Wednesday, April 4, 2012

Some Final Thoughts on the Affordable Care Act

Yesterday I addressed  the second of two links from a conservative alternative to Obamacare.   In that post I focused on the problems with the suggested alternative basically claiming that the market would provide "health status" insurance to address the risk we would all face if we only had an individual insurance market and premiums became unaffordable when our health status changed for the worse.

The need for this type of insurance comes to play only if we can successfully jettison the employer-based insurance system we are so dependent on today.   Dumping employer based insurance is an idea Cochrane embraces because it's the result of a deeply regulated system.  Employer based insurance only exists because it's heavily subsidized through the tax code.  Get rid of the tax code subsidies, employer insurance gradually goes away.

I do want to focus this post on the points of the link I agree with.  In part, one reason health care is so expensive, and increasingly so is because we don't currently have a functioning health care market:
In a functioning market, like car repair, or vet services for your dog, you can pay cash and receive services. Lack of insurance is only a problem for a small sliver of people who don't have enough money for an unexpectedly large  needed service. But it's essentially impossible to just pay for health care.
Paying for health care out of pocket gives you freedom.  Making health care extremely expensive to the point you need health insurance to make the purchase for you limits your freedom.   We paid for the birth of our last baby completely out of pocket with the help of a flexible spending account allowing us to spread the cost through the year.  We had the baby in our home delivered by a naturopathic doctor.   It was significantly cheaper than a hospital birth and we had complete control over how it went.

Our hospital birth babies were much more difficult, expensive, and we were forced to do whatever the doctors and nurses at the hospital ordered.   Since cost is no object, the hospital always errors on the side of caution and intervention which often went against our less intrusive  Bradley-inspired inclinations.

To get to the ideal in health care, we really need to nurture a system where routine and predictable services (yes including most child births) are covered and paid for by the person consuming the health care.  Let the consumer of the health care make the decisions.   Make health care providers accountable by allowing the consumer to walk with their feet.  Today, this option is not as available.

The problem, however, is that even routine and predictable health care can be out of reach for the very poor and we even routine health care needs, in a compassionate well-run society, to be universally accessible.  Which is why, the idea proposed at the end of this article resonates with me so much:
And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers—by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care—we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.
A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care—with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.
The gist of this suggestion is to have a single-payer comprehensive catastrophic insurance policy for everyone.  And by catastrophe, the author means catastrophe, like anything over $50,000.   Chronic conditions with expensive annual costs would also qualify.   Beyond that, everything should be picked up by the consumer with Health Savings Accounts that could be subsidized for the needy and borrowed from for the young to pay for large but non-catastropic expenses.

The ironic thing is that it's much easier to get here from Obamacare than from pre-Obamacare.  Robert Robb has a similar idea to above and describes how Obamacare can be fixed.   The Obamacare exchanges can be migrated slowly over to the catastrophic care described above.  The government just adds HSA to the mix and we're almost there.  Medicare and medicaid could also be rolled in.

How do you get there from here without Obamacare?  With the mess of a crazy mix of medicare, medicaid, employer based subsidized insurance, and the young completely opting out we are currently experiencing?  The answer is you can't.  If the courts renders Obamacare unconstitutional, then our hands are tied.

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