Tuesday, January 09, 2007

Schwarzenegger More Interested In Votes Than In Common Sense And Reason

The Big Pushover Arnold has once again shown his lack of solid backbone as he trudges along that quicksand path to the Presidency. And what makes it worse: His ideas aren't even original.

[Thanks to briansdriveintheater.com for the photo from Pumping Iron, which I have obviously tweaked.]

Take his latest proposal to solve California's health care problem. He wants to insure every child in California, legal or not, plus make doctors, hospitals and businesses pay the price for it. In other words, he wants a top-down solution.

Mitt Romney tried something similar in Massachusetts, and we have yet to see the outcome. They both want to solve the health care "crisis," and who doesn't. But instead of freeing up the health industry and opening it up to competition, they throw the baby out with the bath water (now one of my favorite expressions, because it is such a frequent occurrence these days) by making government the health care dictator.

In fairness I will admit that there is another side of the coin. Both Arnold and Mitt have tremendous Democrat strength in opposition to any free-market instinct they might want to allow to flower. Therefore, they have chosen to compromise. The question becomes: Is the compromise cure worse than the sickness?

There are people who have done such a good job at analyzing the problem that I will let their work stand. Please read Cato's Michael D. Tanner in his briefing paper for a concise and clear explanation of this whole mess.

For those who find my gadfly blogiating more palatable and/or more amusing, I will sum up my view of the problem in as few words as I can.

I see four reasons for the ridiculous medical pricing in this country. First, there is not enough price transparency. I have seen this fact up close and personal. Providers will refuse to give you their real prices, instead quoting something that can be as much as five times the price they have actually agreed and contracted to receive from insurance companies. If you are persistent, you can find out this price by insisting on the "cash price;" but it takes a lot of work and a lot of patience, because they'll give you the run around until the cows come home, for reasons that no one can explain, not even themselves.

What we need is open and free price competition in health care; and it would be very helpful if everyone were billed the full amount for services rendered, with reimbursement coming from their insurance. That way, they would see what treatment options cost UP FRONT, and they could make a reasoned choice instead of picking whatever the doctor recommends at whatever price.

Second, we have what I'll call Doctor CYA Overkill in the analysis and treatment. Doctors work from a CYA (cover your ass) philosophy. Instead of giving you what they think you need, they conjure up that 1% chance that they'll misdiagnose the problem and recommend multiple parallel tests just to be sure so they don't get sued.

By the same token, when it's time to treat, they pick the most expensive option -- after all, who cares? It's paid by insurance. (See my posted personal story.)

Third (and this is my own view, perhaps not that of Professor Tanner), I would instate a requirement that everyone obtain at least catastrophic coverage, just like auto insurance. This requirement I approve of, because without it, the incentive just isn't there for young healthy adults to buy insurance, and for good reason: Young healthy adults have very little chance of falling ill -- and I know, because I used to be one, and an uninsured one at that.

If you disapprove of people gambling, why would you disapprove of their not buying health insurance? The odds are heavily bent in the same direction (although of course they are not quite as exaggerated.) And young people do not have assets to lose if they need expensive care and the provider tries to pursue them for payment afterward.

Young people must be required to pay into the system, otherwise they will just take their chances. Also, don't forget they are insured for auto accidents already, and this is the most likely source of health problems for the great majority of them. Now, I realize this forced insurance idea is not a free-market suggestion; but I am taking into consideration that the other option just doesn't exist in today's political climate. Government will always vote to have taxpayers absorb the pork-barrel expense of free medical care for the indigent. This is just a fact of life. Hence my acceptance of this compromise. But the compromise stops here.

Once the catastrophic-coverage obligation is put into law, the health care market should be allowed to open wide. Providers should feel free to publicize the cost of treatment just like the price of a pound of apples. There should be no hidden negotiations as there are now -- the present hush-hush system is tantamount to price fixing. (See my stories.) And the various state and federal governments should GET OUT OF THE HEALTH CARE BUSINESS, stop trying to regulate it, stop providing it, and get back in line with everyone else if they choose to subsidize a certain sector of the population. They should do this by encouraging the formation of nonprofit NGOs set up for that purpose. (However, I realize that this is a pipe dream, and that's why I adopt the above small degree of compromise.)

The fourth factor explaining the high cost of medical care is the variety of top quality, innovative and therefore expensive care that is available in this country. We've invented most of it, and we use it. Why not -- as long as we can afford it? 'Nough said.

Illegals are a separate issue. Obviously, the illegal love-hate hypocrisy must stop. As to health coverage, I believe they should not be covered for anything, with one exception: I would hate to be the decider who sentenced someone to death for lack of payment potential. I personally know a young fellow who is illegal, who was hit in a car accident through no fault of his own, and who received hundreds of thousands of dollars of treatment at no cost. There is no question but that this treatment saved his life. Having said that, I believe he should have been shipped back to a Mexican hospital as soon as he was well enough to travel. He was not; on the contrary, the whole family came up illegally to be at his side for months on end. (They even accidentally set fire to his apartment, as an aside, with a prayer candle lit for his benefit.)

As for the expenses the hospital forked over, I think that if someone is in this country illegally and is hit by a car and in danger of death, perhaps the hospital should have a charitable section of its budget; but it should also be able by treaty to bill the country of origin, assuming the person is indigent.

Another tongue-in-cheek solution: Perhaps all those US supporters of illegals can devote some of their charitable contributions to covering hospital and travel expenses, instead of pleading for the wrong cause?

Having said all of this, I am all for the experimentation that Arnold and Mitt's ideas represent. If every state came up with some idea of how to solve this sticky situation (I don't think it's a crisis), we could have 50 trials. Surely one of them would work.



Anonymous Carolyn Kent said...

Excellent post, and I truly agree with your main message to keep the federal government out of health care.

The transparency problem you have discussed is moving toward more and more transparency everyday with web sites like Hosptial Compare and even some hospitals are posting their own prices and quality information for consumers to see.

However, it has proven a difficult venture because the industry pricing structure is a web of complication involving skyrocketing supply and pharmacy costs, complicated discount structures for insured patients, and what seem to be outrageously high prices for the uninsured (or underinsured).

The real problem is not the steepness of hospital prices, but the mountain of costs that must be recovered in order for hospitals to continue their operations.

Will hospitals ever find a way to explain pricing structures to consumers? Yes, I believe they will, and they are certainly trying their best to find a simple system of doing so. But even if disclosing prices becomes easy and widespread, the real problem of out-of-control costs will still plague the health care industry.

8:59 AM  
Blogger Katy said...

Thanks for your great comment, Carolyn.

Of course you are right, the hospitals are only passing along to the consumer the prices of primary goods and services they must pay for. No one with any market sense is blaming the hospitals; it's a normal phenomenon of doing business.

It would be interesting to do a study of the mountain of costs you describe. If you are in the business, perhaps you would be well situated to do such a study, and if so, I'd love to hear back from you.

Thanks for the insightful comment.

2:21 PM  

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