Saturday, November 14, 2009

One Healthcare Reform

Proponents of the current healthcare reform proposal in congress like to accuse critics of not offering any alternatives, of only opposing without offering anything. While that accusation is completely not true, it serve proponents of the fascist system well as a big lie, just as calling it socialist instead of fascist serves as another convenient lie.

Rather than dissect any particular part of the fascist bill, a refutation of the false charge that critics offer nothing is also useful. The reason the proponents say that critics offer nothing is because only big government solutions are allowed to be considered. Anything else is not a "constructive proposal" and thus they can get away with that big lie.

In spite of the psychological block against small government proposals being considered, it is always useful to suggest as many small government solutions as possible. That way the next time someone says that critics of fascist health care never offer solutions the critics can respond with "look at all the solutions I've offered that you refuse to consider."

Given the large number of problems, any single solution fails to address the full problem and appears short sighted. But one aspect is all that can be addressed at once.

One of the problems with the current system is that the patient is not the customer. When a doctor treats a patient, the patient isn't the customer. The insurance pays for the visit, and so the insurance is the customer. And who is the insurance company's customer? Since most people get their insurance through their employer, the employer is the customer and not the employee. It is true that sufficient employee complaints can cause an employer to switch companies, but the customer of the insurance company is the employer.

For a truly responsive insurance company, the patient needs to be the customer of the insurance company. For truly responsive health care, the patient needs to be the customer of the doctor. The only remaining question of this particular solution is how to make it possible. As proponents of fascist health care are quick to point out, the average person cannot afford a catastrophic illness.

The first part of the solution is to transfer the tax incentive for the purchase of health insurance from the employer to the employee. That way, unlike the Obama plan, people have a positive encouragement to purchase insurance instead of a punishment for failure to purchase insurance. Persuasion always being preferable to force, encouraging people to purchase insurance instead of punishing them for failure to purchase insurance is a better solution.

To make insurance affordable enough for a person to purchase it, the price needs to be brought down. That can be done through coercion or through encouragement. To do it through encouragement the best way to do it is through removing the rules that prohibit insurance companies from competing across state lines. Putting individual insurance policies in the hand of the customers while simultaneously increasing the number of companies and policies available, while giving people a tax break for purchasing insurance, will drive down the cost to the point where most people can afford it.

Another way to make insurance affordable is to remember that insurance is supposed to be for the unusual event. The way health insurance currently operates is absurd - it is comparable to using automobile insurance to pay for basic tune-ups, or even to pay for putting gas in the car.

Analyzing a standard insurance statement or doctor's visit statement, one finds that in general a large portion of a standard bill is an insurance negotiated adjustment. Another large portion is the patient co-pay. The smallest part is the payment the insurance company makes to the doctor. Ask most doctors what their cash price is and it turns out it is actually lower than the stated price for a visit.

People need to pay directly for office visits, and a good way to do that is through tax deductible healthcare savings accounts. But not the HSAs currently in use, that have an end of year use-or-lose for the funds. What is needed is a roll-over HSA, that allows people to put in more funds than needed while healthy so that the funds will be there many years later when people need more healthcare funds. This is similar to using a retirement savings account. In order to encourage use of a roll-over HSA account funds put into it should be tax free, just as in the current annual HSA.

That will give our current healthcare system another thirty years of operation before it gets as bad as it currently is.

4 comments:

Stephanie said...

the bill certainly isn't perfect that's clear. But the idea of a public option is an absolute winner. When the politics are put aside we are left with an option that's proven successful over a number of years. This should be getting more press, but it's true. Look here to see for yourself. http://cli.gs/23yYaM/

term life insurance quote said...

Thank you for finally understandable post which makes sense! You described ferfectly the essence of a relationship doctor-patient, which is not soo simple and direct as it seems to be at first site...becasue of one reason...the boss in relationship is always that person who pays...this case is no exception.

Dave said...

Poor people is what they want, and poor people is what they shall have. Force everyone to buy stuff they already can't afford, take away incentives to perform, make everyone the same, and watch what happens.

Any a-hole living in north America whose never spent any time in the undeveloped or developing countries around the world needs to take a trip, and go see for yourself where the USA is headed.

If you're a member of the middle class, or what's left of it, do it before hyper-inflation arrives. Then, when you get back, maybe you'll understand what all the shooting is about.

Ayn R. Key said...

Stephanie, it's utter nonsense to describe the public option as an absolute winner - unless you define what you mean by 'winning' since it is clear that the goal of a public option is to make health insurance less affordable for those who are less well off.

Every time there is Public and Private compeition it is the poor who are hurt the most by it.

So, is your comment an example of The Statist Fallacy or simply refusing to even look at small government solutions?