Thursday, August 20, 2009

Health Care Solutions Part 1

So, I’ve listed what I think are the top issues confronting us in our current health care system. Now it’s time to list some of what I believe the possible solutions to be. This is the difficult part and where I’m likely to part company with most of my more conservative brethren. I’ll tell you up front, I think the wimpy public “option” currently under discussion doesn’t go far enough and that’s one of the first things I’ll be addressing as I go forward. So, word to those with a weak stomach for things they regard as socialist: I’ll be treading heavily where our president and the body politic fears to go.

For anyone open to alternatives not being seriously discussed in our pathetic sound and fury public debate, read on. I think you’ll find much of this new ground. For those of you reading these words with amusement from other parts of the globe that are grappling with different problems, you still may find something of interest here. Either way, I’d love to hear from anyone who chances across these pages. Let me know if you think I’m a crank or a reasonably thoughtful individual. More importantly, share your actual beliefs and suggested solutions to the problems we face.

For today, I’ll tackle Access to health care regardless of the ability to pay. I’m sure I’ll lose at least half of the two people reading.

Up front let me say that our current system will not support health care for everyone regardless of ability to pay. . . at least not without massive and distortional taxation. And a big part of the problem is the profit motive. There’s nothing wrong with the profit motive in most areas of life but most of us will agree that we like to remove profit from areas where it may either cause grievous moral problems, or negatively impact life and death issues. Off the top of my head, I can think of two major areas where we generally try to avoid profit as a motive: policing and national defense. Oh wait, we can also quickly extend that to other areas of our mutual safety, fire fighting etc. We pay for these and other services out of our tax dollars and I don’t hear any loud calls for privatization of any of these services. We generally think highly of our men and women in uniform and think they do a splendid job.

We even have some other services that compete directly with the private sector. The post office springs to mind. Yes, some might complain about the post office but it truly is a marvel not easily replaced by the private sector. Fedex and UPS may be marvels but they don’t serve every address in our vast and sometimes sparsely populated land for the price of 44¢! They’ve even improved their customer service and compete well and profitably with UPS and Fedex in the express arena. Yes, they do occasionally need more money or to raise the rates. But wait, what business doesn’t raise rates to cover costs. The post office exists in a monopoly world. They could easily raise rates beyond what they currently charge. There is no alternative for mass distribution of magazines and other printed material. The fact that they go to congress to ask for the right to raise rates doesn’t make it any different from any other concern having management make that decision. Rates are artificially low because we have generally considered this a worthwhile social good. Some will disagree but I would propose that, prior to the advent of email for the masses, the post office was undeniably a positive force for our society and economy. It may very well become obsolete through technology but not by some more efficient private competition. Ask UPS if they really want to carry letters and magazines to every home in the country for a pittance.

So, the government isn’t always terrible at providing certain kinds of unique public services, especially ones that concern important national goals. I would also submit that the government isn’t always significantly less efficient than large private entities. Those of you who work for large corporations, none of which is as large as the defense department, can attest to the waste and even fraud that occurs in your little miracle of modern corporate governance. We need only think of the massive destruction of wealth that has just occurred in the financial sectors to think of how poorly many companies may be managed and how they squander resources. The US automobile industry was once the envy of the world and has been descending into ruin for decades. They can blame their woes on the unions, health insurance costs or whatever they like but the fact remains that most of the European competitors have far more onerous unions to deal with that have seats on their boards and they too must pay a share of the health insurance burden as well as pension contributions and all that while providing 6 paid weeks of vacation a year and more holidays that we can imagine. Do I think our companies should mimic foreign ones in all ways? Of course not. I appreciate the American service ethic, though it’s fallen on some hard days. Still, private doesn’t always mean better and the market doesn’t always pick fairly, honestly or even best. If you want an earful on bad and messy choices, just ask me about the transition to an HD optical disc format!

So, having dismissively trashed the concept of private being innately better than a well managed public entity, you probably believe I want a public health service where all doctors and nurses are public employees and the government manages all aspects of our health care system. I don’t.

Firstly, there is already a large public sector in health care provision and it is likely to grow. I have no problem with that and think that the two can coexist well and may interact even more in the future. There are certain things better handled by a public institution, as I’ve said above, and one of those, for example is infectious disease monitoring and research. The CDC (Center for Disease Control) is just one of many publicly run health care organs that exists and could not be adequately replaced with a privately managed group.

Still, there is no reason why doctors shouldn’t be free to choose their own areas of practice, location and manner and method of service. People are individuals and nowhere are they more individualistic than in their approach to their health and their bodies. It follows that doctors, as individuals will be better able to meet those disparate needs better than large organizations.

The vast majority of doctors working in Germany are in private practice. They do not work for the government and they are just as differentiated as American doctors in the way they approach their practice. There are holistic practitioners, those who focus on nutrition, personal types and mechanical types. There are the renowned “Gods in white” and those who work in partnership with their patients.

So, what’s different in Germany and how does it apply to the US? Germans pay for their health care very much like we do. Employers pay half and the employees pay half. The difference is in how the amount they pay is determined. For the vast majority of Germans, their insurance rates are determined by their income. They pay a percentage of their income, much like a dreaded TAX, to cover all of their health care needs. They do not pay this to the government though. They pay this to a publicly chartered private insurance company. The largest of which is the AOK. These “Gesundheitskassen“ then pay all the claims and manage the money on behalf of their ”clients.“ As you earn more money you pay more money. . . up to a point. Currently, Germany has an income cap that permits you to opt out of the ”public“ system once you exceed it. You are then free to purchase private insurance instead of public. This is somewhat cheaper for high earners because it is no longer based on income. Everyone else is free to buy supplemental insurance and Germany has a booming market for such policies as the Germans LOVE to be insured for everything!

The other big difference is that you do not lose your insurance when you lose your job. You stay with your insurer and it is paid by unemployment insurance. If you exhaust your unemployment insurance than you switch to the social insurance and that pays your health insurance. At no time will you and your family be uninsured.

Other differences? Your insurance pays just about everything at 100% so your insurance expenses are your ONLY medical expenses. You’d think this would result it overuse and abuse of the system and while there is fraud, just as in the US, the German system is vastly more efficient and delivers better results for less money. The Germans do have a fiscal problem with this system but it is not primarily due to fraud or abuse. The problem is the income cap! If, instead of permitting people to opt out of the system after reaching the cap, the government simply capped the amount of income taxed, the system would be more than solvent and its fiscal problems would be, for the most part, solved. Such a system would look more like our social security system, though not in terms of the looming fiscal insolvency, just in terms of the taxation limits.

This is a clearly progressive system that provides solid health care for all citizens at a price they can afford. The costs are also not as negative for employers of the low wage workers because their health care costs are tied to their earnings and, as a result, are very low.

I think this is the only fair way to create a comprehensive health care system and, with the exception of the rates being tied to income, would be relatively simple to implement with our current structures.

Comments? Ideas? I warned you about reading on but I’m glad you did.

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