There are actually two distinct interrelated problems with the US healthcare system. The first is that it is the most inefficient (expensive) healthcare delivery system in the world. The second is that nearly 50 million of us can’t afford health insurance. The second problem is to a very large extent a symptom of the first.
Right about now you should be asking yourself why those titanic intellects inside the beltway are working on "insurance reform" not actual healthcare reform. I can come up with two possible answers. Either they are too stupid to understand the real issues (probable) or they found out that actually reforming the healthcare delivery system itself just can't be done from a political perspective. More specifically the entrenched interests are just too powerful to be dislodged.
This focus on insurance reform (instead of healthcare reform) means that we won't be dealing with the main issue of costs this time around. Not to worry, we don't actually need the government to do anything proactive to solve the cost problem.
Here is the dirty little secret about the US Healthcare system - it's already socialized. Yep, that's right, over the past four of five decades the toxic combination of red tape and the "all you can eat" entitlement mentality associated with the third party payer model essentially removed a sixth of our economy from the very market forces that drive efficiency in all of the other industries. Think about it. Other than plastic surgeons healthcare providers don't actually compete on price or on quality. You can find out more information about your washing machine or your dishwasher than your cardiologist and we all know that a functioning free market CANNOT exist absent good information on price and quality.
Think I’m wrong? Take a look at the EMTALA legislation. This is the (unfunded) law that mandates all patients receive care in the emergency department regardless of their ability to pay. No different than requiring a restaurant serve all patrons anything on the menu regardless of whether or not they skipped the check last night. I’m not saying we let people die on the streets. Just that you can’t place an unfunded mandate like that on a private industry and not break it. The US healthcare system no longer operates as a functioning free market and until it does we have zero chance of controlling costs.
The good news is that it is a much easier fix than our leaders seem to think. All we have to do is decouple (untangle) the social services aspects (care for all) from the actual healthcare delivery system and then let the free market back in. We don't need more legislation we need a whole lot less of it. Limit government involvement to things like mandating transparency of pricing and quality as well as establishing EMR interoperability standards. Expand Medicare to cover everybody that otherwise can't afford insurance, and then remove the restrictions on healthcare providers that prevent them from competing and innovating.
Wednesday, September 16, 2009
Tuesday, September 15, 2009
Healthcare Reform Myth # 4 – A public payer option will put private insurers out of business:
Yeah right, just like the US Postal Service ran UPS and Fed Ex out of business or public schools are running private schools out of business. I don’t necessarily favor a public option however don’t insult us by serving up the simplistic drivel coming out of the insurance lobby as an economic fact. This is the same lobby who spend $1.5 million each and every day lobyying congress. What a complete crock.
Is anybody out there (other than perhaps the congressional lapdogs of the insurance lobby on both sides of the aisle) not clear that the third party payer model is fundamentally flawed and that these guys are NOT your friends? The health insurance companies are in business to make money and with a business model that has an in built incentive not to pay claims you simply cannot hope the insurers have an inherently altruistic nature and will always act in the best interests of their insureds. They won't. The health insurers aren't inherently "evil" - they're just acting in complete accordance with their current economic incentives.
Until the link between the consumption of healthcare and the payment for healthcare at the point of service is restored we will not have a functioning market for healthcare in this country. Until the financial link between the decision to pay a claim and the payer of the claim is severed we will always have problems with the third party payer model.
By the way, the only people that are actually "happy" with their current health insurance are those that have no earthly idea what it really costs them. As they say - ignorance is bliss....
Is anybody out there (other than perhaps the congressional lapdogs of the insurance lobby on both sides of the aisle) not clear that the third party payer model is fundamentally flawed and that these guys are NOT your friends? The health insurance companies are in business to make money and with a business model that has an in built incentive not to pay claims you simply cannot hope the insurers have an inherently altruistic nature and will always act in the best interests of their insureds. They won't. The health insurers aren't inherently "evil" - they're just acting in complete accordance with their current economic incentives.
Until the link between the consumption of healthcare and the payment for healthcare at the point of service is restored we will not have a functioning market for healthcare in this country. Until the financial link between the decision to pay a claim and the payer of the claim is severed we will always have problems with the third party payer model.
By the way, the only people that are actually "happy" with their current health insurance are those that have no earthly idea what it really costs them. As they say - ignorance is bliss....
Healthcare Reform Myth # 3 – Rationing is both bad and avoidable:
Show me someone that genuinely believes this country has the economic capacity to provide every citizen with unlimited access to whatever healthcare services they desire and I’ll show you someone who is too stupid to have the vote. News flash – we already have rationing. It’s called access to care and the basic problem is that right now it isn’t very “rational”.
Here’s one for you. There is only one available kidney and two potential recipients – a 16 year old female and a 75 year old male – who should get the kidney? Welcome to healthcare rationing. By the way, if you answered “the one that can afford it” your moral compass badly needs a reset. The bottom line is that we already ration all goods and services. In a free enterprise system the default rationing mechanism is the pricing model. Nothing wrong with that except that in a "civilized society" we don't let our citizens starve because they can't afford food. We don't let them die of exposure because they can't afford shelter. We don't let the children of the less fortunate go without an education...and we don't let our citizens die on the streets.
Here's what we don't do. We don't provide the hungry with steak every night and we don't provide the homeless with feather beds and five bedroom mansions to live in. Nor (unfortunately) do we provide the children of the less fortunate with world class educations - but that's another rant.
So here we have it. I think all would agree that everybody is entitled to some basic level of care regardless of their ability to pay for it. Put it this way, it's already mandated (unfunded) by the EMTALA legislation so it doesn't matter if you don't agree with that - it's already a done deal. What we refuse to address - or at least the ratbag right refuses to address - is that we can't afford to provide all of our citizens with unlimited healthcare services. That means rationing and anybody who doesn't recognize that reality has their head up their ass. The only question is what rationing mechanism do we as a society choose.
Here’s one for you. There is only one available kidney and two potential recipients – a 16 year old female and a 75 year old male – who should get the kidney? Welcome to healthcare rationing. By the way, if you answered “the one that can afford it” your moral compass badly needs a reset. The bottom line is that we already ration all goods and services. In a free enterprise system the default rationing mechanism is the pricing model. Nothing wrong with that except that in a "civilized society" we don't let our citizens starve because they can't afford food. We don't let them die of exposure because they can't afford shelter. We don't let the children of the less fortunate go without an education...and we don't let our citizens die on the streets.
Here's what we don't do. We don't provide the hungry with steak every night and we don't provide the homeless with feather beds and five bedroom mansions to live in. Nor (unfortunately) do we provide the children of the less fortunate with world class educations - but that's another rant.
So here we have it. I think all would agree that everybody is entitled to some basic level of care regardless of their ability to pay for it. Put it this way, it's already mandated (unfunded) by the EMTALA legislation so it doesn't matter if you don't agree with that - it's already a done deal. What we refuse to address - or at least the ratbag right refuses to address - is that we can't afford to provide all of our citizens with unlimited healthcare services. That means rationing and anybody who doesn't recognize that reality has their head up their ass. The only question is what rationing mechanism do we as a society choose.
Myth # 2 – You can cut costs by cutting the price you pay for healthcare services:
Let’s go with an analogy on this one. Let’s say we buy carpet from the same people that tell us how much carpet we need to buy. We elect to reduce the price we are going to pay per square yard. Are they going to sell us a) more carpet b) the same amount of carpet, or c) less carpet? If you picked anything other than a) then you’re a moron.
The problem is the fee for service model encourages over-utilization and no, it isn't the result of defensive medicine driven by the fear of lawsuits. Not that we don't need litigation reform (we do) but until we eliminate the fee for service model and go with something based on diagnosis we're not going to get a handle on costs. Either that or pay physicians a flat salary.
The bottom line is that as long as the people providing the carpet are paid by the yard you're always going to get more than you really need and anyone that claims otherwise really is a complete moron.
The problem is the fee for service model encourages over-utilization and no, it isn't the result of defensive medicine driven by the fear of lawsuits. Not that we don't need litigation reform (we do) but until we eliminate the fee for service model and go with something based on diagnosis we're not going to get a handle on costs. Either that or pay physicians a flat salary.
The bottom line is that as long as the people providing the carpet are paid by the yard you're always going to get more than you really need and anyone that claims otherwise really is a complete moron.
Healthcare Reform Myth #1 - We can't afford it
What a crock. We already have the most expensive healthcare system on the face of the planet by far. We couldn’t spend more in aggregate if we tried to. We spend 50% more per capita than the next closest industrialized nation and they have a socialized system (Germany). Whenever you hear someone that is against healthcare reform because we can't afford kindly explain in small simple words that it's a matter of which pocket the spend comes out of not how much we spend as a society.
Let me explain. Like I said, we already have by far the most expensive healthcare system in the world and no, despite the ramblings of the "rat bag right", it isn't the best healthcare delivery system the world has ever seen - not even close. The good news is that our current healthcare system already treats everybody regardless of their ability to pay. The bad news is that instead of treating problems at the appropriate time (early) and in the appropriate setting (at a primary care clinic) the uninsured now wait until the shit really hits the fan and then go to the Emergency Department where they are then treated by some of the best healthcare professionals on the face of the planet in one of the most expensive care settings on the face of the planet.
You starting to get it yet? The uninsured already receive medical care they just get it at the wrong time (later than they should) and in the wrong setting (the ED). Worse still they don't have the money to get the follow-up medications or care that they need - primary care docs or specialists are not required to see the uninsured and pharmacies are not required to provide them mdeications - so they end up right back in the ED where the cycle repeats. And guess who pays for all of this? If you have private insurance then you do.
We can't afford universal coverage? Good God, we can't afford NOT to do it.
Let me explain. Like I said, we already have by far the most expensive healthcare system in the world and no, despite the ramblings of the "rat bag right", it isn't the best healthcare delivery system the world has ever seen - not even close. The good news is that our current healthcare system already treats everybody regardless of their ability to pay. The bad news is that instead of treating problems at the appropriate time (early) and in the appropriate setting (at a primary care clinic) the uninsured now wait until the shit really hits the fan and then go to the Emergency Department where they are then treated by some of the best healthcare professionals on the face of the planet in one of the most expensive care settings on the face of the planet.
You starting to get it yet? The uninsured already receive medical care they just get it at the wrong time (later than they should) and in the wrong setting (the ED). Worse still they don't have the money to get the follow-up medications or care that they need - primary care docs or specialists are not required to see the uninsured and pharmacies are not required to provide them mdeications - so they end up right back in the ED where the cycle repeats. And guess who pays for all of this? If you have private insurance then you do.
We can't afford universal coverage? Good God, we can't afford NOT to do it.
Are you a "Label"?
If you consider yourself a Republican, a Democrat, a Liberal, or a Conservative then you’re probably insufficiently self aware to understand what follows so go tune into Rush Limbaugh or Lou Dobbs and get your views spoon fed in easy to digest sound bites. If, on the other hand, you find the tendency of the political class to try and brand you with a simplistic catch all label just plain insulting then read on. By the way, if you are offended by four letter words then just go ahead and skip this blog.
Here is my basic thesis. The terms "conservative" and "liberal" were coined by the political class as relatively simple herding mechanisms and the relatively simple among us allow ourseles to be herded. By the way, the term "political class" refers to that sector of society that make their living from politics. It includes political parties, professional politicians, political staff, political consultants, political press, and lobbyists. There are probably millions of them but the real problem lies with those that either occupy seats in Congress or are actively trying to occupy those seats.
Have you ever listened to someone complaining about either the Democrats or the Republicans as if one party has the answer and the other is full of idiots? Whenever I hear that I think "moron" - they're both equally flawed. The basic problem is that neither actually places the public good at the forefront of their thoughts or actions. Oh, they give it lip service however at the end of the day it's all above achieving and maintaining power and in today's environment that's not a whole lot different than saying it's all about the financial resources necessary to support an endless campaign season.
If you now use the term "conservative" or "liberal" to label yourself then my advice is to put down the ideology and pick up your brain. When you do so you'll find that the degree to which you identify with the status quo (conservative) or for change (liberal) depend on the subject.
Here is my basic thesis. The terms "conservative" and "liberal" were coined by the political class as relatively simple herding mechanisms and the relatively simple among us allow ourseles to be herded. By the way, the term "political class" refers to that sector of society that make their living from politics. It includes political parties, professional politicians, political staff, political consultants, political press, and lobbyists. There are probably millions of them but the real problem lies with those that either occupy seats in Congress or are actively trying to occupy those seats.
Have you ever listened to someone complaining about either the Democrats or the Republicans as if one party has the answer and the other is full of idiots? Whenever I hear that I think "moron" - they're both equally flawed. The basic problem is that neither actually places the public good at the forefront of their thoughts or actions. Oh, they give it lip service however at the end of the day it's all above achieving and maintaining power and in today's environment that's not a whole lot different than saying it's all about the financial resources necessary to support an endless campaign season.
If you now use the term "conservative" or "liberal" to label yourself then my advice is to put down the ideology and pick up your brain. When you do so you'll find that the degree to which you identify with the status quo (conservative) or for change (liberal) depend on the subject.
Tuesday, May 13, 2008
Open letter to Senator John Cornyn (R, Texas) on US Energy Policy
Senator Cornyn,
I must admit to being a little disappointed with the general direction of your recent Dallas Morning News editorial on energy policy. While I concur that free markets are the solution to the current energy crisis I would have hoped that a political leader of your stature would have focused on a little more than expanding the domestic supply of extractable oil and gas.
Economic fundamentals tell us that an imbalance between supply and demand can be addressed in one of two ways – we either increase supply or we reduce demand. The elegant simplicity of the pricing mechanism within a free market system is that a rising price will usually restore balance by simultaneously reducing demand while increasing supply. Perhaps the largest issue with the pricing of fossil fuels is that we exclude waste sequestration from the cost. In other words, as consumers we get a free ride on the pollutants that we presently pump free of charge into our atmosphere. The problem isn’t that the price is too high. The real problem is that it has been far too low for far too long.
Let’s take a moment to consider global warming. There is little doubt that the earth is presently in a periodic warming cycle. The real question is whether or not the billions (yes, billions) of metric tons of carbon we are dumping into the atmosphere each year might be accelerating and/or exacerbating that cycle. While the scientific debate on this issue is not closed most credible skeptics are willing to concede that it is probable the burning of fossil fuels is having some impact. Only a fool (or an ideologue) would dismiss the data out of hand given the downside risk of inaction. Should the Greenland ice sheet actually melt then we lose two thirds of Florida - not to mention most of our coastal cities.
The global warming debate is a high stakes game of climatological Russian roulette. The downside risk in terms of economic loss and human misery so utterly dwarfs the economic costs of migrating away from fossil fuels that it is difficult to believe we are not already taking draconian steps to encourage that migration. One can only conclude that our political leadership no longer has the moral fortitude to make the difficult decisions needed to set us firmly and irrevocably on a path toward sustainable development. Far easier to take the position that because the data remains (diminishingly) inconclusive it is better to do nothing substantive and wait until the data is incontrovertible. Unfortunately by then it will almost certainly be too late. In essence by our continued inaction we are spinning the chamber, pulling the trigger, and hoping that the gun is empty. This would be bad enough were the gun in question aimed at our own heads but it is not. It is pointed right at the collective heads of our children and our grandchildren.
Let’s return to the debate on energy policy. You are absolutely correct in your position that supply and demand should be allowed to solve the problem. The role of government is to ensure that the common good is not lost in the process. This is why we no longer allow our factories to employ children and/or to spew toxic waste into the rivers and streams of this nation. Provided the price of fossil based fuels includes the estimated cost of carbon sequestration we should let the free market reign.
What is the answer if it isn't more domestic drilling? Well, we could start by imposing a carbon tax on all fossil fuels and then using the proceeds to subsidize the cost of revamping the nation’s fleet of automobiles and trucks from gasoline to hybrids as well as perhaps commercializing the carbon sequestration technology needed to turn the words “clean coal” into something other than an oxymoronic marketing ploy. It isn’t going to be easy however when Toyota sells a 55 mpg 4 passenger sedan for around $25K it is clear that the solution is well in hand if we have the courage to make the tough choices.
Senator Cornyn, we need real leadership on this issue. Your leadership. You can (and must) do far better than pushing to lift current restrictions on domestic oil and gas exploration.
Sincerely,
Andrew B. Thorby
Principal
Azima Health Services
214-978-3240 direct
469-835-8929 cell
athorby@azimahealth.com
I must admit to being a little disappointed with the general direction of your recent Dallas Morning News editorial on energy policy. While I concur that free markets are the solution to the current energy crisis I would have hoped that a political leader of your stature would have focused on a little more than expanding the domestic supply of extractable oil and gas.
Economic fundamentals tell us that an imbalance between supply and demand can be addressed in one of two ways – we either increase supply or we reduce demand. The elegant simplicity of the pricing mechanism within a free market system is that a rising price will usually restore balance by simultaneously reducing demand while increasing supply. Perhaps the largest issue with the pricing of fossil fuels is that we exclude waste sequestration from the cost. In other words, as consumers we get a free ride on the pollutants that we presently pump free of charge into our atmosphere. The problem isn’t that the price is too high. The real problem is that it has been far too low for far too long.
Let’s take a moment to consider global warming. There is little doubt that the earth is presently in a periodic warming cycle. The real question is whether or not the billions (yes, billions) of metric tons of carbon we are dumping into the atmosphere each year might be accelerating and/or exacerbating that cycle. While the scientific debate on this issue is not closed most credible skeptics are willing to concede that it is probable the burning of fossil fuels is having some impact. Only a fool (or an ideologue) would dismiss the data out of hand given the downside risk of inaction. Should the Greenland ice sheet actually melt then we lose two thirds of Florida - not to mention most of our coastal cities.
The global warming debate is a high stakes game of climatological Russian roulette. The downside risk in terms of economic loss and human misery so utterly dwarfs the economic costs of migrating away from fossil fuels that it is difficult to believe we are not already taking draconian steps to encourage that migration. One can only conclude that our political leadership no longer has the moral fortitude to make the difficult decisions needed to set us firmly and irrevocably on a path toward sustainable development. Far easier to take the position that because the data remains (diminishingly) inconclusive it is better to do nothing substantive and wait until the data is incontrovertible. Unfortunately by then it will almost certainly be too late. In essence by our continued inaction we are spinning the chamber, pulling the trigger, and hoping that the gun is empty. This would be bad enough were the gun in question aimed at our own heads but it is not. It is pointed right at the collective heads of our children and our grandchildren.
Let’s return to the debate on energy policy. You are absolutely correct in your position that supply and demand should be allowed to solve the problem. The role of government is to ensure that the common good is not lost in the process. This is why we no longer allow our factories to employ children and/or to spew toxic waste into the rivers and streams of this nation. Provided the price of fossil based fuels includes the estimated cost of carbon sequestration we should let the free market reign.
What is the answer if it isn't more domestic drilling? Well, we could start by imposing a carbon tax on all fossil fuels and then using the proceeds to subsidize the cost of revamping the nation’s fleet of automobiles and trucks from gasoline to hybrids as well as perhaps commercializing the carbon sequestration technology needed to turn the words “clean coal” into something other than an oxymoronic marketing ploy. It isn’t going to be easy however when Toyota sells a 55 mpg 4 passenger sedan for around $25K it is clear that the solution is well in hand if we have the courage to make the tough choices.
Senator Cornyn, we need real leadership on this issue. Your leadership. You can (and must) do far better than pushing to lift current restrictions on domestic oil and gas exploration.
Sincerely,
Andrew B. Thorby
Principal
Azima Health Services
214-978-3240 direct
469-835-8929 cell
athorby@azimahealth.com
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