Ron Amundson’s Political Blog

Lots of folks are grabbing onto the freedom and liberty bandwagon after passage of #HCR. In many ways its quite justifiable. All one has to do is look at current and past US govt meddling in healthcare, and the fears are not unfounded. Recent case in point was a 9yr old being killed by county human services… that should never have happened, but with the medicaid eligibility tier being raised, only a totally clueless person would suggest that wont happen again, much less that such needless deaths wont increase in frequency.

Liberals say greater government involvement will prevent such… they are right, if we really had full universal coverage for anyone, even non-citizens, there would be no way a young child would be denied life saving meds over a software/data entry/whacked social worker bug etc. Conservatives say government meddling is dangerous as its often misguided at best, and corrupt at worst. I think they are correct as well… Idealism alone doesnt prevent loss of life, and in government, compromise with lobbyists is the name of the game.

By the same token, having your insurance cancelled when you finally need it, or being locked into an abusive marriage due to the inavailability of health insurance on ones own, or even being denied careers in some sectors is not freedom either. Most certainly the issues of insurance company recision practices, pre-existing condition exclusions due to job changes or family status infringe substantially on individual freedom and liberty. The problem is, the former are idealistically easy, but the costs are insanity cubed. Thus, the insurance companies needed to be bought off, and todays stock market performance most certainly shows a causal effect. They will come out ahead.

Medicare part D donut holes are not a problem for folks with a $5 million dollar war chest upon retirement… The problem is few seniors have that size of a war chest, and thus the donut hole puts far too many in the food vs med decision matrix. Our seniors deserve better… but the last medicare payroll tax hike occurred on President Reagan’s watch. It doesn’t take a rocket scientist to see the problems of increasing costs of care, and inflationary pressures, combined with a static source of revenue to predict a problem. Is food vs meds freedom, or is it better to be politically unpopular and raise revenue to provide some level of freedom for all the folks who paid into medicare for years, only to find out life saving meds are not available when they need them. HCR addresses this, albeit over a ten year period for the donut hole fix, and still for most folks, the medicare payroll tax will not increase for them. Ultimately, pharma had to pay for the donut fixes, and again in looking at todays stock market, a 12 year exclusion deal on biosimilars sets them up to more than make up for their costs in the donut hole.

The individual and state mandates… yep, freedom is decreased. But then again, just ask any state government how many bills currently up for vote take freedom away, and if they are honest, pretty much they all do. Every state has become a nanny state it seems…. where did small govt go, Dems get blamed, but Reps seemingly are just as much into nanny statism as the Dems. Does the state of MN really need to regulate the automotive window tinting business??? Esp with the current state budget scenario??? Does every state need boards of this that and the other sort of thing to protect the individual (all the while, the real intent is to protecting the current corps from competition). At least freedom does exist in part, albeit at a cost. Individuals can pay a fine and walk away from insurance companies, just as states can refuse medicaid funding. On the other hand, using unlicensed,examined or other state regulated firms/individuals can put a consumer in a jam, even if such might provide better value.

Ultimately, I think it comes down to personal experience, and whose freedoms are being impinged upon. Getting rid of recision practices will cause insurance rates to rise… Thats a loss of economic freedom, that is until one needs to use their insurance. Only a few fussed over the patriot act, and by far it did way more damage to the constitution, freedom, and liberty, than even going to a fully universal healthcare system would do. The thing is, unlawful search and seizure doesn’t affect 99.99% of folks, nor does recision, nor “junk health insurance”,where as the increased costs involved do affect many.

And perhaps thats the thing, the cost of freedom… my friend Angela presents the following.

Here’s what I want to tell folks who claim to be speaking for freedom, for limited government, for constitutional government:

AFTER we’re free of a census that asks us to tell the government our “race”,
AFTER we don’t have standing armies all over the world,
AFTER we aren’t in a permanent state of war against a vague enemy,
AFTER we aren’t in a “drug war” that results in a higher percentage of Americans being in prison than citizens of any other major country and kills zillions of people each year,
AFTER corporations aren’t treated as people while being protected from the consequences of their actions,
AFTER we no longer have an IRS that’s above the law and ruins lives,
AFTER the P.A.T.R.I.O.T. Act is seen as a horrible, tragic mistake we once made, and could never make again…

AFTER all those things, and after we’ve solved the problem of human beings experiencing horrible suffering for lack of health care while we stand by and do nothing, let’s sit down over a nice cup of coffee and see if we can come up with an even better solution that honors that beautiful thing called liberty.

My comment on Angela’s writing… the above are all about greed and money, even public safety policy is monetarily driven, despite the best of intentions.

My friend Brian had some of the best ideas ever as to how to solve the healthcare mess on his facebook page, but sadly, no way no how would the real freedoms he proposes ever come to pass. There are just too many lobby leeches dependent upon favorable government regs to upend the status quo in insurance, torts, employment / corp law, and medical scope of practice, at least not until market conditions force them to do so. On the other hand, the current HCR bill is just a bandaid on a gushing wound… it may well be the patient will have to finally cry uncle, but at least the HCR bill provides at least a few more years for him to do so.

The US needs health insurers, no matter their looter functionality, as they are typically the first in a chain of looters, with the chain encompassing Wall Street, Uncle Sam, and hospital administration, all the way to the receptionist at the local insurance agents office. Not one of the looter functions is productive in regards to health, although to be sure, each part of the chain does have productive people… but all on the backs of the sick person, and the physician/health staff actually treating them.

Most certainly moving to single payer by removing a large chunk of the looter infrastructure would be a massive boost in health care efficiency, if nothing else by forcing a greater percentage of health care costs into the productivity arena. The thing is… what happens too all the people, investors, government programs, who are highly vested in the looting arena. (do be aware, while I think single payer is a good step forward, it is far from an ideal solution, and has a multitude of unintended consequences)

On the other hand… the health insurance industry appears to be going the way of the buggy whip. Their business models dont seems to be sustainable on a micro level, and as health care costs continue to consume  a larger and larger percentage of gdp, sooner or later more than just a few are going to cry uncle on a macro level. Currently we have consumers upset, ie they get dropped when they get sick, or as soon as they need coverage. In time, investors are going to be upset because the insurance companies ROI is not sustainable, and thus once they start bailing, well… it will get interesting. Uncle Sam currently serves as a dumping ground for many, once insurance companies cast injured or seriously ill folks aside. Hospitals and physicians, the actual providers also serve as a dumping ground, in that they absorb the bill when no one can pay (as yes, someone does have to pay at some point). Or perhaps, more appropriately, the looters (ins companies, government, and have stacked the deck against the producers (the docs/health providers) such that they, the looters dont have to pay… all the while somewhat appearing willing to do so. Michael Hiltzik’s column in the LA times last week really hit home on this aspect with an article entitled What do we need health insurers for anyway.

So, whats the solution? Do we need them? As an idealistic far left liberal, I say no, we absolutely don’t need them….  plus they are going the way of the buggy whip. The business model is not sustainable, and they are already whining to congress. Its not rocket science to predict the collision path we are on in the healthcare / insurance /economics /govt arena.

As a pragmatist, yep, I think we need them, just as history shows we needed the tobacco companies, and farm subsidies… well up until very recently that is. The question is, will there be an event to start progress down the road to change, just as the lawsuits in the 90′s did for tobacco, or will there be whacked and misguided approaches to prop up failed business models to delay the inevitable as long as possible? And if such is the course of action chosen, what can be done to minimize collateral damage along the way?

Government is likely not going to be the answer… just look at the proposed health care reform bills on both sides… its the same repeated deal over and over again, enrich a connected few over the looses of many… its merely a question of which few are enrichened, not necessarily what is the best for the country, or even the average citizen.  Ultimately, its not the availability of insurance, its the availability of healthcare,and thats a question that far too few are willing to address.

Only 9 folks voted against restoring GAMC… my cynical, but also practical nature suggests the only reason Republicans voted for it, as they knew it would be vetoed. Of course, the truth will come out when it comes to the override vote. Of course, I could be wrong.

Its not a simple call by any means. GAMC is an incredibly spendy program which likely impacts “the least of these” more so than nearly any other legislation. By the same token, a cursory read seems to indicate it approximates a level of care only enjoyed by key employees at F100 firms, and or politicians. In addition, within the population of folks on GMAC, there may be a few folks whose lives depends upon having said level of care.

Thats the tough part…. as in effect rolling said folks into a transition plan, and finally into a lower level of care may cause injury, and possibly loss of life. It wont be overt by any means, but more so, with change, balls will get dropped, and its almost a surety, a few folks will drop through the cracks.

By the same token, throwing money at a likely very inefficient program which serves a likely much larger population than it was ever intended to serve… well thats not prudent either. Such practices are not long term sustainable, and an orderly wind-down/transition is more prudent than running such programs into the ground due to even greater utilization combined with slowly dwindling funding an care levels as time passes.

And there in lies the problem…an orderly transition. Being the state/county government was unable to timely handle even the simple case of H1N1 vaccine distribution, how on earth are they going to manage a major transition in health care without folks being injured or dieing? Fortunately there is a 6 month transition period, which appears to be mostly a paperwork type thing, but after that…. egads.

What Ronald Reagan said all those years back is all too true.

The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’

Business Week broke a story on Wall Street getting dibs on H1N1 Vaccine this week. It was also covered on the Today Show this morning, albeit with a slightly different spin. The Business Week article suggested that Wall Street firms were getting their vaccine only for high risk individuals per CDC guidance, which the Today Show segment failed to mention. While such a process while morally suspect, seems reasonable as a time saving measure for large firms. By the same token, I seriously doubt anyone believes only high risk individuals will get the vaccine. Ethics and morality have not exactly been a proven track record by that group.

It was interesting to note The Today Show’s doctor, Nancy Snyderman, made a suggestion that the best PR route would likely be for the Wall Street firms to donate their vaccine supplies to Hospitals… From a PR point of view, that does make sense. Otoh, by the same token, its not unreasonable to suspect high risk individuals work at those firms, and whether fair or not, to pull vaccine access from a child or pregnant woman at those firms is not cool either. No matter what, the Wall Street firms really have a PR mess and then some to deal with.

I posturoused about the medicine of science, economics, and rationing a bit some weeks ago, and I mentioned a UMN paper dealing with the ethics of rationing during a pandemic. Its interesting to note the 3 big ethical commitments which were recommended.

• Are accountable, transparent and worthy of trust
• Promote solidarity and mutual responsibility
• Respond to needs fairly, effectively and efficiently

Sort of looks like the government blew it in all 3 places with this mess.

Next, lets look at the principles suggested by the UMN paper.

• Protect the population‘s health
• Protect public safety and civil order
• Treat people fairly, recognizing the moral equality of all

It Looks like the govt might have opened the door to blow the civil order aspect based upon reading a comment suggesting Kevlar vests as required apparel for Wall Street employees. Sadly, it does seem that a bad outcome in the civil order arena may occur as time passes as more and more folks are angered at Wall Street. Most certainly, there is no need to add fuel to the fire. As far as public health goes… if someone gets vaccine who is not in a high risk, nor high exposure arena ahead of another person who is… well they sort of blew that too. And morality, well its pretty obvious it was hosed up too.

Of course… a lame and somewhat seedy approach to this, is to view Wall Street as a critical part of National Security. Ie top execs could be viewed as irreplaceable key employees, and as such they must be given a much higher priority than high risk individuals far from Wall Street, such as pregnant woman, or children. I would certainly hope thats not the case…

After reading the media reports on this, it seems pretty lame, and yet another gift to the insurance industry at a cost to taxpayers and consumers. However, upon reading the actual proposals, if implemented correctly, some of these concepts might actually work to the benefit of the consumer and the taxpayer. The devil is in the details.

State line Insurance Purchasing

Purchasing insurance across state lines sounds good in practice, but rather than fostering real competition, its more a matter of giving up individual states the right to regulate insurance. It also opens the door to massive increases in provider administration costs. Yes, we would have more plans available in MN. Yes, on an individual basis, getting a plan with bottom of the barrel coverage such as available in some states, it will be cheaper. However bottom of the barrel far too often ends up with folks massively underinsured. As such, if an underinsured person gets ill and goes bankrupt, the taxpayer and/or medical profession ends up picking up the tab. After all, someone does have to pay. Its a good deal for the insurance company, but a bad one for the taxpayer, and the consumer.

Fortunately Pawlenty’s plan does address this to some extent. By only looking at the top 20 states, the potential for the bottom of the barrel type situation hopefully would be minimized.

Even better, he does suggest an interstate health compact for states to share regulatory standards such as done in the life insurance business. This does make a ton of sense… but I don’t know how happy his party will be at giving up major states rights to make it happen, or how hard it would be to get other states on board. Its a great concept, but the devil is in the details.

Require MinnesotaCare & Medical Assistance to Price Health Care Services Based on Quality and Cost

Again, this makes a lot of sense, provided their is solid data on quality and cost… In the ideal world, this would require the insurance and medical profession to give up significant competitive data. Just as a contractor provides estimates and referrals of past work, or a retailer publishes prices, it just makes good business sense… except in the medical world, where such must be buried as they are deathly afraid of competition (driven for the most part by insurance company practices). Again, I dont see how his party would be happy with increased regulation and transparency to provide for such data, even more so to make it readily available to consumers to assist in their decision making. Alas, rather than real data, costs and quality data are tiered by provider… so who knows if the tiers are real, much less if they are applicable across specialties. This one gets a minus for a very lame implementation, even though the basic idea is a good one.

Develop a Modern MinnesotaCare Product

He is proposing what appears some type of hybrid copay/deductible/hsa type thing for those earning between 133% and 275% of the federal poverty line, and a state funded EBT card to cover out of pocket expenses. This could be a huge cost saver, and a massive benefit to the consumer depending upon implementation. It could provide for much greater patient autonomy, and in doing so, not only keep costs lower, but also provide for higher quality care outside the scope of insurance. Ie, Minnesota care typically only provides for the minimum, and many services and supplies which could be a real help in the preventive care arena are off the table. On the other hand, I dont see his party being too happy with the fact that providers would have to deal with competition, or horrors, competition from alternative medicine. Granted, both parties grant privileged status as well as monopolies to key companies… Its an incredibly bold move to provide for some level of patient autonomy. Sadly, I bet the out of pocket EBT coverage is going to be limited to whats available via current Minnesota care insurance companies, suppliers, and services. Competition is anathema.

Overall, Pawlenty’s ideas could have amazing potential… but its likely the implementation of such will totally gut their potential, and instead further reward the status quo, at a major cost to consumers and taxpayers.

For reference, the press release from Pawlenty’s office, it has much more detail than most news sites.

Its interesting to note that so many folks on both sides of the issue of healthcare reform think its free. Democrats think that preventative care will save money, and reductions of waste will fund healthcare for all. Republicans don’t want higher taxes, don’t want illegal immigrants covered, and think insurance companies should be deregulated. Everyone, Democrats, Republicans, employees, employers, and retired folks think they spend too much money on healthcare. Guess what… healthcare is not free, and if you find it is, thats because someone is paying for it behind the scenes.

It may be that you don’t want higher taxes, but you fuss every time your insurance goes up. Well, the solution to that, is hidden. Bash on the insurance companies enough, and they will reduce benefits and deny claims, not for the nickel and dime stuff, but for serious illness, such that folks can still perceive they have great coverage.

Follow this up, by annual caps, lifetime caps, recision practices, denial of coverage for those with prior c-sections, infertility drugs, family coverage termination, or even ill employee termination, such that folks with illness are no longer covered. Then encourage such folks to get on medicaid, such that their expenses get hidden away in state budgets.

Then to top it off, don’t let states raise taxes to cover medicaid, so they too have to cut expenses and reduce benefits for the seriously chronically ill, such that only acute care is covered.

Of course, even that might be too much, so the solution is to limit acute care… and then the patients only source of acute care is the ER, which of course they wont be able to afford. Its the same deal with illegal immigrants, they get care per EMTALA, but it does have to be paid for. The end result, doctors end up having to fund the ER at huge costs… but of course thats problematic, as they need to make money, or at least stay above water.

So… the doctor’s solution is to raise every ones rates in order to keep doctors from loosing their shirt. Of course the problem with that is, insurance companies and Medicare dictate what they will pay to the doctor. If the doctor is shafted enough, he will say screw it, and leave the system, or perhaps leave medicine entirely. Such will create a supply side shortage, and put a serious dent into the pool of folks considering medicine for a profession.

This in turn affects the loan industry, being ex-docs wont be able to cover $300,000 in student loans, medical facilities wont be able to cover their loans, the pool of folks wanting loans for med school, and facilities will shrink and investors might actually feel some push back for a change.

The question then becomes…

Do we let the market run its course until investors get pinched? It might be the only way folks wake up to the fact that healthcare is not free, and that yes, someone does have to pay.

Do we let lobbyists write healthcare reform to reward their investors? It would bring massive gains in some sectors, with massive costs to others… most likely the doctor or hospital will pay financially and the patient will pay with their life, or at a minimum, a reduced quality of life.

or

Do we realize that healthcare is not free, and that all, everyone from the student loan firms, to the patient has to take some responsibility, and some of the pain of change?

One of the problems with health care costs, is regulation which protects monopolies , ie the good old boys must not be subject to competition. An $8000 medical device maker cannot compete with a $150 Iphone and custom software. I sort of like this quote “We look at determining the effectiveness of the technology — and not the cost — first,” um no… you are looking at protecting vested interests.

Granted, cheaper is not always better, and no doubt for some people, the $8000 device is a better solution than the $150 Iphone. Also, there is a concern, that if even 50% of the folks, if they were allowed, might switch to a $150 device, there no longer would be enough business to justify keeping the $8000 device on the market. Another scenario is the $8000 device might actually have to double or even triple in cost. The thing is… if the market is un-encumbered, someone might just end up coming out with a new device for $2000 that blows the $8000 unit out of the water.

There are two other issues at place in this, first is folks crying foul because they didn’t get a deal, and second is the issue of snake oil and woo.

Folks like to cry foul a lot, I bet many would rather $8,000 of their taxes go to an in-effective device than $150 towards a Iphone, being one can also run games or watch videos on the Iphone. This puritanical fairness stuff is costing our nation a fortune, and impeding quality of life for many… but horrors that little Johnny has an Iphone for his med needs, and their own healthier Bobbie is jealous because you can’t afford to get him one… but alas, you will gladly advocate spend $8000 of your tax money for Johnnys proprietary device, because he cant play games on it.

The next issue is woo and snake oil, and its a huge business. All one has to do is consider the billions spent in supplements and other alternative medicine, some of which likely works wonders, and others are just a waste of already scarce resources. Govt in its wisdom in 1976 stopped a lot of device woo with the medical device act, but alas they also stopped a lot of progress too. Govt in its wisdom came out with HSA‘s to give people more freedom, but then restricted HSA’s so much, that many even proven treatments, devices, and other health care services are prohibited from being paid for under a HSA.

Woo and snake oil are obvious concerns, less so is the puritanical notion of fairness, especially when more and more of our GDP is being sucked up by healthcare expenses. When the costs are hitting astronomical numbers, perhaps we need to take a serious look at the costs of regulations, vs the aspect of fairness, as well as the need to take personal responsibility for purchasing healthcare. Granted, no consumers could know the intricacies involved in bad engineering in a Therac 25, so some regulation is needed.

By the same token, the creation of artificial monopolies and restriction of competition has to end… or it needs to shift to something like a public utilities panel such as used for the land phone system, electricity and natural gas, if indeed it is so critical to prop up said medical device maker monopolies.

An interesting approach might tie monopolistic regulations to tort reform and tight government regulations. Ie, if you grant monopoly status, also grant some type of no fault tort insurance from the government and combine this with an insane level of government oversight to protect the public. If a medical equipment maker does not want massive government oversight and control, it doesnt need govt sponsored no fault coverage, nor goes it need govt granted monopoly or protection status. Such a policy would likely put a serious dent in the world of lobbying for protections… if you need that protection its available, but in effect, you sell your soul to the government to get it.

There has to be a level of give and take. The era of free lunches has to end, or we need to accept that the percentage of GNP going to healthcare will continue to skyrocket until its no longer sustainable. Sooner of later, if left unchecked, the house of cards is going to come crashing down.

Argh…on the whole death panel thing. Guess what, we already have them. Nearly every time an insurance companies denies life saving treatment, people die sooner than they would have they been given care. Nearly every time congress roles back Medicare funding, care is rationed to someone, and people die. Nearly every day changes to the healthcare environment remain in the status quo, people die due to lack of care. This is not rocket science.

Look at the declines in Medicare funding over the last years… every time funding gets cut, doctors accept fewer folks on Medicare assignment. Some of those folks are going to die prematurely, because care is not available to them.

Every time EMTALA kicks in for acute care, and then government drops the ball on chronic care, it costs a fortune, and folks prematurely die as a result.

Every time the # of births is greater than the # of deaths, there is less care available per person, assuming total funds spent both privately and publicly remain the same. Some folks will prematurely die as a result.

Every time an uninsured baby is born, and due to the lack of funding, the QALY for that infant may be set as low as 1/3rd the cost of a new car. Some babies who need care, will not receive any, or only the minimum required by EMTALA, and some will prematurely die as a result.

Every time a new person reaches 65 and starts to receive Medicare benefits, someone else over 65 is going to get less care, and some of those someone elses are going to prematurely die due to lack of care.

Every time a healthcare provider gets paid less than their costs of doing business, whether it be via insurance, Medicare, or EMTALA, sooner or later, said health care provider will no longer be a going concern. As a result, such payment practices foster longer term shortages in supply, and some folks are going to prematurely die as a result.

There are really only two options

1. Fess up that care MUST be rationed, and accept the moral responsibility as a society up front for doing so. Not every person can have the latest and greatest high tech uber comprehensive care, and a few people who might live had such care been given are going to die. Not every person can have even minimal care, some folks are going to fall through the cracks, and they too may die prematurely.

Or

2. Do not accept rationing of care, and do not deny life extending techniques for anyone (even multimillion dollar QALYs are allowable if patients or their families request such). Accept moral hazard, and accept the huge increases in societal costs to support such ideology.

Option 1, is the only politically feasible solution, as no way, no how, will US society ever go for the costs and moral hazard of option 2, no matter how barbaric it sounds to the rest of the world, or even some US citizens.

The question is, will folks continue to accept the current death panels as the optimum, even though it may result in their own, or their families deaths, or reductions in quality of life due to inefficiencies? Or will folks as a society work to reduce said inefficiencies to minimize the number of preventable deaths or reductions in quality of life? The status quo, as well as current legislative proposals which serve to prop up failing business and government models of healthcare are not the solution.

You know, at one time there must’ve been dozens of companies making buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company? You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance, and invest in something with a future. “Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares? Care about them? Why? They didn’t care about you. They sucked you dry. You have no responsibility to them. For the last ten years this company bled your money.

From Lawrence Garfield (Danny DeVito) in “Other Peoples Money”

Yep, we can’t…we absolutely positively must prop up broken business models, privatize gain, and socialize risk, even better if we can shaft the elderly and children in the process. Case in point:

Corn Ethanol, without subsidies, its not sustainable. With subsidies, it prevents competition, ie we dont have sugar ethanol, nor switchgrass, nor other sources… We can’t let corn ethanol down, even if its greatly inferior to other ethanol sources.

Coal, absolutely, we must subsidize coal, and even railroads… instead, we send high tech solar offshore. We develop, and send the tech off shore… because we must prop up buggy whip business models. No matter the damage it causes, both health wise, and economic.

RIAA, the record industry is hosed… so rather than letting the market play out, and/or encourage new business models, the status quo must be kept in place at any cost.

Healthcare, yep, just read the Baucus bill… a major subsidy to the insurance companies, even more so than HR3200. We absolutely can’t let them compete or fail, they must be protected, and now, not only do they have protection, part, A, B, D subsidies, but they get the feds giving them new money left and right. No matter that the elderly, children, and medical providers get shafted, the insurance industry business model must succeed, even if it kills 45,000 people/year.

WallStreet… well I’ve written enough on that before.

We must keep big Ag happy, albeit at the cost of the family farm… Diversity in farming options is a must, there is no question we need to support the family farm… but when the family farm gets the publicity, and not the money, being that goes to big ag, a major rationale for ag subsidies goes right out the window.

Now, I’m not saying we should be heartless, and dump all subsidiezed businesses into chapter 7… There are orderly wind-downs, such as what has happened with military bases, Fermi-lab, and some NASA operations. Yes, ghost towns do occur as a result, but people do rebuild… This aspect of subsidizing buggy whip business models for the benefit of society is not a sustainable practice.

One good thing did happen today! $80 billion in govt subsidies were removed from the loan industry, at least in the house… we shall see what happens in the Senate.

I had an interesting thought… influenced greatly by Dr Laffer’s paper. What if the entire medical sector, pharma, hospitals, insurance, and other providers were to be de-regulated, and truly operate on a much more free market basis. Ie, only the bare minimums as concerns safety and contract law were left in place, could this work?

Would we see, just as in the airline world, prices fall by 80% or more? Would we see the big players in the insurance and healthcare industry start going bankrupt like flies? Would we see provider salaries drop by 50% or more? Would we see a more fair and transparent system? Would we see websites offering the best deal on a gall bladder operation? Would consumers embrace true choice of many options?

The consumer rules in the airline business, the $100 ticket is the prime driver. Governments role is to provide for a minimal amount of safety, protect against scams, and provide for some level of parity. Ie, FAA inspectors check the airlines for discrepancies, and hold them to a minimum level of safety. Market forces go beyond that, and ensure a greater amount of safety than the FAA minimums, at least for the non regionals. Govt agencies watch for price fixing, monopolies, ticket scams etc. Ie, if as an airline, you pull a few too many fast ones, you will have attorney generals asking tough questions, which might even lead to jail time. In the airline world government assures equal access to the basic services such as air traffic control, weather, crash fire rescue etc, from the airliner to the farmer in an old Piper cub (albeit with a radio).

If the market were free, individuals could shop for the best deal. Ie look at all the factors, and buy a plan which meets their needs, rather than being limited to what their employer has to offer, what private plans are available in their state, or even what type of health care insurance they may want. Ie, want alt-med coverage? if a profitable market is there, someone will see a need, and create coverage for it.

Regulation
Initially, medicare would remain much as it is today, in part as politically change is near impossible, but also due to societal values. First society doesn’t want grandma thrown under the bus. Secondly, an element of fairness is needed. Folks paid into it for years, to pull it out from under the rug would be uncool. Apart from that, the care of the old benefits all as it fosters research into prevention, cure, and diagnostics, thus providing benefits even for those outside its direct scope. One parallel is tech transfer from NASA and the military world to the commercial aviation sector. Another parallel is crash, fire, and rescue. Hopefully as pilots non of us would ever have to use it, but just as no one expects to become disabled or subject to chronic illness, the safety net is there if we need it.

By the same token, recision, cancellation for usage, pre-existing condition limitations, would need to be regulated, just as maintenance for ETOPS is regulated. Ie, if you want ETOPS in order to save fuel in the airline world, you need to uphold stricter standards. If you want to provide medicare supplement insurance, or another carrot which leads to huge source of revenue, you must comply with stricter regulations, ie no recision no gaming, no pre-existing care limitations in the rest of your business offerings.

In addition, there would need to be subsidies and regs for those unable to afford even the most modest care. Ie, when you buy fuel, the aviation trust fund provides benefits for all airports from the biggest to the smallest. ATC services, and CFR services are available to all as well, irrespective of financial standing.

Innovation and savings
What a free market might do, is provide for upstart low cost carriers, new markets, new methods, newer ways to save money, and still provide good service at a good price.

Lets say you start a new clinic, perhaps you can have 1 credentialled doctor, and a bunch of support people, such as is common in outsourced maintenance ops, where they have one guy with an inspection authorization, who may supervise a number of repairman, or even those without credentials.

Or, lets say you figure out a way to outsource specialties via telemedicine to third world countries for a fraction of the cost, just as is done with maintenance.

HSA’s have potential, and a free market approach might make them incredibly valuable. Only an insane individual would come up with a business model which provide services, but doesnt give the customer any idea of what the price was until months after the service is provided, yet thats the way it is today. Only an insane individual would put limits on the amount one can set aside for potential future needs. Yet HSA regs on limits pretty much preclude anyone from having more than a few thousand dollars set aside for “just in case”. Only an insane individual would think they can woo customers by limiting choices. Ie todays HSA’s are only allowed to cover very narrow needs, plus they have specific limits upon what goods and services can be purchased, in order to protect the status quo and pseudo monopolies. Imagine what consumer demand could do to medicine, if the consumer were in charge of the HSA instead of the lobbyists.

The Savings
The potential savings from the masses would be amazing, and no doubt would more than cover the cost of a voucher to provider type deal to cover those unable to afford even the minimal plan, same deal with those with chronic illness and the disabled, albeit with greater coverage as need be.

In effect, such an approach would make medicine a commodity for the masses. For a few, if they could afford it, they could go premium, ie just like helicopters or netjets in the aviation world. The masses would still enjoy decent care, great availability, and great freedom.

The downsides…
1. There is an element of unfairness… only a few might be able to see top specialists, but supply and demand would level it out over time.
2. Its unfair to the younger folks, as Medicare would be kept untouched, its now the carrot the carriers want to make money, thus seniors might well have better care than the rest of us. Otoh, they are the primary spenders, so it makes sense… and the efficiency gains, by going free market may well solve the medicare reimbursement disaster of today.
3. The declining wages of medical professionals would be an issue. One would go into doctoring because its what you love, not to get rich, just as pilots do. Of course there is the issue of going too far, and paying new doctors less than they could make at a fast food joint.
4. During the interim, quality of care would likely suffer, but this is where regulation, or even transition funding can play a role.
5. Quality delivery would drop multifold, as would costs as medicine becomes a commodity. Some would yearn for the old days, yet at the same time appreciate the freedom, the availability, and the incredibly lower cost of such a system.
6. The loss of legacy carriers and providers as they find themselves unable to compete without government mandated monopoly provisions would be a sad deal. Multitudes of people would be out of work either by bankruptcy or merger. This is not unlike the loss of PanAm, Braniff, TWA, Eastern, and as of late Northwest.
7. For those who have an employer sponsored plan or are self insured, it is likely such would go the way of the dodo bird, short of “key man” positions. While such plans often provide for top notch care, when an employees cashflow is on the line, the healthy will leave for a better deal elsewhere. Those who need care will stay, thus shifting the employer plans to a much riskier, and much more expensive pool, where before too long, the employer will determine such an approach is not cost effective.
8. Healthcare for the young might be compromised, in that larger revenues are seen in the older sectors. Otoh, if the market presents a need, and is willing to pay it might well rectify itself over time.
9. Its a pipe dream, the status quo doesn’t want competition, nor really do many consumers want to have their skin in the game, and thus be responsible for their own destiny, whether it be business success, or personal well being. They want the other guy, whether it be an employer, the govt, or a third party carrier of whom they have no control to be the bad guy.

In effect, a free market solution like the airline model would minimize harm for all, and provide for a significant element of fairness. Yet, it would decimate ingroup and hierarchy issues for nearly all, and the overall effect of commoditization might well be anathama to many. On the other hand the fact that it bolsters a massive capitalist ideology and freedom could be a huge selling point.

What I fear happening, is the market wont be really free… legislation under a free market label, is more likely to bolster the big players pocketbook, by prohibiting or limiting meaninful competition via lobbyists. Tax codes and such could be modified to provide an equal playing field, yet such would kill off employer plans as few could compete on an open market. Next, the medical and insurance field do not want to see their salaries cut, such as what happened in aviation, when consumers were given real power and freedom. Investors want to see less risk, not more, especially so in the insurance market. The consumer, while valuing freedom, also knows with such comes great responsibility. Few if any want to take that on, because if they do, then they are the ones in charge, instead of a faceless bureaucrat of whom they can throw darts at.