Saturday, January 28, 2006

Private Healthcare and Market Failure - Why Single-Payer is the most effiecient

With Ralph Klein's recent pronouncements, a new CPC government and the Healthcare Debate up over at BPOC, the issue of healthcare is back on national agenda. There is a growing push for more privatization and the indroduction of private insurance to "fix" the perceived shortcomings of the system. Problem is, most of the people making these assertions fail to understand the nature of our system and the nature of market failure.

First, despite what many of the more vocal pundits on the right would have you believe, we do not have a "socialist" or purely socialized medical system. In Canada, the vast majority of health services are delivered through the private sector. What we have is a monopoly on health insurance - that is, your provincial government is your health insurance company and your doctor, or diagnostic clinic, which are private businesses, bills them for the services rendered. Our goverment provides such insurance services to its citizens because left to market, private insurance would result in a condition of market failure - high costs for services that are not needed while services that are needed are unfufilled (people unable to get medical treatment). This is what truly differs us from the US and also what differs us from Europe. Ironically, Europe, oft cited by conservatives as the model we should follow, is more socialist than we are - they deliver healthcare directly to citizens, rather than via public insurance, and doctors and medical professionals are employees of the state.

Insurance is a curious business, prone to market failure and plagued by the twin demons of "moral hazzard" and "adverse selection." Insurance often attracts customers that most need the insurance and who think that they will get more out of the insurance than they pay in via premiums and deductables. These are the last customers an insurance company wants because they will lose money servicing them. The customers they want are those that don't need their insurance. This is adverse selection - automatically attracting the type of customer you don't want.

"Moral hazzard" occurs even after the insurance company attracts the "right" kind of customer. Now that they are covered, formerly careful people have no incentive to remain careful because they can externalize the costs rather than pay it themselves. They become more reckless, causing more "accidents" to happen, resulting in more claims and payouts, driving up premiums and rates.

Insurance companies try to mitigate these issues and remain profitable by refusing to ensure certain people, raising premiums or simply not entering into insurance for an entire class of risks. In health, that means things like pre-existing conditions, age, or sex can be used to refuse coverage, pay only partially or charge much higher rates. It is this that produced one of the bitterest ironies of the Chaoulli case - George Zeliotis, the plantiff in the case that sought private insurance for his hip replacement, would not have qualified for the coverage he sought. The only winners in that case would have been the insurance companies, who would make profit selling insurance and collecting premiums, and Dr. Chaoulli, who would get the money. In the US this has led directly to the market failure in private insurance - very few people get coverage and procedures cost too much. For instance, a colonoscopy in 2001 cost $150 in doctor's fees in Canada, while in the US the same operation cost $475 for the government and $885 through private insurance. This is from both the higher administrative overhead in the private system and the fact doctors can charge insurance companies any rate they choose and for sometimes unnescesary procedures. Health consumers in this system are further encouraged to go along with this because of the "use it or lose it" prisoner's dilemna they find themselves in. The result is an innefficient and expensive system that benefits very few consumers yet generates profit and wealth for doctors and insurers - a market failure.

In Canada, we mitigate these issues by having a single insurer, with a single bureaucracy to reduce administrative overhead and reduce purchasing costs (for instance, vaccines cost less when purchased in bulk by a government, either federal or provincial, and given out to anyone, rather than by smaller firms or clinics that have the overhead of needing to track each dose for billing purposes). Our system removes the insurer's profit motive, allowing coverage to be universal and accssible to those that actually need it. Costs are kept down by negotiation fee schedules with medical associations, where they must justify the need to raise fees. Doctors are still paid on a "fee for service" but the government is able to provide much better supervison and auditing than private insurers, preventing much or the above mention moral hazzard problems. Even in the US, the idea of a central bureaucracy along these lines is quite popular - the HMO is the US corporate version of this bureaucracy. The HMO is even more bureaucratic than the government though, because they still need to account for the extended overhead of billing. For instance, Kiaser Pernmanete has a health care bureacracy larger than most of Canadian government run healthcare systems for its 6 million subscribers in California alone. And it is only one of the providers. Also, it has a single monolithic, centralized bureaucracy rather than a decentrialized one as we do in Canada.

Clearly then, our single-payer system is more efficient and delivers quality healthcare at lest cost than a private system. But what of a mixed system? Won't allowing private insurance along side the public system help?

The biggest problem with this is the shortage of doctors, especially GPs. If doctors are forbidden to practice in both a public and private system, many will move to the higher paying private system, leaving the doctor shortage more acute in the public system further makeing wait times grow.. If doctors are allowed to practice in both systems, they will be "perversely incented" to keep wait times long in the public system in order to move patients to the private system, where they can charge more and earn more. This is actually what happened in England and Australia .

Those who need faster service, like Mr. Zeliotis, or specialized services, or long-term care, will not receive coverage or make the wait times any faster. Insurance companies will make profits, doctors in the private system will make profits. Private clinics like the Copeman will make a great deal of money off of the "low hanging fruit" of easy to perform procedures that only the wealthy can afford, leaving the public system to care for the high-risk, expensive procedures. But Canadians in general will not be any better off and indeed, there is a case to be made that they will find themselves in a far worse situation.

That is not to say our system is perfect, far from it. But private insurance and for-profit private delivery are not the answer. Clearly some of the organizational efficiencies of the private system can help when applied to the public system - specialized clinics, case management, better queue management. The study from Alberta in December shows what is possible. GP's are facing higher costs and thus lower wages. These can be mitigated by sharing adminsitrative resources in a walk-in clinic like setting, as Ontario is in the process of implementing.

Our single-payer system is the most efficient and fair system in healthcare, but as the Chaoulli descision shows, it requires proper stewardship and cannot be subjected to haphazard cuts in funding. It works when properly funded. Combining better funding with better organizational effiecincies, it is possible that our system can once again be on of our points of pride. The system can be fixed without resorting to privatization and private insurance. All that is needed is real political will.

------------
Resources:

Beyond the links above, please read "The Efficient Society" by Joseph Heath, the The Canadian Health Sciences Reseach Foundation Mythbuster page, the testimoiny of Dr. Arnold Relman and the video series from CBC about the birth of our health care system.

25 Comments:

At 4:58 PM, Blogger Idealistic Pragmatist said...

Excellent post, Mike. Thanks.

 
At 5:26 AM, Blogger Herbinator said...

Earned another month on the blogroll with that one.
So many peope labour under misapprehensions in Cdn health care. Our single-payer system is good. And decentralized (provincial) administration makes it a Canadian thing.

 
At 8:37 AM, Anonymous Brad said...

A thorough and excellent post, Mike. Thanks much.

 
At 10:55 PM, Blogger Steve said...

Good post. Despite being a Blogging Tory, there is not much I would argue with. I make many of the same points in a previous post.

However, I am a little surprised at your acceptance of the role of the private sector in the delivery of health services (if you will permit me to have my own stereotypes about lefties). You state:

"In Canada, the vast majority of health services are delivered through the private sector."

Jack Layton seems to have a real problem with that. I just hope it isn't because he is putting the interests of his union friends ahead of the Canadian public.

In any event, solving our health care problems requires pragmatism and a solid grasp of the economics behind it. With your post, there appears to be more common ground than I previously thought.

 
At 8:41 AM, Blogger Mike said...

Steve,

I won't speak for Jack, but the difference between a doctor's office or a walkin clinic style private delivery and the for-profit, queue jumping style of health care (like the Copeman clinics) is night and day. Every one knows that doctors, walkin clinics an many diagnostic clinics are pirvate businesses owned by doctors/specialist that only bill the provincial medical plans. Even the Shouldice is like this (see my post below). This is a private, personal profit incentive for the doctor - and they do make good money doing it. Constrast this with the Copeman, which has shareholders and dividends and extra bills, allows patients to jump the queue.

As for Jack, I doubt this has anything with any union - I think he honestly want to avoid a system of healthcare that allows you to pay your way to the front of the line or that gives the poor and middle class secondrate care.

 
At 9:23 AM, Blogger Steve said...

The problem with Layton's categorical statements against private providers is that it closes off debate. His answer is simply to funnel more money to public institutions.

Well, we pour a lot of money into the health care system already and we don't seem to be getting much in the way of results.

I do not think it can hurt to have a little competition in the system. Let public institutions, non-profit health centres and private providers compete equally to provide health services under the public insurance plan.

That does not mean I support abusive extra billing. But public hospitals also extra bill. There has to be some constraint against that, particularly with respect to queue jumping. If you want to jump the queue, then you should have to pay the full shot.

 
At 6:40 PM, Blogger Carrie said...

Excellent post. Thanks for this.

As for Steve's comment -
Well, we pour a lot of money into the health care system already and we don't seem to be getting much in the way of results.
This is one of my major irritants with the Conservatives - the complete exclusion and disregard for Canadians who are IN the medical system, who ARE benefitting from it because they need it right now. They seem to think absolutely nobody in Canada is receiving healthcare. And if you are a Canadian who needs healthcare, well then you're just not worth thinking about.

We never hear from any Conservative that they appreciate our healthcare system. We never hear any of them admitting that they need healthcare. If they were born in Canada, they've benefitted. The fact that they grew up and have no regard for the system that helped keep them alive and their family intact is offensive to me. I won't say for most Canadians, but considering that they only have a minority government would indicate that I'm not the only one who feels this way.

 
At 8:55 PM, Blogger Steve said...

Carrie,

Get your head outta your ass. Did you even read my comments or are you just extrapolating from one phrase out of context to fit your stereotype about Conservatives?

To say there are problems with our health care system is not to say one does not appreciate it. If it is so perfect, why are we even talking about it? Problem solved, let's move on.

Like most Canadians my age, I have had my share of health issues and rely exclusively on public health insurance for medical care. In fact, my own doctor practices in a non-profit, community health clinic. However, I have enough experience with misdiagnoses and waiting for specialists to know that the system we have is far from optimal.

Before you start attributing bad motives, read my post. I think we all want the same thing - accessible, quality health care for all Canadians.

We need an honest debate about how to achieve it. Paul Martin failed. Can Stephen Harper really do any worse? I think Canadians will be pleasantly surprised if we give him a chance.

 
At 11:39 AM, Blogger Adam said...

Mike,

I'm curious about whether you've given any thought to the questions I asked when we talked about this issue over on my blog. Briefly: I'd expect moral hazard to be an even bigger problem in the Canadian system than in a free-market system (though it might be less of a problem in the Canadian system than in the American system), and I don't understand why adverse selection bothers you at all. (I think I understand the consequences that you expect to arise from adverse selection; I don't understand why you think those consequences are worse than the best alternative.)

 
At 3:48 PM, Blogger Mike said...

Adam,

Well you are going to need to explain yourself a bit better then - I'm curious what the differences you see btween the "free market system" and the American system, since to me the American system certainly is a free market in healthcare.

The reason moral hazard isn't as big as in this "free market" is that the "use it or lose it" pressure isn't there. While some people may act more dangerous and increase risk, the idea that "if I don't get that mole removed now while its covered" is more likely to arise in a private system, and indeed does in the US. This is the kind of moral hazard that increases costs, not nescesarily the boken legs, cracked skulls or cancers. Some people, like university students, will even go so far as to have children simply because it will be covered, because if they graduate school or loose their job, they lose their coverage. In Canada, that pressure is non-existant, since you can never lose your coverage. And this is healthcare, its not like people are going out of their way to get hurt because they are covered - pain is a great mitigator as well.

Adverse selection works against universality and that's what bothers me. And clearly, that's where we differ - I beleive strongly that everyone should be covered, because that is in my best interest. When even a homeless person can get "free" treatment simply by presenting a healthcard, that is likely to lower the incidents of disease, reduce all sorts of injuries, which means less sick days and a better econonmy etc. And the stats bear this out as Canada has higher life expectancy, a generally healthier population and lower infant mortality. I DO care about others besides myself, because in thend that DOES affect me, no matter what Ayn Rand and her ilk want us to believe.

I look at health care as a service ather than a business. Due to adverse selection there could exist people that could in fact pay for health insurance but would be refused coverage because the insurance companies would see them as too high a risk. Or there would be entire classes of healthcare not covered because it is not profitable to provide insurance to anyone. Simply put, the free market could not provide healthcare efficiently.

You might suddenly care quite a bit if you were one of those folks who would not be covered.

And I'm curious as to what you think the "best alternative" is.

 
At 9:26 AM, Blogger Mike said...

Adam,

Try agian...blogger is eating comments...

 
At 12:02 PM, Blogger Adam said...

Mike,

I think Carrie also had one of her comments eaten by Blogger. (And maybe other people, too - I have no way of knowing.)

When we talked earlier I mentioned a few different ways in which the American system isn't a free market: the tax laws, Medicare and Medicaid. Then I told a story that I think explains how those government interventions in the market led to at least some of the American system's current problems. (That is, this isn't some purist "well, there's a tiny government intervention, so it doesn't quite qualify as a 'free' market" objection. I think this government intervention directly and clearly explains a lot of the problems you've mentioned.)

I completely agree with you about the broken legs and cracked skulls - I don't think there's a significant amount of moral hazard going on with that. I don't quite agree about the cancers, because there are some kinds of cancer (lung cancer comes to mind) whose probability is greatly increased by some choices that a lot of people make. In general, failure to do this kind of preventative care (not smoking, eating healthy foods, getting exercise) is one of the main kinds of moral hazard that I'd expect to be worse in the Canadian system than in a free-market system.

Getting moles removed, and having children, seem to me like bad examples of the "use it or lose it" problem, because those are exactly the kinds of problems that I think can be easily traced back to the stupid tax laws. (Why would anybody want to buy insurance that covers mole removal? I'd expect "insurance" to cover rare, catastrophically-expensive stuff, not small common stuff. For most people, the insurance organization isn't adding much value at all on the small stuff - the risk isn't significant enough to be worth paying the insurance organization to pool it. But in the U.S., employees could get that kind of medical service more cheaply by asking their employer to add it to their "insurance" plan (in exchange for lower wages - the point is that a dollar spent by their employer on their health insurance was worth more to the employees than that same dollar paid to them in wages, because of the tax break), which seems to me like a clear explanation for why, over time, more and more stuff ended up being covered by these plans.) Can you give me examples of rare, catastrophically-expensive medical stuff that you think would have the "use it before you lose it" problem? The examples that you gave seem to me like they support the pro-free-market position: intervening in the market created incentives for people to buy insurance for small, common expenses, which made the moral hazard problem worse. So I'd still expect a free-market system to have a smaller moral hazard problem than either the Canadian system or the American system.

When I said "the best alternative" in the context of this adverse selection stuff, I meant the free-market scenario that I described in my comment back on my blog. In a free market, I'd expect there to be stronger incentives to avoid risk-increasing behaviours (like smoking and eating unhealthy foods and not exercising), I'd expect low-risk people to have harder choices to make (pay higher premiums or live without insurance or think of alternative ways to pool risk), and I'd expect there to be much stronger incentives for both the insurance providers and the low-risk people to innovate (which I expect would ultimately be much, much better for the low-risk people in the long run). When you talked about "universality," it sounded to me like what you valued was both short-term and long-term universality, but I think that the Canadian system is only more universal (than a free-market system) in the short term. In the long term, I think the best way for the low-risk people to get reasonably-priced insurance is to make sure that everybody bears the full natural consequences of his choices, and to invent ways of eliminating or working around the information asymmetry.

In my mind, the stuff I just said doesn't have much to do with the "should richer people be forced to pay for poorer people?" issue. (I'm mentioning this because you talked a bit about homeless people, but I think that issue is mostly orthogonal to the moral-hazard and adverse-selection issues that I asked about.) If you end up convincing yourself that the free-market system sounds like it would work better than the Canadian or American systems, except that you still want to make sure that poor people are covered, I'd recommend repealing the laws banning competition and forbidding user fees and all of that stuff, and then just robbing from the rich and giving directly to the poor. Just give the poor people $X each, which they could then use to buy health insurance (or whatever else they decide is most important to them - it's fine with me if they use the money for something else). (This isn't what I'd prefer to do. I'd prefer to do no health-related wealth redistribution at all. But if we're going to do some, I think this would be a way to do it without losing too much of the efficiency of a free market.)

 
At 8:02 PM, Blogger DazzlinDino said...

TAG !!!!!!

 
At 9:09 AM, Blogger Mike said...

Adam,

A quick response:

I simply do not agree that the US is not a free market. Despite the tax laws you state, healthcare is rationed by the free purchase of insurance or cash for medical procedures. Medicare and Medicaid cover very few, relatively speaking, Americans. Is it a totaly free market? Well no, no market is outside of an economics textbook. Given what I said above, I believe that even a truely free market in healthcare, because of the nature of the "product" being sold and the way in which insurance companies and private delivery make profit, will deteriorate in to the market failure I describe. I dare say it would be worse than the US.

The "mole removal" and "pregnancy" example I give are real life examples from Joseph Heath. He additionally points out that people will by insurance if they think they can get more value out than they pay in premiums or deductables.

As for your smoking examples (and others) - all of those are premised on the idea that the person making the choice has control. Even in smoking, where prima faci they do, once addicted to nicotine its is very hard to stop, even if you want to. And the ciggarette companies market so that you become addicted. Sure their is an easy choice to get in, but not to get out. Also, by your logic, Canada, becaue of our public healthcare should have a very high incidence of smoking and other similar behaviours, but we don't. Smoking is declining despite our "free healthcare" system. Other things which contribute to health are completley outside of the control of the individual - genetic predispositions to heart disease, birth defects, accidents etc - meaning they would pay the price for descisions they do not make. And these, incidently, are the basis that inusrance companies would (and do) use to deny coverage, not grant it. For some things, there may be no coverage at all - the insurance product just isn't offered. And given the costs to treat these conditions, most people couldn't do it. So suddenly we are back to a time when only the rich can afford decent treatment, where easily treatable diseases and injuries are go un attended in the lower and even the middle classes, causing the economy to faulter without a healthy workforce and gernally lowering the standard of living. Thanks, but I,d rather not go back to that time.

I look at health as a "public good" with a lot of positive externaties beyond the person being treated. That public good is best served by a public system such as ours, not a free-market that is prone to failure.

We may have to agree to disagree about this.

Dazz - damn your oily hide!

 
At 11:56 PM, Blogger Adam said...

Mike,

I regret using the term "free market." I'm not interested in quibbling over the definition. My point isn't that the U.S. market isn't "totally free." My point is that this particular government intervention seems to me like it explains all of the problems you've mentioned with the American system (including the mole-removal and pregnancy examples).

I'm advocating a system that's like the American system, but without the weird tax laws (or Medicare or Medicaid). Let's call the system I'm advocating "System X," so as (hopefully) to avoid any more argument over what exactly "free market" means. What I'm saying is that I'd expect that System X won't have the problems that you've identified in the American system, because I think that the causes of those problems can be clearly traced back to the weird tax laws.

You've given some examples of kinds of moral hazard (mole removal and pregnancy) that are present in the American system, but not in the Canadian system. I've tried to explain why I don't think those kinds of moral hazard would be present in System X. I've also given some examples of moral hazard (smoking, not exercising, eating unhealthy food) that I think would be more common in the Canadian system than in System X. (I don't understand what you mean when you say that we don't have "a very high incidence of smoking and other similar behaviours." Very high compared to what? I believe that it's very high compared to what it would be in System X.) So my position on the moral hazard thing is: I agree that it's a problem in all three systems, but I think it would be a smaller problem in System X than it is in the Canadian system, because I haven't seen any examples that I think would be present in System X but not in the Canadian system, and I've given some examples that I think are bigger in the Canadian system than they would be in System X.

You've said that you think adverse selection is a problem because you value "universality." I've tried to explain why I think the Canadian system is only more universal than System X in the short term. That is, you're predicting that System X would end up in "market failure," but I think the market would only fail in the short term; in the long term, I'd expect System X to have much more innovation than the Canadian system, and I'd expect that this would result in a more universal system in the long term.

Regarding the genetic-predisposition stuff: Am I correct in thinking that this is a different objection than the moral-hazard and adverse-selection objections? If I understand correctly, "adverse selection" refers to a situation where there's asymmetry-of-information - the insurance company can't tell the difference between low-risk people and high-risk people - and so the low-risk people get screwed over. This genetic-predisposition objection seems to be about the high-risk people (who'll have to pay more in System X whether there's asymmetry-of-information or not) - you're saying that you don't want the high-risk people to have to pay more if the high-risk factor isn't the result of a choice that they made. Is that right? (I'm happy to talk about this new issue if you want; I just want to make sure that I'm right in thinking that I've addressed all of your arguments on the moral-hazard and adverse-selection issues.)

I don't mind agreeing to disagree, but you said several things that sounded to me like I didn't communicate clearly enough the first time. So I've tried to make my argument clearer.

 
At 4:59 PM, Blogger CoteGauche said...

I think it is accurate to describe the US healthcare system as a free market system. I also think it is helpful to realize that free markets rarely work when the goods or services being traded are basic or essential requirements of living. Subsidized or regulated monopolies control the food, transportation, electrical power and telecommunications industries to large degrees in both the US and Canada. Some of these industries are now deregulating, but not without problems (I lived through the power deregulation in California). Agriculture is still massively subsidized. The reasons these industries were regulated or subsidized was originally to ensure universal access. But in the US, this was not done with healthcare.

The nature of the health care market is that it is prone to distortion. There is an assymetry of information, principle agent issues, as Mike mentioned, morale hazard issues, adverse selection, etc. These problem all exist multilaterally between patient, provider, medical insurer, malpractice insurers, employer, regulator, pharmacy benefit manager, pharmaceutical companies, drug retailers, etc. The results of these distortions in human terms are devastating.

Just some examples:

Most insurance plans cover Viagra, Levitra etc. because erectile disfunction is a medical condition, but few cover contraceptives.

If you are a small business owner, or work for a small business owner in the US, it is unlikely that you have medical insurance.

If you are elderly and have Medicare coverage, you will have a hard time finding a provider. Medicare tries to hold down costs, so does not pay as much as private insurers for the same procedures. As a result, many (most) doctors do not take (or cap the number of) medicare patients.

Many under-insured women do not get prenatal care. As a result, when they show up at the emergency room in full labour, it is often the fist time the doctor has seen them. This pushes many deliveries into the high risk category. If it is a complicated delivery, the costs of treatment often far out way the costs of prenatal care.

Until about 1998, if you had a chronic health condition such as diabetes, COPD etc. and changed jobs, you could be denied insurance coverage as a result of a pre-existing condition.

Insurers often pressure employers to lay off of give early retirement to older employees as a means of reducing their health insurance costs.

Employers like Wal-Mart specifically structure their compensation so that employees qualify for state Medicaid programs. They then provide paper work and counselling to help employees apply for Medicaid, thus offloading their insurance benefit burden onto the state.

Cheating on Medicare, Medicaid and private insurance is wide spread and pervasive.

Increasingly, as doctors are investors in medical research and biotech, in clear conflicts of interest, they stream their patients into procedures they don't need and risky drug trial with inadequate information.

Research has shown that perscriptive trend tend to closely track pharmaceutical marketing campaigns. How is this in the patient's interest?

I could go on. The reason these market distortions continue to exist is that health care is an essential service requiring universality. Free markets and universality are incompatible.

Don.

 
At 12:13 PM, Blogger Adam said...

Regarding the government interventions in the food (and other) markets: Sure. I can imagine myself being convinced to be in favour of other kinds of government interventions in the health-care market, maybe similar to some of the interventions in the food market. If you'd like to try to convince me that interventions like that might be a good idea, I'm all ears.

I don't see any reason why I would want insurance that covers contraceptives. They're cheap, aren't they? What value would the insurance organization be adding? But I do understand why people might want insurance that covers erectile disfunction. So I'm not sure exactly what you think has gone wrong in the market on this issue.

I'm not sure whether your complaints about Medicare and Medicaid (Medicare not being competitive with the rest of the market, Medicaid being used to subsidize Wal-Mart) were intended to address my "System X" proposal, or what, because System X doesn't have either Medicaid or Medicare.

In System X, I wouldn't expect insurance companies to offer coverage for routine kinds of prenatal care (or any routine costs of pregnancy in general), since getting pregnant is (except in cases like rape) entirely up to the choice of the parents. (If these kinds of routine costs are covered by some current American insurers, that sounds to me like a clear example of a case that could be eliminated by eliminating the weird tax laws.) I'd expect parents to have to pay for that kind of stuff out of their own pockets - and so if I were considering becoming a parent, I'd have "routine prenatal care" (and also "insurance covering unlikely prenatal catastrophes") on my list of "stuff to make sure I can afford before getting pregnant" (along with "food and clothes for the child", "extra life insurance covering myself and my spouse", and so on). So... could you clarify what you meant by the things you said about under-insured women? It sounds to me like these women made a choice (to not pay for prenatal care, or to get pregnant when they couldn't afford prenatal care), and it ended up costing them more in the long run. (Do you think their problem isn't the consequence of a choice that they made?) I don't want the government to try to protect them from the consequences of that choice. (Do you?)

Regarding changing jobs: this tying of a person's medical insurance to his job is one of the things that I think is easily explained by the tax laws. I'd expect much fewer people to have problems like this in System X.

The cheating thing sounds interesting. Can you say more about that (or point me to an external source that you think is good)? What kinds of cheating?

I don't know an easy answer to the questions about doctors who recommend stuff that's not in their patients' best interest. As a patient, there are some things I can do to try to deal with the problem: (1) find a doctor I think I can trust (recommendations from friends can help), and form a personal relationship with him; (2) get a second opinion on major medical decisions; and (3) do a little research of my own, if I don't feel like I can trust any of the opinions I'm hearing. This is all hard to do, of course (especially #3). But what's the alternative? I can imagine laws that could try to eliminate the most obvious conflicts-of-interest, but I'm not sure that would make me any safer. (This is something that I don't know much about, though. Do you think there are good ways to actually eliminate a significant number of conflicts-of-interest, rather than just sweeping them under the rug?)

Overall... honestly, I'm baffled here. I've been advocating that the U.S. eliminate Medicare, Medicaid, and the employer-gets-tax-breaks law. And what I'm hearing both Don and Mike say is something like (very broadly, leaving out a lot of detail), "No, that would be really bad. Here are examples A, B, C, D, E, F, G... to explain why." But most of those examples seem to me like situations where the problem could be eliminated by eliminating Medicare, Medicaid, or the employer-gets-tax-breaks law! So it seems to me like most of the arguments I've heard here don't actually address my proposal. And so I still believe that System X would be better than either the Canadian or American systems.

One thing I have learned, though, is that it might be worthwhile for me to look into markets like the food market and see whether there are any ideas there that might be worth applying to the health-care market. And also that it might be worthwhile for me to look into ways of eliminating or identifying conflicts-of-interest.

 
At 9:57 AM, Blogger Adam said...

What I said in my second-last paragraph doesn't convey the meaning I intended. What I meant was: I've been advocating a system that's like the U.S. system, but without Medicare, Medicaid, and the employer-gets-tax-breaks law. And what I'm hearing both Don and Mike say is something like (very broadly, leaving out a lot of detail), "No, that would still be worse than the Canadian system. Here are examples A, B, C, D, E, F, G... to explain why." But most of those examples seem to me like situations where the problem could be eliminated by eliminating Medicare, Medicaid, or the employer-gets-tax-breaks law...

Sorry if I've caused any confusion. :)

 
At 10:31 AM, Blogger Mike said...

Adam,

I still contend that the issues I talk about are the problems of a free-market system of healthcare, especially one which (nescisarily) has insurance companies involved. I honestly don't think that tax-breaks and the existence of medicare and medicaid have very much impact.

I also suspect we view this very differently. I think a healthcare system should exist to provide healthcare services to the widest possible array of people. People should recieve services not on ability to pay, but on medical need and on medical need alone. Insurance companies do not exist to provide healthcare, the exist to make money and these two goals are mutually incopmpatible.

If the goal is to provide medical services, then a free market cannot do it. A free market may be good for doctors, insurance companies or those who can make money off healthcare, but it is not the best and most effiecint way to deliver the service. Don't get me wron, I love the market - its great for cars, TVs, land and certain services, but it is not good for healthcare. Your idea means that there are people who will not recieve medical attention becaue they either cannot afford it or becaue the insurance does not cover it, not for any medical reason.

The market doesn't work for certian things - policing, courts, defence and, in my opinion, healthcare. That is where the government should step in.

Although I'm sure you are quite genuine in your convictions, your reasoning always reminds me of the Internatioanl Socialists or the Libertarians while at Univeristiy. when ever either of these groups were confronted with evidence and arguments that said their respective ideas for government (or lack thereof) did not work in the real world, they always said "But its never REALLY been tried, Russia wasn't REALLY communist" or "clearly Communism can only work on a global scale" or "the US isn't REALLY a free market" . These were just rationalization of people not willing to give up on thier utopian dreams.

Sorry, but the answer to what plagues our system is not to roll back the clock 50 years and make it so more people go without health services. No matter what kind of issues our system may have, it is still beter than the system you suggest.

 
At 11:53 AM, Blogger Adam said...

I agree that just saying, "But it's never REALLY been tried," isn't a convincing argument. That's why I've tried to explicitly describe exactly how the particular government interventions in the American health-care market can explain their current problems. The story is simple. This isn't a long, convoluted explanation. It feels to me like a very direct, sensible explanation of how these government interventions could lead to the effects the Americans are seeing. I believe that gradually eliminating those interventions would eliminate or greatly reduce a lot of the problems you've identified in the American system. I understand that you disagree, but I still don't understand why. What part of the story sounds implausible to you? (Do you have questions about it that I could clarify?) Why do you believe that the problems that I've attributed to the tax laws (insurance covering small stuff like mole removal, insurance covering non-accidental stuff like routine costs of pregnancy, insurance being tied so directly to one's employer, etc.) wouldn't mostly go away if the tax laws were fixed?

I also agree that you and I don't share the same goals for the system, but I believe that your policies are sabotaging your own goals. If I were trying to create a system to achieve your goals, I'd create something like System X, except I might add the direct wealth redistribution policy that I mentioned earlier (i.e. just take money directly from rich people and give it directly to poor people).

 
At 10:57 PM, Blogger lecentre said...

Just thought you'd be interested to know this post (and the fog of partisanship) has made it into the carnival of moderate politics I host, the Moderate Circus.

 
At 5:25 AM, Blogger molewartremoval said...

hello! you have very great blog content. visit my blog Click here

 
At 10:54 AM, Blogger Dallas Health said...

What are the various types of health insurance programmes that are available to me, and which is best suited to suit the needs of my family and myself? How do I choose the ideal health care plan? What are the major points that one needs to bear in mind while buying Health Care Insurance Policy? http://natural-health-care-information.blogspot.com

 
At 4:57 AM, Anonymous homecare Glasgow said...

When it comes to the issue of health care one should always expect it to be subjective. Homecare Glasgow

 
At 9:53 PM, Anonymous online viagra said...

Thanks for the nice blog. It was very useful for me. Keep sharing such ideas in the future as well. This was actually what I was looking for, and I am glad to came here! Thanks for sharing the such information with us.

 

Post a Comment

<< Home