Thursday, January 11, 2007

Putting the cartel before the hearse

Arnold Schwarzenegger's new individual-mandated health insurance plan for California has a lot of people talking, many trying to figure out who's conservative and who's liberal. For instance, Jonathan Cohn, writing in The NewRepublic, says, "If a Democrat proposed something like this, Republicans would have a field day, calling him a radical, a socialist, or worse." Arnie is, ov course, a Republican.

Cohen assesses the proposal:
Schwarzenegger had become enamored with the idea of using an "individual mandate" to achieve universal coverage--that is, requiring everybody to buy health insurance, typically from a private insurance company.

These sorts of individual-mandate proposals are not exactly new; they've been kicking around for as long as universal health care has. But they've gained currency in the last few years, thanks to some would-be reformers who believe an individual mandate would be preferable--politically, substantively, or both--to having the government insure people directly....

But while individual mandates may not involve creating whole new government programs--a point Schwarzenegger emphasized in his speech on Monday--they still require substantial government intervention in the free market. After all, simply requiring everybody to purchase insurance doesn't do any good if people can't buy the coverage. The government needs to make sure insurance companies actually sell policies to anybody who wants to buy them. It also needs to make sure poor people have enough money to pay for them. When proponents of individual mandates tout the idea, they frequently gloss over these facts. And when it comes time to put policy ideas to paper, they frequently forget about them altogether.

That's what makes Schwarzenegger's plan so striking, particularly given the source. He's proposing to do all of these things--and to do them in a way that might conceivably work. There's financial assistance for Californians who don't get insurance through their jobs but don't have money to buy coverage on their own, plus an expansion of Medicaid to cover more low-income Californians. There are also regulations that would prevent insurers from jacking up premiums, tinkering with benefits, or excluding people altogether for having pre-existing conditions.

Perhaps the most radical feature of Schwarzenegger's proposed insurance rules is a provision that would regulate "medical-loss ratios." An insurer's medical-loss ratio is the amount of money it spends on patient care, as opposed to overhead or profits. (Yes, the "loss" refers to the money spent on patients. Telling, isn't it?) Not surprisingly, the insurers that provide the best, most cost-effective care have traditionally been the ones with the highest loss ratios, since they're putting the most money into patient care. But thanks to the dysfunctions of the health-care market, those same companies often end up at a competitive disadvantage, because they are the ones that attract sicker beneficiaries--on whom it's more difficult to make money.

By establishing a minimum medical-loss ratio--Schwarzenegger proposed that it be set at 85 percent, higher than that of most commercial carriers--the governor's proposal would level the playing field, so that insurers would have incentives to pursue efficiency rather than trying to skim the healthiest beneficiaries from the market. In other words, it would encourage them to compete based on their ability to provide quality insurance, rather than their ability to game the system, as they do now.

The San Francisco Chron's staff writers, Tom Chorneau and Victoria Colliver, don't see cost minimizing aspects of the medical cost ratio as the most radical part. Rather, they think it is radical from its universal conscription. Folks in SF usually think drafty things are dodgy. They also reflect the feeling in the public that somehow the consumer will not or should not shoulder the expense of health care, as if there were some kind of free lunch (organic, vegan and gluten free, of course).

Concerns on governor's health care plan
Some advocates fear rising costs could be shifted to consumers

A mandate that all Californians have health care coverage -- and sanctions for those who don't -- are perhaps the most controversial aspects of Gov. Arnold Schwarzenegger's plan for extending health care to 6.5 million uninsured residents.

Administration officials said Tuesday that the mandate is needed to make sure insurance carriers have as big a pool as possible to spread the risk -- and the cost -- of care.

But consumers, labor unions and some leading Democrats in the state Legislature are concerned that the governor's plan puts too much of the risk for the rising cost of health care on the backs of individuals -- some of whom can least afford it.

Key to Schwarzenegger's plan for extending coverage is redirecting billions of dollars that are now spent subsidizing the care of the uninsured. Once all Californians are covered and getting regular care, he believes costs for everyone will fall.

Some consumer groups object to requirements that individuals have insurance without putting some cost controls on health care and ensuring that the coverage is meaningful.

Massachusetts has adopted a similar mandate, although enforcement will not begin until later this year. Failure to enroll in an insurance plan there would result in the state taking away a personal exemption on the tax return -- worth roughly $200; but penalties would increase to as much as $150 a month beginning in 2008.

Guambat has had the benefit of growing up in a socialized medical system. Guambat's father was a GI. All of Guambat's ills were attended to, at no cost to Guambat, by the US government. Guambat's choices may have been somewhat limited, but the care was perfectly adequate, or perfect enough, and the price was right. Guambat has always wondered why that kind of medical care was not extended to the greater civilian class.

And Guambat has also had the benefit of living Down Under in a land with BOTH socialized medical care and individually madated insurance. Every income earner in Australia pays 1.5% of their income, over and above and separate from income tax, to the Australian Medicare system. As well, there is a heavily "tax incentivised" private healthcare insurance program, generally along the lines, so it looks on its face, to the Massachusetts model. The premiums have ever only gone up and keep going up, faster than inflation. And the conditions of care in the public system always seem needy, with the standards in the private system more cosmetic than substantive.

Guambat has also known some very fine people who work their tails off as doctors and struggle for a living. And Mrs Guambat points out to Guambat what a fantastic lifestyle the Holliwood plastic surgeons on Dr. 90210 lead. Guambat just read a story some place in the last week as how the top medical student, admitted to practice, in the Philipines has emigrated to the US, where he will work as a nurse because the US will not recognize his scholarship or credentials. Doctors from India are driving cabs in Australia, or so you might believe. Nurses with decades of experience must not invade the professional province of the kid fresh out of med school. Teams of accountants back up each surgery. Some people are left to die in wards and some people are kept from dying in private rooms.

Guambat suspects that the health care industry, broadly speaking, including medical education, pharmaceutics, research, equipment, hospitals, etc., has managed to organize itself along the principal that care is secondary to profit. Whilst there are many good people struggling by to extend the best care they can with limited resources, the industry as a whole "operates" to increase the cost rather than increase the care. From pharmaceutical evergreening to laboratory kickbacks, the focus is on drawing more blood than stemming its flow.

Guambat percieves that medical insurance is simply a license for everyone to rort. Trying to get something for nothing or perhaps their "money's worth", patients lap up every possible entitlement. To get them in the system, insurance companies offer lifestyle extravagances, like gym memberships, rather than necessary care like dental work. Doctors order more lab tests than they need, with a look back over their shoulder at malpractice lawyers, knowing the insurance will pay. Even the legal profession is involved, since plaintiffs' lawyers long ago learned that insurance companies, if not doctors themselves, are easy pickings for contestable claims, and insurance defense lawyers learned that it is easier to pay up and pass along the premiums than fight. Every step along the way is perhaps rational in its own context, but the whole systems works to make health care delivery more expensive than it perhaps could be otherwise. It may be that the nation's economic health rests on the needs of an unhealthy populace.

The whole subject is just too big for a post, let alone for Guambat's mind to contemplate in one sitting, no matter how long Guambat sits. But one thing Guambat feels very strongly about is that there is some very big money being made in the health care system that could easily be diverted to where money needs to be spent, and nothing much if anything is being done in that regard. There is nothing in Arnie's plan that will address the fundamental issues, just add more money to a system that knows how to milk more and more of it. You'd think Microsoft ran it.

Guambat might sum up his feelings about the subject by pointing out that the privitization of retirement, what with IRAs, Keoghs, Superannuation plans and all the rest have done demonstrably more for the funds and financial planning industry than for the retirees, and Guambat feels that Arnie's grandiose plan will end up pretty much the same way, and that may be one reason why it is difficult determining political affiliation from where people stand on Arnie's scheme.

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