Normally, I really like Jeff Cornwall’s posts. However, his most recent, The Elephant in the Room, comes to some erroneous conclusions regarding health care.
I believe that there are two fundamental principles that must guide us through the inevitable health care crisis that is looming on the horizon. First, we must bring personal responsibility back into the payment of health care. Health insurance was originally established to cover only catastrophic illnesses. Over the years, it has moved toward a semi-socialized program that has most of the costs covered by employers and the federal government. But in the end, all these two entities do is take our money through lower pay and higher taxes. We need to take these “middle men” out of the system for all routine health care. It would cut out huge administrative overhead costs that corporations and government spend that if we kept in our pockets would give us more money than we now have to spend on health care.
Second, we need to bring the market back into health care. Government controls health care at the local, state and federal levels. The pages of laws and regulations that control health care would make the 60,000 pages of the tax code look like a short story. The percentage of health care dollars that actually go to direct health is incredibly small. Some studies over the years have shown that 80% of the dollars in the system go to administrative costs. Government’s attempt to manage health care have contributed more than any other factor the the health care cost crisis.
For his conclusions to be correct, the following would need to be true:
- Non-managed (“traditional”) health plans would need to be less expensive than managed care plans. However, the decision of most corporations to select HMOs, EPOs and other managed care options suggests the opposite.
- Government managed care, such as Medicare, would have to be more expensive to administer. Though there are plenty of contradictory articles on the web, research suggests that government Medicare is less costly to administer than private Medicare HMOs, though those HMOs insure healthier patients.
- Some significant portion of health care costs would need to be “discretionary” rather than urgent or emergent. The opposite, in fact, seems to be the case. Health plans find themselves needing to incentivize members for preventive care. These plans find such incentives to come out positive on a cost-benefit analysis because they avoid the sorts of catastrophic conditions that Jeff suggests should be the true use of health insurance. Moreover, without middlemen negotiating rates, physicians and facilities would be free to charge whatever they liked.
I’m not sure where Jeff gets his data–I don’t want to dispute his assertion that 80% of health care dollars are spent on administration but I would appreciate cited sources. More important, though, is that he seems to ignore the fact that good health is a very real public good. People with overall poor health, whether from poor nutrition, poor lifestyle, or poor preventive care, are more susceptible to the contagious diseases that are at the center of concerns about pandemics. Access to health care could even be considered a homeland security or national defense issue: healthy individuals are less susceptible to bio-terror attacks and would be better able to join the military in a time of true national emergency.