Liberals and conservatives on healthcare reform

March 23, 2009


— Stephen M. Davidson, a professor at Boston University’s School of Management, is author of “In Urgent Need of Reform: Saving the U.S. Healthcare System,” to be published later this year. The views expressed are his own. —

Stories about healthcare reform often contain opposing statements from liberals and conservatives. Liberals would use government; conservatives, a market in which private insurers would compete for subscribers. Liberals say a big public-sector role is needed to rein in costs and achieve universal coverage; conservatives say that approach would face opposition from most, if not all, Republicans.

Perhaps unwittingly, that kind of juxtaposition creates the impression that there are two equally viable paths to the three main goals of healthcare reform – financial access to care for all; reduction in the rate of increase of healthcare spending; and more reliable quality of care. But the notion that these are two paths to the same end is false. In fact, competition among private insurers will always produce large numbers of uninsured people –- now at 47 million and climbing — and always produce higher spending than necessary. Here’s why.

To get employers to choose their policies for employees, insurers offer lower premiums, which vary mostly because the policies differ. Covered services usually vary as do charges subscribers must pay (in addition to their share of the premium) when they actually use services. Insurers’ profits are determined not by the number of policies they sell but by the share of revenues paid out when policyholders use covered services. And that figure becomes known only at year’s end when bills for the services policyholders used are added up and deducted from total revenues.

So what can insurers do to increase the probability they’ll finish the year in the black? The fact is they have few tools. Revenues are determined when policies are sold, but most costs represent payments for covered services used by subscribers, so insurers need to keep those payments down. To do that, insurance innovation has taken two main tacks. The surest approach is segmenting the market to induce disproportionate numbers of healthy people to buy policies and, more importantly, to discourage unhealthy ones from buying. The other is setting rules and procedures making it harder both for subscribers to use services and providers to furnish them.

This isn’t the kind of innovation that produces better, faster, and cheaper computers (or other products) for which American ingenuity is justifiably esteemed. It may benefit shareholders, but it doesn’t provide enough benefit to the public to justify a struggle to preserve it.

Moreover, the size of the insurance bill discourages many employers from even offering coverage, their share of the premium discourages many employees from buying insurance when it is offered, and the out-of-pocket costs at the point of service discourage many who have insurance from actually using services. Finally, such a competitive, fragmented system requires higher administrative costs to support it — and higher public-sector costs for people left out of the private market.

In contrast, Congress can achieve the first goal (assuring financial access to care) simply by passing a law requiring everyone to have coverage, then creating mechanisms and rules to make it happen — including ones that will contain future spending. So the key question is not whether to use government or a competitive market, but what goals do we really want to achieve.

The market cannot be the chosen approach to achieve those three main goals. If those are the objectives, government must play a significant role. But different people may have different preferences on a range of other related issues.

Do we want a single-payer option in which everyone has public coverage and a government agency pays providers directly for care? (If so, we could expand Medicare to all Americans.) Another alternative is to create a government-funded program providing vouchers that entitle everyone to sign up with a private health plan which, in turn, would provide the services. If private health plans are used, more decisions would be needed, like requiring them to accept anyone who wanted to enroll and paying them risk-adjusted amounts so they would not be disadvantaged if a disproportionate number of high-risk, high-cost people signed up. And, of course, how to finance the program.

Bottom line: When Republicans say they oppose any government solution and insist on using the market, what they are really saying (whether they realize it or not) is that they don’t want to guarantee financial access to care to everyone or to contain healthcare spending. Competition has a long and honored place in the American economy, but in this sector it won’t serve us well.


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One could flood the earth with nurse scholarships to make that cost go down.

One could market our services to wealthy foreign citizens.

One could have an all commercial, all clinical study, sponsored hospital.

We could have a medical scratch ticket or a scholarship scratch ticket.

We could have three tracks: maintenance elderly, emergent/rare.

We could focus on prevention insurance.

We could sell an insurance policy that gives a large amount of cash if you jsut stay home and die or miraculously recover you get the money.

Posted by Sean | Report as abusive

A fine point of view. Today system is a corrupt one. We need a system which covers ALL americans. A medicare for ALL americans regardless of their age and income.

Posted by RICK N | Report as abusive

[…] Professor Stephen Davidson says with great eloquence what I’ve been saying all along, and there is no doubt about whether or not he’s correct. Common sense will lead you to the conclusion that privatized healthcare is no more compatible with market forces than privatized fire protection, or privatized police protection, would be. The “MARKETS!!!” idiots that insist that our system is a better one don’t stop for even a second to consider what their stupid ideas would look like if you applied them to other situations. Can you imagine, for instance, making people purchase privatized police insurance? Let’s say you lived in an area that was known for having a high crime rate-can you imagine what the premiums would be? And if you could actually get someone to sell you a policy, can you imagine what the deductibles and co-pays would look like? […]

Posted by It’s Damned Simple: Private Insurance Doesn’t Work | Reconstitution 2.0 | Report as abusive

I think the real problem with healthcare is quite simple. It is an almost entirely inelastic market with ever rising costs due to an explosion of research investment over the past 20 years. It is pretty hard to keep costs down when drug makers and hospitals are for profit businesses trying to develop ever higher quality products to sell for ever higher cash flow and profits. A sure way to slow down costs would be to put caps on drug costs and on procedural costs to the end user. I have seen single doses of medicines costing as must as $3,000. Which of course was covered by the state sponsored insurance. Caping sales prices would make drug makers seriously reconsider a no holds barred approach to research spending. Some would argue this would stifle innovation and progress in the medical field. I believe the medical field has created a bubble of its’ own the past 10 years that needs to be popped. It is really disingenious to believe we can have a for profit industry for an inelastic service such as healthcare. Another simple example of such a thing is college textbooks. Students are required to buy the books; and guess what? The books cost 4 times what you believe to be a reasonable price.

Posted by Mike | Report as abusive

An excellent article and the points mentioned are quite clear. Health care is not a business but rather a service that all should have access too. Unfortunately in the US, we have allowed for such a bubble to be created and as all bubbles, it will soon burst as we have seen similar affects within the real estate market. A human life and health care accessibility should not be left to the market therefore; a balance between the public and the private sector must be reached. For instance, drug prices are out of control in the US where one can purchase the same drug elsewhere such as Canada at a much lower cost. Why should Americans bear the blunt of such costs? We spend the most on health care and have the worst system in place with many not even having access to such services, with myself and family included after I lost my job over a year ago.

Posted by Shahin | Report as abusive

Let me see if I can name all the health programs the government currently runs for certain Americans. SCHIP, Medicare, Medicaid, VA, FEHBP (for congress!)… did I miss any? How about preventative care and I can only think of one, WIC. I am certain I am missing some, maybe State and Local health care programs. I know the VNA operates in the county I live in, and there is the county board of health which provides health services the community too. So the neo-cons expect us to believe that all of these fragmented programs couldn’t be rolled up into one for roughly the same cost in current government funds with the added funds people pay for insurance already? Uh huh. They think the cost of people not gettiing preventative care, being dropped by their carrier after they cost too much, not seeking needed medical treatment, or being driven to bankruptcy by illness is a better way as long as the corrupt insurance companies and ‘for profit’ hospitals keep raking in the cash? Making obscene profits from people’s illness and disease is simply a sadistic practice and violates every ethical principal upon which the practice of medicine was founded!

Posted by J | Report as abusive

Simply create governmental alternative, which offers health coverage to all, and let private insurance to exist too. It will work exactly like the postal services now – whoever wants and can afford private and presumably better health treatment, will be able to purchase it, but no one will be left off the board.

Health services are completely nonelastic goods, people always get sick. And pure free market never works well with such goods – read any economic textbook.

Posted by Ananke | Report as abusive

Create a government alternative? Big government unions and big government bureaucracies will not “fix” the problem, nor will more laws or agencies regulating the existing health deliver system. The ONLY long term solution is health education and mandatory sports in the school system. Learn that smoking will cause cancer (visit a cancer ward in the hospital), fast food will kill you (see Supersize Me video), and recreational drugs along with alcohol binges will cause parts of your body, as well as your brain to fail. Eliminate the cost of these factors on the health deliver system and we could save 50% off the top — as well as increase industrial productivity. Throw a lifetime of regular exercise in the mix, and we will all be better off for it. Now that WILL fix the health care system. Smarten up America – quit blaming the system and take personal responsibility for your own health. There will then be plenty left over to help those who truly cannot help themselves.

Posted by JH Been | Report as abusive

To get the U.S. back on track and save itself from years of terrible choices, corruption and outright corporate greed, two basic tenets must be accepted as essential in governing. One, the middle class is the goose that lays the gold eggs. Not the wealthy and super rich and not government. Two, the more the U.S. has policies similar to Western Europe with regard to health care, education, social services, corporate governance, the better off we’ll be. Now that Reaganism and the Republicans are in retreat and near extinction the time has come to make the U.S. a better nation than it has been for a very long time. It may be our last chance.

Posted by Steve Bonser | Report as abusive

Why does everyone always say gov’t subsidies of privaye insurance is any kind of a solution? So, instead of getting sapped w/ a medical or insurance bill, we’d pay it in taxes then have that handed over to the corporations? Gov’t subsidized profits–yippee. If Americans paid into a national pool to same amount we spend on healthcare insurance, we could have have a non-profit healthcare insurance pool. Cut out the middle man. Easy. But, no one will consider for a second even trying to get that past the insurance company puppets in Congress.

Posted by BS | Report as abusive

The fundamental problem will not be solved as long as the patient is someone who is fed into the doctor –> pharmaceutical –> insurance loop to be fleeced of every last cent. The system was hijacked 90 years ago when chemical healthcare producers took over the healthcare system. It then became a matter of money not health.
If I got sick I think I would prefer the disease rather than the cure.

Posted by Chris | Report as abusive

THE PROBLEM: Almost nobody who buys medicine or medical services actually pays the bill themselves; directly. Either you have insurance – and they pay most or all of the cost. Or you dont have insurance, and you dont pay all or some of your bill – charity may pay some – but most is eaten by the provider who is forced to overcharge other customers – the paying – including insurance companies. There is no incentive to compare services and prices. You do not benefit from a good deal. Also the quality of service is difficult to compare.

THE FIX: 17% of US GDP is healthcare spending. Thats about $2.5 trillion per year! That is about $8,300 per person! 1) cancel every government medical program and associated taxes required to raise funds. 2) Mandate that all workers pay %15 of their income towards a national health savings account (HSA). The government could purchase a high deductable insurance plan for every person in america ($8,300 deductable). By buying in extreme bulk the cost per person would be low. The remaining amount would go in to individual HSA. Easily $5000 per person per year in an account that could only be spent on health – until retirement. Young people could build a nest egg – while they are healthy. The money in the HSA accounts could be invested by individuals as it waited until you needed it. The real money – that the individuals could keep when they retired would be spent wisely and invested wisely. Competition!!! Also a customer review process could be instituted to measure the quality of health care vendors. The cost of health care would go down and in time the health tax rate could be lowered. An owenership society would grow where even poor people would have thousands of dollars to invest. This is the fix.

Posted by David | Report as abusive

Statistically, the most money spent on a persons health care in the USA is spent in the last two weeks of life.
By that time most of the insurance companies have bowed out, and it is one of the government programs, funded by you and me, as mentioned by ‘J’ above, that pays.
Don’t forget the Indian Health Service. Native Americans are the only people in America with guaranteed cradle to grave health care. This multi Billion and counting program is run by the government. This totally separate health care system, with layers and layers of ‘old buddy’ management, can now bill Medicare, Medicaid and the VA for any of its patients who qualify for these benefits, in addition to receiving government funding to run it’s own hospitals and clinics. It has been run by an ‘Indian Preference’ management for 50 years. Are these people healthy? These ‘managers’ would scream bloody murder if you tried to put them under the ‘all inclusive’ health care system, and got rid of those duplicate jobs. They complain all the time “our health care is not the same as other Americans”. You got that right-the rest of us don’t have ANY health care.
Germany has some sort of program where an individual is enrolled in a ‘company’ that administers the health care benefits, the AKO is the biggest one, for Miners there is the Knappschaft, and so on. Belonging to one of these is not an optional activity; I think Massachusetts has a health care plan sort of like this. I am not sure how the government pays in for the unemployed and poor, but obviously there is a way. If you want more ‘fancy’ accommodations in hospital (private room, more art work, ect.) you pay for additional private insurance, AND hospitals have a separate section for ‘Private Pay’ patients. I like this touch-this give the ‘bennies’ to those who pay for them, not the Medicaid patients with the biggest mouth (you can tell I work in the health care field!)

Posted by QueZen | Report as abusive

There’s three main reasons healthcare is ballooning in cost.

1. Insurance Companies.
The concept of insurance for doctors, drugs and hospital visits was a good one back in 1940 or whenever it was first introduced. But not any longer. What has happened is that the entire healthcare industry has become drunk and addicted to the insurance payout system. Healthcare providers don’t have to set prices and agree to set rates because they just bill the insurance company whatever they want. Imaging if you owned a business and instead of giving your customer an estimate and agreeing to it in advance you simply billed a third party who was happy to pay the bill whatever is was. Think you may just raise your rates a little or maybe a lot?

2. Lawyers.
Well, maybe not individual lawyers, but the system in general is wacked. It’s simply too easy to sue a doc or a hospital and get away with millions. This has to stop. Remove quack docs and punish them with fines but the entire malpractice industry, which is also propped up by insurance companies, needs an overhaul.

3. You and Me.
What? Yes that’s right. Most of us have gotten fat and out of shape. One third of all army recruits are rejected because of their weight. That is just ridiculous. We need a national nutrition and exercise program that is tied to our national healthcare plan. Just like welfare reform, everyone needs to pull their own weight and get out of this rut we’re in. A major cultural shift is in order.

So there it is. Easy as 1, 2, 3. Of course we’ve got a huge battle on our hands with the insurance companies, the malpractice industry and the chain smoking fatties. But it’s a fight long in coming and I welcome it.

Posted by M Smith | Report as abusive

Simply put the rest of the world cannot be stupid and we Armicans smart after having created the global meltdown. So when it comes to social needs of humanity private sector has little or no incentives except profit hence non-profit organzations exists. Bottom line a single payer system with modifcations to medicare that emphasizes Primary Care vs specialist care is the way to go. I have yet to hear an elderly person complain that Medicare does not work even though it is not perfect it is better that no coverage.

Posted by Dumb Alex | Report as abusive

Most products in the “free” markets are optional for the normal purchaser which creates competition but that is not an option for the purchaser of health care that has a normal fear of pain, death or disabling disease. That eliminates a lot of free market competition especially when Congress passes laws like the Medicare Prescription Drug benefit which forbids any real competition in the market and dictates that by law even Medicare and the VA can’t shop around for lower drug prices. So we have a “world” economy but can’t import U.S. made pharmaceuticals from Canada that would provide a 50% savings even after the round robin trip. We have the hubris to label this free enterprise? Yes, as bought and paid for by big pharmco.
Our health care system is a fraud and a shame perpetrated by lying congressional champions of “free enterprise.”
It’s disgusting, deadly and needs comprehensive reform immediately. Nationalize it like civilized countries do.

Posted by Ray | Report as abusive

Supply and Demand. The quantity of Healthcare provided (quantity supplied) at a fixed (controlled) price will create a severe shortage of care. Employer based healthcare sucks, but ignoring market forces in your solution like this is dangerous.

Posted by Jason | Report as abusive

Professor, the choice is not between liberal or conservative ideologies. And the proposition that Liberal would use government control, conservative would use market control is also false.

The choice is: Is human health, specifically remedial medical care, a fundamental civil right? Yes or no.

The rest is details.

Posted by The Real Deal | Report as abusive

Article: Do we want a single-payer option in which everyone has public coverage and a government agency pays providers directly for care? (If so, we could expand Medicare to all Americans.) Another alternative is to create a government-funded program providing vouchers that entitle everyone to sign up with a private health plan which, in turn, would provide the services.

I suspect that this author, like most Americans, has not understood why their HC-system is so expensive. It is because it is a Service Sector component of our economy, and like most such sectors, the labor component is expensive. An average doctor in America earns $150,000 a year. Multiply that average by the number of doctors and you have just an idea of the cost of one component to health care.

Why do Americans pay twice as much as Europeans, per capita, for health care services? Because, in Europe, the National Health Care systems mandate the cost of HC services practiced by physicians. Those fees are intended to assure the profession an honest pay for more than an eight-hour day.

And, why did the World Health Organization place 10 of Europe’s National Health Systems in the top fifteen? (Whilst the US finds itself at 36th place.) Because a key criteria in their study was “easy access” to health care services. Easy access is jargon for low-cost. In France, I pay $30 to see my GP for a consultation. How much do you pay?

This lower cost is crucial to a program with the onus on Preventive Health Care that detects an illness before it becomes serious. Remedial Health Care is costly, so preventing serious illness is worth its wait in gold.

The US should do the same as Europe. Why not have Health Care provided by Civil Servants paid Civil Service scale rates in government run hospitals? That’s the way the military does it, and it has THE finest health care system in America.

Just a thought …

Posted by LAFAYETTE | Report as abusive

There must be a reason why Americans flock to Canadian pharmacies to fill prescriptions, and Canadians (the ones who can afford, and not only Canadians) flock to USA for treatment.
The most important question is, what health care as such is? A human right, or a market based service?
Say it’s a right, and then all the liberal plans are not only a possibility, but the only way to go. With all the consequences. Since equal distribution is a requirement, the whole distribution system (inherently bureaucratic) must be built – and paid for. The more the bureaucracy costs, the less money will be available for treatment. The less will be doctor’s income – either as a contractor of the government-based system, or as direct government employee. The less will be motivation for bright young people to go to medical school, if they can later get more money for less work somewhere else. An American medical student will become a rarity just as an American engineering student is. Soon America will have to import doctors and nurses just like Britain has – and mostly from countries like Pakistan. Remember some British doctors of Muslim origin that planted car bombs in England a few years ago concurrently with (or instead of) treating British patients? With all the consequences to the quality of American health care as a product – just as we see decline of the quality of American manufacturing products. That’s on service providing side.
On the consumer side, you’ll be stuck with whatever health care services are rationed to you by some local bureaucrat, and whatever providers you are assigned to by the same bureaucrat. You might be lucky to get assigned to someone who is a Doctor by Cod’s grace. Or you can get someone whose accent you can’t comprehend. If you have enough money, you’d be able to go to one of the few remaining private practitioners working outside of government based system (definitely not an option affordable to middle – and even upper-middle class). Or you can travel for health care to some low cost location like India – doesn’t this look like outsourcing and offshoring of yet another American industry? And again, inequity – if you can afford, you’d get that quality of life enhancing joint replacement, or that life saving heart surgery, when you need it, and by provider of your choice. You can’t afford – and you wait for years in the wheelchair. Or you die while on waiting list. Or you die under the knife of that fresh from the school (or from foreign diploma evaluation) surgeon. Just ask all the foreigners who come to America to seek medical treatment and pay for it, even though they have a robust public health care system in their home countries like EU or Canada, and they’ll tell you why.
Who will really lose – that’s exactly the poor who now qualify for Medicaid. Now they’re treated within the same system as privately insured or self-paying patients. If that system gets nationalized and overloaded by the ones currently outside of it, it’s the poor that’ll get the short shrift. While the ones with more resources will be able to postpone buying a new car or forego vacation to get necessary treatment outside the government-administered system, the poor will get stuck.

Posted by Anonymous | Report as abusive

A few years ago a relative of mine needed an expensive $60,000 surgury. This was followed up by about $100,000 in medications over a period of 2 years. Because he/she was insured, the total that the insurance company paid the hospital for the surgury was approx. $16,000. He/she paid nothing. If he/she had not been insured, the total that he/she would have had to pay out would have probably been the full total of $60,000. So, how about the medications? The insurance company paid for virtually all of the medications at full cost of $100,000. What this tells me is the political power that insurance companys have over hospitals, but more surprisingly, the power that the drug companies have over the insurance industry. Another small but salient example of the power of drug companies are the adds you see on television (during prime time!!!!) promoting drugs that enhance a man’s ability to get a erection. It is amazing what the general public will except, but it also shows the incredible power that the pharmaceutical companies have. Power and influence, power and influence…..

Posted by Jaun R | Report as abusive

In reply to Ananke: It’s a fallacy to say that public health care does not co-exist with private in Europe, or anywhere else, for that matter. They complement each other: what one cannot provide the other will, and both tend to be used simultaneously. I know because I’ve used them both and I don’t understand the persistence of this fallacy in the U.S.A. as it’s pretty obvious to assume one will not invalidate the other once it is implemented.

I don’t mind if some millionaire uses the public health care service if he so wishes – as long as he pays his share like all other citizens, it’s his right too.

There are certain services that shouldn’t be offered by a Public Health Care System like sex changes, plastic surgery without any health benefits and certain drug prescriptions (let’s cut down on institutionalized drug pushing and addiction enabling, shall we?). There are far too many needing genuine care to justify a shift of public medical resources to cover for pure vanity, hypocondriacs and junkies. If anybody wanted a prescription of marijuana for health reasons, they could go to a private health care provider for that.

In cases of malpractice, at the moment the competent doctor (physician/medical practitioner,etc) feels himself hounded by the non-existence of a cap on the amounts awarded for malpractice suits. There really should be one accorded by severity, not by how high lawyers could negotiate ad infinitum. Every lawsuit should go to a specialized “triage ward” (well, they do now to a degree..but…), and those qualified to pass would then follow normal procedures under the law.

Posted by Van Dance | Report as abusive

Institute mandatory school sports? Eliminate fast food?

There are multitudinous illnesses and infirmities derived from genetic and environmental factors that are well outside the volition and personal habits of the individual.

To propose that as the solution to the health care crisis is nigh farcical…

That isn’t to say that an active lifestyle and sensible eating habits aren’t laudable. But to FORCE these on people… well, the last time someone foisted such laudable goals on the masses, it was prefaced with the burning of Der Reichstag.

Posted by bluemayonnaise | Report as abusive

I would like to know if those who blame the current physical shape of many in the nation on the lack of exercise ever had a sports-related injury in school?
It seems that anybody with an injury that needs to go to the hospital is because they’re lazy and fat, like Lance Armstrong who broke his collarbone from over-playing his XBox or Playstation.
Or perhaps the guy who has been working the 60-hour weeks his job demands had a stroke because he was a lazy fat jerk.

Posted by Sebastien | Report as abusive

America will not have to import doctors and nurses ‘pretty soon’, we have been doing it for years! What do you think the biggest (education based) export of the Philippines is?
I have worked with a lot of them, a good worker is a good worker, I’ll take a co-worker who knows what they are doing and is willing to work, with or without accent, over an over a lazy educated elitist any day.
Most hospital health care problems are handled by ‘protocols’, designed to treat a specific diagnosis.All well trained doctors use these, wherever they are in the world, they are the ‘standards of care’. So if you get a doctor assigned to you, or if you have your own private doctor, the treatment should be pretty much the same.
By the way, a lot of hospitals have gone to the ‘Hospitalist’ system. These are doctors, employed by the hospital, that are assigned to patients when they are admitted to the hospital. Everyone’s specific condition is of course very ‘unique’ and personal to them, but to ‘Western Medicine’, it is generally just a variant of something seen hundreds of times a year in that hospital. If you go to a hospital and are assigned a Hospitalist, take him/her! These people work shifts in the hospital, just like the rest of the staff. They deal with hospitalized patients only. They know how the hospital functions. They know the people who work on the wards, have actual working relationships with them, even the night shift! They ‘know the system’, and can get things done quickly. In hospitals with 24/7 Hospitalist coverage they ‘report’ off to each other on their patients. If a nurse calls a Hospitalist about a specific patient the Hospitalist pulls out his notes and has the latest info and ‘big picture’ about that patient in front of him/her. If the nurse calls your ‘private’ physician and they are off, out of town or whatever, they generally get a partner who has never heard of you. If you have a ‘specalized’ aspect to your condition the Hospitalist will certainly consult a specialist. The ‘Hospitalists’ are in the hospital 24/7 and if a doctor needs to be summoned ASAP, they are there. I just have to put that plug in about the Hospitalist system since this is a discussion about ‘systems’ changes in healthcare. This is a ‘systems change’, and, as a person who has to work with doctors I think it is for the better.
The comments about health care as “non-elastic” goods, health care not being an option for those in pain (the symptom that usually brings people in- even the most hard bitten uninsured, or frightened illegal alien), and that basic question; Is health care a fundamental civil right?, are all dead (!) on! The way it is now though, the ‘industry’ has figured out how to use the poor, the homeless, the overfed fatties, the illegal druggies, the drunks, and even the illegal aliens, to fuel the enormously expensive ‘illness intervention’ based health care system we have to the almost total neglect of focus on ‘lifestyle changes’ as suggested by JH Been. But who is going to make $ if fewer potato chips, beer and cardiac caths or sold????

Posted by QueZen | Report as abusive

Has anyone ever heard of State Insurance Reform? Probably not, so let me give a brief explanation.

About 15 years ago, in an attempt to fix health care, State GOVERNMENTS came up with new rules and regulations insurance companies had to follow if they wanted to sell health insurance in their state. Prior to State Reform/Regulation, insurance companies followed only rules for the state they filed their contracts with, typically 1 state.

When Health Insurance Reform came along, each state came up with their own, extremely different rules. The result of this was not improved Health Care, but increased complexity of the insurance industry, which in turn made costs skyrocket.

To try and simplify this, think about this… a successful local ball company decided they want to sell their Wonder Ball all over the United States. They find out that they need a license to sell balls in each state. When they apply for the license they find out that each state has different requirements.

Some states require that the ball has to be a certain size, another a certain color, another a certain weight, another a certain price and the list goes on. The ball company has to increase the price of their balls in order to buy new machines, new paint, new packaging and more employees to handle all of these different things.

They also find out the state requires that the ball manufacturers provide reports about the balls they sell in their state. Each state wants a different report at different times with different requirements. So they increase the price again in order to by new computers, software and hire new employees which will gather the information and create reports for the states.

The states also mandate and regulate who sells the balls. The price goes up again because the stores that sell the balls have other balls they sell and require special pricing and contracts to sell balls. So the ball company increases the price again to hire lawyers to write contracts.

Now the balls are too expensive that poor children can’t afford them, so the government decides that they will by the poor children balls. Where does the government get the money to buy the balls?

So why is Health Insurance so expensive? You can thank your government.

Posted by KD | Report as abusive

The US is the land of BIGGER BIGGER BIGGER, MORE MORE MORE is BETTER. Just like everything else that is falling apart in this country, so is healthcare. This is a very poor philosophy that has become ingrained into to many people.

It’s easy to always want MORE MORE MORE but when you have to check yourself and cut back then its a problem.

Out of control.

Posted by Out of Control | Report as abusive

Why must we start with the premise that our elected officals must argue this out based on the principles of their parties?..why not start the discussion with the question..”why can’t the model that is adopted in Massachusetts be applicable to the country”..Sure they have run into difficulties such as a need for primary care services but so will the nation have to deal with this..One of the purposes of a pioneer is clear the path for those that follow. I hope our elected officials recognize that following is just as important as leading.

Posted by notmd | Report as abusive

I’ve worked in the health care industry for over 30 years and the #1 reason that health insurance is so expensive is that the federal government only pays 30% or less of the bill for the Medicare/Medicaid patient so the hospitals have to charge more to the insured patient which raises the cost of insurance. The number 2 reason is an out of control tort system.

I also like the way libs give us the 12 million uninsured numbers but never tell us what the break down of that number is. Most of the 12 million are people that are in their 20’s/30’s that know they will more then likely only need to go to their private doctor once or twice a year and chose to pay for that once or twice a year doctor visit out of pocket instead of $400 a month for insurance.

Posted by Bill H | Report as abusive

As a Canadian citizen, living in the US for over thity years, I have had experience with both systems. ie: single payer and here using private companies.
Everything considered there is no comparison: The Canadian system is by far the better for the average family. Contrary to rumour here, the availability of services in Canada, when you REALLY need them, ie: honestly ill, is as good as anywhere. Yes, there are waits for “not so serious” treatments. That is true, but, for the working family, who can’t afford $20,000 a year premiums, there is no question which is better!

Posted by John H Lindop | Report as abusive

More oversight is definitely not the answer in the Health Care Industry. If you go into any department in any hospital, you will see the piles of paper work dedicated to satisfy the government. Then the costs of care are barely underwritten by the insurance companies and medicare/medicaid. In other industries when more people use the product, prices go down. In medicine, over usage does not produce a lower cost or a better product. CSI not withstanding, medicine,lab are labor intensive. Talk about overusage, look what has happened to antibiotics. Now we have more resistant organisms. Scale back people–use a little common sense. Use hot water to wash your hands and your dishes!!. 50 years a med tech, Liz

Posted by Elizabeth Beutler | Report as abusive

Every time some conservative/Republican says the answer to the healthcare mess is competition and the “free market” they should be slapped in the face. As many other comments have noted there simply is no market for life and death. It is profoundly immoral and delusional to imply that the problem is that sick and dying human beings do not “shop around” enough to get a “bargain” heart operation or chemotherapy. The complete and total answer to this nightmare in America is Medicare for everyone. The rich can always buy their gold plated services anywhere they damn well choose. The rest of us, 99% of us, need this cruel profiting off the sick and dying to end NOW!

Posted by mike tar | Report as abusive

Liz and John H, I certainly agree with both your points! There are many reasons why insurance is so expensive. A few more reasons not mentioned are fraud and the uninsured.

Mike Tar, I think you should pick up Octo-Mom’s hospital bill since your so compassionate and generous!

Posted by KD | Report as abusive

A very complex issue with many simple statements clearly erroneous. Much if not all of above comments very good and clear. Problems exist with deflection of medical care funds to billing, advertising, administration, legal wranglings, defensive medicine practiced for malpractice protection, deflected debt passed on by doctors and hospitals (for underpayment, false information, refused care, etc.) The current medical care in the US covers simple problems well for those financially well off, period! Everybody else is in a mess, more elderly with low funds choosing to not take medicines routinely due to cost and more adults finding job elimination or cut hours adds them to the uninsured or underinsured. In short, our system is a disaster! Ted Kennedy had written a book about medical care in the 1960 s In Critical Condition, (Little Brown, if I recall correctly) Today’s equivalent is worse and should be called ‘On Life Support’.
Problems are systemic and will get worse as the economy moves on. Employer based coverage as a model is doomed to failure. As a physician, I see that the fractionation of care, the time spent getting authorisation for medications, procedures, etc. is already a severe burden and as bad as I could imagine in a one pary payer ‘Socialised medicine’ [Doesn’t that nice Red-tinged reference seem wonderful to conservatives?!]. The only problem is that the current system means that my front desk or my own phone time is spent working with multiple rules and programs within say NY Empire BC/BS (5 alone there) and many for other companies. At least a single payer system would allow for the anticipation of a clear consistent policy. What I currently deal with is a hodge-podge of protocols that make no sense and is more or less a lottery depending on the state and the insurance plan or union benefits package that somebody is luck enough (/unlucky enough) to have.
The problems inherent in the current system deal with problems of wasted time and resources, unsustainable inefficiency, broad inequalities in care and marked lack of value for the health care dollar spent. Even if patients other than the Canadian gentleman above disagree with his assessment of his nation’s health care system, there is no doubt that the country has better outcomes for each dollar spent. The US spends markedly more and has quite pathetic outcomes in health care statistics, often rivalling some third world countries.
A single payer system may not be ideal, but its visibility would make it more responsive than the problems we have with US Insurance companies: Any challengers to this please note A. Cuomo NYS AG’s suit against United Healthcare and the Ingenix mess with United Healthcare paying $50 Million to set up a true ‘Usual and Customary payment system’ database and a further $350 Million for penalty some few days later. Ingenix had underestimated the true values as determined by the NYS AG office by 28%, having its wholly-owned subsidiary, Ingenix, misstate facts. United Healthcare alleged no fault in its payment of the judgement/settlement, though in submitting mis-stated and virtually consistently favourable (for them) EOB s to patients-who then had to often pay the difference- should be considered to be the equivalent of perpetuating fraud. Did you not hear about this? It was hidden by the wonderful landing on the Hudson River of the airliner by ‘Captain Sully’ that virtually eclipsed anything else. The whole of this rather lengthy rant is to state that these companies are doing what is in the interest of patients only to the extent that it is not against the interests of the companies themselves. Is this really better than people’s fear of Socialised medicine?
I am afraid that the system will need to change, but that there is insufficient desire to address our current problems until well after a crisis, akin to the malaise to address our economic woes had been just a number of years ago.

Posted by MJKropf | Report as abusive

Correction, I meant to agree with Bill H not John H.
Government run health care would be a nightmare. Also, no hospital in the United States would turn away a person who is seriously ill. The problem is that there are so many irresponsible people who don’t try to get insurance until they are sick. Those are the stories we always hear about in the news. The people who complain that they can’t get insurance because they are sick. Well, fyi, you are not supposed to wait until you are sick to get insurance.

Posted by KD | Report as abusive

Healthcare in US is a ponzi scheme – to steal from low income group. The premiums are sky rocketing and even Obama administration does not seem inclined to reigning in the cost. The cost needs to go down 50% in 2 years; and it is very much possible. What is needed is a change in mindset.

Now because of paying for health insurance the individuals see doctors excessively, even when not required and consume excessive medicines because they want to recocer the money paid for health insurance or the money which has been stolen from them (legally by con men aka congressmen).

One way could be that all healthy individuals below 50 NOT take health insurance and pay out of pocket. However they pay a small premium to Government who supports them in case of any emergencies.

Posted by Joe the health guru | Report as abusive

There are many ways to cut costs – how about outsourcing the healthcare to Europe / Asia / South America. America is a nation of immigrants. Everyone has a root or branch in some foreign country. Treatment can be combined with tourism / a family visit / an official visit. Cuba and Canada are next door and a very good source for cheaper (and better) treatment. Certain procedures can be done in Europe at 50% cost or in Asia at 20% cost with better results.

Posted by Joe the health guru | Report as abusive

The problem I have with Universal Health Care is that it would ruin an entire industry in order to meet the needs of a few. Why not have 2 systems, a public system for the uninsureds and a private system for the insureds?

Remove of ALL the current government (state and federal) regulations on the private system and create public hospitals and clinics for the uninsureds and government provided health care participants such as Medicare/Medicaid, veterans and public employees.

Private health insurance could be available for anyone including government participants if they so chose.

What I believe would happen is that the private system would be able to lower costs by operating in a competive, market driven environment which would make it more affordable for all employers and individuals.

There would undoubtably be a big difference is service which would encourage everyone to purchase private insurance.

There would no longer be an issue of access to health care because everyone would have access.

Posted by KD | Report as abusive

The solution is so simple, yet no one seems to see it. It is simple supply and demand. With the baby boomers getting older and more people accessing the system, demand is at an all time high. High demand drives up prices. Years ago, people didn’t go to the doctor if they had a cold, they used home remedies. Economics tells us that if demand increases, supply must increase or prices go up and the product must be rationed to those that can afford it.

Increase the supply of healthcare providers and the price will go down. In this country, there is a shortage of doctors, nurses, pharmacists, etc. Ask any hospital. Getting into medical school is a very selective process, creating a bottleneck to increasing supply. We must recruit more people into the healthcare education system and quit weeding out bright students that have the dream, work ethic, and intelligence to be doctors, nurses, etc. Increase supply, remove barriers to get into the profession, retain existing doctors by removing cost burdens (malpractice insurance, bureaucracy, insurance paperwork) and prices will become affordable to everyone. I know many doctors that have left the profession because of these cost burdens. We don’t need doctors leaving the system, we need more of them coming in.

Posted by Steve | Report as abusive

I’m 30 and have not had health insurance in several years, because it’s incredibly expensive through my employer. But I found myself in need of regular health care last fall. To those who may scoff at my “irresponsibility,” let me clarify that I didn’t “wait until I was sick to get insurance.” But I did wait until I was pregnant. And nobody would insure me. Can anyone tell me how that should not disgust me? A country who cares about its future takes care of its people, and of its upcoming generations. A country in which a pregnant woman cannot get health insurance is a country that really needs to take a look at its priorities. Health care is not a luxury, privilege, or commodity; it is a human right. Not everything needs to be about competition and profit. Wake up, America. This is one the rest of the industrialized world’s had figured out for a while.

Posted by Jen | Report as abusive

Here we go again. Everyone’s looking for ways to pay for rising health care cost. Have any of you actually asked why is it increasing? Can anyone actually explain why a simple procedure such as appendectomy costs $30,000 when it’s only $1,800 in Korea? Why are our doctors billing $300 to the insurance companies for every visit when they’re only supposed to charge $80? Or have anyone actually looked at your bill after a CT scan? $2,000 for the scan itself PLUS $800 for operator’s fee which only took 5 minutes. $800 for 5 minutes?

Our hospitals and pharmaceuticals are charging 10~30 times of everyone else in the world. Are our doctors and medicines that much better? Is that why US is the sickest country in the world? Or is it because our hospitals maintenance costs that much more? Someone please explain.

Pharmaceuticals always say their drugs cost more because they spend into research… into what? Boner pills like Viagra and Cialis? Hair loss drugs and botucks? Anything that they can market and make money. All life threatening illness are being researched by private foundations as far as I know.

Everyone’s blaming the insurance company and the system. No system will ever work as long as our hospitals are charging these outrageous amounts of money. Likewise, current system will suffice and everyone should be able to afford health care if hospitals actually charge what they’re supposed to charge. Hospitals and Pharmaceuticals… are the culprits. If our doctors say they will not save people’s lives for less money, bring doctors from other country.

Posted by Brian Choi | Report as abusive

A system in which the provision of medical care and the funding of medical care is provided by different organisations will inevitably lead to conflict of interests.

Posted by Joel Furze | Report as abusive

When there is a schmuck (the public) to be exploited, there is a plenty of ways to do it. In that game legality always wins over morality! Hey, we always want to insure (milk) the healthy ones. They do not burden the insurer. The sick, well, … . In the end insurance busines is busines and not a charity.

Posted by DeSegnac | Report as abusive

Great analysis. Universal access to quality healthcare is not a profitable venture for insurance companies – they must avoid those who really need it in order to maintain profits and therefore become a negative impact on the overall health of the nation. If the overall health of our citizens is an important national goal then the federal government must be involved.

Posted by Dennis Weverka | Report as abusive

Every time some conservative/Republican says the answer to the healthcare mess is competition and the “free market” they should be slapped in the face. As many other comments have noted there simply is no market for life and death. It is profoundly immoral and delusional to imply that the problem is that sick and dying human beings do not “shop around” enough to get a “bargain” heart operation or chemotherapy. – Posted by mike tar

Every time some liberal/Democrat says the answer to the healthcare mess is socialization of health care they should be issued a one way ticket to N.Korea. OK, this is cruel and unusual, so let it be Cuba, the Caribbean paradise of public health care – too bad there’s no way to send them back in time to USSR.
Life and death decisions made by a bureaucrat are not a single bit fairer than market based solutions.
Since the health care in a socialized system is inevitably rationed, someone who does that rationing may decide that for people older than X years the costs of – let’s say hip replacement surgery – are not warranted by the benefit, which may be defined as projected length of life or projected length of _productive_ life. The resources may be better spent on someone with many productive years ahead. Sounds fair to you, doesn’t it? Now imagine your elderly mom bedridden with broken hip for the rest of her life – that’s unless she gets that broken hip replaced. Is it still fair? Now think you don’t have enough $ to pay for that surgery in a private facility, but just enough to make that bureaucrat change his mind – will you hesitate to offer? But because of your offering, someone else (who either doesn’t have enough $ to offer a bribe, or isn’t smart enough to do that) will be pushed back to the end of waiting list – still fair?
Or how about that little example from Soviet dentistry of mid-1980s? There were shots of Lidocaine available, but in limited quantities, so they were reserved for extractions and people with unusually high pain sensitivity. All others had to endure drilling – even into the tooth cavity – without anesthesia. However a smile and a box of chocolates (very hard to get then and there, therefore very desirable item) would make almost any dentist agree with you that you have that unusually high pain sensitivity. A smile alone wouldn’t.
Or how about the separate health care systems for high level Communist officials and everyone else. In a regular city hospital you would likely get a bed in a corridor – until a bed in a room is freed. And the room would be probably as large as a public school classroom, with at least a dozen beds. The meals smelled so badly they’d turn your stomach inside out even if you were 100% healthy. Permanent lack of equipment and medicines, shortage in staffing, especially on nursing level. And that was in the City of Leningrad, other less important cities were much worse off, not even speaking of rural areas. On the other hand, there was Sverdlov Hospital, technically a part of the same Leningrad public health system. Single and double occupancy (you choose) airy rooms with color TV, gourmet meals, fresh cut flowers daily, latest equipment, Western meds, personalized service. Not necessarily best doctors though – they were hired based on CV details more important than skills. Too bad it was available only to a few select customers – so called “Nomenklatura” and their family members. The Kremlin Hospital in Moscow was even more impressive. Yet for treating really serious conditions of really senior (both age and position) leadership, they were either traveling to the West, or inviting Western star doctors for treatment in place, Yeltsin being the last example. All paid for from the same health care budget.
Was it fair? Is that the kind of health care system you want to see in the USA? I don’t. Nor do my parents, current holders of Medicaid and Medicare coverage (yes, combined – they didn’t earn here pensions high enough to be considered not poor). I’ll take my current coverage, with all its per-paycheck costs, deficiencies, copays, deductibles, whatnot any time over free universal health care advocated by the liberals like “mike tar”. Besides, it would never be free, Uncle Sam can’t just print the money, so inevitably the taxes will go up.

Posted by Immigrant from USSR | Report as abusive

Oh my heavens! KD has figured it out! The problem with America having nearly 50 million uninsured and double the costs per capita of other comparable countries is that so many Americans are just too lazy to buy insurance until they are sick. I just knew it was really a bitter personal war between KD and her lazy neighbor who doesn’t work as hard as KD and still expects not to be left for dead.

Sadly America is chuck full of KDs with their smug answer to every problem being the laziness of others. It is all to easy for the conservative/Republican preachers of greed to rally this ignorance into doing nothing to correct the massive imbalance of what Americans pay and what outcomes we are stuck with. I honestly do not believe we will overcome this exploitation of the rubes and the greedy anytime soon.

Posted by mike tar | Report as abusive

Why is health care so expensive? If 47 million people said they couldn’t afford to buy food so the government gave them a card so they could go to any grocery store and buy anything they wanted, what do you think would happen to the cost of food?

Posted by KD | Report as abusive

The purpose of government is to “promote the general welfare” of all of us, “we the people”. Universal, single health care for all of us is cost effective because it increases the risk pull, streamlines the administration of health care claims, includes everybody and doesn’t deny claims or try to discourge the use of appropriate treatment, diagnosis, disease management, healthy lifestyles and pay for by equitably sharing the costs by all taxpayers and putting the for profit health insurance industry out of business. Why have a “middleman” wasting users and taxpayer money for private profit? The invisible hand of the unregulated free mkarket never has and never will provide universal, single payer health care for all. The status quo ante is not acceptable or competing private health and public insurance. Being ranked 37th in the world for health and spending the highest amount is not acceptable. Pass the Nation Healthcare Act, HR 676 now! Medicare for all. Healthcare not health insurance! Healthcare not warfare!

Posted by Paul Rloden | Report as abusive

KD, so are you implying that the government is saying to those 47 millions that they can get any medical treatment and drugs they want? And that we’re paying for those 47 millions? Every other nation in the world manages to keep the medical cost down and therefore keep the insurance cost down. Thereby reducing the number of uninsured. What you’re saying is what US medical industry wants us to believe so we can continue to pay. Like some here said, only schmucks would believe that excuse.

Posted by Brian Choi | Report as abusive

Elizabeth Beutler is spot on about over-usage. People make different choices if they have to bear the costs directly. Costly procedures are done routinely if insurance foots the bill. This is especially true for people of advanced age on Medicare.

The Kettering Institute & National Issues Forum recently assessed the results from public forums in 39 states. They discussed 3 approaches to paying for health care: (1) require minimal coverage for all to reduce the threat of financial ruin, (2) restrain costs in the insurance and pharmaceutical industries, and (3) provide universal health care coverage as a right.

Verdict? Public has not yet come to grips with costs of making health care a universal right.
People struggle with trade-offs & see others’ behavior that increase health care costs, but not their own, nor adjustments necessary for better health or end of life.

Health Care: People Struggle with Trade-Offs
Article & Video: us_detail.aspx?catID=2&itemID=4202

Posted by MomHugs | Report as abusive

Paul R – there are a few problems with your theory…

“streamlines the administration of health care claims” – What you are suggesting (which is not what Obama outlined) is that you would have government “employees” do the jobs of insurance company employees. Oh that would be great! They’ve done so well improving efficiencies in all the other jobs they do! And, I’m sorry, your solution would be to get rid of a private “taxpaying” citizen’s job paid for by a private “profitable” company and replace it with another government employee paid for by …who? EXCELLENT!

“increases the risk pull” . The only time more people in a “risk pool” can reduce the risk is when everyone in the pool, “contributes” to the pool! As you mentioned, you would have all “taxpayers” contributing, what about all the people in the pool who don’t pay income taxes? How many people is that again? So basically, you are just redefining “uninsureds” with risk pool “non-contributors”, what is the difference? GREAT!

“doesn’t deny claims or try to discourge the use of appropriate treatment” – Are you kidding? After the government finds out that they can’t manage the cost of health care by doing the job of the insurance company themselves, what do you think they will start cutting? Services, expensive treatments, tests, (just read comments by USSR).

“middleman” wasting users and taxpayer money for private profit? The only way to remove the “middle man” is to have patients pay their doctors directly. Anyone can do that right now if they want!!! And oh yeah, our government would NEVER WASTE TAXPAYER MONEY!

Also, the last time I looked, health care providers et. all, don’t work for free! Without the evil insurance companies around to pick on, people like you will be looking at the doctors, nurses, hospitals, etc. and complaining that they are “wasting taxpayer money”, that they shouldn’t be profiting from the misfortune and sickness of others. Maybe congress will pass a bill tax 90% of their income! Who knows?

Posted by KD | Report as abusive

Until people realize that the increasing cost of health insurance is the AFFECT of the skyrocketing costs of medical care and over regulation, this problem will never be resolved. Do you blame grocery stores for the cost of food or gas stations for the cost of gas? You can regulate the insurance industry to death and the cost will only get higher. You can get rid of health insurance and it won’t solve the problem. To solve the problem, the focus should be on the CAUSE not the AFFECT.

Posted by KD | Report as abusive

“…After the government finds out that they can’t manage the cost of health care by doing the job of the insurance company themselves, what do you think they will start cutting? Services, expensive treatments, tests, (just read comments by USSR)”
Posted by KD


If government officials get to distribute a valuable and scarce public resource, guess what criteria they would apply? Yep you guessed it right – their own interest. Even if that resource has no monetary value tag attached – it’s supposed to be free and used to maximize the public benefit – it has an intrinsic value that with certain effort can be translated into very material benefits for whoever controls it. Unfortunately the human nature is such that if they can extract these benefits they would. From that Soviet dentist of long ago that converted the dose of anesthetic, which is of no material value to him/her personally, into a very material box of chocolates of a value that’s quite material and absolutely personal. And all the way to the Democratic Governor that very recently tried to monetize for his personal gain the Senate seat still warm from Obama.
Medicare and Medicaid are already riddled with corruption and fraud. If these coverages are to be expanded population-wide, corruption will expand proportionally. Or maybe disproportionally – the bigger the system, the bigger the opportunities to game it.

Posted by Anonymous | Report as abusive

People complain all they can about offshoring and outsourcing without acknowledge their benefits. And now just watch the only industry which has not been outsourced or offshored (even indirectly). How stupid..

Yes, many people are smart here. The cost is at the doctors and hospital. Bring in outsourced medicines, doctors and nurses and the cost will just go down. Easy and simple.

Right now, we need the insurance companies or there will be no one preventing the doctors and their hospitals from issuing ridiculous charges.

Posted by Trevor H | Report as abusive

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