Today’s links started a short discussion on healthcare. The Liberal/Progressive left see universal health insurance (one insurance provider) as a way to ensure the “right” that they believe every American has to good healthcare. Now, I don’t think healthcare is a “right” but then again I’m admittedly quite shaky when it comes what the word “right” (with or without scare quotes) might mean and think that by and large think that we don’t have what is meant commonly by that word, especially for healthcare. But I digress, for the point of this essay is to establish a few “talking points” regarding healthcare from a policy standpoint.

I’ll begin with noting a few flaws with universal coverage.

  • One of the primary problems with universal coverage/one provider for insurance is structural. Representational government, involving elected officials, is particularly poorly suited to handle actuarial matters. Politicians like to promise, and very often promise short term gains ignoring long term costs, e.g., flood insurance rates set by the State is traditionally far below what reasonable actuarial calculations will provide. The representitive banks on the “payback” or disaster which is being insured against will not occur in his/her lifetime.
  • Good actuarial calculations demand an eye to the cost, to the bottom line. That future cost is the future of the company and cannot be overlooked, unlike it can in a politician’s rhetoric.
  • Insurance-as-business has a short term interest in cutting costs, but a long term interest in them going up. That is to say, in the short term a medical insurance provider benefits from cutting health care costs. If a medical procedure costs less, it costs them less and they don’t have to pay as much to provide a given benefit. On the other hand in the long term, their rates and profit are based on a percentage of average costs … which if they go up, then aggregate profits go up as well. One might suspect that the cost/benefit analysis works differently for a government run agency, but this is not likely the case as power as well as profit goes into the government’s payback.

Now some thoughts on healthcare in general.

  • Why is healthcare expensive today? The reason shirts, food, shoes, and toasters are cheap today is because of two factors. Mechanization allows for multiplication of human labor involved in their production and the availability of cheap power. If a skilled or unskilled laborer can produce 10,000 widgets a day with a machine where he can only make one per day by hand, then the price of the widget being sold can drop by orders of magnitude. Unless we increase greatly the number of health care workers and pay them slave wages the price of healthcare is going to stay prohibitively high. Humans, especially skilled humans, cost money (they need to get paid). Ultimately the only way to make healthcare available and cheap for everyone is to get the humans efforts multiplied by technological means. If a doctor today sees 40 patients a day, the only way to reduce health care costs by orders of magnitude is to increase the number of patients he can minister to in a day the same orders of magnitude. This is not as impossible as it sounds. The average village pediatrician sees childhood diseases in waves. When a flu sweeps through the town, he gets hit with hundreds of kids with identical symptoms. Does he need to give the same diagnostic care to all? Couldn’t some intelligent automation and cheap intelligent diagnostic tools multiply his effectiveness?
  • Another reason is regulation. FDA regulation is very expensive, and largely useless from the point of view of the manufacturer. FDA approval does not indemnify a manufacturer from fault. After going through extensive and expensive tests a drug is approved. If later it is found harmful, the manufacturer is still liable even though they got certification. FDA approval is not necessarily a bad thing, but it has cost. That cost should be an option not a requirement and should indemnify the manufacturer from fault. If the FDA approves thalidomide for pre-natal maternal care then there should be no way to bring suit in case harmful effects are discovered later unless the manufacturer fudged or falsified the certification procedure. Requiring FDA approval is likely the single biggest roadblock to innovation in the healthcare industry in the US today. I’m not suggesting it be eliminated, in fact by indemnifying a manufacturer upon gaining FDA certification it is instead strengthened. The other side of that coin is that FDA approval for drugs and health care products should be optional.
  • Univeral/single payer plans miss out on the goal. The goal for government policy should not be to bring equal health care to everyone but to provide a path to better, cheaper, and more effective future health care for all of us. Government driven policy and insurance is not the way to innovate.

Look at an example noted in Monday’s highlight’s comments:

A down to earth example might be the law student whose letter Andrew Sullivan published recently. He has asthma but no coverage since he is in school. He has to basically get his friends mom to swipe samples of the drug he needs. He was jogging on a treadmill and got a sudden pain in his foot. He stayed off of it for several months. In the meantime someone with good coverage will get regular checkups for a $20 co-pay and maybe spend $100 for an emergancy x-ray if they got that mysterious pain in their foot. This type of ‘rationing’ does not seem very efficient or fair.

How might this end up in a “mechanized” health care environment? Today we have many categories of “prescription” drugs and over the counter drug and as well we have protected and generic drugs. My suggestions would severely limit the first category opening up the number of drugs available over the counter, which would almost certainly include asthma inhalants. And as well to the “protected” and “generic” classifications of drugs, other approval schemes would be available besides FDA approved medications. Other independent certifications (or no certification at all) would be available to drug manufacturers. That would leave a larger array of price points for the albuterol this young student needs. In the second case, the student could go to a semi-automated (think Kinko’s) medical diagnostic clinic, rent some scan time with a automated scanner (x-ray or ultra-sound likely) and have the pain in his foot examined. He could have an automated result from an expert system tell him what therapeutic options would be best in his case and the an estimate of accuracy of diagnoses which he could use to decide if he needed his pictures to be examined by a human expert. The clinic would be making money by providing this machine for likely less than that $20 co-pay. Note that in my “plan” anti-plan no insurance is needed. In fact, the existence of insurance would mean that the things needed to give control back to the patient and provide for more health care “product” to be consumed by the population would not be occuring. Single payer or universal health care is exactly the wrong way to get to where we need to go. It is moving to a more covered, more controlled and less effective health care industry, which gets it exactly backwards.

Consider 400 years ago, I’d bet that over 60% of the population farmed. Consider food as analogous to health care. Single payer is a plan to provide “fairer distribution” (an arguable point) and redistribute and control what food is produced. That sounds like a move to the collective farming of peasants who stay with non-mechanized labor for production. But history has shown, a more effective way to provide inexpensive food is to bring in harvesters, trucks, fertilizer, refrigeration, super-markets, and other (farmers, ethnic, health) markets into the equation. Single payer supporters are the ones fighting for staying with the horse drawn solutions on collectivized farms at the same time as a better solution. Today a small fraction of the population farms … and obesity because, in part, of cheap available food is the problem.

So essentially the single-payer supporter is campaigning for the five-year plans of the Soviet era and the failed farm collectivization projects of Lenin and Stalin which caused mass starvation and shortages. So when looked at from a practical standpoint, single-payer healthcare might have pretty poetic stories and market jingles to push its agenda forward. But to put it bluntly, one might ask the supporters single payer, “So which is it are you stupid or evil?” ‘Cause it seems like those are only the two alternatives that remain.

Filed under: Ethics & MoralityGovernmentMark O.MedicinePoliticsYou Cry Out

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