Re: Please Critque these informally presented ideas about fixing the rising health care cost problem
- From: "The Trucker" <mikcob@xxxxxxxxxxx>
- Date: Wed, 12 Apr 2006 21:56:54 -0700
"Peter Olcott" <olcott@xxxxxxx> wrote in message
news:Pkx_f.592$8q.560@xxxxxxxxxxxxx
"Michael Scheltgen" <mjs818@xxxxxxxxxxxxx> wrote in message
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Peter Olcott wrote:
Health care costs are rising way too fast simply because the incentives are
out of whack. Since the health care consumer does not bear the full,
immediate, and direct brunt of their health care choices, they lack
sufficient reason to make the most cost effective health care decisions.
The "consumer" lacks sufficient knowledge to make cost effective health care
decisions.
They don't need that much knowledge, what they really need, but, don't have is
sufficient incentive. A physician can tell them his opinion on the services
that they need, then the must have three more things:
(1) Sufficient incentive to make the most cost effective health care choices,
every dollar saved is an extra dollar of direct and immediate cost that they
avoid. Health care savings accounts opposed to and contrasted with health
insurance would serve this purpose.
So let's have a citizen's dividend to fund the HSA's and people get to
take the money out and spend it on beer if they don't spend it on
health care. That seems to do the same thing you are suggesting.
Health insurance companies can compete for which of them gets to administer a
consumer's health savings program.
Why have this extra layer of "health insurance" companies?
Some health insurance would remain in place for exceptional circumstances,
most would be converted into health savings accounts.
Right!!!! This would be called a National Catastrophic Health Insurance
fund administered by government. Pretty good idea.
After a period of time, the health savings would vest as retirement savings.
Oh darn, I though we could use it for beer money. But I admit that
you have a better idea on this part.
This vesting keeps the health care consumer directly focused on the fact that
these are real dollars, not merely the fake money of a board game.
If you do it with a citizen's dividend (an equal amount to all persons
in the USA) then it will work pretty well.
(2) A price list of health care goods and services.
That sounds pretty good too.
(3) A reliable measure of the quality of differing health care goods and
services.
Like government regulation to keep the quacks out?
From this they simply shop around, and this shopping around instills in the
health care system the required feedback loop pertaining to where goods and or
services need improvements in cost effectiveness.
My CD is a compromise.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org
The most effective way to fix this problem is to provide the key decision
maker (the health care consumer) with sufficient reason to make the most
cost effective choices.
The physician is the key decision maker (or at least should be --
unfortunately now it is the insurer).
When health care providers begin to lose business because their costs are
higher than their competition, they will be forced to look for ways to lower
their costs. This will begin a cycle of increasingly greater efficiency as
the initial incentives propagate throughout the health care industry.
No. They will simply try to avoid unprofitable patients, i.e., the sick and
poor -- which is exactly what HSAs do.
If one hospital performs appendectomies at a cost significantly higher than
that of other competing hospitals, and the reliable measure of the quality of
care is the same at all competing hospitals, and consumers must pay for this
surgery out of their own health care savings accounts, the higher cost
hospital will be forced to lower their prices on appendectomies.
The key to making this all work is to find some incentive system whereby
the healthcare consumer receives the full impact of the weight of their
health care choices. In other words if a set of choices results in an extra
$5,000 of expense, then this extra $5,000 expense must immediately and
directly cost the consumer $5,000. Unless and until the incentives are
changed to this degree, health care costs will remain a problem.
Who do you presume makes these choices when you're unconscious or in pain?
Probably your physician.
You decide which physician to go to in the first place. Most health care
choices are made while the health care consumer is conscious. When selecting
your physician you could also have the option of selecting the hospital that
you might ever need. That way in an emergency situation, this choice is
already known.
If the health care consumer is insulated from the immediate and direct
impact of their health care choices, they will continue to lack sufficient
incentive to economize. If the health care provider continues to be
presented with health care consumers that are not sufficiently motivated to
economize, they lack sufficient reason to seek increasingly more cost
effective solutions. In fact quite the opposite. The rational health care
provider becomes increasingly more profitable the more they raise their
prices, there is no feedback loop of a drop in demand stopping them.
Most health expenditure stems from in hospital specialist services. If you
have heart pain and your doctor tells you you need procedure X, which will
cost your insurer Y (health savings accounts are insurance), are you going to
wait until you see an itemized list of the charges and go comparison shopping
for the best deal on behalf of your insurer??
This should only take a few minutes on the internet. Once the health care
consumer becomes much more cost conscious, these figures will become readily
available. Unpublished prices are viewed as synonymous with {the price is too
high}. Note this plan MUST include some readily available and highly reliable
measure of the quality of health care goods and services.
It does not provide the same thing. It does not instill the highest possible
Only by instilling vigorous price competition in the health care industry
will the most effective solution to the problem of rising health care costs
be fully realized.
Having a single payer system accomplishes the same thing while providing
comprehensive coverage for everyone.
degree of price competition.
The model that would effectively implement these ideas would much more
closely resemble health care savings accounts, than the current health care
insurance system.
HSAs are nothing but high deductible insurance plans. They will not do
anything to contain costs
As soon as most every health care consumer is required to pay every dollar of
their health care costs directly from their own money, this will completely
reverse the health care cost trend. If all of the insurance premiums that
people pay were to go instead into interest bearing tax free savings accounts,
quite often there would be even enough money in these accounts for major
surgeries. In the relatively rare case where people are born with serious
congenital birth defects, or suffer from other catastrophic ailments,
subsidies could be available.
.
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- From: Peter Olcott
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