Health-Care Magic

"insurers' profit margins are in the 25-to-30% range."
--I would like Sojo to post a correction on this, if they are really committed to truth-telling. These numbers are completely false and were recently debunked by the Associated Press: http://apnews.myway.com/article/20091025/D9BI4D...

"the Veterans Administration and Medicare are public programs with a lot of satisfied customers."
--The VA provides health care for poor people...any veteran with money avoids it at all costs.

It's a helpful case study, though. Do we want everyone's health care to be as bad as that provided by the VA?

Medicare is also running out of money...so you know.

"Nor do we want to discuss two huge expenses that all doctors face and that must be reduced if we expect them to charge reasonable fees: the high cost of a U.S. medical education and the expenses associated with the ever-lurking threat of malpractice suits."
--Wow, I'm really glad you mentioned malpractice suits.

I think you do make some good points about controlling costs...the US wants a lot out of health care...we consume more than any other country. The issue of how to contain costs is definitely salient--and it's one that both Rs and Ds will have to confront with Medicare at some point. Tough decisions will be made, and few will be happy with the solutions.

"We don't want to keep insurers' prices low by launching a competing public option

"Do we want everyone's health care to be as bad as that provided by the VA?"

Do you have personal knowledge of the bad medical care provided by the VA? Former Senator Max Cleland (D-GA) was treated at both Bethesda and at the VA Hospital in DC and received the care that he needed to recover from the wounds he got in Vietnam. My nephew is currently being treated by the VA for the PTSD he sustained following duty in both Afghanistan and Iraq. And my husband received excellent care just this morning from an audiologist who took almost 2 hours to check his hearing and fir him for hearing aids. It's really easy to trash the VA and the care that they provide, but each time that we visit, we see dozens of patients streaming through the doors to be attended by dedicated medical professionals and volunteers.

Most of the Americans who have no health insurance do not have the time or resources to attend "Tea Parties" or to travel to Washington to lobby their representatives. I commend Jim Wallis and Sojourners for their advocacy for "the least of these" and I frankly have a difficult time understanding how "Christians" can reconcile their selfishness with the "cup of water" that Christ has placed within their hands.

I have worked at a VA, yes. Some are definitely better than others, but I saw patients every day who were angered by the bureaucracy. Here's a Newsweek cover story on issues they have: http://www.newsweek.com/id/36601/page/1 .

A problem with the VA--like other single-payer systems--is that its budget is determined each year by politicians rather than consumers, and if it doesn't get enough money it is forced to ration care.

"fundamentalist" and "jesse3" are right and I was wrong about insurance company profits. I misspoke: I intended to refer not to profits but to administrative costs, which have increased from about 5% to nearly 20% (or higher, by some reckoning) since 1995. I'll correct the mistake on my own blog. Thanks for pointing it out.

As for the VA, my experience with it is personal--VA doctors have on several occasions saved my brothers life. They have given him frequent and excellent care for over 15 years, and he has paid little or nothing. His wife, on the other hand, has been caring for him and so has been unable to work, and therefore unable to get insurance. She has been without medical care the whole time. Last month she turned 65 and signed up for Medicare. She is extremely grateful for it.

Excellent post. One of the key problems in health-care reform is that each special interest has a strong incentive to resist change. Although the majority of the people want change, their interest is not so strong that they'd have the incentive to lobby hard for their changes. Economists call this the logic of collective action. The current administration has unfortunately made several political mistakes along these lines. (1) They failed to clearly state what were the core proposals, allowing opponents to demonize whatever was proposed. (2) Health-care reform morphed into health-insurance reform; too little effort was made to come up with cost reductions. (3) They probably failed to realize how many special interests they'd be fighting against; they did not clearly let the people know that fear, uncertainty, and doubt would be spread en masse in a disinformation campaign.

That being said, health-care reform is not dead (or at least should not be dead) just because of Scott Brown's election in MA. I've said it before, but I'll mention it again. Filibuster reform is probably long overdue in the US Senate. I propose not abolishing it, but perhaps going back to the 19th century/early 20th century rules. Two-thirds for cloture, BUT filibusterers have to actually stand up and talk non-stop. Otherwise, we have what we've got today, where de facto anything and everything needs 60 votes to pass. The old system at least put the pressure on so that people only filibustered for the issues dearest to them only. Let the opponents of health-care reform speak in great detail on why the reform is bad! There were like more filibusters in one Congress than in all the 19th century, to show how abused it's become.

Ms. Neff made some points and I want to address them. As some people here know, I am an independent with libertarian tendencies.

"[Neff] We don't want to keep insurers' prices low by launching a competing public option, even though the Veterans Administration and Medicare are public programs with a lot of satisfied customers."

Why is a public option needed for competition? Usually it is private companies that provide competition. The main problem -- which the Senate bill did not address -- is that health insurance companies are exempt from anti-trust laws. So instead of fair competition between various health insurance companies, we have a monopolistic health insurance cartel that can fix prices i.e use an "industry standard" to set prices and coverage. This health care insurance cartel needs to be broken up.

"[Neff] We don't want to require insurers to cover basic health care with not-for-profit policies, even though insurers' profit margins are in the 25-to-30% range."

The best way to get basic health care is to have a true free market. What we now have is a monopolistic health care insurance cartel. This cartel needs to be broken up. The Senate bill doesn't address this problem.

"[Neff] We don't want to require everyone to have health-care insurance, even though only a broad pool can keep prices low for the insured."

Why should everyone be required to have health care insurance? What would happen when someone inevitably falls through the cracks of various government subsidies and would be forced to choose between buying insurance and eating and/or having shelter? And if this person chooses to eat and have shelter, then s/he would face a huge fine for breaking the law.

"[Neff]We don't want to put caps on prescription drug costs or allow medications to be imported from other countries, even though U.S. drugs often cost several times more than the same drugs bought elsewhere."

No argument here. People should be able to buy drugs from wherever they want, even from foreign countries.

"We don't want to put caps on physicians' fees, even though our doctors - particularly the increasing percentage of specialists - are by far the best-paid physicians in the world. Nor do we want to discuss two huge expenses that all doctors face and that must be reduced if we expect them to charge reasonable fees: the high cost of a U.S. medical education and the expenses associated with the ever-lurking threat of malpractice suits."

I'm not sure why government needs to interfere with the free market here. If Dr. A charges high fees, then people would go to Dr. B. The main problem here is the huge monopolistic health insurance cartel, which sets reinbursement levels.

"And we certainly do not want any experts reviewing the literature and concluding that certain tests aren't necessary (mammograms!), or that some end-of-life care is wasteful (death panels!), or that a highly advertised designer drug is actually no more effective than a cheap generic. We want top-of-the-line medical care, as seen on TV, even when it is not medically necessary or even advisable."

That should be up to consumers, not the government.

Believe me, we DO need reform. Badly. Too many people are literally dying because of lack of access to health care. However, a host of government regulations, "public options," etc. won't do anything to relieve this without breaking up the monopoly of the health insurance cartel. None of the bills passsed have addressed this vital point. Something must be done, but what the Senate passed isn't going to do it.

I for the most part agree. In terms of cost containment, reforms that have not been seriously discussed in Washington are things like price disclosure (when's the last time you saw a price tag at a doctor's office?) and uniform disclosure of insurance policy terms. In terms of forcing (or pushing/persuading) people to get health insurance, the alternative would be to callously let those without it die of totally treatable illnesses/injuries when they can't pay. Without such callousness, there would always be the temptation to sic it to the humanitarian, which is unfair. Not only that, but we cannot have "shall issue" without "shall buy" because it would create a situation where people can "buy" only after getting sick - making insurance impossible to sell (like being allowed to insure your car AFTER you wreck).

I read an interesting editorial in the paper last week that addressed several shortcomings of the proposed reform, much of it based on how costs have spiraled out of control in Maine since some parts have already been enacted.

http://www.bangordailynews.com/detail/134757.html

I appreciate your willingness to correct this. Most bloggers here don't, even though it's often pointed out by the comments.

I would suggest, though, that your VA experience does not take priority over the vast majority of the experiences of Veterans. "Lots of satisfied veterans" is non-comparative. If there are statistics available, I'd recommend you stick with those. Anybody can find a great example of poor quality and great quality VA care.

One last thing that boggles my mind with the public option... why only one more competitor? Why not two, or three, or twenty? Why not lift state-line bans of insurance, and let those insurers compete? If everyone knows competition makes prices go down, why not let the insurance companies themselves compete? I'm really curious about this, because it makes no logical sense to me to mandate a single competitor when a "free" solution (to the government, at least) is to not restrict insurers within states.

My wife gets her much of her care from the VA due to service connected disabilities, most of the care is adequate but none of it is up to the standards of private hospitals or doctors. She is slowly weaning away from the VA for all care except the neuro-muscular problems that are service connected due to the extensive history. However, the waits are unconscionable, 6 weeks or more to see primary care provider, months for some specialists. A part fo the problem is VA docs do not see as many patients per day as private docs (no profit motive)

Where is that quote from? In the article Ms. Neff says "even though insurers' administrative costs have risen from less than 5% to nearly 20% since 1995". I also double checked the link to the Huffington post article, and it said nothing of the sort. The argument isn't that profits are up to 20% but not Medical related expenses - basically that insurance companies are using less of their revenue to pay doctor's bills and more to a number of things : including profits and administration costs. Do the Price Waterhouse Coopers take that into account in their study?

I see, on further reading of comments I see that she changed the blog. I didn't get to it to see that quote.

To "xfree9"--I'm always eager to correct errors of fact, though I confess I rarely read comments so no doubt have missed many opportunities to make corrections. Re the VA: certainly one swallow does not a summer make, and statistics can be made to support opposing views. But here is a report indicating higher satisfaction with VA care than with private-sector care: http://www.defense.gov/news/newsarticle.aspx?id.... Yes, it's from the defense department, so you may not trust it. But check it out.

As for competition--Germany has an interesting system. Their health care is funded by many competing private insurers--but all are forbidden by law to make a profit on basic health care. Read Reid's "The Healing of America" for a variety of approaches that work elsewhere, but that have not been tried here.

Thank you for the links. Appreciate your interaction.

Question - if the USA health system is so good, why does it not deliver better outcomes re length of life and cost per head, when compared similar nations eg Japan, most of Western Europe, Canada, Australia, etc? Also with out the numbers of severe financial crisis with serious illnesses for those who do not have good insurance. Bit of pragmatism here required.

Following this debate as an outsider, these are incredible differences. What is the problem? Is by tying health insurance to jobs keeps the serfs from revolting, ie not covered if you leave the job, so will put up with anything?

Reid's work is great it compares the US to Britain, Germany, Japan, Switzerland, and Canada moving from socialism to a variety of market models. All these countries cover ALL of their people for 1/2 of our cost. He did a piece for Public Television - Frontline a couple of years ago. I recommend it highly.

The US health outcomes overall are NOT are not better - that's the point. Check World Health Org. health data....we are around 40th in terms of infant mortality and are far from being a leader in terms of longevity....we pay twice as much for our current system than do the British, Germans, Swiss, Japanese, and Canada (they all cover ALL their people and we have over 40 milliojn without coverage). 150,000 people will die this year in the US due to lack of coverage...I doubt any of them would have debated "socialized medical care" which none of current proposals are.

Provide a comprehensive (but basic) health care for all citizens. Taxpayers earning above a certain amount pay an extra 1% (or 1.5% for higher earners). Allow everyone to buy additional coverage if they want it.

This works where I live. I'm proud to pay a little bit more to know that every person who needs medical care will get it. And I also pay extra for better coverage that I want.

According to Price Waterhouse, 87% of premiums go to doctor and hospitals. 5% is profit, on average. That leaves 8% of premiums on average for all expenses of running the business. What is the base for your 20%?

My round numbers were from Wendell Potter, the Cigna whistle-blower. You can read an article of his at http://www.huffingtonpost.com/wendell-potter/th... .

Or you might prefer to go directly to the Price-Waterhouse-Cooper website and look at their graph, which pretty much supports what he says, though the graph shows the under 5% year as 1993. The most recent years, 2005-6, hover right around 80%. Doesn't look like it's been 87%--the figure quoted on so many insurance websites--since 1996, when it took a serious plunge. Here's the link: http://www.pwc.com/us/en/healthcare/publication...

It's probably most accurate to look for "medical loss ratio" since the term "administrative costs" is used in many different ways. An MLR of 85 means that 85% of monies received go to patient care. However, America's problem goes well beyond the low MLRs of the insurance companies. Our doctors have enormous administrative costs of their own, many of which relate to filling out insurance forms.

"In terms of forcing (or pushing/persuading) people to get health insurance, the alternative would be to callously let those without it die of totally treatable illnesses/injuries when they can't pay."It would be callous to force a low-income person to purchase health insurance or be fined. I know that many low-income people would be subsidized. Or at least that is the theory. My own experience with public welfare programs is that so many people fall through the cracks; they don't "qualify" for one reason or another. So this person would be forced to choose between obeying the law and buying insurance, or buying food and shelter for him/herself and family.

The pwc doc is interesting. I'm not sure how it meshes with another pwc doc, "The Factors Fueling Rising Health Care Costs 2008" available at
http://www.ahip.org/content/default.aspx?docid=...

Here are excerpts:

PricewaterhouseCoopers looked at the components of
health care costs. About 87 percent of the costs of health
insurance are benefits paid out. Administrative costs and
profits account for the other 13 percent.

Administrative costs-claims processing,
consumer and provider support, taxes, and profits-accounted for less than one-tenth of the
increase.

_ Consumer Services, Provider Support & Marketing (4%). This component includes
communications with consumers regarding their existing and new benefits, disease
management programs, care coordination, health promotion, wellness and
prevention programs, and related investments in health information technologies
that benefit consumers. This also includes marketing and sales.
_ Government Payments & Compliance (2%). Taxes on premiums, costs of complying
with government laws and regulations such as filing and reporting requirements
and the Health Insurance Portability and Accountability Act are included in this
cost component.
_ Claims Processing (3%). One of the major components is claims processing.
Insurance plans have to process-collect, review, pay, and record-every claim that
comes in from plan enrollees.
_ Other Administrative Costs (1%). Other administrative activities that support health
plan operations are included in this component including premium collection,
actuarial and underwriting services.
_ Risk and Profit (3%). Health plan profits are available to meet risk-based capital needs,
to support continued reinvestment into the system, and to provide a reasonable
return to attract investors.

To calrify my location, Australia.

Sub text to my comment above is that I am concerned about is that ideas from the US are being used from time to time here to suggest the winding back of some our universal multi mode system. Ie a basic universal coverage with more insurance/options available if you wish to / can buy it. There are some tax concessions for this.

Problems include the considerable cost shifting between the States and Federal govt's with an erosion of the public system. The continual push for lower taxes / less government spending does not help as well. Net result, if we allow this push for reduced public funding and all of the checks and balance included, is that we will have a less equal system which costs more. The big gap in dental coverage which is now starting to show up in increasing other costs in the system.