Health Care Reform

Some thoughts and links

1) Health Insurance should NOT be tied to a job. Note that this editorial was written by a Democrat and appeared in a conservative publication (the Wall Street Journal). I think both sides would agree with the article's subtitle that "One thing we can all agree on is that portable coverage is more secure." This also clarifies the true costs of insurance.

"No country achieves universal coverage without subsidization and compulsion, but U.S. politicians tie themselves and the health care system in knots by proposing reforms designed to conceal these realities. Politically, the most appealing plans are those that mislead people into thinking that someone else is paying for their insurance. Currently more than half of insured Americans obtain their coverage through employment, and workers have been led to believe that their employer bears most of the cost of their care — a belief that labor-market experts have concluded is invalid. When a firm pays $3,000 to $7,000 per worker per year for health care, it can get that money in only three ways: reducing potential wage increases, increasing prices for what the firm sells (which means lower real wages for workers everywhere), or lowering profits."

2) Administrative costs are only a small part of the problem. The Washington Post considers them here.

"For one thing, some administrative costs are not only necessary but beneficial. Following heart-attack or cancer patients to see which interventions work best is an administrative cost, but it's also invaluable if you want to improve care. Tracking the rate of heart attacks from drugs such as Avandia is key to ensuring safe pharmaceuticals."

They estimate that, if we could cut administrative costs in half (to the Canadian system's level), we would save about 5% off health care, or 124 Billion. A significant saving, certainly worth doing if it were possible, but not enough to cover growing expenses.

3) New technologies are are driving the growth in health care spending"

"Most real medical spending growth is accounted for by beneficial but costly new technology."

Kenneth Arrow, noted health care economist, agrees.

"The basic reason why health costs increased is that health care is a good thing! ... A lot of these technologies clearly reveal things that would not be revealed otherwise. There's no question about it. Diagnostics have improved. Technology has improved. You know, sending things through your blood stream to help in operations, instead of cutting you open. It's incredible. But these things are costly. ... But, nevertheless, preserving life is a good thing."

4) Crass or immoral as it may seem, we must put a value upon human life.

Some of these new technologies have limited "bang for the buck" and must be "rationed". Some are inappropriate due to age or other conditions. For example, the Kidney Cancer drug Sutent adds maybe half a year to the patient's life. The drug costs $54,000. Worth it? Maybe. But what if the drug cost a million dollars? Most would say not. The article gives several other examples of evaluating and limiting spending that isn't "worth it".

Conservatives have been the main users of the "rationing is bad" point to argue against reform. I think they are being inconsistent here. Conservatives have argued, in my opinion correctly, that economic factors should be used to evaluate expenses for regulations, e.g. consumer safety and environmental regulations. To be consistent, conservatives must also agree that economic factors should be used to evaluate expenses for health care. Which means "rationing".