ponderings: health care

[cellio]

In the comments here we were talking about health care in the US. The current system is broken in many ways, but the "nuke it and start over with some nationalized program" proposals are scary too. What incremental improvements are possible? I have to believe that there are some.

One idea I'm interested in is what would happen if we separated paying for routine care from paying for catastrophic care. What would happen if people could be on their own for the former but could buy a policy to cover hospitalizations, major illnesses, and the like? How effective would that be and what would it tend to cost? What would having that in play do to the over-the-counter (uninsured) price of routine care? (Yes, I know that not everyone can afford to pay for routine care out of pocket. I'm exploring a suite of options, not choosing a single one.)

On the flip side, would medical practices or insurance companies be willing to sell affordable plans that cover all your routine care (only), if they were not on the hook for catastrophic losses? Could that get things down to the point where the average family could afford regular checkups, preventative care, and routine tests (which helps prevent some catastrophic issues)? Such plans exist now in niches (vision and dental, most commonly in my experience), but I haven't heard of one for general medical care. Why not? (Am I totally misunderstanding where the profit centers are in the insurance business?)

Both angles are important. What I'm labelling catastrophic incidents are (as the label implies) financially devastating if you don't have sufficient coverage. Outside of elder-care issues I'm not sure how common they are, but it's the sort of thing I wouldn't want to take a chance on. I insure my car and house, after all -- how much the moreso should I insure my health?

What I suspect has a bigger impact on the poor, though, is the routine care. If you don't have insurance, you're looking at a three-digit number to walk into your doctor's office. Throw in some kids and you're in trouble. (This is why I asked what would happen to those costs if catastrophic care were a separate factor.) Could plans that just cover routine care be made affordable enough for most people? This doesn't solve the other problem, but neither does the current system -- we rely on hospitals' obligations to treat (which is a legitimate public demand while they pay no taxes), or medicaid/medicare/SSI in some cases, to get through those. Remember, incremental improvement.

I'd also like to explore the effects of reducing drug regulation, letting people buy from anywhere that's selling and reducing barriers to getting things onto the market. I know the standard argument against this (those high prices pay for R&D), but I'm not sure how much I believe that. What are the other considerations?

Where else could we look for incremental improvements?

(In case you haven't figured it out, I am not a medical professional, an economist, nor part of the insurance industry.)

Comments

[dsrtao]

The problem with healthcare:

1. It's too expensive.
a. Because insurance firms make profits on denying claims, so doctors need to hire more staff to deal with insurance firms
b. Because malpractice insurance is horrendous
i. Because biological systems are complex, and humans prone to error, and litigation is encouraged by the legal system (which feeds into why lawyers are a drain on the economy, different feedback loop)
c. Because doctors have a lobbying agency that keeps the supply of doctors low, so that they can all charge more money
d. Because medical school is so expensive
i. Because doctors who make huge amounts of money can afford the debt of medical school (loop back to d here)
e. Because technology costs so much
i. Because it's produced in such limited runs. If the market for MRI was 10 million units a year instead of 1 thousand, the unit cost would go down.
ii. Because it's covered by insurance...
e. Because in the 1940s, companies were encouraged to make health insurance part of their benefits packages because it was cheaper than additional income. As a result, your healthcare depends on your employer, which ironically fails to cover you at the time when you are least able to afford it, i.e. when unemployed.
i. And as a result, people don't see the current cost of healthcare; it's all funny money. What people see are copays for office visits, emergency rooms and prescription drugs.
ii. Oh, and somehow optical and dental care are different, even though podiatry and dermatology and otolaryngology are all lumped in as 'health insurance.'
f. Because healthcare is called insurance, even though a lot of it bears no resemblance to insurance at all. Insurance is a bet that something nasty won't happen, shared with enough people that you can all pay a little to cover the few who actually get unlucky. That's not how this works anymore, nor should it for the most part.
g. Because more treatments are available, so people can live longer at higher expense.
h. Because we haven't got a standard for how much human life is worth, and we are not likely to come to a consensus (as a nation).

[siderea]

i. Because medical research keeps finding new ways to treat the previously untreatable and prevent the previously unpreventable, e.g. Lipitor, which cost the world something like $12B in 2006, and now that we can, we must. Who is willing to say you can't have a drug which reduces your likelihood of heart attack? Even if it turns out paying for all those people to not have heart attacks is more expensive than treating the heart attacks they would have had.