In the last several posts on health care it is often pointed out that health insurance companies engage in dubious practices. For example, they’ll deny coverage for the most trivial of reasons. Many posting comments focus on this issue as well as others such as quality of care, the moral nature of providing health care, and so forth. While these are indeed problems with out health care functions here in this country my contention is that these are all side issues. The main issue is money.
For example, suppose we end the practice of denying people health care for pre-existing conditions. What would likely happen? The costs of health care and health insurance would probably rise. People with pre-existing conditions would have easier access to health care, and since they have pre-existing conditions health insurance premiums would have to rise and they’d also likely consume more resources driving up the costs of health care in general.
How about ending the practice of recission, what is the likely impact on health care costs? They would likely go up. People who would have otherwise had difficulty obtaining certain types of care would now have a much easier time. Hence they’d consume more resources driving up prices.
Then there is universal coverage. While it is unlikely that we’d obtain 100% coverage, we could probably get pretty close. But what would happen to costs? Again, people who don’t have easy access will have easy access and will in all likelihood consume more health care resources than they otherwise would. The most reasonable prediction is that costs would rise.
However, making all these changes is also desirable. Making sure that people with pre-existing conditions can obtain medical care that is not financially ruinous is a good thing. So is preventing the cancellation of an existing insurance contract for a ridiculous failure to report a minor health issue. But ending such practices alone will not improve the health care picture. In fact, it could very well make the picture bleaker by increasing the rate of increase in health care costs.
The big issue with health care is the costs. Both the magnitude and even more importantly the growth rate of health care costs are the primary reason for health care reform. I’ve described the health care issue as driving towards a cliff. Solving just these other issues is like saying you’ve adjusted the mirror, turned on the air conditioning, and tuned in a really great radio station. Sure they can be nice and helpful, but once you go sailing over the cliff they wont mean shit. Really.
Now ideally we’d like to control costs and maintain the current level of care or if possible improve it.[1] Addressing the costs issue should encompass both the demand side as well as the supply side of the issue.[2] Also, we can’t just look at other countries and implement that system and expect the same results. As Dave Schuler noted, Switzerland and the Swiss have a very different outlook on things than we do in the U.S. Part of the success there might hinge on that different outlook. Also, there is the size of the population. For example, Singapore has a pretty good health care system. It is also a tiny country with a miniscule population in comparison to the U.S. It is unreasonable to expect linear scaling if we were to move to the Singaporean model of health care…it might work, but the differences in size is pretty large making it a dubious proposition. Still, we should look at these systems that are doing better than the U.S. on the costs side of the issue. Maybe there are things that we can learn and implement here.
If the issue of costs and the rate of growth is not addressed, then none of the other stuff matters. We will eventually go right over the cliff and then all bets are off as to what will happen.
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[1]Improving care while contorlling costs will be very difficult, as the saying goes, “Faster, better, and cheaper–pick two.”
[2]Please do not read “supply side” to mean the macro economic policies that were popularized under Ronald Reagan. I’m talking about dealing with supply issues, the number of doctors, nurses, hospitals, drugs, etc.
