· If we get rid of it, doesn’t that put us back in
the same mess we were in before Obamacare was put out there as a solution?
· Instead of just being negative about the mess
that is Obamacare, why not offer some positive alternatives?
The best starting point is often principle. The economic
principle behind the problem of high health care costs is—something has
interfered with the natural market price. Get rid of the interference, and
prices reach an equilibrium point with demand.
We went through some of this in the November 6th post, showing the
history of government interference leading to separation of who gets services
from who pays for services. I remember a student paper I edited back in college
on socialized medicine. My purpose as a writing tutor was to help the student
make his/her point clearly. But this one I had to say just wasn’t convincing.
And it was with a fellow tutor, so I was allowed to be tougher than on a
regular student. His point was that medicine isn’t like other free market
services, because you never know when you’re going to need the service—so the
solution is for government to step in. I argued that, while I might not know
all the solutions, the pricing problem would be better solved by getting closer
to the market rather than further away.
I did have to think, though, about whether medical care was
different in some way from all other goods and services. It can be unexpected and
unplanned for.
But so can car care. Even with an aging car, there are some
things you can predict. You can, for relatively low cost, do some basic
maintenance that will help the car’s longevity: change the oil, check the
fluids, clean whatever needs cleaning, replace whatever needs replacing. You
can budget in for those things. As the car reaches a certain age, you start
expecting bigger things to need repair or replacement—like transmissions. If
you own an aging car, a good rule of thumb is to expect to pay in repair close
to what you’d be paying in payments on a new car—and then if you get lucky
enough not to have that many problems, you’ve got savings in your budget.
Most of us do typically get insurance for accidents—to help
pay for our own repairs, if necessary, and, even more important, to pay for
repairs of anyone we cause damage to. We can try to avoid accidents with all
kinds of safe driving, but, still, accidents happen. So insurance coverage for those
car versions of catastrophic illnesses is probably worth putting in the household
budget.
We don’t buy insurance to cover basic car maintenance,
because the basic principle is to insure against the unpredictable, not against
the expected. You can, of course, buy maintenance plans, if that helps even out
your budget—but you can be certain the seller of those extended warranty plans
is doing it as a money maker, not as a
service-out-of-the-kindness-of-their-hearts.
Is health care different? Most medical services are
basic maintenance and repair. The costs would have been responsive to market
pricing, if the payer had stayed in touch with the cost. Some people have
pointed out how responsive veterinary medical care still is—because the pet
owner, not a distant insurer, is directly paying the cost.
Would it be a good idea to also budget for unforeseen
catastrophe? Yes, that is what insurance actually is.
The point is, medical care is still like other things we
address through the marketplace. It just looks impossibly expensive—it is.
Because the connection between the service receiver and the payer has been
broken. Any solution has to move in the direction of the market, so that prices
can realign.
Are there any such solutions?
Yes. Yes, actually, some of these have been on the table
since long before Obamacare. The standard list includes: allow insurers to
offer policies across state lines, increase use of health savings accounts,
encourage low-cost clinic care for the uninsured rather than emergency rooms.
The list was repeated by Senator Ted Cruz on Tuesday’s Mark Levin radio show. Cruz suggests we repeal the entire Obamacare bill and start
over. And what then? I transcribed a few paragraphs:
[At 5-minute mark]: We ought to enact real healthcare reform,
that allows people to purchase health insurance across state lines…. Economics
101: if you want to expand access, cost is the biggest barrier, and ideally we
should see a marketplace where cost goes down and people have a lot more
choices…. We ought to empower patients so that insurance is personal, it’s
portable, it’s affordable. Like your car insurance, it goes with you from job
to job and you own it. And you can buy it across state lines. That would do far
more to improve healthcare than anything in Obamacare.
[At 7-minute mark]: If
we would simply allow people to purchase health insurance across state lines,
what we would see is a 50-state marketplace—real competition—so that, for
example, young healthy people, many of whom don’t have health insurance now; if
they had the access to low-cost catastrophic policies, they may well choose to
buy it. But if a 22-year-old single man has to buy a comprehensive plan that
covers everything, including a hip replacement, which he’s not going to need
for 50 years, he’s not going to buy the insurance, because no one wants to
spend the money that Obamacare is trying to get people, to use to subsidize
other folks. It’s a totally misguided policy.
[At 14-minute mark]: Imagine
three years ago, when this was being debated, if President Obama said, “I’ve
got a great plan. I’m going to take away the healthcare of 5 million Americans
in order to cover 100,000. And while I’m at it, I’m going to jeopardize the
healthcare of 100 million Americans who have employer-provided plans…. And
while I’m at it, I’m going to cost millions of jobs and force millions of
people into part-time work, working 29 hours a week.” Is that a good deal for
America? People would have laughed at it. If he’d simply been honest, he would
have been laughed out of the room…. [When he said you could keep your plan] He “misspoke”?
He said it 28 times, unambiguously. Because the only way to sell this law was
to mislead the American people.
There are a few out-of-the-box ideas as well—as you’d expect
from a real free market. I’ve heard a couple of interesting interviews recently on
radio, with doctors who suggest a new model for basic medical care. A few days
ago I wrote down a name to look it up later. I found an article about the model
presented by Dr. Josh Umbehr. He has a practice in Kansas, along with two other
doctors and one nurse.
 |
| Dr. Qamar of MedLion Direct Primary Care on Fox Business News |
He calls it a concierge
model. It’s also called direct primary
care practice. Families pay a set fee, something like $50 per month per
person, and get access to their primary care doctor as needed—by phone, in
office, whatever is needed. Like having your doctor on retainer.
Prescriptions can be filled at very low wholesale rates.
Many tests can be done at minimal costs as well. Off the bat, there’s an
overhead savings of 40% just by avoiding insurance paperwork. This type of
service covers the basic maintenance issues that you need to budget for, not
hedge your bets against with insurance. They encourage people to additionally
get a low-cost catastrophic policy, or self-insure with a health savings
account if they can.
When I was searching for more information about this idea, I
came across an interview on Fox Business News on November 13, with Dr.
Samir Qamar, of MedLion Clinics. His plan seems similar to Dr. Umbehr’s. It’s a
model that can be picked up by primary care doctors across the country—to save
money for themselves and their patients.
When there are pricing problems, there are always market
solutions. Even when the product is medical care.
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