I have long contended that routine care should be paid for out of pocket via health savings accounts with insurance for catastrophic health care only. This would force competition on price/quality as people would shop for routine health care like they do other goods and services.
Yes. Health insurance is upside down relative to other insurance. It is like you expecting your home owner policy to pay for cleaning services. The 20% have always generated most of the costs. Back 30 years ago when I was running an employer plan we would get monthly reports on the big claims. It was generally heart attacks and premies. We didn't get the big end of life claims like Medicare does.
"Health insurance is upside down relative to other insurance."
The nature of the risk is simply different. Houses don't have "pre existing conditions" that are difficult/impossible to fix. If they did, we'd just knock the house down and build a better house... we're reluctant to do that with people (although.. .with climate change, we may start seeing more uninsurable properties, where the flood/fire risk isn't a "risk" at all, but a certainty).
I've watched home insurance polices surge nationwide due to "climate events" once considered "once a century" happening every other year; insurance companies that don't leave a given market like Florida and California use other markets to make up the cost of being in them by charging everyone else more, myself included.
Exactly, every product and service you purchase in America includes someone else’s health care expenses. The people in America that can spread it around the most are the people that get the best health care because everyone else is picking up the tab. It’s not fair to the small business owners that can’t spread it around like big corporations…why anyone but executives and law firm partners and surgeons support the status quo is beyond me??
I am eager to see what you come up with. I hope you'll address one root cause of our misery in health care - the monopolies that exist in several key sectors of the industry:
1. Providers: people do not want to travel around the country - understandably - for care. As health systems have consolidated, and bought up practices, they have created regional monopolies that have substantial negotiating leverage with private insurers. They use this to extract very high rates from insurers - who have little recourse. They can try to narrow networks, but employees and employers want breadth.
2. Pharma - obviously, we enable monopolies for new drugs, both innovative ones, as well as less innovative or 'copy cat' products.
3. PBMs - in theory, these behemoths should be able to lower drug spend by being their own monopoly, but it tends not to work. They end up extracting 'rebates', which are secretive, and may or may not be shared with the ultimate purchasers.
Rebates get shared with the insurance plan and thus ultimately drive down Medicare bids. There is a literal line in the bid form for them and rebates have to be reported. It’s illegal not to pass along rebates in full.
Rebates have mostly gone away with the IRA, but drug costs have ballooned rather than gone down. Lower list prices and cost shares have caused a surge of utilization of high cost drugs.
Went to the cardiologist yesterday. $10 copay. Whatever in the end a 6-mo visit with EKG will cost will be a surprise when they tell me, b/c 10% of that cost is mine since Dr is in network. Then went for bloodwork, where I am supposed to leave a credit card authorization - which they think will be around $11 but they'll let me know. Meanwhile, made sure I saw the cardiologist now b/c if I gave him breathing room and went in two weeks, I'd trigger a $600 deductible. All the while I pay monthly premiums. This is not healthcare -- it is a financial shell game scam. Meanwhile, my 26-yr old falls off the plan next May but all he can get is no-benefits contractor jobs. If people pretend this is what the "market" can do, don't be surprised people rebel against the market, even if they believe other economic mythologies in its place.
All this talk of health insurance and the costs of care misses the fundamental problem: we need to incentivize people to live healthier lives. A possible set of incentives might simply be charging differential prices for insurance coverage, based on documented health of each individual. All who want to have health insurance would be required to go for an annual checkup including a blood test, blood pressure, EKG, etc. Results from the checkup would impact the cost of next year's health insurance. Get healthier, pay less. At present, our medical professionals focus on health problems and ways (such as medications) to lessen the symptoms. These are not health improvements but health bandaids. Let's focus on getting healthier rather than on trying to fix the financial problems of the present system.
Don't you think people will slip a few benjamins to a nurse or clerk at their checkup to get their results within the lower cost bracket? This just incentivizes massive fraud.
Andrew, that may be possible. But note that blood tests are taken and sent out to labs for clinical reports. And usually doctors take EKG, etc. There may be some doctors who will take bribes, but not likely the majority. Good observation, though. Frank
If we look at the history of fraud, contractors who do fake tests will pop up out of nowhere if there was enough money to be made. Look at how much scamming already takes place in existing government programs - and how quickly.
Something to bear in mind... Maybe a quarter of Americans read at a very low level, many are fundamentally illiterate. 50 million are at IQ 85 or below. All of those people need a very simple way to get health care. Walk in, get care.
Most people when given a choice of spend some money or suck it up, suck it up. Prevention is worth a ton of cure. Some things get much worse. To be effective health care needs to take a look at you even when it's just a little old thing.
States suck. I live in a wealthy fit state with a good responsive government led by bright well intentioned people. The single payer system they tried to push on us was horrible, the implementation of our own version of the ACA sucked, we can't even do unemployment.
Forget trying to be as good as some Euro model, if we could be as good as Thailand it would be a huge improvement.
Socialize it. Leave the for profit as a choice for the wealthy. We all need a basic level of care we can't fall below with no one profiting by excess care, inflated prices, or bloated salaries.
And then use the near-single-payer purchasing clout as leverage to drive down prices.
American prices are often double what they are in other countries, because the irrational and morally hazardous market will pay that much. Prices have to be artificially driven down. But Americans HATE that prospect.
Trump's been babbling incoherently for ten years now about the rabbit he's going to pull out of his hat on health care reform any day now. If he really wanted to fix it he could look at... literally any other OECD country for ideas.
Health care costs money and figuring out where that comes from is the ballgame. This isn't that complicated and there are only so many ways to do it. Nobody else does it the way the US does. Unfortunately the alternatives are all "socialism" of one form or another.
Coming up with a sensible improvement would be the easy part. The politics of remaking 17% of the US economy is the hard part, especially in such a polarized society that hates each other so much and has zero social cohesion.
Canada is a bit of an outlier in entirely outlawing the private provision of medically necessary services (except for workplace injuries), but in practice our "private tier" is the US. (Anyone I've ever known who was seriously ill received excellent care in Canada, but for elective surgeries the wait times can be long). European countries just simplify matters by allowing an internal private tier. Either way, nobody in Canada is thinking "gee I wish we were the 51st state".
Great post - many thanks! We should eliminate the profit motive (i.e., the insurance/PBM industries) in one swoop and move all of those premiums directly into well-managed/invested accounts - so that there is just a fund in every state for people's medical needs. Then the pricing is made absolutely uniform - per Longman, "medicare pricing for all."
The profit motive is what lowers costs in every other market , including health care ( less regulated/insured health care … see Lasik and plastic surgery)
Why toss out the only thing that actually has lowered costs?
Thanks for this reply, but profit only comes from jacking up prices to consumers, lowering payouts to doctors, and minimizing the amount of care delivered. Why should I pay billions to an industry whose entire business model is giving me the least in return that it possibly can?
Your complaints, which are fair, relate to regulations not market competition.
Because regulations reduce payments to drs for certain patients, others pock up the tab, regulations and compliance paperwork increases frictional costs to providers requiring increased charges.
Care is minimized because in order to get enough income Drs need to overbook.
You are correct the system is a mess but further restrictions and capped fees gave never worked.
Why do we think dbling down on a failed policy will fix itself?
All insurance faces the major problem of moral hazard, because the consumer has already paid (in the form of premiums).
In auto insurance, it's not that bad; nobody wants insurance to pay for $10K of diagnostic procedures to make sure that your car won't die in the next six months. And nobody wants insurance to pay $100K to keep your 17-year-old car running for (maybe) another three years. With health insurance, it *is* that bad.
Use of QALY and DALY would help. But the same Republicans who screamed that COVID restrictions ignored QALY/DALY would scream that using QALY/DALY in health care is "death panels".
So, good luck.
But I'll be very interested to read the pieces coming out this year. Commonplace is clearly aware of the problems, which is better starting place than most.
No insurance for anyone who has reached their expected lifespan?
Based on your definition of the quality of life?
Explain that to the person who paid 15000 per year for 50 years and used virtually no healthcare and now has a heart condition or treatable cancer that will allow survival for what is an unknown lifespan.
Their sunk cost has paid for things people actually need. Just like people pay $750K+ in income taxes for policing in other people's areas that need it, not in their own areas that don't need it. Any maybe eventually your area does need it, but to stop your problem, you'd need a dozen cops 24/7, and even that would only have a 10% chance of stopping the criminal activity in your area. Those resources could do so much good elsewhere. "But I paid my $750K!!"
Most Americans subconsciously assume that the taxes they pay go into a sort of personal piggy bank held by the state, and when they want it, then they can call on the state to deliver their services they want. The idea that they would pay taxes and have *the state* decide where those taxes are needed most? Why, it's communism! Murderous communism!! Death panels!!!
When Greece robs the young to pay for the old, it's the sign of a statist country in decline. When America does it...it's because I paid my share and I'm going to get my wasteful surgery!
As I’ve insinuated, in America, the only acceptable answer to the question of “who decides?” is ME! The sovereign individual!
That’s why Boomer Medicare will render the country a financial nuclear fallout zone. But hey, Boomers will all be dead by the time the consequences of their me-first “me generation” demands become clear. It’ll be one final ‘kick out the ladder after climbing it’.
I'm looking forward to reading what you have to say. I thought people getting more skin in the game via higher copays would rein in costs. Obviously, that hasn't happened. I'm not sure there is a solution other than forcing the system, through legislation somehow, to treat health insurance more like home insurance where only disasters are covered instead of regular home maintenance and repairs. I think the health insurance 'industry' will be a formidable foe in doing that. Or, maybe there are other solutions? I'm out of ideas and looking forward to hearing yours.
Maybe don't cover $300K surgeries for 98-year-old people with an estimated remaining lifespan of 2.5 years, when the surgeries have a 10% chance of "success".
But this is a non-starter in America, because someone who has paid premiums their whole life will demand the ability to bankrupt the system because they've paid in. The commenter further down insinuates exactly that.
America is a republic, where everyone starts with fighting for their rights, rather than exercising the classical virtue of equity (of not clinging too tightly to one's rights). Health care is a tough policy area anywhere, but it's absolutely unfixable in the United States.
BUT DUDE! ... you have had HOW MANY YEARS since the Trump1 Campaign in which he PROMISED a 'Golden Health Care Plan' to repeal and replace ACA?!
AND YOU STILL are only just promising to study more to produce an example, of a framework, of a model, of a plan, for a policy!
THE EXAMPLE, OF A FRAMEWORK, OF A MODEL, OF A PLAN, for a policy - after so many years - bespeaks laziness and distraction more than brilliance and efficacy.
Do better, faster. In your YEAR of study and writing be sure to visit, meet, hear from and include the priorities of REAL REGULAR Americans!
30 years as a broker helping small businesses and families navigate the health insurance market as an advocate, 10 years as a policy historian, here is my nickel (penny shortage inflation) for what it is worth: In the great sudden political battle over "affordability" which clearly means something different to all, there is nothing being offered by either party (the stupid one or the evil one ala Rush) that addresses actual health care costs. While the stupid party chants "markets!" the evil one inflates dependency "subsidies" to drive addiction: Never mind the full price, we will subsidize it (ie print dollars and take on debt) until noone can afford to break out of the cycle. If you have been in the private ACA market over the last 12 years, the mini-trojan horses have "nudged" you into a terrible set of choices. Exactly as designed. We are coming to the political threshold where no good policy choices are left except one extreme or the other, and the population is conditioned to servitude. I will make this point against both sides infantile theatrics on health insurance companies as the cost driver and profiteer. 1) If the risks and profits aligned for the Monopoly fat cats benefit as "big insurance," the state ACA pools would be swimming with carriers and available plans. They have been whittled down to a very poor set of choices. 2) The ACA mandates a minimum 85% return of annual collected premiums to pay for actual claims; that means the 15% remainder has to cover ALL other expenses. What idiot VC fund manager would recommend it as a growth winner? Hard Pass. Simple, quick solution: If a person has insurance with an insurer, they can never lose their coverage, and can access the menu of plans in the Federal Plan menu. If they lose their job, so what. They keep their coverage with temporary fully refundable premium advanceable tax credits, then transition based on their income. Employers have no control over the plan you select, but they get tax deduction and corporate tax credit bonuses on their contribution to the employee. If the Federal Benefit plan works for a senator's staff in DC or their statewide offices, why wouldnt it fit for all? Medicaid disappears as a standalone poverty marker; Absent fraud, same deal for all americans and LEGAL residents: you get to keep your care, you can elect annually just like Sandy Senator does, and no provider can treat you differently than Sandy Senator when she calls for an appointment. No more Hillarycare (I date myself), Obamacare, Trumpcare (it'll be the best!) Americare for All!
Of course, the concept above is incomplete. It does not directly address the drivers of healthcare costs, does not map out the complicated webs and interests of all stakeholders who would resist simplification and transparency. All of these stakeholders would need to be challenged to get with the program. The American citizenry (including LEGAL documented residents) is the only client in this plan. Stakeholders (medical providers; health systems; pharmaceutical, tech, and med suppliers; insurers; self-insured employers and unions) have to come to the table and realize the 20th century health care financing and graft machine is dead. It is killing our global competitiveness, causing social upheaval, and damaging Americans. A single-payer system is not an answer: where would all the wealthy canadians go for cash care if the US walked that plank behind them? (Really, its a thing at US hospital systems at major border crossings). The stats on spending (last year of life, long-term catastrophic cost %, etc.) are huge cost transfers to the general population, a principle of insurance. As Constraints (Theory of Constraints or TOC, see Eliyahu Goldratt "The Goal") these are formidable and chronic. All complex problems are solvable when broken down into the smaller constraints when the will to succeed is applied to the most important constraints first, then repeated to the goal. Starting with foundational principles 1)no American should face financial ruin from healthcare costs that can be spread across layered financial risk pools, reinsurers, fed government risk plans; 2) employers should have no role in selecting or restricting an employee's health care and insurance options; and 3) insurers offer their menus to all eligible citizens if they participate in the Federal Employee Benefit program and assist in administrating advanced premium credits for eligible citizens and transitioning workers through any type of involuntary career changes by offering catastrophic plan options that protect their families from ruin at lower premium options that can be funded fully by short term federal funding assistance while the worker and family needs it most. An example: COBRA IS 40 years old; the limited options offered are not flexible or affordable, and the fact that they have limited periods of coverage and no guaranteed alternative except the horribly ironically named "Affordable Care Act" means no one chooses it unless they have to due to a health condition. COBRA replacement would be one of the easiest citizen/stakeholder wins. Employees, Employers, and Insurance companies hate it equally for different reasons- the only stakeholders who would suffer from killing COBRA are the TPA and legal firms charging fees to "not actually guarantee" employer compliance and lower liability. A good idea in 1986 is a terrible dinosaur in 2026.
"A single-payer system is not an answer: where would all the wealthy canadians go for cash care if the US walked that plank behind them? (Really, its a thing at US hospital systems at major border crossings)."
They'd have to wait in line like other Canadians.
Maybe Canada would finally get health care reform if its political class knew that they couldn't jump the queue. (Even the leader of Canada's socialist party went to the US for care.)
How much money is going to be saved by the conservative plan that you pay for your basic care and insurance is for catastrophic issues? Catastrophic issues are the drivers of cost.
American health care already makes people pay a ton for basic care compared to other countries. How's that working out? Basic care is usually the ounce of prevention that people put off because of cost.
In 2017 when Paul Ryan attempted to reform Obamacare the final product was better than Obamacare….and a lot more expensive!! So Ryan just ended up pulling the legislation. Republicans want something worse than Obamacare because then it will be cheaper for their wealthy constituents.
Hi Oren. I am also a Ph.D. economist. Here is an article I wrote back in 2017 for Medium. I cannot find the link on-line, so here it is FYI... Seems relevant once again.... I cannot post the whole thing, but here's the begining, and I'd be happy to send the rest.
What’s next on health care: Single Financer, 326 million Payers.
Dr. Jennifer Kohn
September 26, 2017
Now that the partisan Republican health care effort appears over, perhaps we can go back to the drawing board and think anew about both policy and process. As Susan Collins said in her statement effectively killing Graham-Cassidy, “This is simply not the way that we should be approaching an important and complex issue that must be handled thoughtfully and fairly for all Americans.” Few can disagree with Senator McCain’s statement on the floor of the Senate: “Our health insurance system is a mess. We all know it, those who support Obamacare and those who oppose it. Something has to be done.” But there is clearly no bi-partisan consensus about what should be done. The time seems right for something new. In the spirit evoked by Senators Collins and McCain and many others, I offer this proposal for a single financer, 236 million payer health care reform as a starting point for truly bipartisan political dialogue that may please no one, but may nonetheless provide a more satisfying and financially solvent health care system for the American people...
Conclusion
This proposal means a single financer, the federal government, but 326 million payers who can make their own health care decisions in a new market for health care rather than health insurance. Are there important details still missing – sure. Let the debate begin. But let’s stop the partisan game-playing over an issue so intimate and financially critical to every American and to America as a nation. Let’s have a meaningful, transparent debate that goes beyond Democratic and Republican winners and losers and searches with honesty and humility for a system that can work for the American people.
You can’t have this because grifting political operatives in both wings of “the Uniparty” make bank on the never ending phony war over what passes for “healthcare” in America.
Health care is probably an example where an ounce of prevention is worth a pound of cure. So the extremely expensive care provided to one person denies preventative care for lots of people.
At some point it becomes more reasonable to let one person die in order to take better care of everyone else.
What if organ transplants are at that point, such that the poor are denied access and only the wealthy can afford to get one?
And what about the individual’s responsibility to take care of themselves?
Shouldn’t someone who takes care of themselves get more consideration than an alcoholic, for example?
Insurance should not pay for routine care, and maybe not even well visits such as physicals. It’s on the consumer to maintain their health.
Health insurance should have a crazy high deductible, aka catastrophic level of care.
Everybody buys insurance on their own - no employer funded plans, though perhaps tax free employers funds towards health care insurance, if the employer chooses to do so.
Providers should be required to post their one and only cost to whomever seeks treatment for each care CPT code. All comers get the same cash price, and pay the providers directly.
Frontline staff at providers should be required to quote these costs in writing (email) prior to treatment, receiving patients OK in advance. In fairness, providers can ask for full or partial payment in advance. Everybody knows who’s getting charged what, and who is paying.
Consumers pay these routine care costs out of pocket until their (catastrophic) deductible is met, then insurance kicks in.
Insurers CAN negotiate with providers to form networks for these catastrophic services, or perhaps, there is single payer insurance to cover catastrophic treatment with insurers providing “above and beyond” coverage.
I’m sure there’s holes in the above, but the goal is to get consumers invested in staying healthy (i.e. limiting their out of pocket cash pre-deductible expenses), creating competition amongst providers for such services, removing layers of administration and expense, and providing market based choices for levels of deductible and levels of catastrophic coverage (good, better, best) and the resultant cost of health care insurance.
The holes in this plan are a) emergency care (nobody's going to be reading email quotes after a car accident or GSW) b) pre-existing conditions.
Plus "requiring providers to provide the same price" "forbidding employers to provide health insurance"... that's more control over provision than even Canada exerts.
I've always thought the "moral hazard" angle is overrated... people don't *want* to be sick or injured, you don't need to apply further financial incentives.
I have long contended that routine care should be paid for out of pocket via health savings accounts with insurance for catastrophic health care only. This would force competition on price/quality as people would shop for routine health care like they do other goods and services.
Yes. Health insurance is upside down relative to other insurance. It is like you expecting your home owner policy to pay for cleaning services. The 20% have always generated most of the costs. Back 30 years ago when I was running an employer plan we would get monthly reports on the big claims. It was generally heart attacks and premies. We didn't get the big end of life claims like Medicare does.
"Health insurance is upside down relative to other insurance."
The nature of the risk is simply different. Houses don't have "pre existing conditions" that are difficult/impossible to fix. If they did, we'd just knock the house down and build a better house... we're reluctant to do that with people (although.. .with climate change, we may start seeing more uninsurable properties, where the flood/fire risk isn't a "risk" at all, but a certainty).
There are lots of places where flood risk cannot be insured.
I've watched home insurance polices surge nationwide due to "climate events" once considered "once a century" happening every other year; insurance companies that don't leave a given market like Florida and California use other markets to make up the cost of being in them by charging everyone else more, myself included.
climate change lol, way to destroy your whole point
You would have had to have understood my point before you could decide if it had been destroyed or not.
Your point is understandable, but one has to be a panicking alarmist to think that it has merit.
Is gravity just a theory?
OK, but I also didn't want a heart attack, so apologies if it costs something.
Indeed but I was reacting to Cass implying that 80 20 was new
Exactly, every product and service you purchase in America includes someone else’s health care expenses. The people in America that can spread it around the most are the people that get the best health care because everyone else is picking up the tab. It’s not fair to the small business owners that can’t spread it around like big corporations…why anyone but executives and law firm partners and surgeons support the status quo is beyond me??
I am eager to see what you come up with. I hope you'll address one root cause of our misery in health care - the monopolies that exist in several key sectors of the industry:
1. Providers: people do not want to travel around the country - understandably - for care. As health systems have consolidated, and bought up practices, they have created regional monopolies that have substantial negotiating leverage with private insurers. They use this to extract very high rates from insurers - who have little recourse. They can try to narrow networks, but employees and employers want breadth.
2. Pharma - obviously, we enable monopolies for new drugs, both innovative ones, as well as less innovative or 'copy cat' products.
3. PBMs - in theory, these behemoths should be able to lower drug spend by being their own monopoly, but it tends not to work. They end up extracting 'rebates', which are secretive, and may or may not be shared with the ultimate purchasers.
Rebates get shared with the insurance plan and thus ultimately drive down Medicare bids. There is a literal line in the bid form for them and rebates have to be reported. It’s illegal not to pass along rebates in full.
Rebates have mostly gone away with the IRA, but drug costs have ballooned rather than gone down. Lower list prices and cost shares have caused a surge of utilization of high cost drugs.
Went to the cardiologist yesterday. $10 copay. Whatever in the end a 6-mo visit with EKG will cost will be a surprise when they tell me, b/c 10% of that cost is mine since Dr is in network. Then went for bloodwork, where I am supposed to leave a credit card authorization - which they think will be around $11 but they'll let me know. Meanwhile, made sure I saw the cardiologist now b/c if I gave him breathing room and went in two weeks, I'd trigger a $600 deductible. All the while I pay monthly premiums. This is not healthcare -- it is a financial shell game scam. Meanwhile, my 26-yr old falls off the plan next May but all he can get is no-benefits contractor jobs. If people pretend this is what the "market" can do, don't be surprised people rebel against the market, even if they believe other economic mythologies in its place.
All this talk of health insurance and the costs of care misses the fundamental problem: we need to incentivize people to live healthier lives. A possible set of incentives might simply be charging differential prices for insurance coverage, based on documented health of each individual. All who want to have health insurance would be required to go for an annual checkup including a blood test, blood pressure, EKG, etc. Results from the checkup would impact the cost of next year's health insurance. Get healthier, pay less. At present, our medical professionals focus on health problems and ways (such as medications) to lessen the symptoms. These are not health improvements but health bandaids. Let's focus on getting healthier rather than on trying to fix the financial problems of the present system.
Don't you think people will slip a few benjamins to a nurse or clerk at their checkup to get their results within the lower cost bracket? This just incentivizes massive fraud.
Andrew, that may be possible. But note that blood tests are taken and sent out to labs for clinical reports. And usually doctors take EKG, etc. There may be some doctors who will take bribes, but not likely the majority. Good observation, though. Frank
If we look at the history of fraud, contractors who do fake tests will pop up out of nowhere if there was enough money to be made. Look at how much scamming already takes place in existing government programs - and how quickly.
If it's provided through private companies, they have an obvious incentive to crack down on that sort of thing.
This is what private companies would already do if there weren't laws against it.
Something to bear in mind... Maybe a quarter of Americans read at a very low level, many are fundamentally illiterate. 50 million are at IQ 85 or below. All of those people need a very simple way to get health care. Walk in, get care.
Most people when given a choice of spend some money or suck it up, suck it up. Prevention is worth a ton of cure. Some things get much worse. To be effective health care needs to take a look at you even when it's just a little old thing.
States suck. I live in a wealthy fit state with a good responsive government led by bright well intentioned people. The single payer system they tried to push on us was horrible, the implementation of our own version of the ACA sucked, we can't even do unemployment.
Forget trying to be as good as some Euro model, if we could be as good as Thailand it would be a huge improvement.
Socialize it. Leave the for profit as a choice for the wealthy. We all need a basic level of care we can't fall below with no one profiting by excess care, inflated prices, or bloated salaries.
And then use the near-single-payer purchasing clout as leverage to drive down prices.
American prices are often double what they are in other countries, because the irrational and morally hazardous market will pay that much. Prices have to be artificially driven down. But Americans HATE that prospect.
Why is it necessary that those people be able to get health care? I say let them die and improve the quality of the gene pool.
"How might that reform look? "
Trump's been babbling incoherently for ten years now about the rabbit he's going to pull out of his hat on health care reform any day now. If he really wanted to fix it he could look at... literally any other OECD country for ideas.
Health care costs money and figuring out where that comes from is the ballgame. This isn't that complicated and there are only so many ways to do it. Nobody else does it the way the US does. Unfortunately the alternatives are all "socialism" of one form or another.
Coming up with a sensible improvement would be the easy part. The politics of remaking 17% of the US economy is the hard part, especially in such a polarized society that hates each other so much and has zero social cohesion.
Canada is a bit of an outlier in entirely outlawing the private provision of medically necessary services (except for workplace injuries), but in practice our "private tier" is the US. (Anyone I've ever known who was seriously ill received excellent care in Canada, but for elective surgeries the wait times can be long). European countries just simplify matters by allowing an internal private tier. Either way, nobody in Canada is thinking "gee I wish we were the 51st state".
Great post - many thanks! We should eliminate the profit motive (i.e., the insurance/PBM industries) in one swoop and move all of those premiums directly into well-managed/invested accounts - so that there is just a fund in every state for people's medical needs. Then the pricing is made absolutely uniform - per Longman, "medicare pricing for all."
The profit motive is what lowers costs in every other market , including health care ( less regulated/insured health care … see Lasik and plastic surgery)
Why toss out the only thing that actually has lowered costs?
Thanks for this reply, but profit only comes from jacking up prices to consumers, lowering payouts to doctors, and minimizing the amount of care delivered. Why should I pay billions to an industry whose entire business model is giving me the least in return that it possibly can?
You shouldn’t.
Your complaints, which are fair, relate to regulations not market competition.
Because regulations reduce payments to drs for certain patients, others pock up the tab, regulations and compliance paperwork increases frictional costs to providers requiring increased charges.
Care is minimized because in order to get enough income Drs need to overbook.
You are correct the system is a mess but further restrictions and capped fees gave never worked.
Why do we think dbling down on a failed policy will fix itself?
Health care does not work as a market for so many reasons.
The countries that have reduced costs are the ones where a single payer has so much market clout that they can negotiate lower prices.
But areas where health care is far less regulated has actually reduced cost and increased quality. Lasik is a perfect example.
Same with diagnostic imaging, walk in clinics are examples as well.
The evidence is there.
Lasik is a cosmetic procedure. Cancer treatment is not.
Cancer treatment is unfortunately very common.
All insurance faces the major problem of moral hazard, because the consumer has already paid (in the form of premiums).
In auto insurance, it's not that bad; nobody wants insurance to pay for $10K of diagnostic procedures to make sure that your car won't die in the next six months. And nobody wants insurance to pay $100K to keep your 17-year-old car running for (maybe) another three years. With health insurance, it *is* that bad.
Use of QALY and DALY would help. But the same Republicans who screamed that COVID restrictions ignored QALY/DALY would scream that using QALY/DALY in health care is "death panels".
So, good luck.
But I'll be very interested to read the pieces coming out this year. Commonplace is clearly aware of the problems, which is better starting place than most.
With respect … what are you actually suggesting?
Insurance doesn’t cover costs near end of life?
No insurance for anyone who has reached their expected lifespan?
Based on your definition of the quality of life?
Explain that to the person who paid 15000 per year for 50 years and used virtually no healthcare and now has a heart condition or treatable cancer that will allow survival for what is an unknown lifespan.
Does their 750000 sunk cost mean nothing?
Please explain what your comment actually means?
It's not my definition.
Their sunk cost has paid for things people actually need. Just like people pay $750K+ in income taxes for policing in other people's areas that need it, not in their own areas that don't need it. Any maybe eventually your area does need it, but to stop your problem, you'd need a dozen cops 24/7, and even that would only have a 10% chance of stopping the criminal activity in your area. Those resources could do so much good elsewhere. "But I paid my $750K!!"
Most Americans subconsciously assume that the taxes they pay go into a sort of personal piggy bank held by the state, and when they want it, then they can call on the state to deliver their services they want. The idea that they would pay taxes and have *the state* decide where those taxes are needed most? Why, it's communism! Murderous communism!! Death panels!!!
When Greece robs the young to pay for the old, it's the sign of a statist country in decline. When America does it...it's because I paid my share and I'm going to get my wasteful surgery!
Like I said, good luck.
You never answered the question.
What are you suggesting?
The quality of life calculation still isnt explained how you would apply it.
What is a wasteful surgery and who decides?
As I’ve insinuated, in America, the only acceptable answer to the question of “who decides?” is ME! The sovereign individual!
That’s why Boomer Medicare will render the country a financial nuclear fallout zone. But hey, Boomers will all be dead by the time the consequences of their me-first “me generation” demands become clear. It’ll be one final ‘kick out the ladder after climbing it’.
You still refuse to describe the alternative you support.
If not the patient who makes healthcare care decisions for the patient?
Who? How will you appoint the decision maker? How will the decision be made?
Without that information your comments are meaningless.
I'm looking forward to reading what you have to say. I thought people getting more skin in the game via higher copays would rein in costs. Obviously, that hasn't happened. I'm not sure there is a solution other than forcing the system, through legislation somehow, to treat health insurance more like home insurance where only disasters are covered instead of regular home maintenance and repairs. I think the health insurance 'industry' will be a formidable foe in doing that. Or, maybe there are other solutions? I'm out of ideas and looking forward to hearing yours.
Maybe don't cover $300K surgeries for 98-year-old people with an estimated remaining lifespan of 2.5 years, when the surgeries have a 10% chance of "success".
But this is a non-starter in America, because someone who has paid premiums their whole life will demand the ability to bankrupt the system because they've paid in. The commenter further down insinuates exactly that.
America is a republic, where everyone starts with fighting for their rights, rather than exercising the classical virtue of equity (of not clinging too tightly to one's rights). Health care is a tough policy area anywhere, but it's absolutely unfixable in the United States.
Health insurance is really a combination of prepaid health care and insurance for catastrophic expenses. Perhaps those should be separated.
Junk bonds owned by private equity.
Sir, well done! well described problem!
BUT DUDE! ... you have had HOW MANY YEARS since the Trump1 Campaign in which he PROMISED a 'Golden Health Care Plan' to repeal and replace ACA?!
AND YOU STILL are only just promising to study more to produce an example, of a framework, of a model, of a plan, for a policy!
THE EXAMPLE, OF A FRAMEWORK, OF A MODEL, OF A PLAN, for a policy - after so many years - bespeaks laziness and distraction more than brilliance and efficacy.
Do better, faster. In your YEAR of study and writing be sure to visit, meet, hear from and include the priorities of REAL REGULAR Americans!
... your health care policy paper gets a D- at best!
30 years as a broker helping small businesses and families navigate the health insurance market as an advocate, 10 years as a policy historian, here is my nickel (penny shortage inflation) for what it is worth: In the great sudden political battle over "affordability" which clearly means something different to all, there is nothing being offered by either party (the stupid one or the evil one ala Rush) that addresses actual health care costs. While the stupid party chants "markets!" the evil one inflates dependency "subsidies" to drive addiction: Never mind the full price, we will subsidize it (ie print dollars and take on debt) until noone can afford to break out of the cycle. If you have been in the private ACA market over the last 12 years, the mini-trojan horses have "nudged" you into a terrible set of choices. Exactly as designed. We are coming to the political threshold where no good policy choices are left except one extreme or the other, and the population is conditioned to servitude. I will make this point against both sides infantile theatrics on health insurance companies as the cost driver and profiteer. 1) If the risks and profits aligned for the Monopoly fat cats benefit as "big insurance," the state ACA pools would be swimming with carriers and available plans. They have been whittled down to a very poor set of choices. 2) The ACA mandates a minimum 85% return of annual collected premiums to pay for actual claims; that means the 15% remainder has to cover ALL other expenses. What idiot VC fund manager would recommend it as a growth winner? Hard Pass. Simple, quick solution: If a person has insurance with an insurer, they can never lose their coverage, and can access the menu of plans in the Federal Plan menu. If they lose their job, so what. They keep their coverage with temporary fully refundable premium advanceable tax credits, then transition based on their income. Employers have no control over the plan you select, but they get tax deduction and corporate tax credit bonuses on their contribution to the employee. If the Federal Benefit plan works for a senator's staff in DC or their statewide offices, why wouldnt it fit for all? Medicaid disappears as a standalone poverty marker; Absent fraud, same deal for all americans and LEGAL residents: you get to keep your care, you can elect annually just like Sandy Senator does, and no provider can treat you differently than Sandy Senator when she calls for an appointment. No more Hillarycare (I date myself), Obamacare, Trumpcare (it'll be the best!) Americare for All!
Of course, the concept above is incomplete. It does not directly address the drivers of healthcare costs, does not map out the complicated webs and interests of all stakeholders who would resist simplification and transparency. All of these stakeholders would need to be challenged to get with the program. The American citizenry (including LEGAL documented residents) is the only client in this plan. Stakeholders (medical providers; health systems; pharmaceutical, tech, and med suppliers; insurers; self-insured employers and unions) have to come to the table and realize the 20th century health care financing and graft machine is dead. It is killing our global competitiveness, causing social upheaval, and damaging Americans. A single-payer system is not an answer: where would all the wealthy canadians go for cash care if the US walked that plank behind them? (Really, its a thing at US hospital systems at major border crossings). The stats on spending (last year of life, long-term catastrophic cost %, etc.) are huge cost transfers to the general population, a principle of insurance. As Constraints (Theory of Constraints or TOC, see Eliyahu Goldratt "The Goal") these are formidable and chronic. All complex problems are solvable when broken down into the smaller constraints when the will to succeed is applied to the most important constraints first, then repeated to the goal. Starting with foundational principles 1)no American should face financial ruin from healthcare costs that can be spread across layered financial risk pools, reinsurers, fed government risk plans; 2) employers should have no role in selecting or restricting an employee's health care and insurance options; and 3) insurers offer their menus to all eligible citizens if they participate in the Federal Employee Benefit program and assist in administrating advanced premium credits for eligible citizens and transitioning workers through any type of involuntary career changes by offering catastrophic plan options that protect their families from ruin at lower premium options that can be funded fully by short term federal funding assistance while the worker and family needs it most. An example: COBRA IS 40 years old; the limited options offered are not flexible or affordable, and the fact that they have limited periods of coverage and no guaranteed alternative except the horribly ironically named "Affordable Care Act" means no one chooses it unless they have to due to a health condition. COBRA replacement would be one of the easiest citizen/stakeholder wins. Employees, Employers, and Insurance companies hate it equally for different reasons- the only stakeholders who would suffer from killing COBRA are the TPA and legal firms charging fees to "not actually guarantee" employer compliance and lower liability. A good idea in 1986 is a terrible dinosaur in 2026.
"A single-payer system is not an answer: where would all the wealthy canadians go for cash care if the US walked that plank behind them? (Really, its a thing at US hospital systems at major border crossings)."
They'd have to wait in line like other Canadians.
Maybe Canada would finally get health care reform if its political class knew that they couldn't jump the queue. (Even the leader of Canada's socialist party went to the US for care.)
How much money is going to be saved by the conservative plan that you pay for your basic care and insurance is for catastrophic issues? Catastrophic issues are the drivers of cost.
Yeah, exactly.
American health care already makes people pay a ton for basic care compared to other countries. How's that working out? Basic care is usually the ounce of prevention that people put off because of cost.
In 2017 when Paul Ryan attempted to reform Obamacare the final product was better than Obamacare….and a lot more expensive!! So Ryan just ended up pulling the legislation. Republicans want something worse than Obamacare because then it will be cheaper for their wealthy constituents.
Hi Oren. I am also a Ph.D. economist. Here is an article I wrote back in 2017 for Medium. I cannot find the link on-line, so here it is FYI... Seems relevant once again.... I cannot post the whole thing, but here's the begining, and I'd be happy to send the rest.
What’s next on health care: Single Financer, 326 million Payers.
Dr. Jennifer Kohn
September 26, 2017
Now that the partisan Republican health care effort appears over, perhaps we can go back to the drawing board and think anew about both policy and process. As Susan Collins said in her statement effectively killing Graham-Cassidy, “This is simply not the way that we should be approaching an important and complex issue that must be handled thoughtfully and fairly for all Americans.” Few can disagree with Senator McCain’s statement on the floor of the Senate: “Our health insurance system is a mess. We all know it, those who support Obamacare and those who oppose it. Something has to be done.” But there is clearly no bi-partisan consensus about what should be done. The time seems right for something new. In the spirit evoked by Senators Collins and McCain and many others, I offer this proposal for a single financer, 236 million payer health care reform as a starting point for truly bipartisan political dialogue that may please no one, but may nonetheless provide a more satisfying and financially solvent health care system for the American people...
Conclusion
This proposal means a single financer, the federal government, but 326 million payers who can make their own health care decisions in a new market for health care rather than health insurance. Are there important details still missing – sure. Let the debate begin. But let’s stop the partisan game-playing over an issue so intimate and financially critical to every American and to America as a nation. Let’s have a meaningful, transparent debate that goes beyond Democratic and Republican winners and losers and searches with honesty and humility for a system that can work for the American people.
You can’t have this because grifting political operatives in both wings of “the Uniparty” make bank on the never ending phony war over what passes for “healthcare” in America.
Health care is probably an example where an ounce of prevention is worth a pound of cure. So the extremely expensive care provided to one person denies preventative care for lots of people.
At some point it becomes more reasonable to let one person die in order to take better care of everyone else.
What if organ transplants are at that point, such that the poor are denied access and only the wealthy can afford to get one?
And what about the individual’s responsibility to take care of themselves?
Shouldn’t someone who takes care of themselves get more consideration than an alcoholic, for example?
Unfortunately, the thought of sensible rationing is utterly unacceptable to too many Americans.
I look forward to reading the coming posts.
My take, borne of experience:
Insurance should not pay for routine care, and maybe not even well visits such as physicals. It’s on the consumer to maintain their health.
Health insurance should have a crazy high deductible, aka catastrophic level of care.
Everybody buys insurance on their own - no employer funded plans, though perhaps tax free employers funds towards health care insurance, if the employer chooses to do so.
Providers should be required to post their one and only cost to whomever seeks treatment for each care CPT code. All comers get the same cash price, and pay the providers directly.
Frontline staff at providers should be required to quote these costs in writing (email) prior to treatment, receiving patients OK in advance. In fairness, providers can ask for full or partial payment in advance. Everybody knows who’s getting charged what, and who is paying.
Consumers pay these routine care costs out of pocket until their (catastrophic) deductible is met, then insurance kicks in.
Insurers CAN negotiate with providers to form networks for these catastrophic services, or perhaps, there is single payer insurance to cover catastrophic treatment with insurers providing “above and beyond” coverage.
I’m sure there’s holes in the above, but the goal is to get consumers invested in staying healthy (i.e. limiting their out of pocket cash pre-deductible expenses), creating competition amongst providers for such services, removing layers of administration and expense, and providing market based choices for levels of deductible and levels of catastrophic coverage (good, better, best) and the resultant cost of health care insurance.
The holes in this plan are a) emergency care (nobody's going to be reading email quotes after a car accident or GSW) b) pre-existing conditions.
Plus "requiring providers to provide the same price" "forbidding employers to provide health insurance"... that's more control over provision than even Canada exerts.
I've always thought the "moral hazard" angle is overrated... people don't *want* to be sick or injured, you don't need to apply further financial incentives.
There is no need to invent a health care system from scratch... these problems have all been solved in other countries. I recommend the health care chapter of this book: https://www.amazon.ca/Economics-Welfare-State-Nicholas-Barr/dp/0198748582