Well it appears as if it's been more than a year since my last rant about Health Care, so here it goes.
First, I genuinely believe a society has a responsibility to give everyone a base level of health care. The reason for this is that if you do not have people who believe they will live long lives, I believe they degerate into shortsighted people who are less likely participate in standard consumption and generally are more likely to commit crime. And, like it or not, consumption is what makes our society work.
Second, I believe that at the lowest rate of return, people should be responsible for paying their own way. Yes, I am specifically saying that if you are a 75 year old male with chirrosis, you have to put up the money for a liver transplant. Something on the order of 100% of it.
The biggest problem is highlighted in a piece in the Atlantic Monthly "Putting a Value on Health". Specifically:
...health-care delivery in the United States is notoriously inefficient. Consumers lack sufficent information or expertise to make informed choices of physicians, hospitals and treatments. Also, because most of their health care is paid for by insurance, they tend to overuse the system. Physicians, for their part, usually profit from the tests and procedures they order and perform-- whether or not those tests and procedures are truly necessary.
I'm going to have to disagree with the author on at least half of what he says. Is there really proof that the average person is overusing the health care system? It just seems unlikely... it's not like I'm down at the emergency room every weekend, but the few times I'm there it's not like I see lines out the door of women getting free mamograms. Further, I don't think its the fact that everything is paid for by insurance as the reason consumers are less discerning. It's because the right information isn't really out there.
I agree with the author's main point that health care is inefficient. But then I have two questions: 1) what is the root cause and 2) how can I (or why would I want to) improve it? The root cause appears to be that people simply do not have the information necessary to make the correct decisions. When I have a broken leg, or a headache, it's not like I have a research guide in my back pocket ready to identify where to go for the highest return on money spent. The insurance companies have tried this, by guiding people to specific providers but then it feels like a huge pain in the ass, where I can only go to a physician who some nameless individual in an office a million miles away has approved for whatever reason (ideally this does make for a nice story, "we only approve the top 10% of doctors, blah blah blah", I wonder why that never took off).
But then the second component - why should I be responsible for improving it? Here the problem is that people don't feel enough of the pain. By drawing a line, and forcing everyone below that line to pay for themselves, you create a system where below that line everything becomes hyperefficient, with true market forces. Ah, but imagine if they were all tied together? I wonder if that could work. If you said "If 1000 people a year need coronary bypasses, the line is drawn at A. But if you keep it to less than 900, we'll draw the line at B." Would that encourage the group as a whole to behave better? If you saw a person smoking, would you encourage them to stop? Interesting question, though I'm not sure I want my neighbor to be my guardian.
But finally, there's another point. The cost of goods seem to be spiraling out of control. The author highlights a mention about cataract surgery, originally requiring "up to a week in the hospital and [offering] only uncertain results. Now it's a quick highly effective outpatient surgery." Yet, adjusting for inflation, costs have only fallen 1% y/y. How is that possible? A week in a hospital is only 1% more expensive than a 2 hour visit where a machine does most of the work? Further, someone in the pharmaceudical industry is going to have to explain to me their cost structure. I understand the nature of investments, where only one out of every 10 investments pay off, but do all 10 investments really add up to $500 M in cost? That's about 50 highly paid ($200k/year) investigators and 10 huge lab investments ($1 M each) working for 25 years. Really?
I'm sure there are plenty of smart people looking at this, but I just never see any progress. Sometimes I hope for some kind of crisis that forces a complete revisiting of the system as a whole. One might argue we're already there.
