, a reputable company tried to - and sometimes succeeded in avoiding paying for the very types of losses which epitomize the reasons we all purchase coverage. Whether it’s for health, auto, home or something else, a for-profit insurance company is too often motivated by the bottom line.
Still, beyond the question of access and delivery, the most important thing is bringing down the cost of care, which not coincidentally inherently affects both. When we spend about double what many other countries spend not only per capita but as a percentage of GDP and/or the federal budget and they have everyone covered, we have to take a look at what creates that scenario.
The National Center for Biotechnology Information noted in 2011:
“Expenditures on health care are imposing an increasing burden on the budgets of the federal government, state governments, and families without producing commensurate improvements in health or the quality of care. Rather, much of the money spent on health care is wasted, in some cases causing harm.”
And no matter what the product or service, the market is an important factor. As Daniel Horowitz commented in Conservative Review,
“There are obviously some elements of health care that will never work exactly like Netflix or iPhones, but opening the market up to private sector innovative ideas and competition will create growing momentum for choice, competition, and efficiency. As with so many other aspects of the economy, consumers will be the ultimate winners.”
The Center for Healthcare Quality and Payment Reform reported on the Institute of Medicine’s 2011 study The Healthcare Imperative: Lowering Costs and Improving Outcomes, which found "30% of healthcare spending could be eliminated without harming patients. If these unnecessary and avoidable health problems, services, and costs were eliminated, hundreds of billions of dollars would be saved, health insurance premiums could be reduced, and the quality of life for the patients would improve."
Their roundtable discussions focused on unneeded services, delivery inefficiencies, high prices, unnecessary administrative costs, missed prevention opportunities, and fraud, not all of which we can address here. In any event, the devil is in the details but from a broad perspective, there are several significant overall measures that could dramatically improve a primarily market-based system but would be beneficial no matter which direction we go:
1) Move to a transaction-based tax system so everyone pays in.
We are a compassionate society but many hospitals incur large losses treating indigents and others who are unable to pay. A transaction-based tax would mean everyone would pay in and if we don’t have universal coverage of some kind, there would at least be funding for those of lesser means.
2) Rescind legislation that is anticompetitive.
While conservatives often argue for states’ rights, it’s been a common refrain to advocate selling nationwide. This requires modification of the McCarran-Ferguson Act of 1945, which partially exempts insurance companies from federal antitrust legislation that applies to most businesses and allows states more powers of regulation over insurance. Ironically, Democrats have not supported such measures but the GOP-controlled House voted for repeal 406-19 in 2010 and again in a recent vote this session.
3) Reform the FDA.
In this episode of Regulation: You’re Doing it Wrong, the FDA is badly in need of overhaul, especially considering we seem to have much more difficulty than the European Drug Agency that manages approvals over several countries. Adding the cost of long regulatory and post-approval process to already expensive R&D even when other developed countries have already approved certain drugs, dramatically increases costs. The average cost of bringing a new drug to market is already well over a billion dollars. In addition, lobbyists and drug companies have been allowed to promote their own cause while interfering with the approval process for competitors, both existing pharmaceutical interests and up-and-coming innovations, which is one of the many impediments to medical marijuana legalization.
4) Make more drugs available over the counter.
Speaking of marijuana legalization, advocates often support needless regulations on basic routine medications. Making more drugs available without a prescription will drive down costs and allow for more competition without insurance companies or the government being in the middle.
5) Reform health insurance networks.
When you have your car repaired, insurance companies may have contracts with some body shops but ultimately the choice of where to have the work done is yours. Health insurance networks, on the other hand, are exclusive. Opening up all providers to working with any insurance company would not only be better for national competition, it would eliminate most issues related to travel, relocation and students covered by their parents’ insurance who have no doctors near them who accept it.
6) Require transparency in costs.
We require groceries to display nutritional information on the packaging but consumers have little access to menus of what doctors do in order to be able to shop around. Like any other good or service, pricing should be a factor along with such considerations as education and reputation. The National Center for Biotechnology Information offers numerous studies confirming that “transparency of process, outcome, price, and cost information, both within health care and with patients and the public, has untapped potential to support continuous learning and improvement in patient experience, outcomes, and cost and the delivery of high-value care.”
7) Encourage and incentivize high value services, health education, preventive care and “routine maintenance.”
People seem to understand when they don’t do what’s necessary to keep their cars or air conditioning running smoothly, failure is almost a certainty. Our bodies are no different; moreover, it is fiscally challenging to try and address coverage for every sniffle or hangnail. If insurance is primarily to address large-scale expenses, prevention and health maintenance become more a function of education, personal responsibility and things we do as a matter of course.
But many questions can be answered by a phone call or email and doctors are not paid for them. The CHQPR noted, "Medicare and most health plans do not pay physicians for many services that would benefit patients and help reduce avoidable spending."
These are some of the most important overarching reforms that would dramatically decrease costs while helping Americans to better understand their own health and understand what they are responsible for, both in terms of their own bodies and in regard to what their medical dollars are spent on.
As the issue is complicated by a number of factors, there are many other details that could be considered, including a list of 20 ideas from Daniel Horowitz and 9 more from Carol Tice writing for Entrepreneur. I tend to favor simplicity and comprehensive reform but doubt that we’ll this kind of dramatic overhaul right away, so it’s important to be aware of what else might help.
Americans want a simple solution as well; not everyone has the stamina for looking at all the gobbledygoop surrounding the health care industry. The important thing to start with is remembering that in general, we all want similar outcomes and start from that foundation. There is plenty of room for disagreement on the methodology later. In the meantime, remember that particularly in regard to health care, neither the government nor the for-profit private market either causes all of the problems or provides all the answers to fixing them.