Thursday, September 3, 2009

Health Care Reform

I have often posted about what I don't think we should do to reform health care in the U.S. I think I should post on what I thinnk we COULD do to reform health care.

First lets define the problem. Roughly 50 million people in the U.S. have no health insurance. But lets first put some context to that number. Lets subtract the following from it:
1. Illegal Aliens--15 million
2. People who could afford(make over $75,000) insurance but choose not to purchase it--10 million
3. People who are eligble for Medicare/Medicaid and do not sign up for it--10 million

That leaves about 10-15 million peopole who, through no fault of their own, cannot get or afford insurance. Some would claim it closer to 5 million.

Tort reform would be on the top of my list. It is easy to do. Estimates run from 3-10% of every dollar spent on health care goes to lawsuits. This does not even include the millions spent on defensive medicine. Remember though that tort reform is to limit puative damages, not compensatory damages. This means that a person injured by malpractice will still be able to sue for millioins of dollars, if that is what is needed to pay forthier medical care. They will only be limited in how much they can get in as punishment from the doctor.

Pre existing conditions are a tougher nut to crack. I know a person who bought a boat, but didn't buy insurance on that boat....until they day he crashed it. You can't wait until you get sick to buy health insurance. Unless of course you want the insurance companies to go out of business. The only way to get rid of pre existing conditions is to require everyone to have insurance. If we would go to this kind of model I think it should be based on people being required to have catastrophic insurance that pays after the first $5,000 or so of medical expenses. The government could subsidize people who could not afford this.
It goes without saying though, that insurance companies should NOT be able to rescind your insurnace when you get seriously ill becuase you forgot to mention on your application that you had acne when you were 20.

Insurance is part of the problem
If you have insurance, you are not the actual customer in the economic sense. You don't care what it costs. If your doctor wants a test every hour on the hour, you have no incentive to even question it. Think if car insurance covered oil changes, and regular much more would insurance cost?

This is what I like about HSAs and other types of catastrophic insurance.
With High Deductable Health Plans(HDHP) you are put back in the economic equation, yet if you get seriously ill or injured, you are still covered.

Real insurance competition.
In the U.S. there are about 6,000 health insurance companies, yet Americans are severly restricted as to which ones they can choose by the state they live in. Open up the whole country to all of the insurance companies.

Allow insurance tax deduction
Allow insurance to be tax deductible. This will help to lower the costs of insurance.



Lauren said...

I missed this post last night! I love the constructive ideas.

Tort reform is at the top of my list too... I used to live in Cincinnati and had an OB/GYN friend - if she wanted to both deliver babies and treat sick women, she had to pay $250 thousand dollars a year in malpractice insurance!

Then, as much as so many people balk at the idea, I don't see a good way around making everyone get insurance either. It's like car insurance (or boat, lol). If everyone waited until after they're diagnosed with cancer to get insurance, of COURSE rates are going to be insanely high for everyone, no matter if it's a public option or private!

I see your point with HDHPs, and I know you're fond of yours. I don't think it's necessarily the right plan for everybody... but still, I haven't come up with the magical solution for how to keep doctors from performing unnecessary tests while still making sure that they perform enough. Maybe something like a base rate for all GPs with bonuses available when they do good things for their patients like cure their cancer or get them to stop smoking?

Of the 6,000 companies, the majority of Americans only use of three right now... Another interesting thing I heard about in another country (I think it might have been Japan?) is that all their health insurance companies had to be operating as non-profits. However, the health insurance companies can also own and operate for-profit house insurance, car insurance, etc. So the insurance companies all compete to give consumers the most awesome health insurance in the hopes that they will then also choose that company for their other insurance needs. Now that's an interesting twist on competition!

Some health insurance is tax-deductible now for small business owners like us, but it would be nice if more of it was for more people.

Anyways, gotta get back to work. :-)

Rob said...

Malpractice insurance is outrageous.

There has been a $3,800 fine inserted into the bill for people that refuse to buy insurance.
I don't like the government forcing people to buy it, but it would be nice to have no more pre existing conditions.

Also not all pre existing conditions are excluded. My wife has a pre existing condition and when I changed jobs my new insurance would not cover it for a 6 month period unless I could show that we already had insurance. I think they did that to show that we were not just getting insurance because she got sick, and also to know that it has been treated and was under control. Most people who have issues with pre existing conditions are ones that are individual policies.

Thats an interesting point about Japans insurance system. I was born there and didn't know

While I like my HDHP, I wouldn't pick it, or recommend it for everyone, to be sure. My main reason for liking it is that it puts the "real" consumer back in the equation. I do think that is something that could help to control costs in an efficient manner.

Lauren said...

Shoot, I did remember it wrong... it's Switzerland, not Japan. I remembered the concept right, but got all the details wrong lol. I found the transcript of the interview online - here's the excerpt from it that I was thinking of:

In Switzerland, it's interesting. The same company that sells the nonprofit, basic health insurance plan also sells life insurance and fire insurance. And they sell this kind of supplemental insurance to cover breast enlargement or hair replacement. So they try to win you by being really good nonprofit health insurance companies, and then you say oh, that's good. I'll buy my fire insurance there, too. And they're all making more money because they use the basic health insurance as a way to bring in customers.

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