As we consider how to change healthcare, we might want to try to do this slowly. You can find Steps 1 - 3 below in this blog.
Price is a function of supply and demand. This is true of healthcare and health insurance. Every participant, even the government, must make a profit or at least break even for the system to work. That means that as we increase supply and options in health insurance and work to lower demand, or slow its growth through wellness, we must reduce costs so that providers can make a profit charging lower prices.
Step 1: Remove State regulation. Federal preemptive national regulations will level the playing field. Eliminate oligopolies by large insurers who can afford these regulations, allow innovative players into the market, both of which increases supply.
Step 2: If groups of people can band together to purchase insurance or self insure, using professionals to negotiate and set up the plans, insurance and care will become more efficient and wellness will be encouraged, thus lowering demand.
Step 1 and Step 2 increase supply and lower demand, which will lower prices. They will also reduce costs, allowing for profits at lower prices.
Step 3, commissions and volume bonuses paid to brokers may self-correct once Steps 1 and 2 are undertaken. Larger groups will negotiate better rates using professional insurance consultants, making brokers obsolete. In the short term, commissions and especially volume bonuses create conflicts of interest and impact the rising costs of healthcare.
Step 4: President Obama received promises from health care providers that they will reduce the costs of health care by, in part, lowering the number of extra tests and procedures.
This will only happen if there are no negative ramifications for doing so. If tests are reduced and a person dies or becomes permanently disabled, the plaintiff’s attorney will argue that a simple $2000 test covered by insurance would have uncovered the illness and saved the child. When the plaintiff and the weeping mother win that case for millions, doctors and hospitals will be forced to perform that and any other possibly relevant test again. The costs of the test are far outweighed by the potential costs of litigation. The insurance companies will pay for the tests and costs will skyrocket.
I think that trial attorneys provide a valuable check on incompetence and negligence. That being said, there will have to be some very clear guidelines set that establish what tests are warranted in what circumstances. Those laws and regulations MUST protect healthcare providers against liability if they follow those guidelines. These guidelines can be adjusted over time, but not retroactively.
In a cheaper system, people die or become disabled from unusual diseases that present as normal diseases and require special expensive tests to identify. If we are not going to do these tests routinely, providers cannot be punished when that is not enough.
Governments of the people have a hard time sacrificing a few to reduce the costs of the many, even if it is so that the many can receive a basic level of care they cannot get now, without which even more children die or become disabled. This will be a tough, but necessary decision.
Unfortunately, even if passed the law will last until the first parent goes on national television holding their dead or profoundly disabled child who did not receive that $2000 test that could have saved her. The law will be changed. Healthcare providers will be forced to provide all the extra tests again. Costs will rise.
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