Socialized catastrophic health care insurance for all.

by w3woody

BEN DOMENECH: How Trump Can Fix Health Care.
Many Americans’ greatest fear is that their health care costs will bankrupt them. The quality of care we receive is high — I experienced this myself this month after a cardiac incident left me reading the Republican plan in an emergency room — but the expense is opaque, and Americans are not wrong to worry about these costs.

By providing catastrophic care for all, President Trump could ensure that everyone has an ultimate backstop against medical bankruptcy, while freeing the states to experiment with options for reform. It would also enable the private sector to offer new insurance products to supplement the basic catastrophic care coverage.

This is very similar to another proposal I’ve read somewhere else, where the government back-stops insurance companies when personal medical expenses exceed a large number–such as a million dollars or five million dollars of medical expenses per person. The idea being that if your medical bills reach a life-time cap (say, a million dollars), the government then backstops all expenses above that amount.

The rational for this proposal is that in general, insurance has a few properties:

(1) It protects you from unexpected expenses. That is, insurance is for wealth protection, not for expense payment.

(Presently health care insurance in our country is a form of corporate-provided socialized health care, not insurance.)

(2) It has finite exposure for the insurance companies. Meaning when you insure your car or your house, the maximum exposure to the insurance company is the value of your car or the value of your house–and can be priced appropriately.

(Health care expenses can theoretically be unlimited–but the conflict between constrained insurance company exposure and potentially unconstrained health care expenses leads us to the biggest problem with health care: people who are dumped by their insurance companies who are unable to obtain new insurance. Worse, this generally happens to those who are the weakest amongst us: people who can ill afford not to receive medical care they require.)

To me, the biggest problem with our discussions of health care is that we don’t actually break down the health care sector into multiple different types of care, each delivered with different deadlines, having different expenses and having different economic characteristics.

Those who argue for single payer, for example, often argue that health care expenses are unexpected and unscheduled–and in such a scenario price conscious health care shopping makes zero sense. They are clearly describing ER visits, where there is an emergency–but this actually represents less than 8% of all health care consumption in this country. (Some have argued 2%, as many visits to the ER are non-emergency care requests by people who visit the ER because they have no local alternatives or because they are not insured: ERs are required to take everyone regardless of ability to pay.)

This idea that you cannot shop around for a doctor at your leisure ignore annual checkups and ignore the sorts of maintenance health care visits where someone can easily wait a month or so for their appointment. This idea also ignores “urgent care” visits: visits to nurses for things like runny noses and the like, and it also ignores surgical procedures which are required but which are often scheduled out a month or so. (As an example, I knew someone who had to go in for back surgery to relieve back pain. That sort of surgery is not an emergency and can wait a month or two as the person shops around–and in fact, when his surgery was scheduled, it was scheduled a couple of months out.)

Because of the characteristics of the wide variety of different types of health care in our country, we can in fact split the proverbial baby.

I have no problems, for example, completely socializing the cost of ER care: making ER visits paid for by the government. After all, proponents of single payer are correct, at least when it comes to ER visits: if you are in a car crash, you’re not going to sit in the ambulance, bleeding out, trying to find the most cost effective ER. Same with a heart attack or a stroke: those things require immediate emergency care.

I also have no problems socializing the costs of catastrophic care: having the government pay the expenses of those who have run up huge bills because of an expensive series of medical problems. And the argument I would make is the same as those on the left arguing for single payer: in a country as wealthy as ours, we can afford to pay for the care of the sickest amongst us.

I support both of these propositions because in health care, ER visits and catastrophic care represent market failures: conditions where normal economic activity runs counter to desired social outcomes. You can’t price an ER visit prior to visiting, because by definition visits are an emergency. (I’m ignoring the countless ER visits by people who use ERs as a substitute for non-emergency urgent care because they’re uninsured.) And catastrophic care is a market failure: the economic incentive for an insurance company is to limit its exposure–meaning if you die, that’s an economically desirable outcome.

(Note the second outcome is not limited to the United States. We have reports of countries with socialized health care or with single-payer who allow the sickest to die in order to limit the socialized health care system’s financial exposure. If you have limited resources, and a sick person is consuming as much resources as a thousand healthy people–the incentive is to allow the sick person to die. This is the unfortunate side effect of countries like the U.K. limiting access to cutting edge medicines (because they’re too expensive) or to cutting edge procedures. This is also the side effect of countries like the U.K. putting people on palliative care without their consent, and with putting people on the ‘death pathway’ without their consent.)

But outside of these two areas? The vast majority of health care in this country should have transparent prices and transparent performance statistics–including information about the difficulty of the patients to care, not just the overall outcome of patient care at a facility. (I personally would rather go to the doctor who handles all the difficult cases but has a relatively high success rate despite the difficulty of care, rather than to the doctor who has only handled runny noses for the past few years. That, despite the second doctor’s much higher “success rates” and lower mortality rates: it’s hard to die of a runny nose.)

The vast majority of health care insurance policies should be tailored to the need of the customer buying the health care. If you want to self-insure yourself (covering out of pocket all medical expenses up to the catastrophic limit) you can: this is similar to many state DMVs allowing people to self-insure their car insurance by depositing a bond with the DMV.

Insurance companies should be allowed to compete across state lines, and should give you the option to set your insurance coverage amounts and what you pay out of pocket. (Price transparency would allow you to know how much it costs to go to your doctor.)

If the government intervenes in the insurance business, it should be on the back end: requiring billing standardization so that the work by a small firm to submit an insurance request doesn’t involve a thousand different procedures for a thousand different companies. Governments should also enforce honesty and fairness in the insurance business, looking for insurance scams on both sides of the transaction.

But governments should not standardize the policies provided, nor should they mandate the type of coverage provided. For example, governments should not intervene by requiring insurance companies to cover birth control pills; in such a case all an insurance company will do is add the price of birth control pills to every policy they write, and pocket whatever money is not actually spent on birth control.

This also means insurance companies, consumers and health care providers should be at the front line in deciding what is the appropriate way to achieve care. For example, if it appears consumers want to visit registered dietitians more to help them with their health-related diets, insurance companies should be the ones who decide the parameters for providing such insurance. And consumers should be able to pay out of pocket if they decide to. (Right now, the relationship between consumer and doctor or dietitian or nurse or whatever is strictly dictated by the government–if you have neck pain, for example, the care protocol is strictly regulated and strictly dictated to follow a certain course of action regardless of effectiveness.)

And companies should be allowed to experiment with the type of care they provide. If Walgreens wants to hire a bunch of nurses and provide limited urgent care, they should be able to. If a doctor decides to hang his shingle out in some small town without being tied to an Accountable Care Organization, while making house calls and putting up a “gone fishin'” sign on most weekends, he should be able to. If you want to give birth at home with the help of a doula, you should be able to.

Outside of calling shenanigans, the government should not be involved.