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A conservative (free markets and such) friend and I were having a private conversation about healthcare when he asked why there was so much waste in our healthcare system, i.e. why was the cost of actual care so low compared to how much we spend.

Here’s my answer, edited for clarity:

The waste you’re alluding to is caused by the injection of greed and profit into the system. There are thousands of “medical” companies that do nothing but figure out how to charge the absolute most for their products or services. What else would a business do?

Essentially, the goal of high quality healthcare at a low cost is not in harmony with a free market approach for the simple reason that the incentives are not aligned. Businesses are there to make money, and if they make MORE money by charging way too much for services, then that’s exactly what will happen.

Case in point: we pay far more for healthcare in this country and have worse outcomes. The problem with healthcare in the US is simply that it’s being destroyed by parasitic profit seekers. Doctors. Hospitals. Companies. They see medicine as a way to make money, and they act accordingly.

Profit and core services should be mixed extremely carefully, and in very small amounts.

He then goes on to say that he doesn’t agree with people being told what to do, in virtually any form. My response to that was:

Here’s a remarkable secret: people don’t magically become educated and wise when they turn 18.

If kids want to play in the street at age 17, and adults are allowed to tell them not to, then what REALLY changed when they turn 18 and want to spend all their money on lottery tickets instead of education for their children?

Your position of assuming that all adults are equally capable of making good decisions, and therefore need no guidance, is simply and fundamentally flawed. It is a fiction.

Once one realizes this it becomes abundantly clear that helping others through policy is not just acceptable, but a morally self-imposed requirement.

One should not sit back and watch the ignorant flounder in their own misery. We should try to help them.

stethescope

Conservatives are known for their belief that free markets are the answer to all problems—including those like healthcare. The idea is elegant: you have a problem and you unleash the free market upon it. Companies will compete, and you’ll have the best outcomes. Done and done.

It’s been intuitive to me that there is an inexorable conflict here, but it’s important to isolate and call it out explicitly. The issue is that these free market companies are designed to make money, not to provide the best services, and the mistake made by the free market religionists is believing that these are the same.

Healthcare is a demonstrative case in point. Quite simply, the so-called “healthcare” companies are all “profit” companies first—they simply have a healthcare theme. If ACMEHealth can make more money by providing worse care, they will do so. And so will all their competitors.

“That’s why there’s choice…”

The rebuttal made by free market believers is that in situations where companies are putting profit before outcomes, competitors will surface that provide better services, and consumers will have the option to reward those companies with their business (assuming government doesn’t get in their way).

This is fantasy.

This unicorn company they’re referring to will face one of three obstacles:

  1. They will not survive because they can’t make enough money providing the healthcare that the people require
  2. The now-established industry will leverage powerful corporate lawyers and lobbyists to attack the newcomer and ensure they cannot survive
  3. The naive company will replace its idealists with realists, i.e. those willing to cut services to make more money, and will over time become just like the others

The gravest threat is #1—it might be bad business to provide the healthcare that people actually need.

Well…there’s your problem.

This is the fundamental discord between business and core services: for a core service, profit isn’t the goal—outcomes are. Yes, do it as efficiently as possible, but never take your eye off the outcomes.

With business, the thing to never take your eye off of is profit, not the product (healthcare, education, etc.) This is a conflict that cannot be fixed by adding competitors who have the same conflict.

The lack of this fundamental conflict, and the incentive to focus on the outcomes, is precisely the reason government is the best entity to provide core services. Do they lack the aggressive sense of efficiency and optimization that the private sector has? Yes, they often do, and it’s a perpetual opportunity for improvement.

But if you’re going to build a society based on one of these two flawed models, go with the one that is properly incentivized, yet struggles with inefficiency, vs. the one we know to be rotten at its core due to the conflict between profit and outcomes.

Obamacare Basics

June 29th, 2012 | Healthcare

Hi $NAME,

Basically, the role of the government is to provide for our welfare, to see that we flourish, etc. Note this part of the constitution:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Notice that from a GOP perspective even public schooling is anti-American in that it wasn’t guaranteed explicitly in the founding documents and it’s inherently…um, socialist. Are you against public schooling?

The same goes for public fire departments and police departments. It’s quite socialist to rely on other peoples’ tax money to save YOUR house when there’s a fire. Yet both public schooling and public safety are plainly good for America. Why? Because they improve the quality of life of the general population. See again the “promotion of the general welfare” above.

Now, with respect to healthcare we have an absolute atrocity taking place in our country at the hands of greedy, self-interested, take-everything-you-can-get-away-with insurance companies and the billionaires that run them. They are profiting at the expense of the people–it’s that simple.

People who are fighting healthcare reform are basically fighting for their right to go bankrupt if their kid gets sick.

We ticket people for not wearing a seatbelt. Why? And why is it accepted? Because we know that people dying is not good for the public welfare. So we discourage the dangerous behavior for the greater good. As a result, it’s much safer to drive. Same with car seats: they save babies.

This is no different for healthcare. The government is trying to encourage people do what they should already be doing. Just like requiring that they send their kids to school, that they put their kids in car seats, and a ton of other things that are complete common sense when there are tens of millions of people who would suffer without the law.

If your answer is that we shouldn’t have to police people in this way, that’s great. I agree. But we do have to. Because we are a kind, compassionate group of people who realize that some people need more help than others.

It’s not moral, and I dare say not “Christian” to promote the idea that if you’re too stupid to take your kids to school, or to put your kid in a car seat, or to get health insurance, then you deserve to suffer. That’s not accurate. It’s not kind. It’s not American. It’s not what Jesus taught. And it’s beneath you.

I ask you to deeply reconsider your position.

Love,

Daniel

Yes, it crosses the Rubicon of universal access to private health care. But since federal law mandates that hospitals accept all emergency-room cases requiring treatment anyway, we already obey that socialist principle—but in the most inefficient way possible. Making 44 million current free-riders pay into the system is not fiscally reckless; it is fiscally prudent. It is, dare I say it, conservative.

Insightful.

Posted via email from danielmiessler.com | posterous

Most employees assume that if they lose their job and the health coverage that comes along with it, they’ll be able to purchase insurance somewhere. The members of Congress who want to repeal the provision of last year’s health insurance law that makes it easier for individuals to buy coverage must assume that uninsured people do not want to buy it, or are just too cheap or too poor to do so.

The truth is that individual health insurance is not easy to get.

Criminal, this is.

Posted via email from danielmiessler.com | posterous

Many love to talk about how the recently passed healthcare reform bill does nothing to help anyone. Well, here’s a list of those non-things it doesn’t not do–starting immediately and going through 2018.

  • Insurance companies will be barred from dropping people from coverage when they get sick. Lifetime coverage limits will be eliminated and annual limits are to be restricted.

  • Insurers will be barred from excluding children for coverage because of pre-existing conditions.

  • Young adults will be able to stay on their parents’ health plans until the age of 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college.

  • Uninsured adults with a pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014.

  • A temporary reinsurance program is created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.

  • Medicare drug beneficiaries who fall into the “doughnut hole” coverage gap will get a $250 rebate. The bill eventually closes that gap which currently begins after $2,700 is spent on drugs. Coverage starts again after $6,154 is spent.

  • A tax credit becomes available for some small businesses to help provide coverage for workers.

  • A 10 percent tax on indoor tanning services that use ultraviolet lamps goes into effect on July 1.

WHAT HAPPENS IN 2011

  • Medicare provides 10 percent bonus payments to primary care physicians and general surgeons.

  • Medicare beneficiaries will be able to get a free annual wellness visit and personalized prevention plan service. New health plans will be required to cover preventive services with little or no cost to patients.

  • A new program under the Medicaid plan for the poor goes into effect in October that allows states to offer home and community based care for the disabled that might otherwise require institutional care.

  • Payments to insurers offering Medicare Advantage services are frozen at 2010 levels. These payments are to be gradually reduced to bring them more in line with traditional Medicare.

  • Employers are required to disclose the value of health benefits on employees’ W-2 tax forms.

  • An annual fee is imposed on pharmaceutical companies according to market share. The fee does not apply to companies with sales of $5 million or less.

WHAT HAPPENS IN 2012

  • Physician payment reforms are implemented in Medicare to enhance primary care services and encourage doctors to form “accountable care organizations” to improve quality and efficiency of care.

  • An incentive program is established in Medicare for acute care hospitals to improve quality outcomes.

  • The Centers for Medicare and Medicaid Services, which oversees the government programs, begin tracking hospital readmission rates and puts in place financial incentives to reduce preventable readmissions.

WHAT HAPPENS IN 2013

  • A national pilot program is established for Medicare on payment bundling to encourage doctors, hospitals and other care providers to better coordinate patient care.

  • The threshold for claiming medical expenses on itemized tax returns is raised to 10 percent from 7.5 percent of income. The threshold remains at 7.5 percent for the elderly through 2016.

  • The Medicare payroll tax is raised to 2.35 percent from 1.45 percent for individuals earning more than $200,000 and married couples with incomes over $250,000. The tax is imposed on some investment income for that income group.

  • A 2.9 percent excise tax in imposed on the sale of medical devices. Anything generally purchased at the retail level by the public is excluded from the tax.

WHAT HAPPENS IN 2014

  • State health insurance exchanges for small businesses and individuals open.

  • Most people will be required to obtain health insurance coverage or pay a fine if they don’t. Healthcare tax credits become available to help people with incomes up to 400 percent of poverty purchase coverage on the exchange.

  • Health plans no longer can exclude people from coverage due to pre-existing conditions.

  • Employers with 50 or more workers who do not offer coverage face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren’t counted for the fine.

  • Health insurance companies begin paying a fee based on their market share.

WHAT HAPPENS IN 2015

  • Medicare creates a physician payment program aimed at rewarding quality of care rather than volume of services.

WHAT HAPPENS IN 2018

  • An excise tax on high cost employer-provided plans is imposed. The first $27,500 of a family plan and $10,200 for individual coverage is exempt from the tax. Higher levels are set for plans covering retirees and people in high risk professions. (Reporting by Donna Smith; Editing by David Alexander and Eric Beech)

(thanks to this reuters article for the list)

Healthcare Solutions
By Dan Field, MD

danf

  1. Tort reform. Cap every state as has been done in California and Texas.
  2. Medical justice panels. A jury by our peers. Medically trained arbitration panels to hear cases.
  3. Eliminate doctors’ malpractice costs for patients who demand free care. If the government insists that ED docs see every patient (through EMTALA), they are de facto government employees for those patients and should receive government indemnification.
  4. Limit advertising again. It was a bad move when they opened it up.
  5. Research, publicize and reward best practices. The worst hospital at Kaiser today has a better record of sepsis prevention than the best Kaiser hospital two years ago. Some have had ZERO sepsis in two years. Sepsis costs $40,000 to $100,000 per patient and frequently adds to the nation’s iatrogenic death load. Replicate this through the major diseases and some of the $500 billion of savings we need to achieve becomes realizable.
  6. Divest physicians of the benefit of profiting from ordering tests. A study shows a doctor who owns a scanner is seven times more likely to refer a patient for a scan.
  7. Generics drugs for everybody, name brands for those who want to pay out of pocket (or from the HSAs).
  8. Revamp medical reimbursement
  9. Create a two-tiered medical system where everyone has catastrophic coverage and HSAs. Allow the rich and others to opt out for value-added service. This might be just enough incentive to keep some innovation moving forward. I seriously doubt most medication advances are necessary — seems to me they just add a molecule so they can extend the patent without any new, real benefit. First tier accepts all, including, pre-existing illness, with no rescission. Everyone pays same rate for basic tier, everyone gets a tax credit. Not sure how to deal with those that don’t work. Incentivize healthy behaviors — non-smokers with low cholesterol and great genetics are an attractive subgroup. Second tier insurance companies will compete for these stars with lower premiums. Veal calves with remotes and cancer sticks will be avoided like the plague and end up in the first tier or paying more.
  10. Accept that disparities will continue but that they will be better and more morally acceptable disparities than before.
  11. Allow true portability.
  12. Give needles to addicts, along with access to treatment.
  13. Strongly consider legalizing and decriminalizing drugs.
  14. Realize that screening doesn’t save money for society.
  15. People should have a right to unlimited end of life care … as long as they can pay for it.
  16. All government officials must utilize the system they insist we follow, especially “the public option”.

Dan Field is a physician with The Permanente Medical Group.

We need a room full of 100 of these guys and some quality lawmakers who are willing to piss off the big corporations that donate to their campaigns. Get those two things together, and spend 3 months, and I think some excellent reform legislation would come of it.

Posted via web from danielmiessler.com | posterous

If Joe Lieberman or other senators came across John Brodniak writhing in pain on the sidewalk, they presumably would jump to help him and rush him to a hospital.

Someone tell me it makes sense for this to happen anywhere at any time, let alone in the United States in 2010.

Posted via web from danielmiessler.com | posterous

Dazzling, if nothing else.

::

society

There’s a saying in atheism circles that aims to show Christian hypocrisy related to how they dismiss all the thousands of gods that have existed previously, yet fail to understand how atheists dismiss theirs:

I contend that we are both atheists. I just believe in one fewer god than you do. When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours. – Stephen Roberts

Interestingly enough, the same concept applies to conservatives and healthcare. Here’s my modified version of this quote:

I contend that we both support public services. I just believe in supporting one more than you do. When you understand why you support public schools, a public fire department, and a public police force, you’ll then understand why I support public health care.

In other words, you’ll find that most conservatives are quite comfortable with calling a taxpayer-funded fire truck when their precious home is engulfed in flames. Similarly, if a conservative sees someone suspicious in his neighborhood he’ll probably not suffer any philosophical anguish while calling the taxpayer-funded police department.

Neither of these entities are for-profit. They are publicly funded and aren’t competing directly with private services. And it’s the same with public schools. Private services can compete with them if they so choose, and that’s fine, but you won’t find many conservatives arguing that the public versions of the services should go away.

Ultimately, conservatives need to answer a very simple question: what is the difference between someone’s home being on fire and someone’s child needing chemotherapy?

The answer is nothing–not in a modern society. So sure–debate all you want about implementation. Let’s hear plenty of conversation about efficiency and avoiding bureaucracy and such, but the concept itself of public healthcare should not be fought on principle. If one wants to have that conversation then it must also be had regarding all the other public services that are widely accepted as foundations of any first world society. ::

…but he claims there’s no connection.  Did CNN steal this story from the Onion?