Which policy is best for health? No money spent on health? So let’s raise taxes to pay for health? Or pay for it without raising taxes? The United States spends about 18% of GDP on health. That’s more than most of the industrialized world. It also costs less than most countries. The three main components of that 18% are spending by the federal government, state and local governments, and individuals.
There are a couple of caveats. First, health spending does not include the costs of spending on education and the provision of goods and services (that includes health insurance). Second, costs are divided into components, the cost of medical care and drugs, plus administrative expenses. The cost of medical care and drugs includes such things as hospital fees, physician fees, pharmaceuticals, ambulance rides, and the like. Administrative expenses include things such as purchasing insurance and payroll taxes.
So, given the logic of this discussion, what would we need to do to move toward a system of universal health insurance that has the following characteristics:
- Health care is paid for as an inescapable and universally covered benefit with no co-pays, no deductibles, and no annual limits on coverage.
- There are no overpayments for sick or excessive use of care.
- There are no patients who have no coverage at all. There are no people who have to go to the emergency room because they cannot afford the bill or who lose their job and can’t keep their job so have no insurance at all. There are no elderly people dying in the streets because they don’t have health insurance.
- Private insurance companies and the middlemen such as drug manufacturers have a financial interest in providing good quality health care at low prices.
In short, I think we should move toward a system like Medicare that is financed by taxes on all of us. You might think that Medicare is unaffordable and you would be right. But Medicare is financed by taxes, unlike the health care bills we now pay for. Under our current system, health care providers pay directly for every extra dollar we pay for health care. It’s a great deal for them, but it is not a great deal for us.
The big problem with our current system is that we have a wide variety of fee-for-service payment systems. Each provider is paid according to the services rendered. The people who set up these payment systems believe that providers should be paid by the number of services rendered.
But it does not make sense to pay people by the number of services rendered. Providers should be paid by the value of the service they provide. The higher the quality of the services, the higher the payment should be. To determine the value of services, we need a set of objective measurements of those services.
On the other hand, it is very hard to measure value. This is the major problem with the existing fee-for-service payment systems. Until we can measure the value of the services provided, providers cannot be paid a reasonable amount of money. In other words, we cannot determine that services should cost X. We need to move toward a system in which providers are paid a fixed fee per unit of value.
Because there is no single source for deciding how to pay providers, they have little incentive to provide quality care. We need to get away from a system in which a health care provider can be paid a flat fee for his services. We need to move to a system in which health care providers are paid according to the value of the services they provide.
It’s a really tough problem, but we can solve it if we work together. That’s what our current health care system is not. It is a group of stakeholders with different goals and interests that are unable to come together to agree on a single solution to a complicated problem.
Here is an example. The insurance companies and drug companies, which are driving up the cost of medical care, are not really interested in having the public have affordable health insurance. The pharmaceutical companies are happy with high prices because it gives them a profit for their products, but they would not be so happy if the cost of prescription drugs were reduced. The health insurance companies are not very happy because they cannot pass along their rising costs to the consumers, so their income is not growing.
Similarly, doctors and hospitals are not interested in providing quality health care for low prices because they want to make a profit.
If we worked together, we would come up with a solution to this problem. We would establish a set of objective measures of the value of services. We would determine an appropriate price for the services provided. We would then have an entity that is responsible for paying providers according to those values.
This problem is not unique to health care. This is what drives a lot of the expense and inefficiency in other industries, such as car-making and computer manufacturing. Once upon a time, there was a single source of determining a value for these products. It was called the market. The manufacturers and suppliers decided what value their products had. Then they passed that value on to their customers. The customers were happy because they were buying a product that offered them value. The vendors were happy because they were able to earn a reasonable profit.
Eventually, however, this system broke down. There were too many businesses competing against each other. The owners of the businesses decided to consolidate their business interests into just a few large companies. The prices of the products were set in a different way. Now the buyers were the shareholders in the companies, not the customers. They were willing to pay higher prices to get the products.
I believe the market in health care is going to break down as well. Once we are able to have an objective system for determining value, then the market will work again. It will be able to determine the value of health care services so that they will be affordable. Once this is accomplished, the doctors and hospitals will once again be able to set the prices of their services. They will earn a reasonable profit, and consumers will once again have access to services at affordable prices.
More and more people in the United States are becoming aware of the fact that the current system is not working for them.
I have received many letters and phone calls from people who say that they are currently on Medicare and want to know how they can stop paying. They know that Medicare does not cover a sufficient portion of their medical expenses. They know that Medicare does not pay enough to provide a high quality of care. They also know that Medicare does not pay enough for their medications.
The government is looking into ways to reform our health care system, but their reform plans do not have the right solution to the current problems. It is important for you to know the right solution. I am telling you the right solution to this problem now.
How do we change the current system so that we can get out of the health care trap?
I believe that we need a single-payer health care system. Let me explain.
I used to work for my father-in-law who was a physician. He was also a businessman. He owned a small business. He and his wife owned a small restaurant. He provided his services to many patients. The food was good and the portions were big. The portions were big because the patient was paying for all the services, not just the payment for the medical services. The physician did not bill Medicare and Medicaid for the food that he provided for his patients. The patient was paying for the food that he consumed as well as for the medical services provided. The physician billed his patients directly. His patient was making the payment for the services that he provided, not the government.
I worked for my father-in-law when I was a young man. I liked the business. I always made a good profit. I would have earned even more if I did not have to pay my share of the health care expenses for the people who were insured by my father-in-law. My father-in-law paid these costs for his patients because his patients were paying for the services that he provided them. Patients are paying for their own medical services. Doctors are making a profit by charging more for the services they provide. They are not paying for the costs of treating the patients. Medicare and Medicaid are paying for the costs. Doctors do not bill Medicare and Medicaid for the cost of treating patients.
If you are an employer, you have paid this expense for years. As an employer, you have paid your share for years. Your workers are paying their share. Your customers are paying their share. The people who have insurance are paying their share of the costs. Everyone is paying their share.
It should not be so complicated to provide a medical insurance system in the United States. All we need is to have a single-payer health care system. It should be an insurance system that operates on a not-for-profit basis. It should be a system that operates like your automobile insurance. Your insurance company does not need to make a profit on the policies they issue. The insurance companies have an interest in preventing you from having a wreck. Their interest is not in making money on your wreck. Their interest is to make sure that you are safe when you are driving.
All the people who are insured by the insurance companies are paying their share of the costs. There is no profit to be made by the insurance company.
The insurance companies and the people who are insured have the same interest in preventing accidents. The people who have cars are paying their share of the costs. The insurance companies are not making money for the people who have cars. The insurance companies have no profit motive. There is no profit to be made by the people who ensure the cars. There is no profit to be made by the people who make the cars. There is no profit to be made by the people who insure you when you are driving your car.
The insurance companies and the people who are insured have the same interest in providing you with safe driving.
