David Leonhardt writes (HT: Elizabeth Terrell):
is a good way to frame the issue: There is no such thing as a free
lunch. The choice isn’t between rationing and not rationing. It’s
between rationing well and rationing badly. Given that the United
States devotes far more of its economy to health care
than other rich countries, and gets worse results by many measures,
it’s hard to argue that we are now rationing very rationally.
It's an interesting column and I think Leonhardt is maybe half right or maybe even three quarters. He's right that the choice isn't between rationing and not rationing. But I don't agree that the choice is between rationing well and rationing badly. I don't know what rationing well or badly means. He means we ration badly because we spend too much. He's right. The current system doesn't let prices ration. Prices are artificially low. There isn't enough rationing in the global sense.
For me, the crucial question is who does the rationing, a centralized decision-maker or a decentralized system. Centralized decision makers influenced by political pressure inevitably ration badly. Decentralized systems can potentially avoid the problem of political pressure.
The "reformers" want more top-down rationing with prices playing a smaller role than they do now. I want prices to play a bigger role. Prices also play a role in rationing any overall level of care among individuals. This is one reason people tend to be suspicious of prices–they appear to give the rich an advantage. And they let people profit. But those profits produce incentives to control costs that are missing from the current system and that would not be in place in the typical reforms that are on the table.
I want more rationing with less control where power is dispersed. The "reformers" want more rationing with more control and more power. They scare me.
Share
{ 49 comments }
If you prevent prices from working in their job as signals no one can make sound choices.
No one.
It was Paul Heyne's great insight to see that when price signals are eliminated or obstructed, other signals & subjective costs take their place — such as lines, scarcities, waits, unreliable and chaotic production, political quid pro quos, bureaucratic power games, the consumption of leisure, etc.
This is what we are asking for more of in our medical care.
Rationing badly is when price volatility for the good is much greater than price volatility for other goods bought with the same periodicity. This is the essential multi-stage queuing model, and it leads to a formulation for Hayek and economies of scale.
Decentralized systems can potentially avoid the problem of political pressure
Yes and also to maximize their profits from our distress.
Medical care is not always an optional transaction; it is often a nessesity to survive. There is a huge potential conflict when treatment gets in the way of profits.
There is a reason Medicare overhead is just a fraction of private program overhead.
This is a huge problem that has to be solved. Here is a fact: the government is not going to let people die in the streets. Republicans and democrats alike will continue to funnel money to the health care industry with the excuse that they are not going to let people die for lack of medical care.
Given that is the case, do we continue to let private industry write the legislation that lets them protect themselves from market forces such as offering wholesale rates like they offer to every other country.
We are 50% less efficient than other countries. That is the bottom line.
I don't want to hear it is the government's fault: the government is attempting right now to establish the management of the industry in a non-profit way. Let the industry profit from treating people, not from for-profit management.
I have no problem paying for a pill or an operation in a for-profit system. I do have a problem with profits being made by denying me the treatment.
Something has to be done.
Did M. Friedman make a vocabulary error with the word 'rationing'? Rationing implies central planning were goods and services are carved up into small packages and the planners then choose who gets what package. Is the free market not 'rationed' but merely a free association between people who can trade some goods&services for other goods&services?
It's a dumb column in paragraph one, because it ends with an insanely self-contradictory statement: "Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures…"
I don't give damn what all those "measures" are, although excellent cases have been made that they are totally politicized garbage spun by the UN and friends of socialized medicine, as meaningful as Soviet-era Five Year Plan results, or the Chinese Communist's yearly impossible measurements of China's GDP growth.
The only reliable and foolproof measure of the value of an economic good is what people willing pay for it. Since Americans willingly pay for the health care they get, it's ipso facto worth it.
When you find people turning down medical care, saying Naw, this is too expensive, who needs a Mercedes-class heart operation when a Taurus-class regime of exercise and blood pressure pills will work almost as well? or when we see an entrepreneur like Dell eating Blue Cross's lunch by providing cut-rate basic medical care, then (and only then) will I give a moment's credence to all this theoretical posturing about Americans spending "inefficiently" on health care.
We're about to spend inefficiently on health care, I don't doubt. We'll cut the amount we spend on it by 25% (say), and it will be only the cranks who complain that we've cut what we actually get by 35%. Too bad. Seems like every generation has to learn for itself the Fundamental Capitalist Rule: You'll get what you pay for — if and only if you insist on paying for what you get.
"I do have a problem with profits being made by denying me the treatment."
That is the primary mechanism of cost control available to any third party financing system, including government financing.
"Did M. Friedman make a vocabulary error with the word 'rationing'?"
It is a stretch of the concept of rationing as it is usually used, but a very inciteful one. The free market approach is to let each individual ration for himself.
"Centralized decision makers influenced by political pressure inevitably ration badly. Decentralized systems can potentially avoid the problem of political pressure."
In addition, lacking profit/loss, governments inevitably lack direct economic calculation – that is, they have no cardinal unit by which to compare expenditures and incomes. This applies even to 'non-socialist' governments (and indeed, in the Misesian sense a true socialist government would have literally no economy, and no government in history has been totally socialized in this sense.)
The less socialized and/or regulated the economy is, the more effectively the price system works for economization of scarce resources, and the better price-data and techniques the government can mimic.
To K Ackermann,
You commented:
There is a huge potential conflict when treatment gets in the way of profits.
There is a reason Medicare overhead is just a fraction of private program overhead.
We are 50% less efficient than other countries. That is the bottom line.
I would appreciate knowing more about what you mean by the above, and your sources of data for the statistics ("fraction of private program overhead" and "50% less efficient").
"Since Americans willingly pay for the health care they get, it's ipso facto worth it."
This isn't quite true. In fact this statement misses the whole reason why health care costs are escalating so rapidly.
People don't willingly pay for the health care they get. People over 65 have already been forced to pay a great deal for health care, and now they aim to get as much value out of that prepayment as possible. Nobody gives them a refund if they don't use it.
The vast majority of people under age 65 only willingly pay for their health care to the extent that they willingly took a job that provides it. The choice between (income + health care) or (no income + no health care) is not a choice about health care–it's a choice about income.
If people really did have a choice between spending money on health care or spending it on something else, we'd have a very different price structure in the health care industry.
This country has benefited by not having a central rationing authority. But its achilles heel is that it was founded on a system with NO rationing. Only as costs have (naturally) grown out of control in the last 25 years or so have third party payers introduced some form of rationing into the system.
"There is a reason Medicare overhead is just a fraction of private program overhead."
Which probably explains why the CBO estimates waste, fraud, and abuse in the Medicare program to be about 1/6 of its total expenditures. Private insurer's overhead goes toward keeping costs down. Obviously if you simply cut that overhead, you will have a problem with waste.
I think it is incredibly naive to think that it is possible to have a remotely functional market in healthcare at our current level of technology. I agree that there aren't any good answers to the problem coming from the government, but to think that there could be a market in this area is just wrongheaded. The demand is insatiable, the service is frequently required under duress. There is no way we're getting a market out of this.
Now, after another 30 years of genomics research, biotech, etc., it may be another story. The technology may reach a tipping point where outcomes are so good that new technology is geared toward lower costs. But, there is no comfortable way to get there from here. And if your husband gets cancer in the meantime, you're not going to sit down & budget it out to decide whether to go with the $150,000 of chemotherapy or let him die & use the cash to buy that RV you've been eyeing. You can't have prices if there is a widely held moral imperative for everyone to have access to the current standard of care.
I agreed completely up to this point.
This point seems to wander in a dubious direction. My problem with rationing by price is not that the rich may profit. The problem is that the rich may consume far more than others. "Profit" in a narrowly economic sense is a product of investment. Investment is what I do instead of consuming. Consuming more is the opposite of profiting more.
I want rich healthcare providers to profit by providing healthcare. I don't want rich people generally to divert every spare dime to living as long as possible rather than reinvesting profits in other economic growth and innovation.
In principle, every spare dime a man can muster might buy him another scintilla of life, with diminishing returns. My first year of life extension might cost a single dollar while my last second costs a billion, but if I value life extension over everything else, I'll still spend every spare dime on life extension. If everyone values life extension over everything else, we never invest in anything else.
Market capitalism is all about human action, but human beings are not "rational actors" in some ideal sense imagined by market economists. Maybe people rationally pursue every possible second of life at any cost, but market economists don't make this assumption. Market economists assume that investors seek to maximize their profits, not their life expectancy. In fact, people maximize many things other than profit.
Right. The profits aren't the problem. The point you're missing is the excessive entitlement to consume.
No, I consider myself a "reformist" in this category, but I want more rationing where power is less dispersed. I want to ration the health care of the wealthy specifically and then let market prices do the rest. That's a progressive consumption tax. I might also support a little charitable assistance for the poor, but that's a separate issue.
I don't want central planners deciding what health care everyone consumes. I don't want central planners deciding specifically what health care rich people consume either. I don't want central planners deciding how much health care rich people consume versus other personal consumption. I only want entitlement to personal consumption generally limited, so Bill Gates may divide his personal consumption however he likes, but he may not spend his entire fortune on his own life extension.
Being very wealthy should not entitle someone to spend every spare dime on his own health care, even at the expense of burning all the furniture in his business to gain that last second of life, because if he's a rational life expectancy maximizer, that's just what he'll do.
If he's very wealthy, the furniture in a man's business is not his to burn to feed his obsessive human need for life. The business is his to steward for the benefit of the market, and if he values profit over his own life expectancy and other strictly personal considerations, that's what he'll do.
Here's where Ayn Rand missed the boat. The virtue of market capitalism is the pursuit of profit by individuals, but it's not simply about individual selfishness. In fact, the pursuit of profit by an individual is fundamentally an unselfish act.
The problem with our health care system is too much life. What we need is less life and more death.
No. People's children are forced to pay a great deal for their parents' health care. People receiving Medicare benefits today didn't prepay for their health care. They paid for their own parents' healthcare.
Medicare creates a statutory relationship between paying for the health care of older people and becoming entitled to similar payments from younger people later in life.
That's not "prepaying for healthcare". Prepaying for your own healthcare would be building a hospital now that you expect to use later. Medicare doesn't operate this way.
If we'd acknowledge this reality, our healthcare problem would lessen, because typical parents won't starve their own children to extend their own lives; however, people will always demand more from "the government".
People will starve other people's children to benefit themselves and their own children. Natural instinct doesn't prevent that. Lions instinctively kill the offspring of other lions for example. Dingos are female dominated, and female dingos do the same thing.
As we collectivize the obligation of children to support their parents into an obligation of the young generally to support the old generally, and as more older people are childless themselves, the Social Security system becomes increasingly parasitic and burdensome on the young.
The Russians get this now. The post-Soviet constitution explicitly codifies an obligation of children to support their parents, and this obligation clearly substitutes for the former system of cradle-to-grave security from a collectivist state.
I thought Ponzi schemes were illegal.
Health insurance companies are not gouging consumers to make a profit. If that were the case, we would expect to see a profit margin above that of average companies. Similarly, if companies had monopoly power, we should expect to see above average profit margins. Here are some data that I put together
The net profit margin for the S&P 500 is:
Past 12 months: 8.24%
5-yr Average: 12.29%
These are the net profit margins for the largest national health insurers:
2008 Net Profit Margin
Humana: 2.24%
Aetna: 4.47%
Cigna: 1.53%
United Health: 3.67%
Wellpoint: 4.07%
Coventry: 3.21%
5-yr Average Net Profit Margin
Humana: 2.39%
Aetna: 7.14%
Cigna: 6.50%
United Health: 5.72%
Wellpoint: 5.01%
Coventry: 6.14%
I did a bit more analysis here:
http://unintendedeconomist.blogspot.com/2009/06/health-care-company-margins.html
A big part of the problem is that consumers do not face enough variation in their medical costs based on how much they consume. The way the third party payer system currently works prevents prices from being a rationing mechanism.
Russell,
"They scare me."
Yep. What we depend on the government for the government can withhold in order to control us. We already have a world in which the government can withhold social security payments for any number of reasons. Imagine a world in which they can withhold your healthcare, housing, fuel, or job.
Tomb:
As a retired CEO let me assure you that I could have made my "profits" look like anything I wanted them to look like.
You are confusing the issue, which is whether we should be billing patients for the insurer's total middle-man costs and the unnecessary administrative costs they foist on the system. Costs like high CEO salaries and bonuses, unnecessary actuarial costs, broker commissions, gatekeepers, and their costs for lobbying and campaign contributions. All of which are expenses that keep profits (and taxes) down. Plus the added billing personnel required by hospitals and clinics needed to deal with the extra insurers.
There is a better way if you can put pragmatism ahead of ideology, and that's a Medicare-for-all system. For the same dollars we are spending today we could provide first-class Cheney-care to 100% of our population, and do so without rationing and wait times.
But not to worry, our politicians have been well greased with $46 million from the insurance industry to avoid doing what's in the best interest of the people or their business customers.
Jack Lohman
http://SinglePayer.info
VikingVista,
"If people really did have a choice between spending money on health care or spending it on something else, we'd have a very different price structure in the health care industry."
Agreed. And the idea that healthcare is "something that we just have to do" is Progressive mythology. The truth is that we all die sooner or later, and that there is no shortage of people on the planet.
Last I remember reading, the cost of providing health care to the uninsured was on the order of $50 billion per year. So why not just pay it? Just reimburse the hospitals. Free riders would either fall under welfare provisions or become indebted to the government.
"We are 50% less efficient than other countries. That is the bottom line."
Sorry, I can't let you get away with that statement. You really need to define and explain your terms. I have a hunch that after you do there would be some who might reasonably disagree.
"Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures…"
The fact that people travel thousands of miles, and pay out of pocket, to get access to our healthcare system has to say something about its true quality.
"I do have a problem with profits being made by denying me the treatment."
The government will SAVE money by denying you treatment.
Do that make you feel better?
>>Did M. Friedman make a vocabulary error with the word 'rationing'?<<
Uh, Gil, the only thing of Friedman that is being quoted is the remainder of the very sentence that invokes him. Maybe the Times counts on other readers making the same mistake.
I don't favor "single payer", but I admire this candor from a (former) member of the leadership class.
I favor compulsory, individual, health insurance (paying for risk), along the lines of compulsory liability insurance for drivers, not an entitlement to anything the health care industry decides to label "health care" and a taxpayer financed bill paying service. Chronic illness is a separate issue that must be addressed separately.
I don't object to some statutory measure to ensure that people either pay a compulsory health insurance premium or have it paid through some charitable program. I don't want someone with a broken neck or newly discovered cancer going without treatment because he neglected to pay his insurance premium last month.
This issue doesn't yield easily to simple solutions. "Single payer" seems a dangerous idea to me, but if you'll be more specific about what you mean by the term, we might agree.
" I want prices to play a bigger role." Russ
Doesn't price play a role in the current private health insurance system? Aren't there multiple private firms competing for customers? Is it working?
I see it (price mechanism) sending as much as 20% of every health care premium dollar on CEO's salaries, an army of claims deniers and and adjusters and screeners of pre-existing conditions. (none of which add efficiency to delivering health care).
So Russ or anyone lets pre-tend we live in a free market/ price run economy. Lets pretend you are in the lower 20% of income earners and you have chronic renal failure. Tell me what happens when you go shopping the market for treatment? Is Walmart gonna plug you into one of their dialysis machines for a price you can afford?
Anyone?
I really don't think you guys give any hard thought to the real world implications of proposed policies.
Gil: "Rationing implies central planning were goods and services are carved up into small packages and the planners then choose who gets what package."
Economists use what I believe to be the correct definition of rationing:
"In economics, it is often common to use the word "rationing" to refer to one of the roles that prices play in markets, while rationing (as the word is usually used) is called "non-price rationing." Using prices to ration means that those with the most money (or other assets) and who want a product the most are first to receive it. Such rationing happens daily in a market economy. Non-price rationing follows other principles of distribution.
Non-economists seem to be less precise, and uses the economic term "rationing" when they really mean "non-price rationing".
If we're going to participate on an economics blog, then I suggest we be more precise and use the terms "price rationing" and "non-price rationing" when we intend a restricitve use. I also suggest we use "rationing" to include both, which apparently David Leonhardt and Russell Roberts are doing.
Martin, the problem with our current "private bill-paying service" is that it is consuming 31% of our very high health care costs without ever laying hands on the patient.
The best thing we could do is pass a Medicare-for-all system that would cost 10% instead. That 10% and 31%, for the record, also includes the extra billing departments in hospitals and clinics and doctor’s offices.
I don't like "compulsory health insurance premiums" because they just add to the existing burden.
I have Medicare. I get sick, I get care and the caregiver gets paid. With none of the extraneous costs I mentioned above.
If someone were asked to design a system for our nation I'd hope they'd do what Taiwan did. They traveled the world looking at what everybody else has done, and went home and developed a Medicare-like system for everybody.
Now, Medicare isn't perfect and I've lambasted it too. But it is a hell of a lot better than the private for-profit rip-off that we currently have. We are driving jobs out of the country and causing employers great consternation trying to compete with foreign product that does not have health care costs built in (which adds about 15% to the cost of wages). Some, as you know, simply closed the doors.
The alleged problems with health care tend to be grossly overstated in order to justify the government making things worse through socialized medicine.
In addition, it is a fallacy that spending any given amount for health care is even a problem. What's wrong with people deciding to spend money or their well-being? Isn't it a manifestation of a collectivist mindset to even care about the total cost of individuals' spending? Milton Friedman valued, above all, individual freedom, and individuals should be free to determine their own spending.
The first steps in any changes should be undoing destructive regulation of health care and insurance, as well as eliminating government insurance programs. Next, if there are problems of access to insurance, this is a matter of welfare. The government could simply subsidize insurance, e.g., through vouchers. (We don't address alleged hunger through the government growing crops–we issue food stamps.)
Beware of all of Obama's plans. He is engaged in, among other things, the deliberate destruction of the private economy. He lacks the competence, wisdom, or desire to actually improve health care or any other part of the economy.
>>Given that the United States devotes far more of its economy to health care than other rich countries<<
Scary chart from that link. 15% of the 2006's $13 trillion GDP. Why, that's $2 trillion (actually 1.95T) of our GDP devoted to healthcare. Wow!
Let's assume that the federal government budget numbers for 2007 our somewhat close to the 2006 numbers because, well, what's a few billion anyhow?
So I add up a few lines such as healthcare services (Medicaid alone is 300B), health research and training, Medicare (560B), hospital and mdical care for veterans (40B) and the numbers come out to be $983 billion. That's half of the entire $2 trillion amount and it does not include the totals from state governments! For those of the statist persuasion I've got just one question: how in the hell can you assume that we don't already have government-run healthcare when, after adding in what states spend on health, over half the expedatures on health are done by government?
Folks, if the healthcare system seems broken or inefficient, does this information at least go far in explaining why this may be the case? And the solution is to let the government get involved even more? As Barbara Billingsley translated the 'jive' in the movie Airplane, "Golly!"
Jack Lohman: "As a retired CEO let me assure you that I could have made my "profits" look like anything I wanted them to look like. "
Jack Lohman: "it is a hell of a lot better than the private for-profit rip-off that we currently have."
Jack, were you a CEO of a publicly-traded, private-sector company? I ask that because I would be amazed if any such CEO would ever use consecutively in one sentence the words "private for-profit rip-off".
I would draw a distinction between rationing and economizing. In the case of rationing, distribution of a particular good is limited by third parties according to some general formula or central plan. Economizing, by contrast, involves a person allocating their own limited resources in the way that seems best to them.
Whether it's a particularly American trait or part of human nature, people in this country really do not like the idea of third parties restricting their access to care. You can see this quite clearly in the brief flirtation the American health care system had with HMOs during the 1990s. HMOs worked by sometimes refusing doctor-recommended treatment, and in terms of holding down costs they worked remarkably well. Yet they quickly became so hated by the American people that the whole concept of HMO-as-cost-controlled had to be abandoned. By contrast, people with limited incomes have to economize they consumption of valued goods and services every day, and this economizing does not lead to the sort of rage that rationing engendered. Whether it is the added sense of control that economizing provides, or the added flexibility, or some other factor, the fact is that people generally do not view having to economizing their own purchases of a good or service with having their access to that good or service rationed from above.
Beware of all of Obama's plans. He is engaged in, among other things, the deliberate destruction of the private economy. He lacks the competence, wisdom, or desire to actually improve health care or any other part of the economy.
Posted by: DAVID SHELLENBERGER
Yeah, because the economy was in such great shape when it was handed over to him after 30 years of policies people like you and the Chicago School have been pushing.
Ridiculous!
David, I'd have to say that Obama has very good reason not to trust the unfettered free market (and I didn't even vote for him. I voted for McCain).
And if I were still a CEO (I owned an independent diagnostic lab that did patient testing), I'd say "Whoopee!" to your DEregulation of health care.
But I'm not, and if it were only doctors and community hospitals in the loop it might not get out of hand. But now we have greedy CEOs making $10-20 million per year and shareholders who want to maximize profits to their fullest. That's not what I want for my family.
"…greedy CEOs making $10-20 million…"
Actually, I think that the profit in the industry as it is will be a significant obstacle to changing the industry. The profit results in a revenue stream to the government. I think the government is going to find it very troubling the thought of to replacing a trillion dollar or so revenue stream with a trillion dollar or so burden.
First, a bit of a tangential point. If Congress will succumb to $46M in lobbying now, why would they succumb to lobbying later? Such as a $50M donation from a pro-life group to remove abortion performing doctor from funding?
Second, I used to work for a Big tax and audit company, and the law significantly limits how much you can adjust your profits. Companies pay A LOT of money to find ways to right down their taxes. The market also limits writing down profits because stock holders will dump their shares. Plus, since executives are heavily compensated through stock, they have an incentive to boost the price. If a company could increase earnings, it will likely boost its stock price. So it seems unlikely that a company consistently would hide too large a portion of their profits. The executives have an incentive to increase margins. It seems you have forgotten that the market is a check in more than one way.
Third, let's see how much those factors you listed would affect not profits. "Costs like high CEO salaries and bonuses, unnecessary actuarial costs, broker commissions, gatekeepers, and their costs for lobbying and campaign contributions."
Let's take the smallest (in terms of revenue) company, Coventry. And let's look at 2007 (before much of crisis stuff really kicked in).
Revenue: 9,879,500,000
Net Profit: 626,100,000
"Costs like high CEO salaries and bonuses"
Let's give 2 million extra to each of 5 executive: 10M
"unnecessary actuarial costs, broker commissions, gatekeepers"
These are administrative costs. Selling and general administrative costs were $1,789,991,000. Let's say Coventry inflates this number an extra 20% (assuming they haven't done so already)
357,998,200 (for a total of 2,147,989,200).
"lobbying and campaign contributions"
Lobbying for all health insurance companies was $60M in 2008, which was highest year. (http://www.opensecrets.org/lobby/indusclient.php?year=2008&lname=H03&id=). Let's say one company paid all $60M of that.
This adds an extra $10M + $358M + $60M = $428M = 4% of revenue. Let's say Coventry had already taken this 4% write down, to go from 10.34% to the reported 6.34%. Then Conventry's profit margin in 2007 would still be below the S&P 5-yr average.
Health care insurance company margins are well below the average. And if they had monopoly power, like a company like Microsoft has, we would expect to see MUCH larger margins. Compensation incentives will induce executives to maximize share price, profits, and their own compensation.
The numbers tell a story that is different from yours.
closing quotes (hopefully)
blackadder: "In the case of rationing, distribution of a particular good is limited by third parties according to some general formula or central plan."
That may be the way the term is used by the general public, but I don't think that's the way economists' use it. As I understand it, your definition is what economists refer to as "non-price rationing".
Can we use economics definitions on an economics blog?
randy: "I think the government is going to find it very troubling the thought of to replacing a trillion dollar or so revenue stream with a trillion dollar or so burden."
That's an interesting observation!
"I really don't think you guys give any hard thought to the real world implications of proposed policies. " Muirgeo
Do physicians give a hard thought to the real world implications?
Recently I heard the CEO of a company involved with creating the electronic medical records make a presentation to CFA's about his company. After his speech he mentioned that the payback for creating electronic medical records is extremely short — about one week. The reason is that when a physician prescribes a pill the system will reply that there is a generic pill available and ask if it is O.k. to prescribe that instead of the name brand version. The savings from using generics instead of brand names is immense, yet most physicians don't bother prescribing generics. Physicians give excuses about being too busy.
I wonder if the savings are that huge, why don't physicians take a step to help their patients and lower health care costs by prescribing generics? The real world implication is that some of the billions in wasteful spending on health care world be reduced without having government — or insurance companies with their formularies — do it for you.
Close italics
Interesting, before I posted close italics, I saw italics all the way down. After that, previous post appeared properly.
>>I see it (price mechanism) sending as much as 20% of every health care premium dollar on CEO's salaries…<<
Something does not pass the whiff test on this one. Perhaps it's because of where you pulled that 20% number from. Now if you had written shareholders, I would have let it go even though, that number, too, would have likely been exaggerated.
>>Doesn't price play a role in the current private health insurance system? Aren't there multiple private firms competing for customers? Is it working?<<
Too many times, these are not individual customers shopping for insurance, they're other private firms dealing with the insurers to negotiate premiums for their group of employees and they're making their best guesses as they purchase the tiers of coverage that they think their employees might use.
>>So Russ or anyone lets pre-tend we live in a free market/ price run economy.<<
So, do we get to also pretend that people like you have finally seen the benefit of economic liberty and have rejected the distortions of well-meaning but incentive-damaging regulation of the state? If yes, can we pretend this more often as you troll here for reponses?
>>Lets pretend you are in the lower 20% of income earners and you have chronic renal failure. Tell me what happens when you go shopping the market for treatment?<<
Are we pretending that I (we) made the choice to not pay for the insurance before we became ill and now expect to be treated at the same cost as if we were insured and had pre-paid? To answer your question: I guess I pay the market rate if I am worth a damned as a human-being or I visit the county hospital and expect my free luch if I am a parasite on society. Or, there's another option: I show up at George Belella, MD's doorstep and ask for help becase I know that he's compassionate and will take care of my healcare needs with his own resources. And if Dr. Bellla doesn't have the expertise in this area, I am certain he has some like-minded physician friends that he can introduce me to.
>>I really don't think you guys give any hard thought to the real world implications of proposed policies.<<
Ha! I'm waiting for the day — some day after univerasal heathcare/health insurance becomes a reality — that people like you suggest that life insurance should be provided by government and that the premiums should be decoupled from the risk of the individual and coupled, instead, with the ability to pay the premium.
Medical care is not always an optional transaction; it is often a nessesity to survive.
Like food?
Jack Lohman: "But now we have greedy CEOs making $10-20 million per year and shareholders who want to maximize profits to their fullest."
Shouldn't we applaud shareholders who wish to maximize profits to the fullest? I think Adam Smith explained how business owners maximized consumers' welfare when they acted in their own self-interest. History has proven him correct, don't you think?
The problem with health care is that the consumers are generally not in control of their health care dollars.
Changing the identity of the third party won't be an improvement for the consumer.
Well TomB, then we don't really have a problem with insurers taking 31% of the total costs? Then let's go after the doctor who is making $200-300K or the CEO of the local hospital making $500K (both of which I think are okay.)
No, we have a make-work industry that must be eliminated from the loop. The 31% that we are spending on that bureaucracy should be spent on patient care instead. The only way to reasonably accomplish that is through a single payer system that is funded by taxpayers rather than corporations.
TomB: "The way the third party payer system currently works prevents prices from being a rationing mechanism."
I read this all the time, and it makes sense at first. But then I wonder why the intermediary of insurance should matter.
Why cannot the third party payers perform the rationing? Certainly they can – and do – set the maximum amounts they will pay health care providers.
Why can't third parties offer potential insurees a number of packages, with varying terms of coverage? That would include the frequency of treatment to be compensated, the types of treatment covered, the maximum total coverage allowed. By varying such terms, they could adjust the pricing.
Oh, yeah. State laws severely restrict the third parties in the policies they may offer.
Isn't the problem really government interference on the supply side of the health insurance market?