Thursday, August 20, 2009

How to actually improve Health Care in the US

Posted by BigDog

Largely, the US medical system is second to none in terms of service, responsiveness, ease of access, and advanced medical technique. There are some issues particularly in very rural areas that lack enough doctors. However, the main problem is cost - rising costs, who pays for it and how.

So what do we do about it?

1 - Tort reform. Two factors are in play here. First is the cost of 'defensive medicine' - the practice of ordering a lot of expensive tests and treatments just to avoid any possible lawsuit. This adds up to hundreds of billions of dollars a year. Second the cost of outrageous lawsuit awards directly drives up medical costs by making liability insurance expensive - not to mention opportunity costs associated with the suits themselves. We all pay because some lawyer got rich.

The example to follow here is... Texas! Texas capped non-economic damages and put a time limit on when one could file suit. The results are spectacular! Not only has liability insurance dropped by double digits, but the result is that more doctors are moving to Texas and into underserved rural areas.

This is a great example of consequence. The consequences of unjust tort law doesn't just effect lawyers and insurance companies, there is a chain reaction of poorer services, higher costs and inconvenience for everyone. We all suffer so guys like John Edwards can get rich.

2 - Allow insurance policies to be accessed and sold across state lines. This means that someone in New Jersey can buy a policy in Pennsylvania or elsewhere subject to the oversight of the state in which it is sold. This reform would simplify and modernize our insurance markets. If another state has a better insurance policy, why shouldn't you be able to buy it?

Each of these reforms would save the American people hundreds of billions of dollars a year and would cost nothing to implement.

Other useful reforms that don't cost much if anything:

Make insurance policies personal property. This goes along with insurance policy portability. The insurance policy is owned by the individual who takes it with him/her when he moves or changes jobs.

Freeing up occupational licensing. There are a lot of petty rules which govern who can do what with a medical license. While some regulation is needed, the rules are increasingly byzantine. Many simple procedures can be done by nurses, nurse-practitioners and other medical professionals without bringing in more expensive professionals.

Make medical providers to post their prices. Every other business has open, transparent pricing. When you walk into a restaurant there is a menu. Prices of groceries is on the shelf or on the item. Auto mechanics give you an estimate before they start work. My veterinary surgeon gave me a high and low end cost estimate BEFORE she did surgery on my dog - and she signed it. But if you go to a hospital, they hand you a bill afterward. This is wrong. They don't want you to know that they charge one thing to one person and another to the next. In part this is because Medicare and insurance companies won't pay the full amount - in medicare's case only a fraction. Up front pricing would help, allowing consumers to compare prices for services.

Get rid of the Medicare, Medicaid and VA bureaucracies, instead simply buy a private policy for those groups. I have mentioned this in a previous thread. The idea is that instead of a gov't run 'insurance' system, the gov't simply takes the money it spends and buys a private insurance policy for people over 65 or the poor. End of gov't involvement. It would be better to give them a voucher to go buy their own policy or even pay for the one they had when they were working, see above. In the case of VA hospitals, instead of running hospitals, the gov't would buy their former servicemen a policy or give them a voucher for same. Note that I am NOT saying 'get rid of medicare, which of course would be the first claim by critics.

Sarbanes-Oxley is killing so many businesses including insurance and medical services companies. Getting rid of Sarbanes Oxley would have a general effect in improving the business climate, which in turn would help the health care industry.