Republicans are going to lose the debate on Healthcare because they are arguing about the wrong issues. In Town Halls all across America “Senior” citizens have been berating AARP representatives and elected officials alike for their support of the wicked Healthcare plans now winding their way through Congress. Two of the issues most cited as evil by “Senior” citizens are the supposed rationing of Healthcare proposed in the bills and the “Death Panels” which will decide whether people get coverage or not at the end of their lives.
Unfortunately, those people defending the Healthcare plans are wrong also, although for entirely different reasons than the ones their harshest critics are upset about. The defenders of Obamacare, as it is currently conceived, have wasted precious time and breath explaining the benefits of things like "death councils." They have also, in a state of panic, removed any and all savings from the Healthcare plans by kowtowing to “Senior” citizens and promising that they will not lose ANY benefits from Medicare at all!
All this has distracted from the essential problem with Healthcare in the United States: Government interference in the Marketplace.
One of the biggest market inefficiencies, Medicare, appears to be totally misunderstood by policy makers. The Healthcare reformers seem to think it is a great system worth expanding. This is a huge issue because Americans are living longer and our society is getting older. Unfortunately the AARP has frightened policy makers with Town Hall terror stories, saying “Old people vote!” so cutting their benefits is impossible. This is not true, and cutting our societies ‘benefits’ is in fact necessary.
The story of Healthcare in America starts in 1935 during the Great Depression and the passing of the first Social Security Act by President Roosevelt. At that time, policy makers and voters envisioned Social Security as a safety net for the very few people that lived to be very old, a way to respect the eldest members of society. That is demonstrated by the fact that the life-expectancy in 1935 for the average American was 62 and the retirement age set by Social Security was 65. In other words, most Americans were dead for 3 years before they began receiving Tax-payer sponsored retirement. http://www.economist.com/displayStory.cfm?story_id=13900145
Today life expectancy in the US, according to the CIA World Factbook, is 78 years old. That means most people will live for 13 years on Welfare (aka Social Security, Medicare). Also, if those people 65 and over actually did retire, that would mean an additional 12.8% of our population would be unemployed, minus any of the over 65 already accounted for in our current near 10% unemployment numbers.
The irony of it is that these “Senior” citizens are not retiring. Social Security and Medicare are not strong enough to support them so they are in fact continuing to work. By virtue of their age they are usually highly experienced as well. That is fantastic for US companies and it is terrible for young-workers entering the job market and competing with people who have 40 years of experience on them. That would not be a problem if those “Senior” workers were also not getting subsidized by the younger workers.
I keep putting “Senior” citizens in quotes because, in the end, it is this assumption that has bankrupted our country. People 65 and over are in no way Senior citizens. They are not old, and anyone who has seen the Baby Boomers on the dance floor rocking out to the music of the 60s and 70s, will agree. I recently attended the Healthcare Town Hall in Hawaii (put on by Republican City Councilman Charles Djou. Djou is running for the House of Representatives seat being vacated by Neil Abercrombie. Since the rest of Hawaii’s Congressional delegation apparently has no respect for Hawaii’s voters' Healthcare concerns, a Republican had to hold the Healthcare Town Hall). The “Senior” citizens at that debate were FULL of energy and more than happy to BERATE the poor AARP representative who was there explaining, “No really, we are going to bankrupt the entire country just to protect your benefits, seriously.” He was telling the truth and they still hated him. 65-and-overs will not be retiring soon either. I know lawyers who are still working who are on Medicare and Social Security. In fact, our “Senior” citizens are FORCED to join Medicare at 65, which is just simply a blatant denial of our fundamental freedoms. Where in the Constitution does it say that the Federal Government can force me to join a National Healthcare plan?
I am not suggesting that we ration Medicare or Social Security. I am proposing the phased increase of the retirement age in both plans until they are in parity with the life-expectancy-to-retirement age ratio of 1935. Since we are not just going to raise the retirement age to 78 next year, I suggest that all across the board, the retirement age is pushed back 4 months at the start of every fiscal year. That would probably barely keep up with our increasing life-expectancies, especially since if we pass Healthcare reform we will all be living EVEN LONGER.
The 2nd huge problem with Healthcare that is being totally ignored is the massive Market Inefficiency created by State regulators' monopolies over their own insurance markets. http://www.cato.org/pubs/handbook/hb111/hb111-16.pdf The Cato Institute, THE Free Market thinktank in Washington has a great explanation of this because they are obsessed with Free Markets (as they should be since Free Markets have brought more people out of poverty than any force on Earth).
There are many reasons why States having the monopoly on regulation of their insurance markets is a terrible idea, however I believe an historical example is best. Back when our country started, we had the Articles of Confederation. Those Articles allowed States to regulate Interstate Commerce. What happened was that the States all protected their State industries and taxed all goods from neighboring States to raise funds for their State governments. It was a terrible system and it nearly destroyed our country and it was part of the impetus for the creation of the Constitution.
Today, we seem to have ignored this fundamental tenet of the Constitution, that the entire United States is a Free Trade zone, specifically in the insurance market. I quote the Cato Institute:
"The Cure: Force Regulators to Compete
The original sin of health insurance regulation is not guaranteed issue, community rating, any-willing-provider laws, or mandated coverage laws. The original sin of health insurance regulation is insurance-licensing laws. Each state uses insurance-licensing laws to require every insurance policy sold to their residents to comply with all other insurance regulations.
Insurance-licensing laws prohibit individual insurance purchasers from joining insurance pools with residents of other states. Put differently, they prohibit residents from purchasing out-of-state insurance products that come with a different set of regulatory protections. As a result, insurance licensing laws erect barriers to trade between the states and prevent individuals from shopping for regulatory protections the same way they shop for other insurance features. In effect, insurance-licensing laws give each state’s insurance regulators a monopoly over providing regulatory protections. Those regulators then behave the way all monopolists do: they provide a low-quality product at an excessively high cost.
The best solution would be for states to repeal insurance-licensing laws. Doing so would eliminate government’s ability to use regulation to redistribute income, or to shower rents on favored special interests.
Government enforcement of contracts would continue to provide the financial solvency protections and other safeguards that insurance purchasers demand. If that is infeasible politically, preliminary steps could provide nearly as much benefit to consumers.
With an approach known as ‘‘regulatory federalism’’ the federal or state governments would leave most health insurance regulations intact but would allow individuals and employers to purchase health insurance from other states, regulated by that second state. If a purchaser is content with her own state’s regulations, she could continue to purchase a policy regulated at home. But if her state imposes too many mandates, or prevents the insurance pool from protecting itself from irresponsible and opportunistic behavior, then the purchaser could choose an insurance plan with more consumer-friendly regulations."
This would create a regulatory environment much like Corporate Regulation, where States like Delaware have created a niche for themselves as the best Corporate Regulators. For a full explanation of the benefits, I really encourage you to read the Cato link I provided: http://www.cato.org/pubs/handbook/hb111/hb111-16.pdf
The final big market inefficiency which our current debate on Healthcare ignores and I will address is the government subsidy of Employer-based Healthcare. http://www.economist.com/displaystory.cfm?story_id=13899647 This is actually only a small part of a bigger issue, however it is a critical part that is not being covered at all. The bigger issue is that the incentive structure for Doctor’s pay is entirely messed up and it encourages over-consumption of Medical Insurance by consumers.
Employer-based Healthcare does this by hiding the true cost of Healthcare from consumers. Because their employer pays for most of their medical costs, employees will often request unnecessary tests and treatments because they never see the true bill. The current Healthcare debate addresses the critical problem of incentives; however it still ignore the critical issue of the massive subsidy we pay in the form of tax breaks for companies providing Healthcare. Individuals buying their own Healthcare do not get similar tax breaks.
The one big lie in the current debate where it does touch on Employer-based coverage, is that you will be able to keep your coverage http://www.economist.com/blogs/democracyinamerica/2009/06/what_will_happen_to_your_healt.cfm. While President Obama has repeatedly stated that you can keep whatever plan you wish, the truth is that if you do keep your employer-based plan, the cost will increase if the benefits stay the same.
In summary, I have not read everything there is to read about Healthcare. I have not read all 5 bills currently before Congress. What I have noted here comes from my observations of various Town Halls, the News Media, Print Media and months of arguing with my family and friends. The ideas I have laid out here (Increasing the retirement age, eliminating State regulatory monopolies and replacing the subsidized Employer-based Healthcare tax break with a tax-break for individuals with Healthcare) are not the only problems. Drug companies need to be better regulated so generics come on line faster. Doctor’s incentives need to be fixed. Tort reform is required to cut back on Mal-practice insurance. However, the three main points I have outlined have been largely ignored in the current debate. If they are not addressed, any Healthcare reform passed by Congress will really just be an exercise in futility, one which we will not be able to afford, literally.
Most importantly, no matter what reform passes, this is a debate that needs to be had. I give President Obama credit for starting it. However, his demonizing of the Town Hall protesters ignores their real fears and concerns. His attempt to ram huge changes in our Healthcare system without a national conversation about it could doom us to having a terrible system and it gives reform (which is necessary) a bad name. The Town Hall protesters also need to learn respect. They are indeed being lied too, however the lie is not that “they will get to keep their coverage.” The lie is that we could afford to cover everyone over 65 years old in the first place.
Subscribe to:
Post Comments (Atom)
I heartily agree that we're not having the right debates, and I fear that the Conservatives are going to get the worst end of any new health care plan, because their representatives have made blocking the Democrats their priority over drafting a viable plan of their own. But they're not the only ones guilty about talking about the wrong things. The Democrats seem to only be able to talk about the uninsured as the reason for needing reform, and the media focuses in on whomever is screaming the loudest about the stupidest things. And the public sucks it all down.
ReplyDeleteAlong with the reasons you listed, I'll add some more reasons we need to reform:
1. Our current system has made the general practicioner of medicine an onerous and not very profitable profession. Thats why the best American doctors tend to become specialists, and it is so hard to find a good family doctor. While this does give the U.S. the deserved title of having the best specialized care in the world, it is much cheaper and more efficient to tackle medical concerns with a GP.
2. Insurance companies now supercede the doctor's advice on medical treatment.
3. People who pay in to decent healthcare insurance often can't afford their treatment. For example, it isn't uncommon that a cancer patient that requires 3 treatments a week can not afford the $50 co-pay per visit, and therefore does not get the treatment, despite a lifetime of paying into their policy.
4. Our medical culture has become one of over-prescription, rather than prevention and/or cure.
5. We do pay for the uninsured, in both the form of higher health premiums and diminished service. When I lived in Philadelphia, it was very difficult to get ER care, because the uninsured would flock there. Most area hospitals closed their ERs because they were big money losers. My trips to the ER at that time were costly, unclean, and inconvenient. I once had to take a subway across town with 2nd degree burns from my knees to my ankles to get ER treatment, then there was an hour wait.
6. Our medical record keeping is very primitive. As a result, costly tests and procedures are repeated (X-rays, etc.) and information that could be used to aid diagnosis and treatment are not shared efficiently between doctors.
>In fact, our “Senior” citizens are FORCED to join Medicare at 65, which is just simply a blatant denial of our fundamental freedoms.
ReplyDeleteThis is incorrect. No one is forced to enroll in Medicare. In fact you need to have paid a minimum amount into the system to be eligible for it. What is "forced", which we discussed earlier, is that providers and particularly insurance companies mandate that Medicare be billed as primary, because Medicare itself promotes that. This means that even if you have other health coverage Medicare will be billed, so long as you have it.
>Where in the Constitution does it say that the Federal Government can force me to join a National Healthcare plan?
This is just a silly argument. The constitution doesn't specify a bunch of things that the government can and does do frequently. My favorite example, to spite so-called "strict constructivists", is that the constitution does not give the Supreme Court the right to determine whether laws are constitutional. Judicial review was invented in the Marbury v. Madison decision. Until you start calling for the abolition of the modern Supreme Court, you can quit making arbitrary appeals to a limited view of the Federal government's judicial authority.