9/08/2009

Commenting on Anonymous' Comment

Here is a comment from Anonymous on The Conservative Soldier's post last week:
Your optimism is impressive. It does not seem realistic to me. What would all of your conservative reforms do about policies with annual and lifetime benefit maximums, about cancellation (or non renewal) of policies when people get sick, about out-of-pocket maximums that do not apply to certain diseases? These and a number of other injustices in the current system have nothing to do with the problems you list, and everything to do with greed.
Inescapably, unless one believes that when it comes to the provision of health care everyone is entitled to everything then there must be restraints on care. Those restraints are determined either through the political system, the price system or a blend. In my lifetime there has been no unfettered free market in the delivery or financing of health care and there will not be one for the rest of my life.

Anonymous decries benefit maximums and recission. Nobody likes these things but those are two ways the price system allocates limited supply (of either dollars or doctors) across unlimited demand. A political system will face the same problem, the solution will just take a different form. Some people will pay higher taxes. Some people will have to wait longer than they do now. The price of new technologies will come down, but the cost of R&D risk won't, which means some technology that might have emerged also won't. Over time some outcomes which are choices, not insurable events, will be covered, if advocated by vocal special interests.

I think health care costs more than we want it to because we demand a lot of it, partly because we're rich, advanced, aging and lazy and partly because we've created the illusion that someone else pays for health care. Accordingly, I think health insurance should be personal, not corporate, property. I think government should fund a means-tested pool to pay for some of the uninsurable. I think people, not employers, should be required to buy health insurance. I think insurance companies should be allowed to sell mandate-free policies. I think there should be cross border competition. I think the government should subsidize health insurance for those who can't afford a mandate-free policy. I think the health insurance industry should be required to offer a national, irrevocable policy free of political mandates and actuarially sound. I think combat veterans should get whatever damn treatment they want, paid for by the rest of us. I think if you're a bigger risk, insurance should cost you more. I think health care providers should have to disclose prices. I think if you're here illegally no hospital should turn you away but eventually you should be sent back. I think an employer who hires an illegal alien should be punitively fined. I think all school age children should be provided basic inoculations.

I don't have all the answers but I know everyone can't have everything. Anonymous, how would you decide who gets what?

6 comments:

Johnny Keynes said...

Your response is the exact problem with the conservative side of this issue. I am intensely interested in the debate, and understand the issues and economics behind all of this. You are a good writer. And despite this, my eyes glazed over as I got midway through your second paragraph and my mind wandered off to other things I need to get done today.

It is unfortunate that platitudes and sound bites carry the day in so much of our political rhetoric these days but that is the reality we are handed. What is easier to hammer home...your eloquent defense of the free market system or "DEATH PANELS"?

Johnny Keynes said...

Oh, and I couldn't agree more with your comment on combat vets. It would sure as hell make my life easier.

The Daily Pander said...

Johnny:

Are you criticizing my ideas or are you criticizing our country's process for delivering a solution?

Johnny Keynes said...

Neither. Your writing was good and your points well taken. It's just hard for Americans to read a well articulated rational argument in this age of mass ADD. Basically, I am criticizing the attention spans of most Americans these days.

Anonymous said...

I don't recall saying that everyone should get everything.

I listed issues that I thought were egregiously bad. There are two functions of health insurance: one is to protect against catastrophic events, the other is to pay for routine expenses.

Regarding the catastrophic function: A lifetime maximum completely contradicts the purpose of catastrophic insurance. It's like a car radiator that only leaks when you turn the engine on. As for the supposed inability to price insurance with no lifetime maximum, that is silly. Don't you remember improper integrals, 1+1/2+1/4+...=2 and all that? The out-of-pocket maximums that don't apply to certain diseases is a feature that I have some experience with, and I can tell you that it gives you a pretty nasty feeling in the pit of your stomach when you discover that the insurance you thought you had isn't real.

Regarding coverage for routine care, this is perhaps not so unreasonable. It would probably be more efficient for people who just need routine care to pay directly rather than go through the insurance middleman. The difficulties are 1) you still have to do something for the extreme poor who can't even afford routine care; 2) you will have created a new battleground over when various levels of care cross the line from routine to catastrophic; 3) you will create motivation for people to not seek care in situations where early routine care can prevent later, nonroutine care. But resolving these difficulties may still be easier than fixing our current system. I don't know.

Regarding risk based pricing, a moderate amount of this may not be unreasonable; it is hard not to like having one rate for smokers, one for nonsmokers. But such a policy does not reduce overall risk in the system, it weakens the main effect of insurance: reducing individual risk by spreading it as widely as possible.

Johnny Keynes said...

Anon,

Good points. I think we especially need to look at markets for routine care. If we look at other insurance markets, we find little of this kind of coverage. In housing, your insurance policy does not cover the cost of replacing the roof every 20 or so years or making sure you replace the sump pump every 5 years. Similarly, auto policies don't cover oil changes or transmission fluid. You get the idea.

Such an approach would certainly focus consumers on the true costs of the services they now expect for only their $10 co-pay. As far as those that can't afford routine care, there is certainly a lot to be said for things like tax credits and HSAs to address this.