solveproblemOver the past couple of months, I have spent much time considering the current debate on reforming healthcare in America.  In my post, “Healthcare – Define the Problem,” I stated what I considered to be the key problems.  A few days later in “Reform, Yes – Government Program, No” I said that I would suggest some solutions in a later post.  This is that post.

First, you need to know that I think the “healthcare crisis” in America is one created by politicians as a tool to grab more power over a huge sector of our economy. That doesn’t mean that I think our system is perfect, that it can’t be improved.  It does mean I think that what we are reading today in much of the press is simply manipulating public opinion.  As mentioned before at this blog, I believe that if a lie is told often enough, eventually people accept it as truth.  Today there is barely a ripple of disbelief when a politician says that 50 million Americans are without healthcare.  It is blatantly false but has been said so often that we believe it.

Solutions?  If we agree that defining the problem gets us halfway to the solution, then I would concentrate my efforts to solve the “crisis” on things that address the key problems that were stated in “Healthcare – Define the Problem,” namely, the cost and uneven delivery of medical treatment, and, the lack of focus on prevention. In my view, solutions should be oriented towards incentives, not mandates.  Government mandates (think Prohibition or War on Drugs or War on Poverty) have a history of complete failure. Incentives work (think the $1,000,000 to fly a heavier than air craft, or, the pay scale that helps convince people to study for 9 years in college to become doctors).

medical-solutionsLet us start with prevention.  I am not like the President.  I don’t want to make the insurance industry into the villain.  I don’t want to demonize the Republicans or the CBO.  In fact, I think the insurance industry can be a big part of the solution.  If our government will get out of the way and the States will remove the mandates, I think the insurance industry could come up with a menu of options from which to choose the insurance we want.  It would then be priced based on what you want, not what you are required by your government to buy.  In the area of prevention, I think that insurance would be cheaper for people who are not obese or who don’t smoke, or who have regular annual checkups with sufficient lab work to find and prevent major problems.  I know that this sounds a bit simple.  Just think what would happen if someone knew that they could pay $50 per month more and have a smoking cessation program included in their health insurance.  Once they have completed the program, they stop paying for a smoking cessation program, and they get a preferred policy that saves them 10% on their total package.  I think a fair number would give it a try.  Similarly, I think that reduced premiums would cause a fair number of people to have annual checkups and to watch their weight.  This is not a cure-all to our lack of focus on prevention, but it is a start and one that gives people incentives to make wise choices rather than having Big Brother mandate what you do.

Next is cost. This is the good-news/bad-news part of the debate.  The bad news is that healthcare costs are high, health insurance is expensive, and prescription drugs are very expensive.  The good news is that this presents us with an almost unlimited number of opportunities to cut costs.

We could start with national recognition that Medicine should not be a substitute for a trip to Las Vegas or the lottery. By that I mean that no matter how bad it is, there should be a limit on how much could be awarded for pain and suffering in a judgment in a medical malpractice lawsuit.  All the money in the world will not bring back the past.  Insurance and lawsuits should aim to mitigate the problem, not be a substitute for winning the lottery.  If insurance companies did not have to plan for huge pain and suffering awards, insurance would be cheaper, as would the rates the Doctors must charge to cover their insurance bills.  Many, if not most, Doctors today practice “preventive medicine” where priority number one is to protect themselves from lawsuits.  If they were not doing this, they could practice more effective and lower cost medicine.

Costs for medical care insurance are also driven higher by State mandates for coverage of an ever growing number of conditions.  Having seen what happens when a State legislature mandates coverage of, for example, prenatal care, every lobbiest for every small group is working to have their group’s problem become a mandated coverage.  Think how much of the cost of your healthcare insurance goes to pay for such things as: Accupuncture Treatment, Chiropractic Care, Transexual Hormone Therapy, Breast Cancer Screening, Diabetes Screening, etc.  All those may be valid medical treatments but why should everyone have to pay for them?

Will you spend more or less money on what you buy when you know what it will cost you?  If, each week when you went to the grocery store you had a limit of $50 to spend, would you not carefully choose the products that most fit your needs and your budget?  Would you not skip some things that would be nice to have and concentrate on the things you needed to prepare wholesome meals?  On the other hand, if you don’t have a budget and don’t know the prices of the products in the store, is it likely you will buy things you don’t need and pay too much for many items?   You will probably even stock up on things you know you don’t need.   When all services are provided by your Medical Plan and the cost is the same whether you use them or not, you will use more services.  That is what the new Healthcare Plan is setting up. How is it possible this will reduce costs?  I think we would reduce costs if each person who wanted healthcare insurance had a menu of services with costs to provide them.  I also believe that if you had the opportunity to insure the risks you cannot afford and are reasonably likely to happen that you would buy that coverage.  It is not unlike a policy for an automobile.  You have the choice so when your car gets up in years, you probably would not spend the money on collision insurance.

I would like the insurance companies to price what they sell based on its cost not on some government mandate.  Price controls (which is what the mandates in effect are) have never worked.  The usual result is a shortage of whatever is controlled.  One of the key reasons that healthcare insurance is so expensive (that there is a shortage) is that government has mandated costly coverage that few people want or need.  I think the insurance companies would be smart to offer a portability option.  They make a bit more money each month and the owner of the policy has the assurance that they will continue to have the insurance even if they lose their job or move from the area.  Last, I think they would also sell a ton of “catastrophic coverage” policies.  If they could do that (without all the frills mandated by the states) I think most people would choose that plus other coverage that they feel fits their needs and budget.

So, in a nutshell, I think we need to eliminate government mandates on the insurance companies – let the market tell them what to offer.  I think we need an incentive-based preventive medicine component.  We also need to limit the awards (payoffs against bets) in the medical malpractice lawsuits.

It wouldn’t hurt for us to look at Kaiser Permanente and the Mayo Clinic or Grand Junction, Colorado to learn what they are doing.  All are successful at keeping people well, containing costs, and have a reputation for quality of care, in spite of dealing with government control and regulation in the form of care mandates.  Does that sound like the V.A. Hospital System?

We still have the many of the most skilled Doctors and Nurses and the most innovative medical industry in the world.  Getting government out of it makes much more sense to me than the current suggestions we see coming from Congress and the President.