On the Contrary

I got an interesting email the other day from a friend who was forwarding a message regarding a survey by the Obama Transition Team to some physicians regarding their suggestions on health care reform.  I found this somewhat interesting because we have a wealth of data on Universal Health Care (UHC) systems from other nations who have implemented it in a variety of ways and it would seem to be the prudent thing to do to look at actual experience instead of asking the blind to lead the blind.  Americans are in many ways very uneducated about other systems and are very susceptible to propaganda about the problems with these systems.  These approaches to UHC range from the dreaded government employment of doctors (the English system), to the Japanese system where the government pays the bills, but the doctors/hospitals are all private contractors, there is no limit on visits, and there are no gate keepers (you can go directly to a orthopedic surgeon or any other specialist without screening).  Each system has its advantages and disadvantages, but they all have one thing in common, they do away with private insurers. Note:  There is an excellent piece by Washington Post Reporter T.R. Reid called Sick Around the World that summarizes some of the advantages and disadvantages of these systems which orginally appeared on Frontline.

Here is what we know from their experiences:  One size does not fit all.  By that I mean that each system has distinct advantages and disadvantages, but they all provide UHC.  In some systems there is a waiting period for elective surgery, but the waits are exaggerated by those who are against UHC and in the Japanese system there is none.  If you think there is not a waiting period in the U.S., you haven’t been in the system lately.  Some of the systems have learned to incentivize preventive medicine and have reduced costs by paying doctors for healthly patients instead of endless testing.  The downside of many of these systems is that physicians generally feel they are under compensated.  The growing cost of medical care and the problem in UHC systems of capping salaries/government set prices for services is always going to be a contentious point.  So the real issue is to find a mix of the best characteristics of each system and then try them out.  I don’t think we are going to find out which is the best system by ignoring what is being learned around the world by governments who are acting providing UHC.

But in this email was the following statement which I believe is a widely held belief that troubled me:  “I have felt for a long time that here a private pay system should exist along side of UHC and that seems the position of the coming Administration.”  It troubled me because it makes no logical sense, at least in my small brain.  To my knowledge, nowhere else in the world that has UHC does such a system exist.  This I believe is a logical outcome of the business model for private health insurance.

It goes something like this:  Health insurers take in funds in the form of fees for their insurance.  They make payouts based upon claims against their insurance.  Fees must be reasonable enough to attract customers, and the payouts have to be less than the fees or the firm fails.  There are several ways to control payouts.  First is to provide cost effective medical care.  But even the most cost effective care can be overcome by catastrophic disease.  So health care insurers have taken two parallel strategies to stay in business:  Skim off healthy enrollees (pre-existing conditions void coverage) and denying claims based upon technicalities in their policies.  The hope of Republicans is that somehow more competition among insurers would reduce the cost to enrollees, and making it more affordable for all.  The reality of profit driven health care instead has driven a competition for healthy enrollees and more arcane ways to deny coverage.  The really sick end up under some form of government support in a system that increases their costs which we all pay for and in a way subsidizes the profits of private insurers.

This reality is why in my mind, UHC and private insurers don’t co-exist.  The private insurers are still at the mercy of their business model so we still would have that 30% markup in administration costs while they go about their business of skimming the healthy and denying care to maximize profits for shareholders, while dumping the real costs on the government.  The only people who benefit from such a system are the wealthy who already benefited from our present system. It is true that the Obama administration has proposed a dual track system with private insurers competing with a federal program, but this is a political necessity until the reality of such a system becomes apparent.  What always boggles my mind as I listen to those who cry the sky is falling when we mention a single payer system is that they fail to recognize that that is what Medicare is and I see none of them shunning that coverage.  For most of us it is the only game in town when you consider for profit insurers when we reach 65.

When you really think about it, the real competition should not be in cost of fees, but in effective care.  If we had a single payer system, and our medical providers were free agents, their incentive would be to reduce costs while providing excellent care to attract customers.  The profit motive in private insurance and denying care is no longer in play.  I wonder why this is so hard to understand?  Oh, I forgot.  Anything government does they do badly.  My thought here is only if we set them up to do it badly.