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Wavepacket Blog
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Thu Sep 10 23:24:51 2009
The Healthcare Debate
The new proposals don't fix anything.

Please fix this patient!
Image courtesy of John Asselin, U.S. Air Force

Of course, the Great Healthcare Debate is all over the news now. Obama gave a speech to Congress yesterday--check that out, it includes the heckling!--and there have been various healthcare proposals flying around.

[Random aside: did you read his Back to School speech? I thought it was excellent.]

I wasn't sure what to make of the healthcare debate! I had to spend some time educating myself on the debate, and healthcare. I've had various small health care issues (bad ankle sprain last year, for instance) where I had to visit an Emergency Room and deal with complicated medical bills, but nothing like a prolonged stay in a hospital. I get healthcare insurance covered through my employer and rarely think about it.

However, this is clearly a large debate with many things at stake:

We still spend ridiculous amounts of money on healthcare, and it's getting worse.
Medicare is going broke fast and anyone in my generation (30's and 40's) is a fool to think there will be any money left for us.

I'm not a Democrat, but I'm not a Republican either. I'm an Independent who cares about healthcare (and no, I'm not going to any town hall meetings). I just wanted to understand the issues and see what I thought should be done.

I had many questions myself. Why exactly is our healthcare system broken? Many people claim it is broken, and they all have their own solutions to sell, but what exactly is broken about it?

Also, What is the Democratic solution? How is it going to fix the problems?

And finally, Why is the solution so complicated? I remember everyone complaining that No one had actually read the healthcare bill, why didn't they?

What I discovered was:

The current proposals don't talk about what is broken, they talk about coverage (which can be related, but isn't the same thing).
The Democratic solution is about increasing coverage, not fixing anything.
The proposal is complicated because they are adding more tweaks to an existing complicated system, rather than fixing the root problems.

To put it succinctly, I was disappointed! I was hoping someone might fix something. I don't think improving healthcare access is bad, but this isn't really a fix.

My guess (and prediction) is that a version of this healthcare bill will pass. We'll spend a bit more to increase coverage, and try to find ways to pay for it. I doubt we'll be entirely successful at that, but increasing coverage may be worth spending more money.

However, I do wish someone would actually fix the system. This isn't tweaking, or addressing fraud, but really going back to basics and rebuilding the system right.

First of all, the fix shouldn't start with a complicated 1000 page document. Instead, there should be a simple statement of principles that fits on one page. Then we could look at the principles and decide if they were right or not. If they were, we could tell Congress: "go and implement a healthcare solution that follows these principles."

So what would those principles be?

Lately, I read a great article about the healthcare system by David Goldhill in The Atlantic Monthly. The author gave a good overview of what was wrong, and his points on how to fix it. You may disagree! But I thought he had a great starting point for principles to really fix the system.

Here are Goldhill's principles:

Move away from comprehensive health insurance, and avoid any single form of financing. Instead, consumers would pay for healthcare in a variety of ways: out of our pockets for major, predictable expenses, with only massive, unpredictable expenses covered by insurance.
Have a catastrophic insurance program that all Americans would pay into. It would pay out only for real catastophes (medical incidents and bills over $50K only, for instance). Most of us would never be benificiaries. This fund is just there to cover the true, rare catastrophes.
We'd pay for healthcare out of our income and savings. Large events that cost more (appendectomy, birth) would be covered by credit.
For low-income Americans, the government could fund some of this.
The government could fund preventive medicine as a way to bring overall costs down.

The number one complaint to the Goldhill approach (having us pay for almost all expenses ourselves) is that it would be too expensive. However, we are paying those costs today! It's just hidden. If you are lucky enough to be employed, a huge chunk of money is being paid for your healthcare by your employer. (If you aren't lucky enough to be employed, your government healthcare payments are coming from the paychecks of those that are working--the government doesn't create wealth, after all, it just moves it around). You don't see it, but it's money that is being paid and can only be used for healthcare. Under the Goldhill plan, you would get that money and be able to save it yourself. And you could spend it on other things besides healthcare if you wanted to!

Goldhill's article gives a good argument for why this might work. I like how his plan gets medical costs and bills to be very transparent, lets consumers decide what to do, and naturally forces hospitals and healthcare providers to lower costs while improving care.

And the general idea, that comprehensive health insurance is a poor way to cover most healthcare expenses, is key.

I don't know enough to say if Goldhill's plan is the best or not. But I like how it fixes (or attempts to address) the core economics of the issue, rather than trying to patch or extend something that is already broken.

If nothing else, ask your Congressional representatives to provide you with a clear, short list of the principles they will use to reform health care!

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