First of all, everyone is correct in what they have stated about American medicine. However everything proposed will not solve the problem. We all need to get closer to the ground and note some special characteristics of the “health care industry.” I would recommend no matter how tedious a short treatise by Kenneth Arrow entitled “Uncertainty And The Welfare Economics Of Medical Care.”

Some points I have learned.

An insurance pool must be large enough and reflective enough of the population to cover the unwanted risk of not having access to basic health care.

Health insurance as presently purchased has the peculiar property that if its subscriber has to cash in on what is covered it can produce what is being insured against. That is, it can produce bankruptcy or even death. How short to leave oneself is an economic question but usually made by those least able to protect themselves in a health crisis.

Getting professional help and establishing a desirable doctor-patient relationship is your best asset for personal care.

Individual care has become a human necessity since the 1960s when medical knowledge reached a critical mass to make it so. Careful studies have shown that being uninsured in this country produces 44,000 excess deaths per year. Care becomes so imperfect without routine access that many lives are put in jeopardy.

No one pays for their particular care but contributes to supporting the system itself. No one is keeping a separate account for you but the money is used to keep the health delivery in good shape. It should be that the largest portion of the insurance dollars were directed in this way. Overhead should be under 10% not the present 15 to 20%.

The sick and those with identifiable problems need help not vilification. If there are no sick for doctors to learn better care, it will not be available to you if you happen to fall into this category. Most of these problems involve intervention by practitioners but are probably more effective using public health tools. Smoking, vaccinations, unhealthy food recalls are examples to ponder to see if this holds water. Most of the frustration of individual providers is the lack of broader tools to intervene.

The government has passed footing 50% of the health care expense by default. Our present system is actually creating what is abhorred. Private insurers are pricing themselves out of the business and shrinking their pools to include the mostly healthy. The recent increase in California of some groups to 39% is Enron accounting. They put these souls into their own smaller risk pool when Wellpoint actually covers millions of lives and covering them would have made little difference in their bottom line. Their use of the worst free market principles will be their death knell.

It is incorrectly stated that Insurance Company profit is 2 to 3% since this only becomes true if you include the “medical loss ratio.” However the latter is to pay provider bills, not run the company. In fact, usually by law, they are required to hold money in reserve to cover payments but it is not touched or used. Their profit margin is therefore closer to 10 to 15%.

An American solution can be enacted but it must take insurance principles and the unique nature of the health care industry into account. Many models exist in the world including totally public(England), public/subscriber/insurer(Canada), HSA/insurance/public(Singapore), insurers/public(Germany), Insurers/Employers/Public(France). Without a doubt all comers want to see good care for all but we have to bark up the right tree.

HSAs address the needs of a portion of the middle class and the rich. They do not address the needs of those who cannot save the $5,000 in addition to the insurance costs. They do not address the needs of the unemployed (rather a large problem, at this moment), the poor, and indeed a large portion of the middle class. For those groups for whom it will work, it will likely work as you say. But these are the people who need the least help.

I think you may be confused about how HSAs work. They are ALWAYS tied to a catastrophic insurance plan. Mine is typical. There is a $2500 deductible, a 20% copay on the next $12,500 (for a maximum out of pocket of $5000), and then Blue Cross pays 100% up to $5 million. So my cancer will cost me $5,000 at most, and I have more than that in my HSA account, so I’m 100% covered.

HOWEVER– I have a powerful incentive to not waste money. An MRI of my knee cost my HSA account $850, so I dragged my feet until I saw the knee just wasn’t getting better. It’s that commonsense hesitancy– the money is there, but it isn’t Other Peoples Money– which HSAs produce.

Although HSAs have been very slow to catch on, there is good evidence that they restrain costs in the working insured population– see, for instance, the articles in the Wall Street Journal on the experience of Safeway and Whole Foods. What we need is a statewide trial of “refundable” HSAs in a Medicaid population, where patients are given the money to manage in their accounts.

The problems of the American lifestyle are so pronounced, and the health care delivery system so complex, that only a fool would consider any intervention a potential panacea. I’m old, but I’m no fool. I need every tool in a big bag of tricks to push my patients in the right direction. I think HSAs would help, sure– but so would bike lanes on Topeka roads, a $2.00 per gallon tax on gasoline, and a 5 cent per ounce tax on sugared soft drinks, to go along with my continual prodding, wheedling, shaming, and encouraging.

In the meantime, and after reading all the comments on this article and John’s, I still think there are only two alternatives for restraining health costs in America: a single-payer system with rationing by panels of experts, or HSAs with rationing by patient choice. As a believer in localism, only the latter appeals to me. Neither one is currently under consideration.

Thanks for your response. I think “dispirited” is a fairer word, though I don’t know that I’d single out one particular class of American society for that appellation. Having had the blessing of growing up comfortably in a suburb of great wealth, I saw plenty of dispiritedness in the ranks of the successful. As I see the conversation unfold here, I’m more and more convinced that you’re aiming at truth, and I greatly appreciate that. I have some disagreements and confusions and am curious about how they’ll strike you.

First, as others have noted, HSA’s don’t seem likely to be able to achieve what you want them to. There is the problem that Mr. Medaille has pointed to, and also the problem that they are no help when medical problems get severe. If you get cancer, unless you’re really rich, you’ll go bankrupt even if you’ve socked away money in your HSA religiously if that’s the way you pay for things. But if you backstop HSAs with insurance, you’ll undermine the healthy-lifestyle incentive that seems the primary benefit of the HSAs as you describe them (which I think are probably existent, but I suspect they’d be much less powerful than other forms of behavior inducement – see below – I’d certainly be interested in experimental data though).

Second, even if we idealize away the problems mentioned about HSAs, I don’t think people will respond to the incentives as you hope they will. It’s not like people have no incentives to avoid obesity now. The potential long range medical costs of obesity don’t strike me as nearly as powerful motivators as the high social costs attached to obesity, especially among the young. And yet, more and more children are morbidly obese, in a culture that more and more fetishizes thinness, fitness, and muscularity. I don’t think the problem is one that reasonable incentives can fix. Much more plausible to me is the possibility that we live in localities that are perversely structured, and that we are lured toward bad habits through mediums of communication that are powerful enough to largely bypass our rational inclinations to cost-benefit analysis that respond to incentives. So while I am 100% in agreement with you that our lifestyle problem is if anything a far greater threat than our health insurance problem, I’m quite skeptical about both the prospects for rationally convincing people to live otherwise given the social status quo, and of the wisdom of pushing more individual responsibility instead of collective responsibility for health and for shaping our cultural and social situations more broadly.

I think localism is crucial to changing the situation, as the social bonds between people at extra-local levels of governance are probably too weak for the kinds of spontaneous normative organizing that Lin Ostrom explores in her Nobel Prize winning work to arise. But my hope is that there are possible positive kinds of social reorganization that would both increase local ties and increase cosmopolitan love for the rest of humanity.

Sorry I’ve taken so long to respond.

Here’s the answer to your question in the best article I have ever read on the economics of health care (from the September Atlantic). Absolutely every point the author makes rings clear and true from my experience:

“How American Health Care Killed My Father” http://www.theatlantic.com/doc/200909/health-care/1

Dang. I attempted a semi-serious answer to both, bumped my keyboard, and the whole thing erased. Here’s the gist: Septeus is ranting, and it’s hard to answer rants about “crap” medicine from someone who considers me “insane” to hold my views. I have 4000 active patients who will disagree with him about the quality of their health care. I’m sorry he’s so disgruntled, but I attempted a serious argument, and this is not a reasoned response. End of reply.

Cecelia apparently thinks that bad prenatal care is the result of society or the health care system. That is sometimes the case, but (as I said on 29 September) amphetamine abuse plays a role, too. So does personal irresponsibility in the form of missed visits, smoking, obesity, etc. Then there’s the way we keep extreme premies alive long enough to count in statistics, which isn’t done in other countries.

Her point about health care being more than emergency care is valid, but when you get to preventative care (my specialty of 23 years, after 6 years in the ER), personal irresponsibility is just as striking. I know that some people believe that personal responsibility is a fiction, but I’m not one of them, and that colors my views of American health care.

For your chronic dyspepsia, I would recommend over-the-counter ranitidine, 150mg twice daily. It is cheap, and effective.

You are insane to think having insurance will get you good care. People are denied care all the time through insurance company policies and people in rural area are denied care by the fact they often have drive more than 100 miles for a proper hospital. Why do you think RAM is now spending so much time in the United States?

For the amount of money we pay for health care we get crap medicine and anyone denying that frankly doesn’t know what he is talking about.

Quote: “Because we are a truly empathetic people, and we feel sorry for responsible people with hard-earned assets who lose their insurance with their job and can’t afford to replace it.”

Wrong! We want “reform” because we are tired of being ripped off by the HMOs and insurance companies and having needed public hospitals shut down while we pay more and more for less and less.

Quote: “Because despite all the weeping and wailing in the media, we’re pretty happy with our own coverage. It’s like with politics: people hate Congress, but love their congressperson.”

Are you crazy? Apparently, you where asleep for the entire month of August where folks ready to lynch the traitors both democrats and republicans and don’t give me the crap about how everyone one of thousands of people where personally hired by Dick Army. Most American so disgusted by politicians that most of us don’t vote for either party and stay home.

Most Americans that are happy with their coverage because they aren’t sick and don’t to really on it as soon as they have to rely on it they quickly start to hate the system and that’s not count the 40+ million uninsured and underinsured (myself included).

Quote: So– how do we reduce costs?

That’s not the issue. The issue is how do we get our money’s worth because we should have twice as good health care in America considering how we have paid for over the last 30 years yet we keep hearing how we have to ration even though we are getting less and less for more and more of our money.

The proper question is who is leeching off the sick and stealing the country’s investments in healthcare?

The only people who would try and build a healthcare system by asking the question “how do we reduce costs”? are Fascists and yes that includes Nixon whose fascist tendencies where well know.

Quote 5: “How does the government reduce costs?
Who knows? They’ve never done it. “

Wrong. Under the Hill-Burton System the rates of disease and indeed elimination of various diseases such Whopping Cough, Small Pox, Polio and other result in the great cost saving in health care the world has even seen. Public investment in cures reduces costs. Investment in for-profit medicine eliminate the desires for cure and turns medicine from curing to keeping people sick in order to loot them. A non-profit system would return medicine to it proper basis of healing rather being collection of money.

Quote 5: How do private insurers reduce costs?

That is very simple task. We do what Swiss did and make them non-profits because we you get the profit motive out of the way people start focusing on actually doing something worthwhile like providing people with access to health care and building up your physical capital rather trying to drive stock value by keeping your your customers sick which is the current model.

Quote: “Yes, the issue is rationing– and it’s about time we started this national discussion. It has started badly, with the New York Times trotting out Dr. Peter Singer to examine the topic from the view of a secular utililitarian. He really did an excellent job of presenting the choices; alas, his comments elsewhere regarding the advisability of terminating human defectives age two or less, and pulling the plug on Granny, instantly set conservatives on the scent at full bay… The answer was, “little enough that we can afford it,” and the point is that we were not Nazis in the 1970s, and we are not Nazis now. But we do live in a world of finite resources, and at some point choices have to be made between what is possible and what is the best use of available dollars until the Money Tree is rediscovered. This conversation should be rational, as opposed to emotional. Can we afford quadruple bypass surgery on 89 year old citizens?”

This is crazy Nazi stuff and totally irrational and insane. I suggest you folk here read Dr. Leo Alexander on how the Nazi system started with these very assumptions and how if we weren’t careful we would find ourselves where the Germans where during the depression talking about “Quality Adjusted Life Years” err “lives unworthy of life”.

You do not build anything by asking an accountant how to cut cost before you’ve hired the architect. The question should not be can we afford quadruple bypass of 89 year olds but can we cure heart disease so that we don’t have to do bypasses anymore but if you assume any system of rationing you are assuming a fixed state of medical science and have thus eliminated the potential cost reductions.

The idea that the Money Tree is monetarism that assumes money is what allows us to treat people. People treat People and the Money Tree could be discovered and that wouldn’t treat a single person.
The question how do better improve the physical capacity to delivery care given and then organize the financial side of national economy after we have figured out what kind of medical improvements we want. That’s how you solve the health care crisis. Rationing always makes things worse because it always starts with false apriori assumptions that disallow the possibility of creative solutions. If you mandate rationing procedures then you outlaw the clever ways people can figure out how to solve problems as the problems arise by forcing everyone onto determinist mode of decision making that denies them Liberty.

You no doubt you’ll try and give examples and playing the moral dilemma game but just like philosophy professor you will fail because I’d figured out a way to save both lives in every situation given enough technology and energy.

Now you mentioned the British system as somehow a model of ration and not being Nazis when we all know the King’s Fund which current runs the NHS forced euthanasia policy and has promoted eugenics since the 1907 and during the 1930’s the Brit set up the Voluntary Euthanasia Society to help Hitler look good because until Hitler signed the pact with Stalin the Brits loved the Nazis.
And if you haven’t paying attention the Britain today is pretty much a Fascist Orwellian Police State with post-modern PC values complete in with pre-crime and in-home with speakers that shout order from Big Brother. And no this not a joke it is the UK tday. See http://www.telegraph.co.uk/science/6222938/Artificially-Intelligent-CCTV-could-prevent-crimes-before-they-happen.html and http://www.wired.com/gadgetlab/2009/08/britain-to-put-cctv-cameras-inside-private-homes/.

Dr. Iliff has already explained why financial incentives may promote greater individual responsibility for maintaining health. Just because a good is desirable in itself does not mean that people cannot choose something else in preference to it. So how are they to be led to do what is necessary to take care of their health? Through law or by being financially responsible for the consequences of bad behavior?

And the response would be that this is voluntary behavior. So what is the UK gov’t/NHS going to do to cut down on expenses associated with obesity?

No health reform prior to MSAs/HSAs had the slightest pretense of changing lifestyle behavior.
That is simply wrong. Everything from co-insurance to copays. Nevermind this though. Good heath and living are goods in their own right, and the argument that they need financial incentives to be desirable is pushing something that should be more than just asserted.

Maybe not yet, but obesity is on the rise in the UK.

Here’s a fact to counterpose your fictions: The World Health Organization ranks the US 37th in the world in quality, mainly because we lack universal coverage and care is a financial burden for many Americans. Fair enough, and I agree that’s a problem. However…. we’re 1st in the world in “responsiveness”, which has two components: respect for persons (including dignity, confidentiality, and autonomy of individuals and families to make decisions about their own care); and client orientation (including prompt attention, access to social support networks during care, quality of basic amenities, and choice of provider).

Which brings me back to what I keep saying: Americans are exceptional, and they prize individual autonomy and liberty over government authority and control. Which is why ObamaCare or ClintonCare always provokes a revolution. Now: as believers in localism and liberty, where do you stand?