Health Care Reform

I see a couple possibilities for Health Care in America:

1) We do nothing

2) We create a totally government run system

3) We create a partial government/private insurance system

4) We get government entirely out of healthcare, totally private

5) We get rid of insurance all together for healthcare

1) We do nothing:

I don't really see this as a best choice. Currently we are spending ~16-17% of GDP on healthcare in the US. In 1967, we insured about the same percentage of people (85%) in the US for about 5% of GDP.

2) Government Run System: aka One Payor System

Since when has the government ever SAVED you $$$$$?

Right now the pharmaceutical companies, the AMA, the insurance industry, the medical devices companies, and all other health-care related companies are pouring millions of dollars into lobbying Congress. None of them want to see the healthcare pie in America get smaller. The only group that is going to get screwed in a government run system are the American people. They simply don't have the money and lobbying effort to protect their interests.

3) Partial Governement/Private Healthcare system

This is basically what we have right now. We have Medicaid and Medicare from the governement and private insurance that is usually tied to employment. Since 1967, the government has been covering a larger portion of the population, although it is still smaller than the private sector portion. In this system, it is the insurance companies who "ration" care to those they cover and the government "rations" care for the people they cover.

This system clearly isn't working for us because it costs so much.

4 & 5) With a private system, I see two possibilities:

First though, we need a brief economics lessen. Fundamental to a free market system is that consumers of goods and services can ascertain the QUALITY and COST of the good or service they are purchasing.

When you went to the doctor last, did you see a menu listing the prices of all the procedures your doctor offers? Did you know how much your visit was going to cost beyond the co-pay? Yes, the visits really do cost more than $20. Did you know how good or bad the doctor or his/her staff had performed the service you needed compared to other doctors? No...? I didn't think so.

The medical profession has done a tremendous amount of work to make sure patients cannot assess the quality or cost of their health care. Doctors/AMA have made deals with insurance companies to give them a better rate in exchange for not sharing information about malpractice cases or procedure success rates.

Isn't it interesting that You are the customer, the one buying the health care and yet you are the one being kept in the dark about the real costs and quality of what you are buying! Sure, the insurance company "paid" their portion. But where did they get that money? Oh wait, that came from the premiums you have paid every month. So at the end of the day, it is all your money. It is also interesting that the insurance companies get to tell you, the customer, what services you can have and what doctors you can go to, regardless of need or geographic proximity? In every other business situation what the doctors and the insurance companies are doing would be called Collusion and would be illegal!

My approaches are aimed at creating a system where consumers/patients know costs of and can assess the quality of the care they are buying.

1) We create a system where all preventative, routine/common medical needs are covered by insurance. Things like strept throat, flu, immunizations for school children, physicals, etc would be covered. For major medical, people are on their own. You get cancer or need open heart surgery, the individual pays for every penny, no insurance allowed for major medical by law, even if you can afford it.

The benefits as I see it in this system would be that all people have "basic" coverage. This means that a brilliant child born into a poor family would be given the care needed to keep him/her healthy enough to fully develop their talents because they are not sick or dead. This could create a labor market competitive advantage for the U.S. in the long run and we will not have wasted as many resources educating kids who are too sick to work or die. Also in this system, the insurance companies set a price for how much they will pay for each service like they do today. This could create incentives for doctors to cut costs and the difference is higher profit for them. Obviously, this has a good side and bad side. Those doctors who provide worse care by cutting too much would be "found out" eventually if we had a system where a quality of care database was available to patients based on past experience. The database would be a lot like the databases insurance companies have today with all the malpractice payments, etc. for each doctor they insure.

The down side I see is that people would over use this basic care segment of the health care system because it costs them nothing. Don't have time to go to the doctor because Jonny or Suzie is sick? ... go to the ER! Get your 2 annual dental cleanings each year because you are ENTITLED to them whether you need them or not. This is the perverse way things work when it costs people nothing. Doctors would also leave the basic care area because there would be less money in it. The government or insurance companies would set a rate for services and that would be all the doctors would get. The only way insurance companies could make money in this system would be to 1) encourage high usage of health care to generate revenues - the volume approach or 2) compensate doctors less and less for procedures to create higher margins for themselves.

2) We create a system where people pay for their own preventative, routine/common medical needs (No insurance). This creates a system where patients are very aware of the costs of their health care. They immediately begin a few behaviors: They start shopping around for the cheapest rates for each service. They start negotiating with doctors over price. They start doing more homework to assess the quality of the doctor they are seeing for each service. Do they really need the Michael Jordan of medicine for their flu or child's immunizations? They don't use medical services they don't REALLY need.

These new behaviors have a few very positive benefits:

When people have to pay for it, they will only go to the doctor when they really need it. No more scheduling dental appointments for a cleaning just because the insurance allows it every six months. The "I'll be damned if I don't get every penny of the benefits I have "paid" for" attitude will go away. So will the over use of health care. This decreased demand will result in a lower costs for health care services in the short to mid-term. It will hurt in the immediate timeframe for those who absolutely need healthcare now and cannot wait. These people will pay the current high costs. The pain will be brief though!

When people start shopping around and negotiating the prices of services, this creates competition between doctors. Competition lowers prices as does negotiating and knowing the costs upfront. When was the last time you saw doctors compete on price with another doctor? Where are the price wars?

When people start doing more homework in choosing doctors, and I mean more than just, "who do you like" or "who's good". When they start looking at who has the fewest dropped babies, malpractice suits, or highest cancer survivor rates, then they will be able to choose the right doctor for their needs. This will reward the best doctors and punish the worst doctors. The best can charge a premium and the worst will be in court and out of work. This encourages doctors to act in the patients best interest and stay current in their field.

Side Note; I find it very interesting that I don't see or hear about unemployed doctors. Are all doctors really good at what they do? Are they really the best and brightest? I mean, even #1 draft picks fail sometimes!... but no doctors? This is because there is no competition or accountability for how good or bad they are. All it takes to be a doctor is to get through O Chem and the dedication/drive to get through school. I know some idiot doctors!

The people of the United States really need a system that will allow them to assess the quality of their doctors. By placing all the malpractice cases, survival rates, and recovery rates, etc in a national database available on the internet, people and doctors could see who is the best in their area for each service or specialty. No private/personal information on patients would be needed.

For major medical, individuals buy their own plans according to their needs and their means. It would be like buying life insurace where you can choose whole life or term-life, but the government wouldn't be involved in choosing or rationing.

Mandatory health insurance:

How is this working in Massachusetts? Oh wait, their system is bankrupt!

Of course, according to Joe Biden, "We need to spend more to avoid bankruptcy". Brilliant Joe

What if I refuse to pay or buy the health insurance? Can I just quit my job and go on welfare? Won't they just be giving me the same health care for free plus other benefits and I won't have to work anymore? Sounds like a great plan to me!

They have really thought this out, Idiots!

At what point does law become tyranny as well?

Some interesting articles:

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all

The Health Care Bill
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3200:

Spending other peoples money

http://www.realclearpolitics.com/articles/2009/08/05/impossible_promises_97774.html

Mark to Market

Mark to Market:

Eliminating this rule was done so banks would not have to write-down the value of their assests. Also known as the millions of homes they own because they gave loans to people who couldn't really afford the house and loans that were for more than the house is really worth. Writing down the value of these assets showed the world just how vulnerable these banks were and how risky the bets they had made really are.

What the SEC has done was just camoflage how bad the balance sheets of these banks really are. They have done exactly what they are supposed to stop. The reason we have accounting rules for publically owned companies is so shareholders can see the true value of the company in which they are investing. Eliminating mark to market has just made the banks look much stronger than they really are. They no longer have to show the losses they are taking or expect to take on the risky loans they have made. We have just introduced a huge shell game of confidence into the stock market on a level never seen before. All the SEC and Obama adminstration has done is told everyone the banks are wearing clothes.

My guess is that the Goldman Saks and Morgan Stanley's of the financial world will buy the profitable parts of Bank of America, Wells Fargo, and Citi when the losses really start to mount. The tax payers will be left with all the toxic assets at the end of the day while these other banks will reap huge profits. Since they will be the only game in town, they will enjoy a nice monopoly and we will suffer for it as a result. Think the new fees and terms are bad now? Wait until there is no competition!

Too Big to Fail or Too Big to Save?

We have been told by the Federal Reserve Bank, the Treasury Department, and both the Bush and Obama administration that the banks and autos are too big to fail, they are too important to our economy to let them fail. We must bail out their risky behavior at any cost to ourselves. These bailouts were made very quickly with hundreds of Billions of dollars, yet no real debate or communication was engaged in with the people who would eventually pay for these bailouts. We little people were just told it was too complex for us to understand and that this was the ONLY way.

I come from a school of thought where there are always more than one way of looking at things. There is always more than one solution. So here is one of those other possibilities: Create a new, healthy bank with the bailout money.

Why is this a possibility?

1) A new healthy bank would be able to create loans under tougher lending standards, but not the draconian terms banks are not offering consumers. This new bank would keep the availability of credit available to sound businesses and individuals, something that was a major problem last Fall, the banks didn't even trust each other. This would have enabled more businesses to stay in business, lessening the job losses. Individuals could have gone to this new bank and refinanced their mortgages with the great lower rates now available. Of course, those who never had any business "buying" their home wouldn't be helped by this, but those who were close and make "smart" decisions could still make it work and keep their homes. This in turn would have lessened the housing market collapse because their would be less houses on the market because more people were able to refinance. This would have helped both the banks and the individuals. It would have enabled the banks to sell the homes at a higher price, helping their balance sheets. It would have helped the individuals who had their house repossessed by the bank because they would owe less money.

Because businesses still have a bank from which they can borrow, they will still be in business and will not have to lay-off their employees. This again creates a virtous cycle in the economy.

2) With the bailouts, the banks reaped all the rewards of their risky behavior while the taxpayers get stuck with the bill. Remember all those record setting profits in 2005 from the financial firms? How big were those bonuses that year? In fact, where is that money now? Oh yeah, it is with the very people who got us into this mess. The very ones who understood what was happening and the risks they were taking.

In setting up a new bank, the banks who took risks too big for their balance sheets would fail. The shareholders who pushed for higher and higher profits and returns would end up with nothing. The employees and executives who enabled this greed to create the risky loans would be in the unemployment lines. The businesses and banks who had healthy balance sheets and did not take unreasonable risks survive. It would be survival of the fittest.

What are those banks who got all of our bailout money doing to show their appreciation? They have raised interest rates on credit cards, they have raised ATM fees, checking account overdraft fees, introduced new fees - like talking to a teller in person, cut credit limits (which hurts your credit score) and added annual fees on credit cards. They are going to get the money to pay back the taxpayer from the taxpayer!