Tuesday, December 30, 2008

Mandated Health Insurance Isn't a Capitalist Solution (Or a Solution At All for That Matter)

Everyone from my classmates to some of my family members has recently been talking to me about universal mandated health insurance as the solution to our healthcare woes. Apparently, we can solve our healthcare crisis by making everyone give money to insurance companies. The two things that I find most amazing about this argument are:

1)It is almost universally proposed by individuals with socialist leanings
2)The argument as to why it should work is usually that it is a capitalist or free market solution.

I think we need to get a couple of things straight. There is no such thing as a federal free market mandate. By being a federal mandate, it automatically ceases to be free market, which is essentially defined as being devoid of government interference. You cannot mold capitalism to your personal whims. Capitalism is why some people don't buy health insurance now. Forcing everyone to buy it is a strangely crossed socialism/fascism hybrid in which we force everyone to subsidize each other while simultaneously creating a profit for a private financer that is controlled by public regulatory bodies. This system cannot work effectively. I'll explain why:

As a precursor, let me point out a couple of universal points that are argued to achieve the mandated health coverage utopia:

1)People who can "afford to pay," are required to buy health insurance or face stiff tax penalties
2)People who cannot "afford to pay" are subsidized to some degree in the purchasing of insurance, with some groups inevitably being fully funded.
3)Insurance must cover pre-existing conditions
4)There is some control on insurance rates
5)Your insurance can't "drop" you
6)There is some continuing tie to employer funded insurance

Here's why these things don't work:

1)It doesn't address the overall cost at all
2)By forcing those who can "afford to pay" to also pay the taxes that subsidize those that can't "afford to pay" you are creating socialized medicine with two middle men. You have the government AND the insurance company. Far from being a free market solution, you get a government beauracracy and a company that largely generates profits by lobbying the government beauracracy and denying payment for things that the government gives it money to pay for.
3)If insurance covers pre-existing conditions, rates have to go up.
4)If rates are controlled, they cannot go up to cover pre-existing conditions. Companies will have to lobby for a rate hike that no one can afford, receive subsidies (a second knock against those who can "afford to pay") , or operate in the red.
5)By requiring insurance companies to keep patients for life, you require them to charge everyone more up front to deal with the inevitable risk factors that will appear later
6)You continue to rely on the employer based insurance model which is itself a relic of the New Deal Era as an attempt to avoid wage control policies.
7)The new system does NOTHING to address malpractice problems
8)The new system does NOTHING to ration expensive care
9)The new system becomes a hindrance to a new system, because it is now a mandate.

If people had to pay for their own care, there would be no medical cost crisis, because contrary to popular belief, the cost of medicine would over time come down to the price that people could pay. If you eliminate some of the malpractice incentives to over test, people will simply not want to pay for low yield testing. Insurance companies couldn't sell insurance unless it was cost effective. In a system without EMTALA, the cost effectiveness of the insurance system would be better assessed, as people would actually have an incentive to buy it.

Something doesn't become capitalism because a corporate entity is making a profit from it. Something is capitalism when it is the product of the natural adaptations of the free market based on the individual preferences of the people within the system.

I am actually going to take a stance here that most people will be shocked by. I believe in a two-tiered system. I believe in a locally funded county system that adapts to the local needs of its area and provides safety net care to prevent the spread of infection and control disease. I believe that the proper role of a lot of residency training is in these institutions as it was originally designed to be. I want the feds out of 99% of medicine beyond the prevention of nationwide disease epidemics and bioterrorism. I want the local governments out of the private medical system. A private system with a small safety net is better than than the hybrid mess we have created, and seem to want to perpetuate, any day of the week. That would be a true capitalist solution to healthcare. Entitlements at the public institution would be limited by budget considerations, and private healthcare would function like all capitalist systems, providing what it can based on the preferences of the people with the most cost effective solution that meets those demands outshining the others and taking market share.

Only in a dream.

14 Comments:

Blogger Quash said...

Easily the smartest, most well thought out argument on the issue. Ive tried to explain these ideas to my family/friends, fellow medstudents. No one seems to get it. Well done and well said, Doctor

12:10 AM  
Blogger Panda said...

english has it

4:57 AM  
Anonymous Anonymous said...

There are significant problems with allowing healthcare to survive purely on the principles of capitalism. Mainly, who is the consumer of healthcare? For capitalism to work, you need a consumer who can understand the costs and benefits of a product. The consumer has to be able to compare alternatives to the product to decide how much they want/need the product.

So who is the consumer in medicine? It can't be the patient who does not have the knowledge to package their symptoms into a diagnosis or understand the costs of tests that they require vs the costs of tests that might be helpful. It can't be the doctor who may have ulterior financial motives as to why to do or not to do a test or procedure. Plus, most doctors I know have no clue how much lab tests, xrays, and CT's cost. (Actually, few people in a hospital can tell you why medical tests costs what they do. Separate discussion...) How about insurance companies as consumers? Well, they fit the mold the most, but they obviously have some ulterior motives also.

As a medical student, I am sure you have heard of the "golden years" when paternalism ruled. Funny thing is, it still does. Many patients leave the medical decisions to a doctor because they do not have the knowledge to be an informed consumer.

The next issue is patients also have to be consumers of physicians. They have to be able to find a quality primary care provider and/or specialist for their problem. How are they going to do that? Either as a referral from another doctor (paternalism) or by word of mouth from other patients (see above argument - patients do not have the medical knowledge to be good consumers). I am an ER doctor and I can tell you that some of the worst physicians from a quality standpoint are loved by their patients. Patients don't know protocols or the newest literature. They judge their doctor on how much they like them and not real quality measures. As an ER doc, I have a separate issue with referrals. There is only one surgeon on call. What if I think that he or she is incompetent. I still have to send my appendicitis patient to the OR.

I am by no means a socialist (opposite end of the political spectrum actually) but capitalism does not fit well with healthcare. But don't get me wrong, I would prefer the government stay out of it also. Very thoughtful blog. I agree you can't expect the physicians to be perfect. There are going to be some misses. Otherwise, the costs will continue to skyrocket. But, the American philosophy is immediate gratification. Misses are aloud as long as it doesn't happen to me or my family.

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