Comments on: Health Care Financing Reform: (53) The Long-Term Solution to the Problem of Cost http://www.ohioverticals.com/blogs/akron_law_cafe/2009/10/health-care-financing-reform-53-the-long-term-solution-to-the-problem-of-cost/ University of Akron School of Law Blog Thu, 18 Mar 2010 20:05:07 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Not B. Graham http://www.ohioverticals.com/blogs/akron_law_cafe/2009/10/health-care-financing-reform-53-the-long-term-solution-to-the-problem-of-cost/comment-page-1/#comment-2558 Not B. Graham Mon, 02 Nov 2009 18:32:39 +0000 http://www.ohioverticals.com/blogs/akron_law_cafe/?p=3585#comment-2558 If we really are committed to solving this problem, perhaps we need to take a step back, walk around the problem, roll it over a few more times, weigh it, and run some models based on more than just cost - like supply, demand, and benefit. I agree that lack of universal health care is the problem that MUST be addressed - but I doubt that a government administered model (GAM) is the way to do it. In a GAM, the taxpayers ultimately bear the risk and cost. I worry about the incentive to innovate and provide better care in a GAM. I worry about the cost associated with continuation of the enormous insurance bureaucracies (EIBs). After all, the ultimate goal of the EIBs is to make money - they have shareholders after all, folks. For EIBs, patient care is good provided that the care adds to the bottom line. Yes, EIBs are good at moving and distributing risks and costs, but relying on them helped get us to this point of present urgency. And EIBs have so much money and resources at work in Washington - what's a well-intentioned Senator or Rep supposed to do to filter through all the BS (technical term). The health club references in the posts above struck me. If you belong to a health club and the health club has other locations in other areas, you can often use a facility affiliated with your home club for free or a nominal charge - provided you paid your dues at your home club. No enormous bureaucracy or government agency needs to get involved. Memberships or subscriptions to clubs are available at reasonable rates, too. Activities at the health club are directed toward serving the needs of each individual, as the individual needs or wants. Individuals can choose what club they want to belong to. Perhaps a young unmarried professional might choose a Bally's or Gold's Gym. Perhaps a family would choose a YMCA, JCC, or local community rec center? What if Americans did not have to deal with government or EIBs to get reasonable cost health care? What if Americans could simply buy a subscription from a local health care provider network for, say, a 3 - 6 year term (sounds like a car loan)? Why not even consider the possibility of a lifetime or 30 year membership financed by the local network with the help of a local bank? If the Fed or state government wants to get help, it could license and regulate local health networks. This structure may incent local networks to really deal with efficiency issues and focus on providing the best care possible by enabling them to take a longer term view of their business processes, which incent them to shift cost structures from short to longer terms - perhaps resulting in cost savings in addition to benefits. Oh, and this structure would eliminate the EIBs and reduce government involvement, thereby achieving additional cost savings and mental health benefits for providers and their accountants. If we really are committed to solving this problem, perhaps we need to take a step back, walk around the problem, roll it over a few more times, weigh it, and run some models based on more than just cost – like supply, demand, and benefit. I agree that lack of universal health care is the problem that MUST be addressed – but I doubt that a government administered model (GAM) is the way to do it. In a GAM, the taxpayers ultimately bear the risk and cost. I worry about the incentive to innovate and provide better care in a GAM. I worry about the cost associated with continuation of the enormous insurance bureaucracies (EIBs). After all, the ultimate goal of the EIBs is to make money – they have shareholders after all, folks. For EIBs, patient care is good provided that the care adds to the bottom line. Yes, EIBs are good at moving and distributing risks and costs, but relying on them helped get us to this point of present urgency. And EIBs have so much money and resources at work in Washington – what's a well-intentioned Senator or Rep supposed to do to filter through all the BS (technical term).
The health club references in the posts above struck me. If you belong to a health club and the health club has other locations in other areas, you can often use a facility affiliated with your home club for free or a nominal charge – provided you paid your dues at your home club. No enormous bureaucracy or government agency needs to get involved. Memberships or subscriptions to clubs are available at reasonable rates, too. Activities at the health club are directed toward serving the needs of each individual, as the individual needs or wants. Individuals can choose what club they want to belong to. Perhaps a young unmarried professional might choose a Bally's or Gold's Gym. Perhaps a family would choose a YMCA, JCC, or local community rec center?
What if Americans did not have to deal with government or EIBs to get reasonable cost health care? What if Americans could simply buy a subscription from a local health care provider network for, say, a 3 – 6 year term (sounds like a car loan)? Why not even consider the possibility of a lifetime or 30 year membership financed by the local network with the help of a local bank? If the Fed or state government wants to get help, it could license and regulate local health networks. This structure may incent local networks to really deal with efficiency issues and focus on providing the best care possible by enabling them to take a longer term view of their business processes, which incent them to shift cost structures from short to longer terms – perhaps resulting in cost savings in addition to benefits. Oh, and this structure would eliminate the EIBs and reduce government involvement, thereby achieving additional cost savings and mental health benefits for providers and their accountants.

]]> By: susan eustis http://www.ohioverticals.com/blogs/akron_law_cafe/2009/10/health-care-financing-reform-53-the-long-term-solution-to-the-problem-of-cost/comment-page-1/#comment-2552 susan eustis Sat, 31 Oct 2009 23:13:42 +0000 http://www.ohioverticals.com/blogs/akron_law_cafe/?p=3585#comment-2552 I believe that automated process can do much to reduce the cost of health care delivery. This will decrease employment in the health care delivery system, an anathma to the politicians, but is effective in cost reduction. Another aspect of health care cost analysis relates to looking at the different populations who are served by the system. I maintain that there are large portions of the population who are well served by the current system, and who are not overly expensive to care for. I believe that it would be good to start looking at the different segments by cost and make determinations about the health of the system based on that more granular analysis. Just a people pay for health clubs now, it may be that the health clubs could ally with the HMOs and provide health tracking for the government, with the clubs and local government recreation facilities receiving a subsidy for doing that. I believe that automated process can do much to reduce the cost of health care delivery. This will decrease employment in the health care delivery system, an anathma to the politicians, but is effective in cost reduction. Another aspect of health care cost analysis relates to looking at the different populations who are served by the system. I maintain that there are large portions of the population who are well served by the current system, and who are not overly expensive to care for. I believe that it would be good to start looking at the different segments by cost and make determinations about the health of the system based on that more granular analysis.
Just a people pay for health clubs now, it may be that the health clubs could ally with the HMOs and provide health tracking for the government, with the clubs and local government recreation facilities receiving a subsidy for doing that.

]]> By: Dan S. http://www.ohioverticals.com/blogs/akron_law_cafe/2009/10/health-care-financing-reform-53-the-long-term-solution-to-the-problem-of-cost/comment-page-1/#comment-2551 Dan S. Sat, 31 Oct 2009 21:36:50 +0000 http://www.ohioverticals.com/blogs/akron_law_cafe/?p=3585#comment-2551 For the most part, I believe Quidpro has offered an excellent response to the Professor's challenge. Here are my thoughts on one aspect of the challenge: RE: "Health insurance should operate the same. It should insure against catasrophic losses, not routine dental checkups." What we need is a two-level system of neighborhood preventative/maintenance healthcare programs that are prerequisites for coverages for non-routine losses that would be covered by true insurance policies. If you don't inspect the brakes and change the oil at prescribed intervals, your extended policy won't cover your blown engine or caliper replacements. Allow employers to offer access to hmo(?)-styled programs while requiring everyone purchase a blanket plan for catastrophic health events. That sticky 'pre-existing condition' situation may have to be limited to genetic disorders being covered by some sort of government option. Right or wrong, all other conditions may have to be considered 'preventable' and covered by the same rules as smoking and skydiving for risk management premiums. For the most part, I believe Quidpro has offered an excellent response to the Professor's challenge. Here are my thoughts on one aspect of the challenge:

RE: "Health insurance should operate the same. It should insure against catasrophic losses, not routine dental checkups."

What we need is a two-level system of neighborhood preventative/maintenance healthcare programs that are prerequisites for coverages for non-routine losses that would be covered by true insurance policies. If you don't inspect the brakes and change the oil at prescribed intervals, your extended policy won't cover your blown engine or caliper replacements. Allow employers to offer access to hmo(?)-styled programs while requiring everyone purchase a blanket plan for catastrophic health events. That sticky 'pre-existing condition' situation may have to be limited to genetic disorders being covered by some sort of government option. Right or wrong, all other conditions may have to be considered 'preventable' and covered by the same rules as smoking and skydiving for risk management premiums.

]]> By: Quidpro http://www.ohioverticals.com/blogs/akron_law_cafe/2009/10/health-care-financing-reform-53-the-long-term-solution-to-the-problem-of-cost/comment-page-1/#comment-2550 Quidpro Sat, 31 Oct 2009 15:09:17 +0000 http://www.ohioverticals.com/blogs/akron_law_cafe/?p=3585#comment-2550 Professor, Let me answer your challenging question in the affirmative. Yes we can. We can create incentives to promote long-term health care in a system of private insurance. It is already done in the life-insurance market. (Smokers and sky-divers pay higher premiums.) But this would require treating health insurance as insurance and not as a cost-shifting mechanism. It would also require severing the tie between health "insurance" and employment. As i have previously stated, the problem is that health insurance has come to be seen as an entitlement. This manifests inteslf in many ways. First, health insurance is tied to employment. Although there may historical reasons that health insurance is viewed as a benefit to employment (which are reinforced by our present tax code), there are no logical reasons why this should be so. Automobile and homeowners insurance are not typically provided by employers. Reform that would allow the tax benefits of employer sponsored health insurance to be enjoyed by indviduals would be a large step in addressing this anomoly. This points to a second and more fundamental problem. Health insurance is not really insurance as that term is understood in other contexts. Rather it is, in many respects, an elaborate (and unnecessary) system to shift costs to other parties. When my car requires an oil change or a brake job, I do not consult my auto policy to see whether my mechanic is "in network". When my home needs a new coat of paint, I do not struggle with my homeowners policy to determine my "copay". Yet for the most routine medical expenditures, we have created an army of clerks and accountants to process payments and forms. This is ludicrous. I obtain automobile insurance to guard against large losses, not to cover routine maintence. Health insurance should operate the same. It should insure against catasrophic losses, not routine dental checkups. This change alone would result in great savings as it would do away with the cost of processing insurance claims for routine costs (as opposed to creating a new federal bureaucracy, which can only add to costs). It would also nullify the debate on whether any reform bill should cover elective abortion The answer is "no" because it would not cover any elective procedures. I don't have to pay for your abortion and you don't have to pay for my face-lift. Third, we need less government involvement, not more, in the actual detail of policy language and mandated coverages. Such involvement simply feeds tha idea of entitlement. Beyond clearing the field for competion and providing the same tax advantages discused above, the government should get out of the way. Government can help by allowing insurance companies to sell across state lines. This will increase competition (which will drive down costs for the Professor) and increase choice. Aren't we all pro-choice on this issue? In short, if individuals owned their health insurance policies, and health insurance operated more like insurance rather a perk of employment, then you would be able to establish long term relationships between providers, patients and insurers. You would also create the incentives to focus on the long term rather than the immediate. Professor,

Let me answer your challenging question in the affirmative. Yes we can. We can create incentives to promote long-term health care in a system of private insurance. It is already done in the life-insurance market. (Smokers and sky-divers pay higher premiums.)

But this would require treating health insurance as insurance and not as a cost-shifting mechanism. It would also require severing the tie between health "insurance" and employment.

As i have previously stated, the problem is that health insurance has come to be seen as an entitlement. This manifests inteslf in many ways.

First, health insurance is tied to employment. Although there may historical reasons that health insurance is viewed as a benefit to employment (which are reinforced by our present tax code), there are no logical reasons why this should be so. Automobile and homeowners insurance are not typically provided by employers. Reform that would allow the tax benefits of employer sponsored health insurance to be enjoyed by indviduals would be a large step in addressing this anomoly.

This points to a second and more fundamental problem. Health insurance is not really insurance as that term is understood in other contexts. Rather it is, in many respects, an elaborate (and unnecessary) system to shift costs to other parties. When my car requires an oil change or a brake job, I do not consult my auto policy to see whether my mechanic is "in network". When my home needs a new coat of paint, I do not struggle with my homeowners policy to determine my "copay". Yet for the most routine medical expenditures, we have created an army of clerks and accountants to process payments and forms. This is ludicrous. I obtain automobile insurance to guard against large losses, not to cover routine maintence. Health insurance should operate the same. It should insure against catasrophic losses, not routine dental checkups.

This change alone would result in great savings as it would do away with the cost of processing insurance claims for routine costs (as opposed to creating a new federal bureaucracy, which can only add to costs). It would also nullify the debate on whether any reform bill should cover elective abortion The answer is "no" because it would not cover any elective procedures. I don't have to pay for your abortion and you don't have to pay for my face-lift.

Third, we need less government involvement, not more, in the actual detail of policy language and mandated coverages. Such involvement simply feeds tha idea of entitlement. Beyond clearing the field for competion and providing the same tax advantages discused above, the government should get out of the way.

Government can help by allowing insurance companies to sell across state lines. This will increase competition (which will drive down costs for the Professor) and increase choice. Aren't we all pro-choice on this issue?

In short, if individuals owned their health insurance policies, and health insurance operated more like insurance rather a perk of employment, then you would be able to establish long term relationships between providers, patients and insurers. You would also create the incentives to focus on the long term rather than the immediate.

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