Conservative Think Tanks

Why have the Republicans been unable to propose an alternative to ObamaCare? Anyone can criticize. Where is the Republican alternative?

Okay, I’ll grant some exceptions. Newt Gingrich had a comprehensive health plan in last year’s Republican primary. It was my plan. Four years ago John McCain had a comprehensive health reform. That was also basically my plan. Mitt Romney oversaw health reform in Massachusetts. That was a Heritage Foundation plan.

Yet none of these ideas has garnered the support of the Republican rank and file. Why not?

Think about the special interests Republican politicians are likely to talk to. Doctors, hospitals, insurance companies, drug companies, device manufacturers, employers, etc. Their interests are all different. I doubt if you can come up with any significant health reform that won’t be vigorously opposed by at least one of these. Since heath care is a $2.6 trillion industry, special interests are willing to spend megabucks to oppose reforms they don’t like.

Then there are the conservative/libertarian think tanks. You would think they would at least share a common vision of health reform that many Republican officeholders would find appealing. But they don’t. The messages from the think tanks have been almost as diverse as the views of the special interests. Did you know that each of the major right-of-center think tanks has its own reform plan? And they are all different!

Oh, I get by with a little help from my friends
Mm, Gonna try with a little help from my friends
 

What brings this to mind are two American Enterprise Institute (AEI) publications — one by Joe Antos on Medicare reform and the other by Tom Miller on more general health reform. Both are quite good. They are informative. There is little that I saw that I disagreed with. (I plan to write more about them in the future.) Then I begin thinking about the short-term Medicare reforms that Tom Saving and I proposed in Health Affairs and the long-term Medicare reforms Tom and his colleagues at Texas A&M developed for the National Center for Policy Analysis (NCPA). I suspect that there is not much in the NCPA proposals that Tom and Joe would disagree with. But in terms of the written text, I would guest there is only about a 10% overlap between our work and theirs.

A politician following the AEI publications would miss out on about 90% of what the NCPA proposes. A politician following the NCPA publications would miss out on about 90% of what the AEI scholars think is important.

Overall, think tanks on the right have a habit of ignoring each other. Often, they don’t even footnote each other. We proposed the idea of Health Savings Accounts (HSAs) in the early 1990s. The proposal was quickly endorsed by the Cato Institute and other more libertarian organizations. Today, HSA plans are the fastest growing products in the health insurance marketplace and I think it’s safe to say that the idea is no longer even controversial. But I believe it was at least a decade before the idea was embraced in any publication produced by the Heritage Foundation, the American Enterprise Institute or the Hoover Institution.

Is this state of affairs the result of being overly competitive? Of seeking product differentiation? Of each organization trying to develop its own market niche? Possibly. A more likely explanation, I suspect, is that the folks on the right really do have very different visions of health care.

About two decades ago, I wrote Patient Power with Gerry Musgrave. More recently, I wrote Priceless. If you skim the introductions to both books, you will quickly see the idea that the doctor-patient relationship lies at the core of everything that is important in health care. However, I can’t recall any other major, right-of-center think tank ever writing about the doctor-patient relationship.

The NCPA web site is about the only place on the Internet where you will find a continuing, ongoing interest in how we can create a genuine market for medical care in which providers compete for patients based on price, quality and convenience. This is the entire focus of the Medicare reforms I proposed with Tom Saving. By contrast, most of our friends in other organizations are inordinately focused on third-party payers and see the activities of these entities as being central to health reform. In my ideal world, health insurance companies would have a shrinking role — eventually becoming no more active than a garden variety life insurance company. (The social function of a life insurance company, by the way, is to do nothing more than verify deaths and pay claims.)

Another difference: the NCPA and the Cato Institute seem to be the only organizations with an interest in creating a real market for health insurance in which risk is priced accurately. Only in such a world will health plans compete aggressively to take care of the problems of the sick. Failure to understand this point is why AEI scholar J. D. Kleinke thinks that ObamaCare is market-based reform.

The news is not all bad. More thinkers on the right are openly advocating the fixed sum tax credit (defined contribution) subsidy that Mark Pauly and I proposed years ago as the ideal way to subsidize private health insurance. In addition to Joe Antos and Tom Miller, see the Weekly Standard piece by James Capretta (AEI and Ethics and Public Policy Center) and Jeff Anderson (Pacific Research Institute).

Even so, there are differences among the think tanks that are real and ongoing.

At the time of the debate over HillaryCare, there was a major clash among the right-of-center think tanks over the direction health reform should take. Peter Ferrara recounts some of the history here. Partly in response, Grace-Marie Turner (Galen Institute) established the Consensus Group — to try to forge…well…a consensus. In the early years, we actually did find some common ground. We even published a book.

Yet with the passage of time, the consensus seemed to dissolve and the organizations drifted apart. The Heritage Foundation continued to push ahead with the idea of managed competition, modeled on the Federal Employee’s Health Benefits program. Hoover Institution scholars published their proposal for tax subsidies — completely ignoring the Goodman-Pauly analysis and provoking a backlash from others in the conservative health policy community.

In the six months leading up to the passage of the Medicare Modernization Act (which created the prescription drug benefit under Medicare), I believe the Consensus Group never met. At the time of its passage, the right-of-center think tank community was deeply divided. The group did meet occasionally leading up to the passage of ObamaCare. But it was never able to agree on principled opposition — such as the NCPA’s Health Contract with America.

Josh Barro, writing at Bloomberg on the Republican failure to develop a credible health agenda, agrees with my point about the special interests. But he goes on to fault the conservative think tanks for putting too much faith in free markets — regurgitating arguments that I thought I demolished some weeks aback. The conservative think tank problem is not their belief in free markets. It is that each think tank seems to have a different idea about how markets can solve problems.

Bottom line: there is no common health policy vision on the right. Come to think of it, there is none on the left either. But I’ll save those guys for another day.

Postscript: After seeing an earlier version of this post Grace-Marie Turner wrote to say that there is a positive side to diversity. Here are some of her comments:

Think about markets: Companies don’t all gather around and offer one identical product. They participate in the marketplace of products and each is trying to differentiate themselves to offer something that is faster, better, and cheaper. The free-market policy community offers the same marketplace of ideas. We are not all robots. We have our own ideas, but they do converge around patient power, the doctor-patient relationship, competition, choice, and markets. None of us disagrees. We all bring our own ideas, experience, expertise, and perspective to what we offer. And members of Congress have the same issues and challenges. That is how democracy works: Lots of smart people coming together with ideas organized around some central principles so that policy can be forged from these raw materials….

I ask that you consider the value of competition in markets. That is exactly the environment we are living in. And the customer will be better off for it!

Okay, readers. Tell us what you think.

 

Comments (41)

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  1. Ken says:

    Wow. This is really interesting.

  2. Mark Kellen, MD says:

    You forgot to mention that intelligent people always want a “system” or an organizing structure when the reality is that the more complex the problem, usually, the more devolved it should be. Thus, in health care, the only way things get better is for the rulers, republican or democrat, to get out of the way.

  3. Kenneth A. Fisher, M.D. says:

    We too have a right-or-center think tank, the two of us and this is our plan. This plan is also based on John Goodman’s concepts. http://www.washingtontimes.com/news/2012/may/3/prudence-of-a-patient-centered-approach/

  4. Keith Bell says:

    The more I think about it the more I like Dr. Carson’s remarks at a recent conference with Obama sitting nearby on the dais. Dr. Carson a reknowned pediatric neurosurgeon suggested that everyone have an HSA plan at birth. For those that can’t afford the premium the government could subsidize including contributions to the bank account. All others could contribute annually up to the cap to be used when necessary. Any amounts left over at death can be willed/transferred to another family member. It’s a very simple idea that would work.

  5. Greg Scandlen says:

    John,

    Pretty gutsy of you to raise this. I see two problems here –

    1. Even “conservative” scholars think they have to anticipate and solve every potential problem. Many don’t really believe in the ability of markets to self-correct. They seem to think a group of really smart people can sit around a table and work it all out. IMO this conceit is mostly self-serving — “what would the world do without us?”

    2. Unfortunately many on the right confuse crony capitalism with free markets. So they tend to overlook rent-seeking on the part of big business and fail to address regulations and taxes that favor dominant companies over potential competitors (think of Certificate of Need surviving in Red States). Very few right-oriented groups dared to challenge the rent-seeking behavior of PhRMA, for example.

    The way out of this dilemma is to insist on making the rights and abilities of the individual consumer our guide-star. A company that pleases the consumer will thrive, those that don’t will and should fail. We don’t need to weep for those failed companies any more than we bemoan the demise of 8-track tape manufacturers.

  6. Elizabeth Reid, MD says:

    Physicians think of themselves and their patients as the central players in the healthcare drama. Wrong. The third party payers and the institutions required to support the work that goes on around the patient have pushed doctors and patients offstage. Why not keep walking? If doctors and patients had same relationship around health insurance that plumbers, electricians, and homeowners have around homeowner’s insurance, transparency and economic normalcy would return to at least part of the world of healthcare expenditure. Maybe State Farm and Allstate could get into the business of Bodyowner’s insurance. . The hooker is that all physicians would have to opt out of third party payment. Herding cats comes to mind.

  7. Devon Herrick says:

    On the one hand, I agree with Grace-Marie Turner. Think tanks are a marketplace for ideas. As such one should expect the ideas to be diverse. On the other hand, there are some ideas that have emerged to become something that all free market think tanks should embrace; and some ideas that all should shun. A uniform tax credit that would assist everyone equally is something that most should agree on — including left-of-center policy shops. Along the same idea, abolishing the open ended employer deduction should be something that all (Left and Right) should agree on.

    I don’t know why HSAs have become political. There’s sufficient evidence that HSAs (or HRAs) offer better incentives than comprehensive plans. Policymakers should have taken steps to ensure health plans sold in the exchange contained an HSA/HRA.

    The U.S. just began an initiative to reform health care. It’s a travesty that the outcome of this initiative is a program premised on the idea that it’s possible to provide something very costly for nothing. We are destined to revisit this reform in a few short years.

  8. Anne Willey says:

    Health care is one of the most complex and dynamic market sectors. Finding a policy plan that all can agree on would assume a finite solution with finite ideas, which is contrary to market innovation and adaptability.

    That is what government does, not market-supporting think tanks and policy makers.

    Case study: We attended a CMMS presentation here in St. Louis on how the feds were streamlining and improving health care as a result of PPACA. It took 5 slides and 25 minutes to define a “family” for Medicaid eligibility and Exchange subsidies. Trying to codify what a family is to match other social, immigration, tax, etc. definitions is what we get when we try to replace millions of market sector experts with a few people trying to agree on one solution.

    Government and others trying to micro-manage this market sector is like the floo-floo bird, always flying backwards, missing what lies ahead.

    De-regulating, getting market-distorting government and its warped incentives out of the health care business, and focusing on what patients and providers need to offer affordable, accessible, quality healthcare in this country is all we need to agree on.

    Let all the fresh ideas loose!!

  9. Dean Schooler says:

    Thank you, John, for the roadmap. Leads me to wonder about think tanks’ strategies (if any) for getting their ideas and prescriptions into the political system and hands of political leaders and administrators who have the ability to turn them into law, policy and regulations. Leads me also to ask if, at the heart of think tanks’ prescriptions lie ideological assumptions and starting points, science and indeed historical patterns and precedents within the think tank itself. What also may have been lost along the way could be the absence of a constitutional underpinning (e.g. federalism, limited government, separation of powers, rights etc.). Has anyone designed and attempted a summit of think tanks and charged the process with at least agreeing on what’s held in common and on what’s complementary? All this said, and even done, I worry most that an ill- and under-trained field of journalism and writers and the loss of the written word and rise of soundbites and chatter have left the culture and political leaders without a way to even begin thinking seriously about policy, public or private. Solid, needed and challenging beginning though, Dr. Goodman. Thank you.

  10. Andrew O says:

    Interesting post. Didn’t realize how much divide there was amongst conservative think tanks on health care reform. While diversity can be a good thing in most instances, I am not sure that it is actually helping in this regard. There is a reason why Conservative policymakers have been criticized for not having been able to propose a comprehensive reform bill in uniform fashion.

  11. Peterson says:

    I agree with Devon. Diversity is an important aspect of think tanks, but its amazing that some ideas are not more widely accepted.

  12. Grace-Marie Turner says:

    While I appreciate your including my comments, it clearly did not disuade you from making this very erronious assumption — that the market-based think tanks have no core ideas or plans. In fact, we all converge around core ideas supporting markets, competition, and individual ownership of health insurance in support of the doctor-patient relationship. It is inaccurate to say otherwise.

    We do not believe in creating another monstrous 2,700-page bill that would attempt to restructure one-sixth of the economy. Rather, we believe in advancing specific policy ideas, such as refundable tax credits for the purchase of private health insurance, which is a bedrock organizing principle of the Consensus Group and policies that moved toward a defined contribution to support public and private insurnace. Speaker Boehner’s call for a “step-by-step approach to common sense health reform” is the right approach in resetting the very distorted incentives in the health sector.

    And, to correct the record, the Health Policy Consensus Group continues to meet and has been meeting regularly for nearly 20 years, including the run-up to passage of the Medicare Modernization Act.

  13. Buster says:

    Greg makes an important point. Especially that there are entrenched special interests who complain about the direction health reform has taken, but would never support a reform where they were not guaranteed a captive market. Consider how hospitals would fare without third-party payment. Would patients actually pay a $50,000 bill for a service that would cost $10,000 at a competitive facility? It’s doubtful. Drug makers too want to ensure their products are covered by insurance, correctly guessing that consumers would balk at brand-name drugs costing $200 per month when an acceptable generic substitute is available for $4. For their part, many doctors have a vision of the perfect world, where insurance pays physicians’ asking price without regard to prior-approval and negotiated discounts. Patients want health reform that guarantees them access to cheap insurance that allows them to obtain all the care they want – with little cost sharing. None of this is likely in a free market.

  14. Gabriel Odom says:

    I really like Avik Roy’s plan.

  15. @Grace Marie Could the consensus group meet soon, together with John Goodman, and come up with a roadmap to systematically morph the ACA into a plan acceptable to the group? And then get some Republican politicians behind it?

    @Keith Bell Carson’s ideas that you report are found in my approach. Wonder if he’s read it and is considering other elements?

  16. Diana Furchtgott-Roth says:

    It’s Democrats that come up with large comprehensive plans, not Republicans. It’s great that think tanks have their own proposals. Now, it’s up to the politicians to take some winners and enact them into law. Perhaps, seeing the failure of the comprehensive Affordable Care Act, politicians could enact a series of small, carefully thought-out bills, which could be read and understood in advance. These could include expanding health savings accounts; altering the ACA to allow the purchase of catastrophic health insurance–or any inexpensive plan–in health exchanges; and taxing the value of employer-provided health insurance.

  17. Don Taylor says:

    What is really missing are elected Republicans willing to champion some/any of these ideas….including being willing to lose re-election to push health reform. I am not sure there are any.

  18. K. Yale says:

    Hmm, hadn’t thought of it like this?!

    Is this diversity, reflection of the complexities that is healthcare, or just a lack of leadership? And, for that matter, where have all the leaders gone?

  19. G. Roth, DO says:

    Dr. Goodman:

    Any plans to release Priceless in “audiobook” format??

  20. Bob Hertz says:

    There is a libertarian named Kevin Carson who ought to be embraced by conservative think tanks.

    He endorses hard-nosed free market principles – where hospitals have to disclose their prices for outpatient care or they do not get paid.

    What makes many Americans recoil from right wing health care is their first hand knowledge of what it is like to be wheeled into a hospital emergency room, and emerge with a grotesque bill that would exhaust anyone’s HSA after just one day of intensive care.

    Avik Roy has addressed this, I forget just when. Americans must have protection against price gouging in emergency care, when consumer choice is just a macabre joke

    If given that protection, much of the public would warm to libertarian concepts.

    Garrison Keillor once said that a liberal is a conservative who’s been through treatment.

    Well,a health care liberal is a conservative who has been threatened with bankruptcy by ruthless hospitals

    Deal with this, and the think tanks will get more traction.

    bob Hertz, The Health Care Crusade

  21. Beverly Gossage says:

    I began speaking out about Ed’s connector/portal/exchange when it was first proposed. I was disappointed that it took so many years for other conservative/libertarian think tanks to realize that the government creating a faux marketplace is a not a good idea…no matter the industry.

    I agree with Devon that there should be some ideas that are universally accepted but there are others that should be universally denounced.

  22. Joyce Cordi says:

    Interesting discussion about the alternatives to ACA –

    I agree with Ms. Turner – a competitive marketplace offers more than one product. Consumers chose what works best in their specific situation —

    Even when there is only one product – it may be sold as branded or generic side-by-side.

    In both drugs and groceries the stigma of generic over branded has disappeared over the last decade – something marketers did not anticipate but current economic conditions drove and, in fact, made “hip”, aux current –

    Why should it be different in health care or health insurance?

    Seniors who are driving the generic preferences in Medicare are likely to be (like me) the younger users. We are used to PPO and HMO plans in which we had gate keepers who had to refer us to specialists with different co-pays in-network and out-of-network. We’ve paid different co-pays for brand name and generic drugs –.

    We are going to reduce the average Part D cost not just because we are healthier but because we have had to “shop” for health care for years –

    We would drive down the costs of Part B, as well, if we had different sets of choices –

    For health care, in general, the big change will come when the PPO groups and the HMO groups start to publish prices – so that we can make smart consumer choices –. As co-pays increase – more and more employer-based insured as well as Medicare patients are going to demand this.

    Organizations like Kaiser and Sutter (here in the West) are aggressively pursuing ways to use technology etc.. to deliver quality care better, quicker, cheaper and smarter – because they believe that Medicare (as we know it) and ACA will put them out of business, otherwise.

    And preventing their own demise is the strongest strong motivator to compete.

  23. Brian Williams. says:

    It seems antithetical for libertarians or conservatives to plan anything on a national scale. Central planning doesn’t come naturally to us. Maybe that’s why it is hard for the center-right think tanks to unite on nation-wide health reform.

    Anyway: politicians generally don’t understand that simple liberty is a good alternative to a comprehensive plan. It is hard to imagine Congress passing any law that expands freedom.

  24. John Goodman says:

    Just to be clear about Avik Roy’s plan: There is much to like about the Swiss health care system, but it is still managed competition. And it has many of the flaws that we have previously identified in our analysis of managed competition.

  25. Studebaker says:

    I like the Swiss system. However, if I were to venture a guess, it would be that the Swiss system suffers from the same temptation for politicians to meddle that the American systems endures. For instance, when coverage is mandated, industry is tempted to lobby for specific benefit mandates. Insurers are tempted to lobby for guaranteed issue/community rating. Disease advocates are tempted to lobby to ensure their specific disease is covered. Drug makers are tempted to lobby that that drugs are included.

  26. Bob Hertz says:

    A couple of years ago, Uwe Reinhardt wrote a piece about the Swiss health care system after Regina Herzlinger had praised it.

    Uwe pointed out that:

    a. all Swiss insurers are non-profit

    b. all Swiss insurers participate in a mature risk adjustment system, so that no one makes a profit on underwriting

    c. all Swiss doctors and hospitals agree on a fee schedule — there is no Wild West where out of network doctors bill $10,000 for a surgery with no disclosure

    d. Swiss hospitals are supported in part by taxes. Therefore insurance premiums are not as high as in the USA.

    I am afraid that if some American libertarians were actually sent to Switzerland, they would consider the Swiss system quite socialistic.

  27. Greg Scandlen says:

    Bob Hertz -

    a. Speaking as someone who worked for a long time for a not-for-profit Blue plan, I can attest that it makes absolutely no difference in the behavior of the company. If anything, for-profits are at least accountable to shareholders, while in a not-for-profit management appoints the BOD.

    b. Underwriting IS a “mature risk-adjustment system.” I have yet to see one that works better.

    c. Paying all the Docs the same fee would be fine — if all the Docs were the same. As it is, some are much, much better than others and should be paid more for their skill.

    d. I would support taxpayer funding of hospital emergency centers. Why should patching up bullet wounds of gangbangers be paid for only by the privately insured?

    The question isn’t whether something is “socialistic” but whether it works.

  28. John Goodman says:

    Matt Yglesias just posted this:

    At the highest level of abstraction, the idea of the Affordable Care Act is that over time Americans should be transitioned out of a blend of employer-provided insurance and lack of insurance and into a system of regulated, subsidized, individual plans. The model is Switzerland. And in an information Reuters piece, Douglas Holtz-Eakin and Avik Roy—two of the most important conservative health policy thinkers around—propose that Republicans embrace a system whose goal is to transition Americans into a system of regulated, subsidized, individual plans modeled on the Switzerland approach.

    In other words, they want Republicans to surrender.

    Here is the link:

    http://www.slate.com/blogs/moneybox/2013/02/20/gop_surrender_on_obamacare_douglas_holtz_eakin_and_avik_roy_say_it_s_time.html

  29. Greg Scandlen says:

    Right. So the State determines–
    1. Who may provide insurance,
    2. What it must cover,
    3. What consumers must pay, and
    4. Requires that everyone participate.

    And this is a “conservative” approach?

    All this to solve the “problem” of the uninsured who are responsible for perhaps 3% of health care being uncompensated?

    Good Grief!

  30. David Theroux says:

    John,

    Thank you for this incisive article. However, you failed to note that unlike the other think tanks, the Independent Institute was out in front and with you from the beginning. You partially note this in the preface to Priceless regarding our book American Health Care. http://www.independent.org/store/book.asp?id=33

    We similarly have published numerous studies before and since critiquing all aspects of government involvement in health care.

    David J. Theroux
    Founder and President
    The Independent Institute

  31. Avik Roy says:

    John, I wholeheartedly agree with your critique of managed competition. It’s not the ideal solution — something closer to Singapore or South Africa, as you note in your latest book, is even better. But given the health care system we are actually working with, and the political difficulty of reform, Switzerland is our realistic best chance.

    I haven’t heard anyone else come up with a more politically plausible avenue for market-oriented reform, but I am eager to learn from the group on this score.

  32. John Goodman says:

    @ Avik Roy

    Understand. Maybe my lagest post is a littel harsh. just tired of reading people re-hashing old stuff.

  33. Bob Hertz says:

    To Greg Scandlen, mainly:

    The conservative interest in Swiss health care is partly due to the recognition that voluntary individual health insurance in the USA has some serious problems.

    If there were no group insurance and no Medicare and no Medicaid, then fewer than 20% of Americans would have health insurance at all. This would be worse at older ages, when people need their coverage the most.

    Why do I know this? Because I have been in the private insurance industry for 35 years. Look at private disability insurance and private long-term care insurance.
    They cover just a sliver of upper middle class persons, carriers drop in and out of the market, premiums are almost never guaranteed, and claims can be a minefield. Actuarial death spirals are the rule, not the exception.

    Without large employer groups and federal programs, the health care industry would shrink drastically. Providers would be mainly paid by cash or credit.

    This would not be the end of the world, but the one sector of our economy that is still creating jobs would be ravaged. No one wins if there is a near depression, not conservatives or liberals.

    Bob Hertz, The Health Care Crusade

  34. Blake Ashby says:

    The primary challenge of many of these ideas is that they are based on an economic unreality – individuals are not qualified to make most healthcare purchase decisions. The reason that the sheep markets that Adam Smith wrote of worked are because each individual could be a knowledgable buyer. They could feel the sheep’s coat, look in its mouth, and make a determination for themselves of the worth of the sheep. This isn’t true in healthcare. An individual has no way of knowing whether the lump on his arm is cancerous or benign. Because we don’t really know what we are buying, what is wrong with us that needs to be corrected, then we cannot be informed consumers. And because we cannot be knowledgable consumers, “market” based solutions will not be able to address our rising costs.

    There are certainly many fundamental reforms that will control costs and increase coverage – John McCain’s proposal for a single collector/multi payer plan, also supported by NCPA, would be transformative. But as long as we mix fantasy and the hard-nosed truth, our efforts will always come up short.

  35. Greg Scandlen says:

    Sorry, Blake, wrong on all counts. Much of what we encounter in life is beyond our personal understanding, that does not mean we can’t have an effective market. What do we do when dealing with a vastly complex tax code or legal system? We hire an agent. That agent has expertise we do not have, but that agent is also responsible to US and no one else. The agent is accountable to us because WE pay him. The problem in health care is that WE are not paying the agent (doctor or broker), the insurance company is. So the agent is accountable to the insurance company and not to us. Change that relationship and you can have a very effective market.

  36. Bob Hertz says:

    Greg, there is another aspect to what Blake is saying in his comments that you have not addressed.

    He was hinting at the dilemma where the patient can never know what his medical liability might be.

    Other forms of insurance do not operate that way. The owner of an old car knows that he does not need full collision coverage. The owner of valuable antiques and art work knows that he does need replacement fire insurance coverage. The business owner with large debts knows how much life insurance he needs.

    Even the individual with a tax or legal problem has a pretty good idea of what his exposure is. A speeding ticket costs only so much. A capital gain carries only so much in extra taxes.

    Whereas the ability of our health insurance to send out bills for hundreds of thousands of dollars seems a lot more random. This creates pressure to buy huge amounts of health insurance. This same ability to send out $500,000 bills for cancer care also creates pressure on workmen’s compensation insurance and on malpractice insurance.

    In fact, the ACA has new provisions that remove what used to be $250,000 limits on health policies. Obama bragged that this was a humanitarian reform. I thought it was awful.

    Where I am going is this: one way to control the cost of health insurance is to control health care liability. Remove some of the need for insurance!

  37. Blake Ashby says:

    Sorry Greg but your analogy is wrong.

    The doctor is not an agent, the doctor is a service provider. I do not go to a doctor to help me find another doctor, I go to get something fixed. But among the range of problems, I don’t actually know if something is kind of broken or really broken. If I have a leak in my house, I can identify exactly what the problem is, and I can get a few different plumbers in to give me an estimate. I know what the problem is, and I know what the outcome needs to be – the pipe is fixed. But if I have a lump on my arm, I don’t have that level of insight. I don’t know if it is a benign fatty tissue, or cancer. If I go to a doctor, he is going to charge me at the least several hundred dollars to make the determination. So its really not practical to go to three different doctors for quotes, because each one will have to perform the same tests to understand the lump. And imagine if I did go to two different doctors. One might tell me that the lump is harmless, another might say that the lump looks harmless but should probably come off anyway. So how do I know which one is right? I can’t.

    This is my basic point. We try to shoehorn healthcare into the paradigm of the free market, into Adam Smith’s sheep markets, but the necessary elements aren’t there – you can’t have a true individual market without knowledgable individuals, and the vast majority of us lack this knowledge.

  38. Greg Scandlen says:

    Blake,

    NO! If you go to an attorney, you don’t know what your liability is until he explains it to you and then he represents you — he is performing a service. Ditto an accountant to do your taxes — he is performing a service. Medicine is no different, EXCEPT for the third party payer.

    Bob,

    Sure, you have potential exposure that is very high. This is also very unusual. Same as in the legal system where you might be facing the death penalty. BTW, I would not hire an attorney to represent me for a traffic ticket any more than I would go to a doctor for a cold. But I absolutely agree with you on doing everything possible to minimize the need for insurance — especially third-party payment insurance. I’m far more comfortable with indemnity coverage.

  39. Blake Ashby says:

    Hmm… still not sure of the analogy… in very limited cases, attorneys can tell you your liability (ex. you defaulted on a loan). In other cases attorneys can tell you your exposure, but the jury tells you your liability.

    The point that we seem to miss over and over again is that if you have a healthcare situation, you are not paying with your money – you are paying with the money of the other people in your pool, your group. No matter how you slice it, healthcare is a group activity, a risk pool. We need to stop trying to shoe horn it into an intellectual construct that is just not accurate. We have a far better chance of making an impact on our healthcare system if we start from how it actually works.

  40. Blake Ashby says:

    Looking for Feedback.

    Hi everybody. We have been working on a white paper on healthcare reform, arguing that we need to let the members of a group health plan take more control of the shape of the plan. We are interested in comments and feedback, both from people in healthcare and from consumers. If you have time and are interested in dry, academic subjects, please take the time to read the paper and send me your thoughts.

    Thanks

    Blake Ashby

    http://cheatinghistory.com/?p=294