US Controversies and Big Ideas 2008 and Beyond

Individual Mandate for healthcare: the flawed comparison with auto-insurance

In the make-belief world of the current administration, supercilious comparisons are made to justify its proposed programs which have no basis whatsoever in reality. Fallacies abound and seem logical to the unsuspecting. One clear example is the justification for an individual mandate for health care. “Just like compulsory auto-insurance is mandatory, so also for health care”. Yeah, that seems like a straightforward and reasonable justification.

It goes a step further. An auto accident could cause damage to another person who probably does not bear any responsibility for it. Such a person needs compensation for the harm caused to him. The person who caused the accident will be able to pay only if he or she has an insurance plan. Similarly, the administration argues, everyone needs to have a health insurance plan to pay for their care rather than end up in an emergency room where they cannot be denied care. That society would otherwise pay for their care.

First, the individual mandate for auto-insurance does not require drivers to pay for comprehensive insurance. They only need to pay for the minimum level of liability coverage. The individual mandate for health insurance, proposed in the conceptual plans, are required to meet the standards of coverage that the Government requires each person to have which would now include pre-existing conditions. The comparable auto-insurance would include not only comprehensive coverage but also costs of repair and maintenance including oil change!

Just like a person whose auto-liability insurance includes only the minimum coverage will have to pay out-of-pocket for any amount in excess of it, the individual mandate can at the most require a minimum level of health coverage.

A more efficient alternative to individual mandate is   health savings plans. For those with very low incomes, the government could provide vouchers to fund the accounts. This would be akin to earned income credits. For emergency care, the expense could be paid over an extended period of time to cover the deductibles. The rest would be covered from the insurance plan.  

The Sophistry on Medicare: The case against Government takeover

What the Democrats lack in governance, they make up in sophistry. The issue of Medicare and Government takeover is just one example. They sneer at the apparent hypocrisy of Republicans who have taken on the role of opposing cuts in Medicare. “If you are against Government takeover, why are you supporting a government program like Medicare or even Medicaid? Similarly, the Democrats chide the elderly for opposing government takeover while insisting on retaining their own government health program.

Given an option, the Republicans are inclined to offer choice and private services to the elderly. The Medicare Advantage program was launched for precisely that reason. And the Democrats are viscerally opposed to Medicare Advantage. Better still, the Republicans would be inclined to simply offer vouchers to low income or retired folks which they can use to pay for privately delivered services.

The Medicare program has already been paid for by the elderly—it is now their turn to benefit from the investments they have already committed. That the Democrats are now considering the reallocation of funds from Medicare to their universal care experiments is only confirmation that the government cannot be trusted to comply with social contracts. When public finances are mismanaged, governments will be inclined to raid cash hordes.

The rationale for Medicare and Medicaid or for children’s programs for healthcare was not that Government provision of health is generally better than private delivery. Instead, the premise was that private markets fail to function when the elderly, the low income folks and children don’t have the purchasing power to buy health care.

With advances in knowledge about the health care business, its time to look at alternatives. The elderly can take care of their health needs if they are able to save money in their health care accounts over their working life. The poor and children of low-income households can pay for their health care with vouchers.

The Democrats are looking to make cuts somewhere to pay for universal access because they refuse to institute incentives which will help to cut costs. Resources are scarce and increasing demand for health care can only be fulfilled by supply side reforms including competition in the health care industry. The Democratic program cannot possibly increase access so they will only redistribute resources from one group to another without improving the overall system.   

 

Political quacks prescribe wrong medicine for health policy

Among the welter of brain dead notions propagated by an ossified Democratic Party is the idea that universal access to health care will necessarily improve the quality of life in the USA. Their spokespersons cite the higher life expectancy in their own mecca in Europe. The reality is that citizens in countries like Canada are pressing for access to health care in the private sector especially in its Western provinces. Also, health tourism in Canada is rising as its citizens,unwilling to wait for care, are traveling to countries like India where they can buy care at a lower cost. This is the kind of failed "universal care" system that Democrats are prescribing for the USA.

In the final analysis, access to health care will depend on its costs. Efficient use of resources can free resources that can be shared with those who do not have the means to pay for their health care. Just like food stamps ensure that the poor can eat, health vouchers could be used to help the uninsured pay for their care. This can only happen if the patently inefficient health sector is reorganized to lower costs. Walk into most doctor's office and you will still see paper files! Yes, here in the USA.

All too often patients are unable to distinguish between disease and a wellness issue. For a long-time, I suffered from stomach acidity, diarrhea and similar problems. All tests, however, showed that I was fine. Much later, after doing my own research, I realized that I had a digestion problem which could be cured by consuming fibrous foods, eating whole grain bread and by avoiding gluten. Doctors, on the other hand, were mindlessly prescribing pills which aggravated the problem. Many others told me a similar story. Just imagine how much money must be lost in the absence of elementary education about common conditions best cured by home remedies.

Recently, the Milken Institute has assembled facts to show how easily health costs can be lowered in the USA. Obesity and smoking account for a very high share of the trillion dollars that it costs to treat chronic diseases like diabetes, pulmonary problems, etc.  Surely, this is something that individual responsibility will help reduce. If we had to pay insurance premiums and not our employers, we will pretty soon see sense and lower our weight. Similarly, we would quit smoking.

Most individuals are daunted by the prospect of paying for their own health care. They tend to overlook the benefits; their health premiums will be reduced if they take preventive measures to improve their health. If they stay well, the value of their health accounts will continue to increase and could be later used for their retirement.

Costs are also high because doctors are unable to absorb all the information they need to prescribe the best therapies. I was reading recently about a study which looked at how doctors treat infected tonsils.  As a  parent, I was aware of two contrary approaches to treatment of tonsils of my then young child; you either live with the recurring cold and cough that he suffered or have the tonsils removed. This study that I incidentally read in the book "Random Walk down Wall Street" found that in a sample of patients, half were advised to live with the problem and the others to have the tonsils operated. When those who were advised to live with the problem took a second opinion, half were recommended an operation and the others to live with the problem. Again, those who were advised to live with the problem were taken to other doctors and the result was the same each time. This is like rolling a dice to come to a conclusion.

The fund of medical knowledge out there is just too much for individual doctors to absorb on their own. Doctors need information technology that can help store data on the procedures followed and the outcomes. They can then rely on statistically valid approaches besides their own individual judgment rather than take chances with their patients.

In the end, common sense will help solve problems in the health sector. This is entirely missing in the way Democrats think....