Asymmetrical Information

You've outlined a pretty decent set of criteria. It's an excellent matrix for a discussion. I wish you (or someone) could tell me how much it would cost. I don't have the vaguest clue - is it cheap, medium, very expensive, Medicare, or Dukakis?

On first glance, it would appear that this would have two effects:

(1) people below the magic 200 percent line (how'd you pick that, by the way?) would start to consume more health care, proportionately, than people below that line.

(2) there would be a significant disincentive to go from 195 percent of poverty line to 205 percent.

Also, what's your measure of "quality"? By a number of measures, we already have the highest quality healthcare in the world, so what improvements are you looking for?

---What do we wnat to spend our moeny on that's better than health care?

Obviously, we'd rather spend money on beautifully sculpted plumbing than health care when WE AREN'T SICK, OR when we can get SOMEONE ELSE to pay for our healthcare!

But more importantly, the reason that we have stores of beautifully sculpted plumbing is because we've controlled costs for cheap plumbing, for hard metals, for composite materials, for mortgages, etc. Every element of the home buying/improving economic system has dramatically controlled its costs, allowing the market to work as well as possible. In other markets too, it's because we have controlled the costs that we have this money to spend. If we don't control the costs of health care, the rest will never exist.

And doctors (particularly specialists) are greedy and are paid too much. They abuse their monopoly power, time to take them down.

It's a great plan... except for the 200% of poverty line bit. Graphing health care costs vs. income, you will get something worse than a kink in the graph: you get a disconnect. And we all know how that creates problems.

What if this was modified slightly to a sliding scale? Start at 0% for people with no income and gradually move it up to 15% for people with higher incomes (we can even do this continously instead of step-wise, since all this accounting is done electronically this day and age anyway).

I can't agree with this more. Jane, I think it's a great idea.

Or another way around this 200% disincentive is to make any income below 200% of poverty exempt from calculation.

Let me clarify: say poverty's $100. Instead of having someone making $201 pay 15% of $201, that someone will pay 15% of $1, so that there isn't this disconnect with someone making $199. Someone making $8000 will pay 15% of $7800. This would probably be a simplier solution than the sliding scale one I threw in a few comments back.

But this whole 200% thing is really just a technical detail. The general crux of the plan sounds great!

Music to my ears. Now can you just convince about 10 million more Canadians? We might have a chance to get rid of this ridiculous North Korean-style system if you do.

Call me a cynic, but I suspect that rationing already occurs under our health care system today, simply via inadequate information to patients, indifferent bureaucracies, and HMOs pushing to cut costs.

I wonder how those costs might explode if the government cheerily agrees to pick up the tab, and how long our waiting lists might become.

It seems to me that this scheme would create a disincentive to preventive care. It pays more to be really sick rather than regularly get your check-ups, go to the gym or not smoke.

How about mandating health insurance for the fraction below the subsidy line? Selection on grounds of prior conditions could be banned, but insurers could still be allowed to offer lower rates eg. to non-smokers.

As long as someone can opt out if they want. Certainly you're not suggesting that it would have to be mandatory, are you? I can say that I don't want it, and then I don't have to pay for it, right? As long as I have that freedom to choose what's best for me, everyone else can have whatever health care system they want.

I don't think you have dealt with the basic characteristics of health care, e.g. It can be infinately expensive and as was pointed out Preventative care is worth while, though cheap.

My suggstion is detailed in: http://wematter.blogspot.com/2006/03/single-payer.html , and it is summarized as:

1) Make it univerisal.

2) Pay 100% of the reasonable costs of health treatments that are cost/beneficial.

3) Allow people to get 50% of any savings that they can achieve by getting it less expensively.

4) Allow people to pay the excess for more optional treatment or lugury services.

The objective is to allow the society to decide on what level of health care we want to cover and also allow people to benefit it they can get the care less expensively or if they can affort, and want to get more expensive care.

Note: Preventive care is supposed to be cost/effective, and thus would be covered.

I'm really disappointed that decartelization of the medical industry and the introduction of real health insurance market gets no attention as a serious proposition, but I suppose its total political infeasibility is the price you pay for a policy that actually gets to the heart of the problem. Oh well...

How about not covering anything that has a patent?

Also, I think people should consider "Why did I choose not to go to med school?"

For me it was the inefficiency of the schooling, the politics, and inefficiency of the industry.

"We're so rich that we have stores full of nothing but beautifully sculpted plumbing."

Plumbing has saved more lives than doctors. Of course, it doesn't have to be beautifully sculpted to do this - it merely has be functional and put together correctly.

This seems like a total non-starter, politically. People aren't worried about catastrophic health care costs (maybe they should be, but they aren't), and the number of people with health care costs in excess of 15% of their incomes is infinitesimal (which is why people don't worry about it). So this program has no constituency.

Great idea, but one fatal flaw; 0nce I hit my 15% ceiling, I will spend like a drunken sailor. Very old people with small incomes and huge bills will eat you alive. Just think what nursing homes would look like - they would be gold plated from bottom to top.

You know where this leads... the portion paid by the government is going to be too expensive, and the government will respond by rationing.

Government is absolutely not going to ration *my* health care, period. I'd rather mortgage my house to care for a sick spouse than simply be told 'no' by some unionized clerk.

A very thoughful and well considered series of post.

Congradulations.

How will this create "a genuine market in health care services"?

You identify one obstacle: employer-linked insurance, but how does your plan discourage it?

A very similar obstacle is one you encourage: government paying for care. Like insurers, this results in hospitals quoting fake numbers and shuffling money around internally.

Why not have a free market in health ?
Everyone buys his own health insurance, or pays out of pocket, and gets all the treatements he wants.

Government hepls the poor buy insurance.

The uninsured get basic treatements, paid for by the government, after their assets have been taken first, to pay the bills.

Very simple paln, isn't it ? What's wrong with it ?

Nothing will change until individuals are willing to "lean into the strike zone" if they can't pay for care out of their own resources, or the resources of their family and friends, lodge brothers, congregationalists, etc. So if you spend your money on fancy plumbing, and have nothing for catastrophic health care, then be willing -as I certainly am - to lean into the strike zone rather than hire men with guns to go out an take the resources from others.

> How about mandating health insurance for the fraction below the subsidy line?

How are you going to force people to pay? If they don't, what are you going to do? If you don't have a substantive answer to the first question and your answer to the second is significantly different from "cut them off", "manating health insurance" is a crock.

> Selection on grounds of prior conditions could be banned

Like that's going to work.

Hidden subsidies are even more expensive than explicit ones. Health insurance that ignores known risks is a subsidy game, and the folks doing the subsidizing are going to resist.

> 2) Pay 100% of the reasonable costs of health treatments that are cost/beneficial.

Cost/beneficial to whom?

Note that the folks who sell "free" goods tend to raise their prices to capture all subsidies. This doesn't actually increase supply or the benefits, it just increases the prices.

"Have the government pay for all health care expenditures above 15% of adjusted gross income..."

Why ?

What does "all health care" mean ? Some government defined level of care ? There ain't such a thing as "all"!

Why? Let affluent people (most) pay *ALL* their health care expenses themseleves. (Here "all" means: all they wish).

Government should, maybe, help the poor, but why pay for everybody ??

My 2-step program for health care financing reform:

1) Make it possible to decouple health insurance from jobs by giving privately purchased insurance the exact same tax breaks as employer purchased. On the one hand the full cost of employer health plans must be reported on pay stubs and W2's, showing total compensation (including any employer-paid subsidy above the employees share), and the whole pre-tax amount deducted from that compensation to pay for the insurance. On the other hand, employees must have the option of directing pre-tax deductions from their paychecks to their own HSA and insurance plans.

2. Create a three-tiered health care system, and make the government-backed tiers relatively unattractive.

In tier 3 you pay with cash, HSA, or insurance, and you get as much care as you and your insurance company are willing to pay for. The only government subsidy for this tier is the tax deduction, which we might decide to reduce or eliminate.

In tier 2, any American citizen can walk in and get needed standard treatment first, and talk about payment later. Payments are mean-tested and guaranteed by the government. Costs are held down by several means: Malpractice claims go to mandatory arbitration by a government agency rather than a court, with awards limited to actual damages. Rather than "punitive damages", the board hearing a case can take away the doctor's license. Where different treatments are available, the doctor has to prescribe the cheapest one or demonstrate why a different one is required.

In tier 1, vaccinations, periodic checkups, and other preventive medicine that has been determined to be highly cost-effective are "free" (tax-paid) to all American citizens, but you get whatever doctor is available and you cannot sue the service providers or the manufacturers of vaccines and other drugs and equipment. If you don't like that deal, pay for it yourself.

markm,

Sensible plan.

But in tier 2, people should be forced to pay out of their own assets (as long as there are any) before the government steps in and pays the rest of the bill.

Where's the incentive to keep costs down if the government will ultimately pick up the tab for 85% of costs (more for those dirt-poor individuals)?

The more money that is put into the pool for purchasing health care products/services, the more that will be charged for them. Isn't that what happens when more money is made available for student loans and grants?

I would suggest one more component.

Have the government make a list of health-care procedures, ranked by cost/benefit criteria. The government payment for medical costs greater than some amount would apply only to those procedures that have a cost-benefit ratio better than some specified amount. Also, insurers may cover what is on government's list up to some specified cost-benefit ratio, and specify that in policy language, and be absolutely protected against denial-of-care complaints.

"We're so rich that we have stores full of nothing but beautifully sculpted plumbing. What do we want to spend our money on that's better than health care?"

Sorry I don't know who this "we" is. "We" is not a monolithic creature with one huge brain and one set of interests and desires. "We" are actually 300 million individuals with individual desires, individual priorities, individual levels of ambition and ability to earn and save. How much more purely collectivist can you get than to ask "what do we want to spend our money on that's better than health care"? I will decide how to spend my money, thank you, and not expect anyone to pick up my tab - for health care or anything else. I would 1000 times rather spend my money on beautifully scultped plumbing fixtures than on the health care of deadbeats with an entitlement complex. If you want to do so, by all means - spend to your heart's content! But don't drag me into your schemes with this "we" baloney.

Great idea, but one fatal flaw; 0nce I hit my 15% ceiling, I will spend like a drunken sailor.

Where's the incentive to keep costs down if the government will ultimately pick up the tab for 85% of costs (more for those dirt-poor individuals)?

When was the last time you decided to take time away from your life, waltz into a hospital, sit in a waiting room, get injections, and perhaps even get someone to cut you up all for just the fun of it? Okay, you might get people who will try to use it for "useless" treatments like botox injections or liposuction, but it is not difficult to set some simple rules to exempt medical "luxuries" from the system (they won't count towards your 15% "co-pay" and won't be covered by the gov't). People do not want surgery or hospital stays unless they need it, and most people dread checkups (just ask most males in their 20's and 30's) and dental appointments. And even if they did love it, if people did go in more for the day-to-day things, that's not so bad because the bulk of the costs lie with the really sick and those who are terminal.

One important caveat is that medical treatment is not like other economic goods. For most goods, lowering the cost that if faced will increase consumption, but for treatment, it may not necessarily increase consumption, and if it does, it will only do so up to a certain point defined by the physical health of the individual.

Except for the poor (who, w/ Medicaid/Medicare are already being covered by the gov't), that 15% is a hefty chunk of change that people will have to expend before getting to "free" coverage, and as such, most people will probably not use up that 15% at all, and those who do are most likely the old and very sick, and this plan was explicitly made under the value judgment that care should be given to them even if it is costly.

Well, I'm not happy with "Government" being a payor. Even the things that are currently paid for by governments (at all levels) could perhaps be worked up a bit better via privitization.

I take as a given that governments have NO incentive to streamline, improve, innovate or reduce costs like for-profit companies do. The more government gets into the act, the worse (and costlier) any services will become. Compare the USPS with UPS or FedEx, for example. :)

When private companies are competing for my healthcare business, they're going to be trying to improve service, cut costs and give me a reason for choosing one over the other(s). Basic Capitalism.

Additionally, when health services are paid for (guaranteed) by government, I can see an incentive for more (read unnecessary, or redundant, or CYA) tests, diagnostics, proceduers & meds being ordered, because they "don't cost anything", and will also increase profits of the healthcare provider.

Any solutions??? Maybe: Law requires anyone who drives a motor vehicle to carry insurance - why not mandate everyone carry at least some basic (catastrophic care) health insurance too? The very poor or unemployed can be participants in a "safety net" coverage system akin to Medicare.

That 15% also permits health insurance companies to design and market a good plan to people, because the 15% acts as a cap on what they would have to pay out.

Caps can be set for whatever amount you want, but they are necessary to permit the calculations necessary to devise insurance plans. Part of the reason med mal insurance is lower in states with caps is not because the caps radically reduce the amount a jury can impose, but because they set an upper limit on the possible exposure of the insurance company.

One problem nobody seems to have raised yet, is defining what "15% of income" is. We have discussed many times, in past threads, the difficulty in reforming the tax industry because the rich have lots of ways of preventing income from being counted as such. To define the 15% here, we either must reference it from the existing tax code (ick), or create a new code of definitions that will, in time, effectively become another tax code (ick, ick).

Honestly, before wanting anything like this, I would prefer Markm's plan -- it sort of runs parallel to the Post Office analogy, and the competition presented by other full-private carriers.

Interesting posts but most miss the point.

As one post correctly stated, basic plumbing saved more lives than any medical advance. "life-improving, new treatments" benefit a tiny minority. The key to better societal health care is PREVENTION, not cure. Want to avoid the poor being sick? Get rid of cigarettes and alcohol.

It is patently false that "new treatments will save a lot more lives than covering the relatively small number of uninsured". Not that covering the uninsured (who tend to be young) will save tons of lives, new treatments pretty much palliate disease a tiny bit better than before.

Don't make the mistake of thinking Doctors actually cure people. We prolong lives, hopefully for the better. Cynical? Nope. The truth.

In terms of money, numerous well done studies show that 50% of Medicare dollars are spent in the last week of life. The problem isn't lack of money, it's our society's belief that we can cure Grandma when her body gives out.

Anony: "The Rich" hiding their income to skim a little off The Man isn't the big expense to worry about, anyway - the poor and middle-class outnumber the Very Rich Who Have Tax Shelters by a large number; probably three or four orders of magnitude.

If the State is paying, then everyone's end-of-life expenses will be roughly equal across tax brackets, for our purposes, and the tax-evading rich are more or less statistical noise compared to Everyone Else and their claims.

I'd like to have doctors take more responsibility for the quality of care that they provide. Perhaps by organizing patient feedback and more grading of doctors. Perhaps by quantifying health by some sort of standard and seeing which doctors improve it or let it slide. I don't know the best way to do this, but I do think that a lot of doctors proscribe some garbage medicine, the patient says 'to heck with that, it didn't work or had horrible side effects' and goes somewhere else. I've paid a lot out of pocket to go to holistic practitioners (herbal medicine) before resorting to the drugs and crisis medicine that the US specializes in.

A publicly funded healthcare system means that I'll still pay for the doctors that I go to, 100% and I'll be paying for other people using conventional medicine as well.

All this talk of nationalized healthcare is just a huge subsidy for a medical institution that talks about 'standards of care.' This seems little more than justification for treating a patient without really helping them and still getting your bill at the end of the day.

If you don't fix my car, you don't get your pay.

With doctors; it'd be interesting if any complications for a given surgery had a mandatory reimbursement level to the patient, possibly exceeding the surgery for serious things like death. Use this in place of malpractice lawsuits, so there aren't just a few big winners who are willing to take the doctor to court.

My "clarification": What is cost/benefit? -- My thought is that each procedure have:

. 1) a cost that it generally will be done for in the area and

. 2) An expected benefit, e.g. number of years of live extension or quality of life improvement over the expected life of the patient.

and then the cost/benefit for the procedure is computed.

I realize that this may be difficult and not totally accurate but insurance companies set "1)", and we have to consider "2)" when we look at a procedure.

. The idea is that, if we as a society, feel that we want to spend money to support some medical costs, we should spend it on the most cost effective procedures rather than any procedure.

. In addition, we should provide ways to allow people to try save money by getting the procedure less expensively and to decide to pay extra for procedures that are less cost/effective or provide more luxuries.

... Re: Andy Freeman on March 27, 2006 10:29 AM (re: Mike Liveright March 27, 2006 04:15 AM)

Re: "If you don't fix my car, you don't get your pay."

Odd analogy, if taken at all literally. People don't generally get "fixed" from many illnesses, but mostly just survive them, sometimes at a lesser functional level. Parts cannot simply be replaced, and even if available don't always work as designed. How does one "guarantee" results from, say, starting a cholesterol-lowering agent? Balderdash.

And I don't know where you get your car fixed, but I have paid for partial, temporary, and failed repairs many a time.

"In terms of money, numerous well done studies show that 50% of Medicare dollars are spent in the last week of life. The problem isn't lack of money, it's our society's belief that we can cure Grandma when her body gives out. "

The problem is how do you tell when it's Grandma's last week of life?

Say Grandma is 70, and she catches an infection and winds up in hospital. The doctors estimate there's a 50% chance of her pulling through with treatment, and if she does she'll return to about 95% of her previous condition and could live for a couple more decades. She had an enjoyable life before her illness. Do you treat her? If she dies anyway, was it therefore a bad decision to treat her? How about if she was 50? Or 80? Or 30? How about it's your 10-year-old daughter in hospital with a mystery disease and the doctors don't know if she's going to survive or not?

How about if you were in a traffic accident? You're there unconscious, the ambulance turns up, and the staff assess you as having a 50% chance of survival if they get you to the hospital. Do you want them not to take you in order to avoid the risk that they'll spend a massive amount of medical care in what turns out to be the last week of your life?

Say you're dying of cancer. It's terminal. You've accepted that. Your doctors have accepted it. You're in great pain. Do you want full pain treatment, nursing care, etc, in your last week of life? Do you think your spouse might want it for you?

It doesn't surprise me that we often spend 50% of medical care in the last week of life - and I don't think that can be much reduced as often we don't know for sure that the person is going to die in the next week (or year). And other care is pallative, and it's quite rational to want to spend on making someone's last few days relatively comfortable.

Ryan seems to be advocating a Guaranteed Results standard for tort law. Apply that to medicine, and you'll certainly end the malpractice suit mess - because to pay for the insurance that standard will require, doctors will have to raise their rates to where only a few people can afford care.

You don't have to wait for the legislature or courts to implement such a standard. Just ask your doctor to sign a contract guaranteeing the results of each procedure, and specifying penalties if it fails. If you can find a doctor who likes to gamble, no doubt he'll be happy to treat your cold - for a fee almost as large as what you'll get if you don't recover within the specified time. This doctor is gambling on your immune system, on possible hidden problems with your health, and on you following instructions, so he'll need a big payoff when he wins to show a profit on the average.

This recurring theme of "people not using medical treatment if they don't need it, because it isn't fun" has a major flaw.

It's like the argument that single mother's pension would never encourage out-of-wedlock births because you, personally, would not like to be a single mother, even with a pension.

It ignores the fact that it isn't YOU that is the problem. It is someone who is on the verge of deciding to go for it anyway, and this pushes them over the edge.

Don't believe me? Ask a family doctor who most of his patients are. They are people who "don't feel well". They are people, living on welfare, or retired, or housewives, who don't do anything all day, are bored, feel useless, and want someone to talk to them, make them feel important, and say it isn't their fault for being useless.

In other words, they want to sit down, talk to a doctor, and have them pay attention to them. (Something nobody else would ever do). They want a diagnosis: "See, I'm not lazy! I have chronic fatigue syndrome/ADHD/Gulf War syndrome/etc. I'm a victim!"

This may strike you as a horrible way to spend a day, you'd rather be at work. But you aren't the problem.

Back up and slow down. How about starting over with something like automobile insurance (compulsory, basic, with add-ons and a little competition), and have the gov't cover those who can't. [Actually, it already does this through Medicaid and various poverty programs.]

We live on 1 pension and 1 SS (that's income, not assets keep in mind), and I think our medical costs in 2005 were around $10,000--that's medicare, medigap, drug, vision, dental, long-term care ins. and our various co-pays for 2 healthy people. Neither of us was sick. So if we didn't have other assets, we couldn't live. I think you're naive if you think anything as badly managed as our present bloated gov't system can be extended and expanded.

When was the last time you decided to take time away from your life, waltz into a hospital, sit in a waiting room, get injections, and perhaps even get someone to cut you up all for just the fun of it? Okay, you might get people who will try to use it for "useless" treatments like botox injections or liposuction, but it is not difficult to set some simple rules to exempt medical "luxuries" from the system (they won't count towards your 15% "co-pay" and won't be covered by the gov't).

Well since we?re exempting elective cosmetic surgery and the proverbial camel?s nose is under the tent:

Will fertility treatments and erectile restoration be covered?

Will abortions be covered?

What about vasectomies and tubal ligations?

What about paying for lung cancer treatment for smokers or liver transplants for drunks?

Do we have to pay for people who live sedentary lifestyles and develop heath disease and diabetes?

Or (on the other extreme) what about compulsive joggers and athletes who injure their joints and develop arthritis?

Will there be a clause that exempts coverage for injuries caused by particularly risky behavior (e.g. downhill skiing, bungee jumping, etc.)?

> My thought is that each procedure have:

In reality, many procedures also have "fans". Just as certain diseases get more funding than they should from govt, certain procedures will also get funded that no rational procedure would fund.

Any health care plan that relies on rational behavior by policy makers and/or recipients is doomed, no matter how well it would work if both were rational.

> Law requires anyone who drives a motor vehicle to carry insurance - why not mandate everyone carry at least some basic (catastrophic care) health insurance too?

We jail people who drive uninsured. Unless you're willing to do the same for folks who don't buy health insurance, the comparison fails.

Almost all of the "mandatory insurance" plans are assuming some sort of subsidy from one sub-population to another. Is there any reason to believe that the subsidizers are going to go along quietly? If not, how are you going to coerce them? (Telling them "it's for your own good" or "you'll get yours later" won't cut it.)

Boy, there's just no pleasing everyone, is there?

"We're so rich that we have stores full of nothing but beautifully sculpted plumbing."

Canada used to be richer than the USA, per capita. The we got universal state funded health care. Now we are much less rich than the USA.

Gee, ya don't suppose there might be some link...

Jane is onto the beginning of a good idea.

The problem with medical insurance is that it's not insurance. It is an exchange of a dollar today for a payment of a dollar tomorrow.

A primer on insurance. Insurance is a small payment to cover the cost of an unanticipated potential large future loss. Does anyone have an insurance policy like that? Only if you have purchased an HSA and high-deductible plan. The "traditional" policy begins to pay the moment you seek medical care. The best analogy is like expecting your auto insurance to pay the mechanic part of the cost of an oil change.

Until the consumer of care becomes the payor there will be no reduction in the cost of care.

I would also posit that health care would be used almost infinitely if it were not rationed. There are just different methods for rationing. In Canada care is rationed by queuing. In the U.S. it is rationed by cost. I don't know that one is better than the other, but they both effectively limit the amount of health care consumed.

As an addendum. Proof that health care will be utilized to the maximum is the behavior of Medicaid patients, (at least under the Texas program.) This group generally has time and they have no financial risk with health care. They will go to the doctor for things that the rest of us would never consider worthy of a physician visit. If the doctor is too busy to see them immediately, they will present to the ED, (and if you've had need of emergency care you know that that is outrageously expensive.) But they have no concern because it costs them nothing, not money, because they have Medicaid, and not inconvenience because they have nothing but time.

I advocate cost-plus budgeting.

1) We determine how much it costs to give everybody good quality healthcare, hopefully with very little limitations or rationing. We'd likely need to spend something like 20% of GDP. Dental care, including teeth whitening/straigtening should be covered. We also ought to give people over 40 one cosmetic procedure every three years (I'm know I'm overdue for lipo) -- it would be great for national self-esteem, and hence, for productivity.

2) After we calculate the cost of #1 we add to it the other parts of the budget to come up with a total.

3) Then we raise taxes by enough to cover the cost of the total budget figure derived at in #2.

We still probably wouldn't have a total public sector much bigger than the OECD average, according to my back-of-the-envelope math, and we'd sure all be happy and healthy. Plus, we'd have a boom in healthcare that would counterbalance any drag on the economy created by the tax increases.

Canada used to be richer than the USA, per capita. The we got universal state funded health care. Now we are much less rich than the USA.

I don't know that Canada is "much" less rich than the USA. Last time I looked Canada, which has been growing robustly since getting its act together in the mid nineties, had reached something like 80% of US wealth levels. And Canada manages that with less poverty than the US. And less income stratification. And more social mobility. And much less violent crime. And without anybody losing their house because their kid got sick.

And, oh yeah, Canadians live longer.

I'm not sure I'm ready to call this bad, but I see another consequence. Jane's plan would arguably overfund medical research.

To explain, let me discuss VCRs and DVDs. When VCRs first came out, they were expensive. Only rich people could afford them. They were also expensive to develop. The excess cost that rich people paid for the first paid for VCRs paid the start up costs of developing and producing VCRs. The same is true of DVD players and DVDs. The same tends to be true of any technology; initial offerings are expensive; those who buy products first essentially pay the development costs.

Somebody was smart enough to see that VCRs would be popular, made a financial gamble and got rich. Other people try to invent stuff and failed, losing lots of money (Pony Express, sheets of toilet paper, home delivered groceries (?), eg).

One thing that makes our medical system is great is that we are the most inventive. It is also one of the things that makes our system so expensive. We pay more for our drugs during the patent period than the rest of the world; we pay more for drugs during the patent period than after the patent period. We pay to develop new drugs for the whole freeloading world.

By paying ALL expenses after 15% of gross income, you are taking much of the gamble out of whether or not to invent a medical breakthrough. What happens when a medical researcher spends lots of money on salary and perks to create a medical device of marginal utility? Patients past the 15% spending threshold will tend to buy such devices to alleviate their own suffering because someone else is paying for it.

Who will decide what price is reasonable? Will patients be able to buy anything, no matter how little good it does? Will patients be able to buy anything, no matter how unlikely it is to do good? Will we have government beaurocrats evaluating research expenses?

Thorley hit the nail on the head. I keep reading about providing "basic" or "necessary" services. Who defines that?

Does the government plan cover kidney or heart transplants? If so, do we cover all of them, or do we exclude those whose lifestyles contributed greatly to their illness? What about the anti rejection drugs?

Social security, Medicare, Medicaid and welfare started off as very limited programs that have morphed into monstrous programs.

What would prevent the government plan from doing the same thing?

I finally understand 'libertarian' definition 4. Someone who is at liberty not to work for health insurance. In a less noticed speech, Patrick Henry said, "Give me liberty or give me Blue Cross Blue Shield paid for by the State of Virginia."

And Canada manages that with less poverty than the US. And less income stratification. And more social mobility. And much less violent crime. And without anybody losing their house because their kid got sick. And, oh yeah, Canadians live longer.

Only 30 million people, no impoverished immigrants waiting outside one border, large trade neighbor next door providing a captive market for Canadian goods and services, and -- very probably -- different methods of counting infant mortality. Oh, and their healthcare system is not in good financial shape, you may have noticed.

You are, at best, comparing an apple to the applecart -- and even then the apple does have a bruise or two, if you bother to roll it over and look at the underside.

People do abuse free medical services. When I was in the Air Force, it was quite common to see people bringing their kid into the base clinic for a minor cut or scrape that obviously needed only disinfectant and a bandaid. When Medicaid recipients do something like this, you might wonder whether they even know how to use a bandaid, but all Air Force members were trained in basic first aid.

>How are you going to force people to pay?

Deduct 15% from the paycheck and route them to an insurer, who gives back the surplus. If somebody refuses to make a contract, assign them to a default insurer.

Man, here I was thinking I was at janegalt.net. I didn't realize I'd wandered over to lillianrearden.net.

WTF, Jane?

Thanks for all your thought and a well-done proposal. I notice a couple of other smart people have picked up your post for comments.

I don't agree on all points, but in the main I have no quibbles. Having spent my entire working life managing what most people carelessly call the "working poor" I think I have a few insights that don't get mentioned in either the ivory towers of academia or the links at the local golf course. Twenty-plus years paying the max into social security made me strive hard to act and think like a Republican, but my heart was never in it. I suppose blue-collar origins and the circumstances of my aging parents were part of my problem. I dunno.

I'm encouraged to see an intelligent discussion beginning to surface once again. Not since Hillary Clinton launched a Quixotic effort to fight this dragon has anyone else had the courage to try it again. I think most people are still gun-shy in the aftermath of her debacle, but it is long past time to give it another try.

Lots of good, thoughtful comments, but they all illustrate the basic problem: it's impossible to plan the economy. Planning for national healthcare is as absurd as planning for national transportation.

Let's look at a "National Transportation Plan" that covers everything for people with incomes less than 200% of poverty, and every transportation expense over 15% of whatever is defined as income. Some obvious outcomes:

1) People with incomes under 200% of poverty would be riding limos everywhere, taking first class in airplanes to visit grandma, etc. An alternative option would be to build a big bureaucracy that determines when and where a person can travel, and what is considered 'basic' transportation, etc.

2) People whose transportation costs are going to bump up close to the 15% line would, at some point, join the group in #1 in the limos (or the lines at the local 'Transportation Administration').

3) People who have small incomes would have the opportunity to grab benefits. Let's say you are retired, and have grandkids spread out all over the country. Why not buy those super-duper first class tickets for a couple of trips when all the rest of the year you fly free?

4) Since people who pay taxes (a group that has a large overlap with the group that is the most productive in society) are going to get upset walking back to coach with their $1000 ticket while the aforementioned groups are complaining about the quality of the booze in first class, the bureaucracy is going to come up with rules, lots of rules...

5) All these rules are going to create inefficiencies, hold back innovation, etc. while doing little to hold down costs.

Hmm...sounds like what we have right now.

Why not just have fed loans for health care for those who cannot afford it? That would keep it as close to the free market as possible. We do give loans now for education...

Personally, I don't think the gvt should be giving away free healthcare to anyone. If you want to do it through a private charity, that's fine. But personally, I'd rather give my chairty to other things, cancer research, etc. Hey, that's my preference....

Canada used to be richer than the USA, per capita. The we got universal state funded health care.

Compared to the United States Canada has an economy heavily tilted toward manufacturing, steel, and resource extraction. The analogue in the U.S. would be Pennsylvania, Ohio, and Michigan, which combined also have a population of about 30 million. Compare their performance vis a vis the rest of the United States over the last generation, without national health care and with health care benefits paid by employers like GM and U.S. Steel, and Canada looks quite good by comparison.

And in either case everyone is moving to Alberta and Texas.

> Deduct 15% from the paycheck

That works really well for the self-employed, folks who get most of their income from tips, and so on.

Then there are folks living on savings.

For single-income couples, how are you going to get the money for the non-worker? What? You're going to provide yet another "don't marry" incentive?

These and many more reasons are why they jail people for income tax evasion. Why do you assume that an insurance tax (which is what it is) won't require similar measures?

So, are you willing to jail people who don't pay the health insurance tax?

"We're so rich that we have stores full of nothing but beautifully sculpted plumbing. What do we want to spend our money on that's better than health care?"

Jane, obviously, in our quasi-free market economy of which Libertarians are so enamored, the answer to that question is more beautifully sculpted plumbing.

As astute as Adam Smith may have been, the invisible hand will not solve all problems. You, it appears, are beginning to grasp that there is a place for a discussion of what is, and what is not, a "public good." For that I am grateful.

I take as a given that governments have NO incentive to streamline, improve, innovate or reduce costs like for-profit companies do. The more government gets into the act, the worse (and costlier) any services will become. Compare the USPS with UPS or FedEx, for example. :)

Last I checked, USPS was still considerably cheaper, just as reliable of the 'private' companies and independent of government subsidy. Compare that with the privatized (I think) German Post service that charges a Euro ($1.20) for a postcard to the States. The cost in the other direction? $0.70

The government does about a million things ineffeciently, but you have to admit that they're mostly things that private companies wouldn't do, can't be trusted to do (private police? No thanks. And, Blackwater jokes aside, let's talk about cutting back our military, but not privatizing it).

"What do we want to spend our money on that's better than health care?"

Jane, we spend huge amounts of money keeping people on the edge of death alive for very short periods of time- from twenty minutes to a few weeks. Take a look at this week's New Yorker, which describes emergency room rescussitation procedures- procedures that keep the patient alive less than 15% of the time, and when they do usually result in severe brain injury.

My own father was kept alive for six weeks after a stroke. For the first month he had a rapidly decreasing chance of recovery; for the last two weeks, he was comatose and we were in the hospital on a death watch. We paid nothing; the cost of two weeks of intensive care was certainly substantial; he gained nothing; and the family (my mother in particular) were put through unnecessary emotional distress.

I can think of a great many things that we as a society could spend our money on that would be better than that kind of care. After school ice cream for first graders would be nice.

Another unadressed question is why the gvt should pay for this? It's one thing for a common good, like defense, where we all benefit even if only one person decides to pay.

With helping the poor with health care, why force someone to contribute? Maybe they want to give money to help starving children in Africa? Or maybe they want to drink it at a bar? I'm not sure why it is fair to make anyone give to a particular charity.

Jane,

The series of posts have been interesting.

What about Domestic Medicine?

Couldn't this be streamlined into the framework of each family's healthcare needs?

Building a strong infrastructure that supports families through health care educational and practical needs? In this way a creative friction between theory and practice will result?

I'd like to propose some things that would make health care less expensive for the poor.

1) Use doctors less for every-day visits and use nurses and physician assistants more. For things like ear infections, strep, sprains, etc., you don't need an MD involved. The training involved to become a physicians assistant/nurse are less intensive and less expensive. Use these folks more.

2) Use generic drugs whenever possible. Yes, the flip side of this is strictly enforcing patent rights. But sometimes, having the latest and greatest isn't that much of an improvement. Asprin is a decent painkiller, as are plenty of other OTC drugs, use them instead of these new drugs whenever possible. If patients insist on using more expensive drugs when a cheaper alternative is available, make them pay the difference.

3) Prosecute fraud. Create an atmosphere where people fear being caught.

4) Health savings accounts instead of insurance. Make people pay for their health care so that they will WANT to see a physicians assistant or buy the OTC or generic instead of the ground breaking discovery. As well, make this money transferrable so that those who are healthy and generous can donate to those who are sickly (I'm on the fence as far as being able to take money from HSA out for other expenses after a period of time).

Any other suggestions?

As far as comparing Canada and the U.S., there are great disparities between the Provinces. Alberta, the wealthiest, and Prince Edward Island (arguably the poorest) don't show their differences because of equalization payments (the wealthiest provinces send 'surpluses' to the Feds who then redistribute to the poorest). Think of it as a constitutionaly mandated ear mark.

Another unadressed question is why the gvt should pay for this?

Josh, the issue comes up because few Americans are comfortable turning away sick people from hospital ERs--particularly children--unless they can prove they can pay. That's why we have the unsatisfying status quo, and any resolution is likely to move in the direction away from what you're positing.

"What do we want to spend our money on that's better than health care?"

There are lots of things I'd rather spend my money on that are better for me than your health care is. On the other hand, I'd be happy to spend all of your money on my health care.

"few Americans are comfortable turning away sick people from hospital ERs--particularly children--unless they can prove they can pay. That's why we have the unsatisfying status quo..."

Here's the thing that gets me. I think most people would agree with that statement. But, they would answer that the government should pay. People also have the idea that a hospital should be forced to accept everyone for emergency services.

It seems to me like people are taking the easy way out. Someone else should have to do something! But I wonder, if there was a charity collection to serve this purpose and hospitals had to either draw from these funds (unless they wanted to give free care), who would contibute and how much?

Most large US cities have quite a bit of "medical tourism", where people come here to get emergency treatments. Would everyone want to fund that? Would people geel good helping patch up someone after a gang-fight? I think if individuals "felt the pain" of this transfer they would make a better decision.

"Don't make the mistake of thinking Doctors actually cure people. We prolong lives, hopefully for the better. Cynical? Nope. The truth."

Yes, we only prolong lives. We don't cure disease.

Would you rather be a diabetic or an AIDS patient or a prostate cancer patient in 2006 or 1980? We prolong lives a LOT, using expensive treatments.

-dk

Toby: Nitpick time; the USPS has an effective subsidy from the government in the form of its monopoly on mail services. (Not, of course, parcel services, but mail. And delivery of any package, parcel or mail, to a mailbox.

And while I'm not sure of it, I suspect very strongly that post offices get tax exempt status (as if they were outright government buildings), and are built using tax dollars.

(The key to the latter is that the post offices all seem to have a nice government plaque commemmorating, say, the President under whose time in office they were built, and the way the USPS website is clear to say the USPS receives no federal money for operations; the need to specify operations implies strongly that they get capital expenses of some sort, as well as their admitted funding for employee benefits.)

The USPS gets huge subsidies; they're just not plain transfers for operations.

Only 30 million people, no impoverished immigrants waiting outside one border, large trade neighbor next door providing a captive market for Canadian goods and services, and -- very probably -- different methods of counting infant mortality. Oh, and their healthcare system is not in good financial shape, you may have noticed.

I agree with all of this with the exception of the bit about "different methods of counting infant mortality" which I take to mean you're referring to how most countries do not include stillbirths (which make up about 40-50 percent of children in industrialized nations who die within a year of being born) in their infant mortality statistics. Both Canada and the United States count stillbirths in their statistics.

That being said, I think it worth nothing that in calculating infant mortality rates, we're also including people who may have immigrated from another country with poorer prenatal care (say Mexico) who had their children in the United States. Those children who tragically die after birth or are stillborn get counted in the statistics for the United States even though most of the health-care related decisions and factors that lead to these deaths occurred elsewhere. This is of course not a statement about the merits of immigration, simply a realization that when you have a nation which attracts immigrants from poorer countries more than another country, at least a portion of that countries' health statistics will be driven in part by what kind of care these immigrants had or didn't have before they came here.

This is of course not a statement about the merits of immigration, simply a realization that when you have a nation which attracts immigrants from poorer countries more than another country, at least a portion of that countries' health statistics will be driven in part by what kind of care these immigrants had or didn't have before they came here.

Yes, but I wonder if that effect actually comes into play when we're talking about Canada and not, for example, a European country. Proportionate to its population, Canada is a greater immigration magnet than the U.S. is. The CIA Factbook ranks the U.S.'s net migration rate at 3.31 migrants/1,000 people, vs Canada's 5.85 migrants/1,000 people.

Now, I'm not sure what the economic status of all of these migrants is, but to the extent that Canada is strenuously working to increase its population and has opened its doors greatly to immigration from all countries around the world, I don't imagine that they are lacking for poor or disadvantaged immigrants. Certainly well-educated immigrants looking for positions in education, medicine, engineering, or the pharmaceutical industry can make a better salary and a more prestigious placement in the U.S.

>>Canada is a greater immigration magnet than the U.S. is.

I always wonder about that. You read so many varied estimates of illegal aliens that I don't think anyone really knows.

>So, are you willing to jail people who don't >pay the health insurance tax?

Yes. Sick people need to be treated before they require a visit to an ER. If the public provides free health care, those who fail to take acceptable measures to avoid drawing on those funds are in effect stealing public money. You cannot hope to give subsidies and get away without fighting abuse. You might just as well take effective measures.

Jane, the definition of "poverty" is supposed to be just that: the absolute minimum amount necessary to get by. Clearly you don't believe that. Rather, you are proposing, in essence, to define a second "real poverty" poverty line, at half the current one.

Your proposal is a non-starter right there: the left will never allow poverty to be defined down, because their source of political power is in handouts to the poor.

As for the rest of your proposal, well, it's deeply illiberal. But never mind that. I understand that your bleeding heart drives you that way on the "poor". But I don't understand your motivation for the 15%. Why that? Why does the government need to do anything for anyone other than those who really "can't afford it"? Can't they buy insurance? Not via jobs (I agree with you that's idiotic). On their own or for their kids, as far back in time as is necessary to make sure there's enough ignorance to maintain insurability.

re: Canada
Because of the way Canada accepts immigrants, it can screen for those with higher education, income potential, and ability to assimilate (English-speaking). It has a higher percentage of Asian immigrants than the US I believe.

The US not only has the problem of illegal immigration from Mexico but of a legal immigration system that is biased in favor of family relatives who may or may not be productive. This lets in larger numbers of low-skill, low education, and poor Latinos instead of high mobility Chinese or Indians.

For all those reasons, Canada's immigrants are likely to have fewer health problems and are more likely to move up the income and social ladder faster than the bottom half of US immigrants (legal and illegal).

This absolutely INSANE.

If your answer to ANY problem is "Government Intervention" then you simply haven't been paying attention. In the case of Health Care we've had INCREASING government intervention since WWII (our current health care financial crisis can be traced, fairly linearly to wage controls during that period).

You come out with:
"Have the government pay for all health care expenditures above 15% of adjusted gross income, and cover 100% of health care expenditures by people living under 200% of the poverty line."

This:
http://www.census.gov/prod/2005pubs/p60-229.pdf

claims that the "Median Income" for "All households" is 44,389 dollars per year (in 2004).

If you're a "nonfamily" household, the median income is 21,797 for women, and 31,967.

I can't find (and don't have any more time to dig) information on the actual size of the households, or the number of people.

If we turn to Appendix B, we get poverty tables.

For four people the povery line is about 19,300 (varies on the number of minor children).

For one person (under 65) the line is 9,827.

This means that in BOTH CASES %200 percent of the "poverty line" (19,654 and 38,600) is fairly close to median wages, which means that between 40 and 50 PERCENT OF THE POPULATION of this country falls into that category.

You say:

"I don't want the government to kill off the incentive to invent life-saving, or life-improving, new treatments."

If the government is going to be providing--in terms of paying for--health care for a significant percentage of the population, do you SERIOUSLY think that those regulatory #!@$%s will do it without enacting wage controls?

Go look at the DRG (I think it's called, it's been 15 years since I've been involved in health care in other than as a patient) Something like Diagnostic and Report Guidelines, a book that says "you have x, you get y days in the hospital". It's the government telling doctors how many days in the hospital the Feds will pay for. All the insurance companies follow along with this. (Of COURSE they do. If they insist on a smaller stay in the hospital they'll get sued and accused of being greedy, and there's no point to paying for more). There are other regulations about how much Medicare will pay for this or that. The insurance companies also follow those. Now with the Medicare drug plan the Government WILL be doing the same thing with drugs, and the greedy selfish grey hairs will be insisting on more an better coverage until they'll get all their drugs for nothing. Because saying no to them is mean.

"I want there to be a genuine market in health care services."

And the answer is to get MORE government involvement?

Let's look again at those "poverty numbers" again. 9,827 for a single person. That's roughly (assuming a 20 hour work week) 9.44 an hour.

That's a pretty pathetic wage. If you assume full time work, it's even worse, 4.70 an hour.

What do you have to be to make those kinds of wages?
1) Young, as in just starting out life.
2) Incredibly bad at making choices. As in, do I want to go to work today or hang out doing crack and robbing 7-11s?

As long as you subsidize bad choices, you get more of it.

The biggest need is to get health care COSTS down. This is done through (1) increased competion, (2) reduced regulatory burdens, (3) Some sort of honest tort reform where doctors don't wind up paying 2-5x their considerable (and largely deserved) wages for mal practice insurance.

Ultimately though it's not going to do any good, and we're going to wind up with the government running health care and screwing it up--mostly because of hte labour unions and the big auto companies.

One thing that drives me crazy is that when I look at the "invoiced" price and then what the insurance company pays. I had a disputed claim last year for $500, which I paid. Come to find out, if I was an insurance company, it would have cost less than $250! Eventually, the doctor got his $237 from the insurance company, I got my $500 back, and we were all happy. But you know what, I would have paid $237 and NOT filed with the insurance company. That extra $263 just stuck in my craw too much. Similarly, I spend $400 a month for health insurance. The list price of my medications total like $600 a month, and my co-pays are around $150. Thus I'm essentially saving $50 a month on medications, and the quarterly doctors visit (about $150 a visit) is covered, as are "disasters" of course. You know, I'd rather pay $200 a month for insurance against the disasters, and pay "wholesale" for my doctors and medications out of my own pocket, but the system won't allow that. Sick people burden the system because we are forced to! Fix this problem, and you fix most of healthcare.

Petro, Amen bro.

Before any government subsidies are doled out - We must break The American Medical Association grip on the Medical Schools. If the supply of Doctors were doubled surely this would help lower the cost of medical care.

"What do we want to spend our money on that's better than health care?"

Others have already pointed out several answers to this question, but not the one I suspect to be of ultimate importance: Investment in the future to let our children live even better lives than we do.

Shifting too much spending from this to consumption in the form of health care may threaten the very existence of our society.

Ultimately though it's not going to do any good, and we're going to wind up with the government running health care and screwing it up--mostly because of hte labour unions and the big auto companies.

I agree we'll probably see an increase in government payment of healthcare bills. But what does that tell us about healthcare? You can blame it on creeping socialism, but in sector after sector throughout much of the Western world, there's less, not more socialism (think energy, steel, transportation, banking). Why is it that healthcare seems impervious to this trend? Could it be that, at the end of the day, healthcare is simply one of those few items that can't be adequately provided by the free market?

I'm a big fan of capitalism, and tend to be fairly libertarian in my opinions on the economy (I'd privatize public education tomorrow morning if I could). But I don't possess a religious belief in the efficacy of free markets. I like to judge the situation on a case by case basis. I'd much prefer that government not be involved in, say, the provision of banking services or electricity or airline travel. But I don't see any way to square the knot of universal access and a hands-off approach by the government. You can have one or the other, but not both. Most people want a guarantee that they'll always be able to get treated if they develop cancer or MS. And most people want a guarantee that they'll be able to get this treatment without losing their house. Maybe that doesn't speak well of human nature, but I think that's just the way it is. I'm simply not going to lose sleep worrying that our healthcare system is run with insufficient capitalist purity so long as the government leaves music to Apple, razor blades to Gilette, and haircuts to Joe's barber shop.

And anyway, government has already screwed up our healthcare system but good. I think it's simply not realistic to describe the healthcare delivery system in Australia or France in this manner (though maybe it would be a fair way to describe the UK or Canada's system). I mean, the health of the modern day French or Japanese or Australians or Swedes is really quite high. They may choose different tradeoffs than Americans, but their experience shows that more government involvement, if done wisely, can mean anything but a "screwed up" healthcare system.

I think at heart, the hollerin' at poor Janey stems from the fact that the classic libertarian position simply doesn't concern itself with making sure nobody dies because of lack of access to the healthcare system. I think that holding such a position is intellectually honest and consisent, but I also think it's exceedingly rare. I give our host a lot of credit for realizing this, and for attempting to toss around some ideas as to how government can be involved in guranteeing the universality of healthcare access in the least objectionable and inefficient manner possible.

Petro, awesome job!
However, for those doubters in the validity of the free market, I would like to suggest that perhaps you're not taking all aconomic factors into consideration. As I've just explained in other places, lifestyle can play a major role in how much health care we need. Risky behavior may not be considered an economic decision, but it can result in some pretty big economic decisions. While not all health care is linked to non-behavior related factors, a more significant portion is. By subsidizing risky behavior, we actually increase the number of people who will engage in it. In this way, government regulated health care can be shown to continuously grow as people are more and more removed from the consequences of their actions.

In the Winter 2001 issue of The Public Interest (r.i.p.) Milton Friedman suggested a way to achieve objectives similar to Jane's: the federal government buys everyone an old-fashioned accident and hospitalization insurance policy. The deductible is high [it could be means tested] and the co-pays never decline to zero. Net result: most health care is paid for by the people whose money is being spent, driving demand and cost down, while leaving no one truly in the lurch. He's a crafty old codger, that Friedman fella.

[I]"Before any government subsidies are doled out - We must break The American Medical Association grip on the Medical Schools. If the supply of Doctors were doubled surely this would help lower the cost of medical care."[/I]

Surely not.

The AMA is irrelevant to the issue of physician supply. It is a private organization and counts only a minority of U.S. physicians in its membership anymore. Most physicians are members of their specialty societies and do not belong to the AMA precisely because the AMA has not been effective in representing the interests of physicians in many specialties in recent years. The AMA has nothing to do with the numbers of medical students attending U.S. schools, or the numbers of foreign medical graduates getting green cards to practice here or visas to train here. You are attributing power to the AMA that even at its peak membership among practicing physicians the organization never had. The Center for Medicare and Medicaid Services in HHS has had far more influence over the physician supply through its direct funding of hospitals that run postgraduate teaching programs.

Please provide an explanation of how expanding the physician supply as you propose will make the costs of medical services any cheaper. Most prices, as actually paid, are fixed by Medicare and large third-party insurers. Posted prices are largely token, and exist as they do because Medicare requires a charge against which they demand (by law) the deepest discount. Since few people actually pay full price, what influence do you think lowering those prices will have? Pumping up the numbers of physicians isn't going to change that.

Where will the savings you imagine come from? Will you attract more physician candidates--with presumably lower qualifications than you do now--when the salaries are lower? Will the opportunity costs of physician training and the real costs of medical education become lower? Will you be able to attract candidates to a profession that pays its members no better than workers in other fields where bright people can start work much younger and with considerably less debt? How about the operating costs of medical practices, where overhead in high-cost urban areas can be 70%; will flooding the market with providers make the overhead decrease to accommodate the lower charges you think unregulated competition will create?

>more government involvement, if done wisely

It would be more reasonable to assume the toothfairy will provide free dental work.

>But I don't understand your motivation for the 15%. Why that?

To stop free riders. If the government pays only in the catastrophic case, you'll have an incentive to get sick catastrophically, if you have to get sick at all. There would be a significant minority of those who wouldn't take their medications, have regular check-ups and early treatment.

The 15% as a number are coming from Jane's limit at which the government would take over.

>Can't they buy insurance?

They can, but many will be unwilling. Unless you force them, you are subsidising, hence encourageing, the results of bad choices.

Do we get more high-risk births from Mexico than Canadians get from the rest of the world? Very possibly.

We have a quirk in our system that if a pregnant woman can sneak across the border and give birth in the US then the baby is a citizen. This is considered very important to a lot of Mexicans, especially since under our rules the child can pull the parents into the country. That, combined with a neighboring country with a third world medical system, leads to lots of potential high-risk births.

Canada may also give citizenship to those who are born there, but say what you will about the US it's hard to argue that Canada shares a border with a country with a third world medical system. Note that Russia borders the US, not Canada, and in any event not many people live in Siberia and that's not a dash like the Mexico border is.

The Canadian immigration rules are tough. I'm a seasoned software developer earning a six figure [US] salary, with a Ph. D in computer science, with english as my first language [alas, no knowledge of French -- my second languages are Spanish and Russian] and I have a high-skilled spouse, and I still couldn't amass the required 67 score to immigrate. I was only one point short, but I presume the standard means what it says and I would be denied permission to immigrate.

-dk

With the estimated number of illegal immigrants as 3% of the country, disproportionately male and predominantly not pregnant, I would love to know how many "anchor babies" would have to die at birth in order to have a measurable effect on our overall infant mortality rates compared to Canada's.

Despite the appeal of having your child born as an American, it's probably also way more appealing to a) hold off on pregnancy until you've crossed the border or b) smuggle your child into the country than to try to cross the Sonoran Desert while pregnant. I think that people are being swayed by the media appeal/political appeal of "the anchor baby problem" to imagine a massive effect on U.S. infant mortality rates that doesn't exist.

The AMA is relevant to the issue of physician supply. They are the Gate Keepers, and accredit all Medical schools through their Liaison Committee on Medical Education (LCME). Overly stringent standards limit the number of seats at US Medical Schools, and raise costs. As a result, a Medical School cottage industry has cropped up in the Caribbean, and it produces a large number of qualified residents every year – with lower tuitions and no government subsidies.

There is no question cost of medical care would come down if the number of Doctors were increased. The Laws of Supply and Demand have not been repealed for the medical profession. In fact with an inelastic demand curve – a shift in supply (even a highly elastic supply) could have a pretty big impact on costs.

Shifting the supply curve would not be cost free. The AMA can’t just wave a wand, dismiss a few ephemeral standards, and double the production of doctors – but medical education costs can certainly be streamlined. There are tons of qualified applicants with great MCATS who are rejected every year. Medicare plays a big role in funding the residencies – but it isn’t the bottle neck – there are residencies that go unfilled every year. Moreover - teaching hospitals do a poor job of accounting for the true cost of educating a resident. I bet the residency costs could be reduced (fewer tests – more residents/attendant) without much impact to patient care or graduate education. The Medical Profession has already acknowledged the resident hours don’t make much sense – and probably increase costs. I really think we have a tendency to gold plate our medical education. Its like the Air Force telling us how bad we need the F-22, or when NASA pitched the space shuttle as cheap access to space.

Someone wrote... "And doctors (particularly specialists) are greedy and are paid too much. They abuse their monopoly power, time to take them down. " ......

OK. And when you get 'your own' personal health crisis, gushing your life blood or clutching your chest in agony, you will then go to whom? Your spirit healer? Your janitor? Mommy?

Lets see now, a Specialist gets there in general as follows:

High school - 12 years
College - 4 years
Medical School - 4 years
Residency/Specialty Training - 3 to 7 years
Subspecialty Fellowships 1 to 2 years
...........or more. At least double the training of most nominally well educated humans.

During which time they usually end up in deep debt with huge education loans. Hundreds of thousands of dollars in loans in many cases.

If they start a private practice they incur another huge expense to set up a clinic, buy very expensive equipment, hire staff and so on. All for your chizling benifit, right....

Payment is a nightmare. People see medical care as a right (it is not, it is a skill/product for sale) and once they feel better are often dis-inclined to want to pay for their last illness or injury, even if they can. And when insurance or other 3rd party pays, it is never full payment and may take many months to recieve, if at all. Meanwhile the practice owners cover the overhead of providing those services already rendered. There is no other business where the client or customer typically has the expectation that you will provide an extremely valuable service to them now with little or no collateral, and that you can then be paid months later when they get around to it, if at all, in nickels and dimes. And that if you don't get paid by them it is OK because,'well, you are a rich doctor after all and you don't really need MY money....'

So they set up policies to see that they get paid. Maybe even paid up front for some services. So they can pay their rent and employees, pay their school loans off and have a lifestyle equal to their economic value to a society. Consider that this is a career where you don't even become a working professional until you are in your late 30's or maybe even your early 40's. You have to be able to make your return on investment in maybe 20-25 years instead of the more normal 35-40 working years of the average high school graduate (or not) who thinks his labor is worth $75/hr, like your local car shop guy.

And you expect to pay field laborer wages to the guy who is going to cut open your kids heart or brain? Or try to save your leg from amputation when you fall off your motorcycle in a drunken stupor? And then you want the right to sue if you don't like the outcome of your own stupidity. Grow up!

How do I know this? I own and operate a primary care clinic. I am a Physician Assistant-Certified (PA-C) and have been in the medical arena for 25+ years as a nurse and then as a PA. I spent over 10 years in ER's and ICU's. I know what it costs to provide medical care. If it is to be provided, someone must pay. High value skills will always carry a high price, just like high performance cars, jets or boats. It is in the end a sellers market for skills everyone wants access to when they are sick or injured. I'm open for business, come and see me, I can help. I accept cash, check, VISA, medicaid or valid insurance.

But you don't own my skills or services, they are not community property. Nor are the skills of any practitioner of this or any other profession. They are for sale, this is our livelihood and we have as much right to earn what the market will bear as a plumber or truck driver: pay up or you won't get them. Thats how it works. All the socialist crybaby hand wringing won't change that.

To "Bomb Thrower":

The fact that the AMA has a liaison committee with interests in medical education does not mean they control medical school class numbers. They are not an educational certifying agency, except within their own organizational interests. They have no more authority to tell a private or state university how many students they can seat in a class than does any other private independent organization. At best, they hand out medical "Good Housekeeping" seals. They provide advice when consulted. They are not empowered to accredit schools, or license graduates. Just because they make recommendations doesn't mean anyone has to follow them.

Numbers of available residency positions generally exceed numbers of U.S. graduates. The empty spots are usually filled by
graduates of non-US schools on educational/training visas. A small number come from proprietary overseas schools serving U.S. citizens unable to gain admission to U.S. allopathic or osteopathic programs. The reasons for their choice is usually that they are not as well qualified as those applicants that do gain admission to U.S. schools (we are not talking about highly respected national universities in other countries--no St. Andrews, no U. Witswatersrand, e.g.). Those final remaining residency spots that go unfilled are most often marginal programs perceived to be undesirable by any applicants, programs with poor resources or poor records of maintaining teaching faculty, or shaky accreditation.

"Gold-plating" education? How? Unless you propose revising the structure of postsecondary education in the U.S. to mirror the programs in the U.K., where medicine is taken as an undergraduate curriculum following completing A-levels and O-levels, then I don't see where you will reap savings in training doctors at the undergraduate level. As for residency level training, where again the untapped savings. 80 hrs/wk or 100 hrs/ wk, the pay is the same. Residents are paid low, fixed salaries. The workweek length is irrelevant to savings. Please explain to this benighted writer--who has passed through this system--why you think the system is so wasteful. What "testing" would you eliminate to make the training cheaper without affecting quality?

With the "market" consisting of few buyers representing either the federal government or large private insurers, there is little flexibility to respond to increased supplies of doctors even if the overhead expense of practice was very low. Are you arguing for a sweatshop economy? That is fine for plentiful unskilled labor, but with highly skilled labor that by the difficulty in qualifying is inherently scarce, your idea won't work. You think free market; I predict black market.

> who thinks his labor is worth $75/hr, like your local car shop guy.

The local car shop guy doesn't think that his labor is worth $75/hour. That's what the car shop charges. Out of that money, they pay the car shop guy, the receptionist/cashier, pay rent, buy equipment, taxes, and so on. (The expenses are not unlike those of running a medical practice.)

Of course, you're perfectly free to work on your own car. Since it only requires a high school education and you've got one, what's the problem?

Chenry –

The LCME, which is effectively controlled by the AMA, is THE Medical School Accreditation Agency for the United States. LCME Accreditation is required for schools to receive federal grants and to participate in federal loan programs. It is much more than just a “Good house keeping seal of approval”.

I don’t propose getting rid of any testing, but the amount and quality of the training should be reduced. The USMLE pass rates are off the charts – 97% for Step 3. That’s what I call Gold plating. Caribbean rates aren’t bad at about 75%. You do not need a cannon to kill a fly. Nurse Anesthetists are near perfect substitutes for Anesthesiologists.
We can sacrifice a little bit of quality for significant cost reduction

I’ll believe the financial risks of attending medical school are too great when there are open seats at US medical schools. Medicine is, and will continue to be a very lucrative profession - even after the AMA cartel is broken.

To Bomb Thrower;

I am not sure I agree with you that there is such an untapped willing pool of qualified medical school applicants presently refused entry to U.S. medical schools. There are osteopathic schools and of course offshore schools, and overseas universities as potential sources of medical training. Bottoming out educational standards for admission to U.S. schools and presumably enlarging class sizes might flood the market with lots of graduates with lower application qualifications than ever before, but where does that translate into less expensive care or better access? We have already opened immigration generously to noncitizen physicians willing to train here and many stay. We can hardly get them cheaper as a society since we have asked the citizens of other countries to foot the bill for their education.
Except to create a pool of low-qualified graduates--assuming these students you think should be admitted actually are able to graduate--you have done nothing except create more graduates needing jobs to pay their school debts and make a living. How does their "being there" meet their need for patients who can pay?

I still think your AMA rant is off-base; locking them out of the LCME would do nothing. Bright people are not going to be willing to go through the rigor of a medical education, whatever you may think of it (been there?) if at the end of the process they will make a living no better than accountant or engineer or teacher. The application process remains competitive--which I think is a good thing and encourages smart and interested applicants--only as long as the reward is proportional. So physicians make more than most other occupations; they should and I hope they continue to do so.

If you are arguing that doctors are overqualified based on the high passing rate of the Step 3, I don't see the logic. Steps 1 and 2 have lower rates of passing. You don't get to Step 3 unless you pass the first two.

Nurse anaesthetists are presumably qualified as reflects their training. Calling them the equal of anesthesiologists begs proof. Got any?

I wonder if there isn't some partial solution in two prongs - (1)two-tier tort system and (2)"standard of care" software.

(1) What if any physician were allowed to formally opt out of the tort system and merely do his best? Clients would be required to give formal irrevocable informed consent or go elsewhere. (In essence joining a licensed buyer's club.) Tort recovery would be limited to 110% of the amount paid, determined by binding arbitration. Cost of medical services drops by roughly 20%.

(I know, tort lawyers would never allow its existence.)

(2)Why is there no computer system formalizing diagnosis and testing? Things done by computer get faster and cheaper and better over time. Even thought there would always be some human components, there have to be a large number of sections of the medical process that can be automated. Here is one place where government development of Software makes perfect sense, since this item cannot possibly be completed without someone able to say "No, it wasn't right, but no, you can't sue me."

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