(C) 1992
by Jalexson
The American health care system is complex
and its problems cannot be solved by simplistic solutions such as creating
some gigantic health care bureaucracy to manage the system or by forcing
businesses to chose between firing employees or providing them with health
insurance. Systems become more difficult to improve as they become more
complex because changes may produce unanticipated negative effects.
The discussion about providing access to health
care to all suffers from two major misconceptions. The problem cannot be
solved without first clearing up these misconceptions.
Health care costs and health care spending
are not the same thing. Health care spending can increase even if health
care costs decline.
Many people fail to understand how insurance
operates. Insurance merely provides a means of sharing risks. Insurance
doesn't provide a magical source of funds to pay for health care. Giving
people health insurance is the least cost effective method of providing
them with access to health care.
The Clinton administration's health care proposal
is the equivalent of a mechanic claiming that he has to replace a car's
engine because the carburetor isn't working properly. Solving any social
problem must begin with an analysis of the system or systems involved with
emphasis on any defects that need to be corrected. Attempting to impose
a solution without understanding the system can make the problem worse.
High quality health care benefits the economy
by improving worker productivity and by providing jobs for health care
providers. Purchase of sophisticated medical equipment creates manufacturing
jobs. Overpriced health care distorts the economy by reducing consumer
spending power and thus reducing employment.
The term "health care costs" refers to the
amount the patient, or the patient's insurance company, pays for specific
medical services. "Health care spending" refers to the total amount spent
on health care by all patients, private insurance companies, and government
programs.
Total health care spending will continue to
increase regardless of what happens with health care costs particularly
if more people obtain access to health care. The aging of the population
and the development of new medical treatments have been increasing health
care spending. People who would have died from cancer or heart problems
thirty years ago are receiving treatments that dramatically increase their
lifespan. Children who would previously have died before starting school
now can live normal lives.
Surgery, development of new miracle drugs,
and highly sophisticated equipment come with high costs that cannot be
significantly reduced. Increases in cure rates offset these cost increases
by allowing many patients to remain productive. Reductions in the need
for long term treatment associated with some of these improvements also
may reduce total costs for some patients.
Government should consider all expenses associated
with health care problems rather than focusing only on payments for health
services. People who become too disabled to work force government to increase
spending for various public assistance programs. Families of wage earners
who have died also may need government assistance.
Research and development constitute the primary
cost component for new drugs. Spreading out these costs over more patients
can reduce the price individual patients must pay for each drug.
Trial and error plays a major role in development
of new drugs. The process typically involves a thorough evaluation of such
potential drug sources as newly discovered plants. If a company finds a
plant contains a substance with medicinal properties, the company then
tests the substance for effectiveness and any undesirable side effects
before the federal government allows the company to market the drug.
Research and development expenses also affect
medical equipment costs. The complexity of the equipment affects its cost.
The portion of these costs passed on to each patient declines until the
patient load reaches the machine's capacity, at which point an additional
machine must be purchased. The energy and labor expenses necessary for
the operation of the machine may or may not vary with the number of patients
depending on the individual machine.
Unfortunately patients increasingly face unnecessary
health care costs. Legal expenses associated with medical malpractice lawsuits
and expenses associated with processing of health insurance claims add
unnecessary costs to patients' bills. Many doctors have become greedy.
Many have increased their personal income even though medical technicians
play an increasingly important role in providing health care.
Congress needs to thoroughly examine health
care costs before making any decisions about how to reduce costs. Arbitrarily
cutting back on health care spending, like Clinton proposes, would unconstitutionally
deprive people of health care they can now obtain. Americans do not have
a right to whatever health care they want without having to pay for it,
but they do have the right to seek health care if they are willing to take
the actions necessary to obtain health care. The Constitution does not
give government the power to limit the ability of citizens to use their
own money to purchase health care or to participate in health care insurance
programs of their own choosing.
Proposals designed to provide everyone with
health insurance ignore the way insurance operates. Proposals that would
create some form of government controlled health care system either along
the lines of the Canadian system or Clinton's approach are unlikely to
be practical in a nation as large and heterogeneous as the United States
even if they were constitutional.
The only nation comparable to the United States
that has tried a nationally controlled health system was the late Soviet
Union. Organizations, especially political organizations, require rules
and bureaucracy to operate uniformly. The larger the organization the more
complex the rules and the larger the bureaucracy. Without bureaucratic
control, some regional and local components of the organization may start
operating independently of the larger organization and begin pursuing different
goals.
Flexibility provides the primary strength of
the U.S. health care system. The diversity of health care providers and
insurance programs provides a greater potential for improving the quality
of health care because each will approach health care problems from a slightly
different perspective. Smaller organizations can change quicker than large
organizations because large organizations have more to change. A single
national organization or nationally controlled state organizations would
lack the flexibility of the current system.
The federal government can correct the problem
of workers losing insurance coverage for some illnesses when they change
jobs by requiring all group health insurance programs to cover any disorder
that was covered by a worker's previous employer provided insurance.
Insurance redistributes the costs of health
insurance either by having those who are healthy pay the medical costs
of others or by spreading out the payment for health care over a longer
period of time. Insurance actually increases costs by adding the administrative
cost of shifting funds from the insured to the insurance company and finally
to health care providers.
Existing government and private insurance programs
are part of the problem. Government insurance has encouraged the health
care industry to increase costs. Lax administration in the early years
guaranteed providers would receive payment even for unnecessary procedures
like pregnancy tests for 80-year-old men. Having health insurance encourages
people to seek medical assistance for minor health complaints that may
not require a doctor's services but do require a payment to the doctor.
Democratic politicians who promise an all inclusive
federal health care program are perpetrating a cruel hoax on the American
people. Unless these politicians are incompetent they know such a program
cannot work. The federal government has no magical ability to solve domestic
problems and has difficulty operating in anything resembling a cost effective
manner.
In recent years the federal government
has shifted part of the cost of health care for senior citizens from Medicare
back to those who benefit from it and shifted part of the cost of providing
health care to low income persons through Medicaid to state governments.
Children continue to suffer from malnutrition in spite of decades of federal
food programs. Many have become homeless in spite of decades of federal
housing programs. The quality of education provided by public schools declined
as federal aid to education increased.
The only way the federal government can be
expected to develop a workable government health insurance program is if
voters replace all the people currently holding elective office in Washington.
Part of the problem with private health insurance
involves the practice of having the insurance company pay all medical bills
rather than just paying for something like operations or hospitalization.
If car insurance worked like health insurance, the car insurance would
pay for oil changes and tune-ups as well as for damage caused by wrecks
or severe weather. Paying the doctor by having money pass through the insurance
company increases health care costs by adding a middle man.
This practice has developed because employers
have taken over the task of purchasing insurance for employees. The lack
of income taxes on money employers spend on health insurance encourages
employees to want the insurance company to pay a higher portion of their
health care bills. This same goal could be achieved by allowing employers
to switch from providing employees with comprehensive health insurance
to paying money into an employee's Health Care IRA. Withdrawals for health
care would be tax exempt to eliminate the need to have people pay taxes
on withdrawals and then claiming tax deductions for medical expenses.
The employer would retain the benefit of helping
employees pay for health care while giving the employer greater control
over the company's health care costs. The employee would continue to receive
tax free health care assistance while gaining greater control over his
health care and building up savings in years when the IRA money from the
employer exceeded health care bills. A Health Care IRA would be completely
portable from one job to another and still be available after retirement.
The employer could continue to provide catastrophic
health insurance or allow the investment company handling the IRA to provide
such coverage. The investment company might be able to provide such coverage
at far lower cost because the risk would be spread among a much larger
group than are employed by most single companies. The investment company
might vary the charge for such insurance depending on the amount individual
account holders have invested in the fund.
Having patients pay their own medical bills
using their IRA would eliminate the high administrative costs associated
with having health insurance companies pay the bills. Patients would pay
bills using either a credit card or check approach. The patient might write
a check on a special health care account or use a special credit card issued
by the company managing the IRA. The law could allow use of regular checks
or credit cards, with the bank managing the checking account or credit
card billing the IRA for the total amount of medical bills paid and providing
the patient with a regular summary of medical transactions.
The law would limit medical care payments from
an IRA to persons and facilities licensed to practice medicine by the state.
However, patients would make decisions about what type of treatments to
use their IRA's for. Eligible medical treatment could include cosmetic
surgery and experimental surgery most insurance companies currently won't
cover.
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Any effort to assure the availability of health
care must begin with measures designed to reduce costs. The high cost of
health care reduces the amount of money consumers have available to purchase
other goods and services. These efforts should emphasize reduction of costs
like administrative costs that involve paying people who do not actually
provide health care.
Changing the way malpractice cases are handled
would reduce the cost of medical care by eliminating unnecessary costs
associated with malpractice lawsuits. The federal government should also
consider becoming more directly involved in providing health care by directly
subsidizing health care facilities run by local government or other entities.
Malpractice lawsuits provide an expensive and
largely ineffective way of discouraging health care providers from making
mistakes. Government should require health care providers to warranty their
work just like many repairmen do. If something went wrong after a doctor
or hospital provided treatment, the doctor or hospital would assume the
cost of fixing the problem. The bill for a given type of treatment would
include an amount to cover insurance against something going wrong either
because the doctor erred or because of soon unanticipated side effect.
The system would take a no fault approach except for situations in which
the patient ignored the doctor's orders and acted in a way that aggravated
the medical condition. For example, someone who continues to smoke after
receiving treatment for lung cancer should have to pay for any resultant
treatment.
Having the courts determine whether or not
health care providers should pay for subsequent medical problems encountered
by patients increases costs regardless of the size of damage awards. Malpractice
insurers must pay legal costs even for cases they ultimately win. Attorneys
may encourage insurers to fight unwinnable cases in court rather than pay
some form of settlement. In come cases insurers may pay because the settlement
would cost less than fighting the lawsuit in court. Doctors and hospitals
wishing to avoid malpractice suits may perform medically unnecessary tests
solely to have the results available to use as evidence in court.
Patients and their insurance companies ultimately
pay the bill for malpractice lawsuits. The cost of the warranty approach
would also be passed along to patients. However, the costs would be lower
because patients would pay only medical costs, legal costs would no longer
be necessary. Doctors would have a greater incentive to provide the most
appropriate medical treatment because they could not pass along the cost
of additional treatment to the patient. Under the current system, doctors
must choose treatment and procedures according to what judges and juries
with no medical training consider appropriate.
Individual doctors who are less effective in
providing appropriate medical treatment for specific ailments could be
required to pay an additional fee or to discontinue attempts to treat such
ailments. Malpractice suits do not eliminate ineffective doctors. Punitive
damage assessments against a doctor's malpractice insurance company only
force patients of other doctors to pay higher medical bills.
The federal government could further reduce
health costs by requiring non-profit hospitals to actually be non-profit
operations. Past regulations have been so lax that Wesley Medical Center
in Wichita, Kansas, was essentially operating at a profit in the years
before a for-profit corporation purchased it from Kansas Methodists. Wesley's
"excess revenue" increased over 100% a year for several years. Government
regulations should require that any excess revenue received by non-profit
hospitals at the end of the year could only be used to cover charges to
patients who have had trouble paying treatment their bills.
The federal government should prohibit hospitals
and clinics from passing along the cost of building construction to patients
or their insurance companies. Medical facilities could charge patients
for maintenance expenses, but not depreciation expenses. Non-profit facilities
would have to rely on donations to pay construction costs. Profit making
facilities would have to use profits, or stock sales, to pay for construction.
New construction represents an investment.
Businesses should pay for investments through profit increases resulting
from increased revenue rather than be treating construction costs as something
to simply pass along to customers. Incidentally, requiring facilities to
use profit to pay for construction would not limit the ability to deduct
construction expenses or depreciation when figuring tax liability.
Non-profit facilities should not be making
investments with patients' money. Instead non-profit health facilities
should rely on donations to finance new construction and purchase of expensive
equipment like other non-profit organizations do. Some non-profit hospitals
rely on donations to pay for patient treatment as well as construction
costs. Hospitals could offer donors an incentive in the form of reduced
charges for using new equipment, but donors who subsequently took advantage
of the offer might have the reduce the amount of the donation that they
could deduct when figuring income taxes.
Prior to creation of federal health insurance
programs, non-profit hospitals managed to supplement patient charges with
charitable donations. Many non-profit hospitals(e.g., St. Jude's and the
Shriners' hospitals) still operate this way, if they charge patients anything
at all.
Government operated health clinics could supplement
private facilities, particularly in low income urban areas and rural areas.
This approach could reduce government costs by eliminating administrative
costs associated with insurance programs. Directly paying salaries and
other costs would help fix government spending at a specified level.
The federal government might consider a similar
approach for private health facilities. Participating facilities would
receive a grant to fund the number of positions needed to handle patients
eligible for government aid programs like Medicare instead of being paid
for each service the facility provides.
Large private health insurance companies should
consider adopting similar procedures to compensate health care providers.
Instead of paying individual patient bills, large insurers should pay health
care providers according to the average use of services by those they insure.
Private companies and government could use annual audits conducted by computer
to determine average use.
Using this approach would require insurance
companies to abandon the current approach to copayments and deductibles
which may not be cost effective anyway. Instead copayments and deductibles
would depend on the nature of the medical need. Clients might, for example,
pay a part of the cost for initial diagnostic visits to a doctor, regardless
of the total amount spent during the year, but not pay for visits related
to treatments for the medical problem identified in the initial visit.
Deductibles might apply to elective treatments but not to essential treatments.
Clinton's proposal for a one page health care
form could exacerbate the billing problem because the form might have to
be too complex to avoid providing inadequate information to insurers. A
more desirable approach for those companies that wish to continue using
individual customer billing would involve establishing a uniform format
for transmitting information by computer between health care providers
and insurance companies. The health care provider might transmit all relevant
information to the insurance company or the insurance company computer
might query the health care provider for the information needed about each
bill. Social Security numbers should not be used to transmit information
by computer or to identify patients in the computer because of a possible
loss of patient privacy.
Some clinics and hospitals are experimenting
with placing doctors on salary rather than having them charge fees for
each office visit or other action. This approach improves the ability to
predict costs while discouraging the practice some doctors reportedly have
of looking at a patient chart in a hospital and then charging the patient
more than a plumber charges for a house call.
Charging patients a uniform fee for treatment
of specified medical disorders rather than using itemized bills would also
help eliminate a reported source of abuse by health care providers such
as charging 80-year-old men for pregnancy tests. Providers would save money
by not having to keep track of each individual cost item. Providers could
take actions such as analyzing blood samples in the most cost effective
manner rather than having to worry about whether insurers will pay for
a specific test. Lab technicians might be able to conduct tests more quickly
if they checked every sample for the same information rather than conducting
tests according to a patient's age, sex, etc.
Government research should emphasize general
subjects such as the immune system rather than specific disorders as well
as covering nutrition and investigation of natural or "folk" cures. Government
should also coordinate information about medical research. Private research
into specific disorders is more likely to produce cures because researchers
tend to be more dedicated to the task. Government research programs tend
to attract researchers who are looking for funds. Some of these researchers
may have other interests but portray or adjust their research as being
related to whatever goal government wishes to achieve. Private groups tend
to focus their research efforts and may ignore broader issues.
The federal AIDS research may demonstrate the
disadvantage of having the federal government examine specific disorders.
Finding a cure for AIDS may require a much broader effort than simply looking
for some cure. Some researchers dealing with Chronic Fatigue Syndrome believe
Chronic Fatigue might be more accurately described as Chronic Immune Active
Syndrome. Cancer may also involve a failure of the portion of body's immune
system that disposes of cancer cells including the cancers associated with
AIDS. The federal government might have a better chance of finding a cure
for AIDS if it emphasized research into the general operation of the immune
system rather than only attempting to find an AIDS cure.
Medical researchers need to establish a better
model to explain the cell than the one that relies on the outdated notions
of Charles Darwin and his followers. A recent news article stated that
researchers were surprised to discover a mechanism that seemed to regulate
growth so that growth occurred in spurts at specified times rather than
in some other fashion. Anyone with an understanding of systems in general
would realize that healthy growth in animals must have some central control.
For example, both of a person's legs must grow at the same rate or he will
have trouble walking. All parts of the leg(bones, nerves, muscles, skin,
etc.) must grow at the same time at the same rate or the leg will be defective.
Biological life, especially animal life, is
too sophisticated not be designed by some highly intelligent being or beings.
Even with our modern scientific knowledge, we cannot come close to duplicating
most animal subsystems. Animals are too well engineered to have simply
developed from some random chemical reactions. The design and operation
of the cell is logically consistent with the description of a biochemical
computer with molecular memory.
Many doctors and other health experts suffer
from the attitude that the medicines drug companies produce contain some
type of magic potions. Actually the "miracle" ingredients in modern drugs
typically are based on plant extracts, fungi, or soil microbes. Pharmaceutical
companies may not actually use "stump water" or a "mud dauber's nest" like
Granny on the "Beverly Hillbillies", but the ingredients in their miracle
drugs often come from similar sources. Folk medicine is based on years
or, in the case of the Chinese, millennia of observation and experimentation.
The lack of "control groups" in these experiments does not eliminate the
possibility that many of these cures may work. Recent developments in the
technology for examining chemicals have been indicating the presence of
far more chemicals with possible medical value in common foods than researchers
previously suspected.
The wide availability of plant products such
as those sold as nutritional supplements limits the practicality of drug
company investigations of medicinal value. A drug company might not be
able to recover its research costs because anyone could grow and sell the
plants with medicinal value. Government could recover its research costs
through taxes collected from those who profit from growing and selling
the plants.
The medical profession should seriously consider
changing the way it trains doctors and other health care professionals.
The current method of training doctors encumbers them with a high debt
that they must repay while attempting to start a practice. This potential
debt could be eliminated by shifting to a system that allows doctors to
work their way through medical training by using skills as they acquire
them.
Those wanting to be doctors would start out
in positions like Emergency Medical Technicians and move to positions requiring
more training as they learn more about medicine. Students would be getting
practical training as they study medicine rather than spending years learning
in a classroom and then having to obtain the experience allowing them to
practice their skills. Prior contact with medical problems would give medical
students questions their studies would help them answer. The current approach
to medical training gives students the answers before they understand the
questions.
Most technical jobs in medicine could be part
of the training cycle including nursing. Students who could not handle
the requirements of a job requiring more skills would still be able to
perform jobs at the level they had demonstrated they could handle. EMT's
often have problems with burnout that force them to quit after a few years.
Treating the EMT position as an entry level medical position would encourage
EMT's to study to qualify for more advanced positions instead of possibly
dropping out of the medical profession.
The change in medical training would allow creation of new positions that might help improve the ability to provide health care without increasing costs. One position could be similar to an EMT or paramedic position. Such individuals would visit the homes of those complaining of health problems to obtain blood and urine samples and make a preliminary examination for the doctor who could then use this information to determine if the patient would need to visit the office for further evaluation before prescribing treatment. An in home examination would potentially allow discovery of any environmental problems, such as carbon monoxide leaks that might explain the patient's condition. In some cases the in home examination would allow a prompter response to potentially serious problems that might require hospitalization than having the patient come to the office might.
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