Bring Healthcare Home Where It Belongs

The breaking news this morning is a report that representatives from ‘the health care industry’ have developed a plan to save $2Trillion dollars over the next decade so that the President can get his universal health care plan.

This bit of news should send warning signals to everyone involved.  The gist of the story is that the “health care industry” sees the need for a preemptive strike to save their enterprises from federal intervention.  They hope that they can avoid the fate of the auto industry and the “Chicago Way” which has forced enormous change upon them.

As I’ve been reading and listening to the run-up of this topic in the past couple of weeks, I kept returning to one important point — Why has health care become so completely intertwined with employment?  Why is the government, under Obama’s plan, making it mandatory for employers to offer health insurance and penalizing those who do not?  It really makes no sense to do this.  Think about it– employers do not provide automobile or homeowner’s insurance, and those issues are at least as important; more people have auto accidents than need heart transplants.  Without a car,  you can’t get to work in most cases–so why isn’t there a need to do this?

The answer is probably not easy to come by.  With health insurance being the responsibility of the business that employs you, it relies on another business to provide it.  Two business entities that require something of each other can develop effective and low cost solutions–that’s capitalism.  However, what’s missing in this case is that the receiver of the services, the employee, is not part of the process, unless they are inserted into the mix through labor unions (another business entity–you can say all you want about their role as worker’s representatives, but their control of union dues, etc have turned them into businesses). The medical service (hospital/doctor/clinic) is added to the group to actually provide care when needed, so a fourth business entity, with its own requirements, adds to the complexity.  When you add government regulators to the arena, you now have 5 large entities with bureaucracies all interacting with very little concern for the actual ‘customer.’  No wonder the system is so ineffective and costly.

Going to ‘single payer’ systems or government run health care only solves part of the complexity.  The union no longer needs to be significantly involved because there’s only ‘one plan.’  The insurance companies willl still be involved, but like companies which support Medicare, their role is to be a ‘government contractor’ and to make everything a ‘commodity’ (not much room here for innovation or improvement). Companies will still need their staffs, government staffs will grow even larger, and hospital administration will become as streamlined and effective as the local tax office or IRS (which it is already–it can only get worse!).  Doctors and health care providers will only be allowed to charge set fees, so their ability to increase revenue will wither away and they will not be looking to establish new ways to treat patients that are not part of the ‘authorized treatments,’ since they may not be reimbursed by the system.  In short, this is a terrible future ahead.

Now, back to my original point.  Look at auto insurance, for example.  There is a robust set of companies offering something that is required by law.  Some state government insurance commissions have limited oversight to ensure that consumers are not being ripped off, and most states have minimum mandatory levels of coverage–but other than that, the intervention in the marketplace is fairly benign.  Consumers are free to choose whatever company they want, and the competition for individual consumers helps the companies innovate and keep costs low (think GEICO, Progressive, State Farm, etc.).  The auto insurance companies provide consistent competitive pressure on the ‘health care providers’ (in this case auto-body shops and the like), and in general the system works pretty well.  The auto insurance companies have also pooled resources to study car crashes and recommend design changes (airbags, crushable bumpers, etc) as well as supporting ‘cultural changes’ like not driving under the influence, car seats and the like.  It is true that they have a robust set of lobbyists in Washington and the state capitals, but their legislative efforts don’t appear to be outside the norm.

In general, the systems seems to work OK, without having to go to your employer’s HR department, talk to your union rep, or call the insurance company’s national headquarters. 

The same is true for life insurance, even more so.

So why does health insurance need to be so different?  I think we would be far better off without the layers of involvement.  I would much prefer having the options to set up a Health Savings Account and go find a health insurance provider on my own, and have that insurance ‘honored’ by the health care provider of my choice.  With the internet and availability of information, I believe that ordinary consumers would be better off working the issues on their own behalf.

The alternatives being discussed with government based health care are just plain awful.  We need to break away and ‘think different’ before it is too late.