Healthcare, One More Time

George Rebane

[This is the transcript of my bi-weekly KVMR-FM commentary broadcast on 21 January 2011.]

The dodgy passage of Obamacare last year, its rejection by most Americans, and the results of last November’s election have ushered in a new season of healthcare debate.  It is doubtful that repealing that abominable legislation will come to pass any time soon, but even Democrats are beginning to discover that it will not be the cost saving solution to socialized medicine that they touted before they passed it.

From all best estimates, no member of Congress has yet to read the damn thing, let alone understand what’s in it, or what impact it will finally have on keeping Americans healthier.  Pelosi’s prescription regarding ‘pass it first, understand it later’ is still an ongoing voyage of discovery for our nation that daily reveals more shoals, rocks, and sandbars where clear sailing was promised.  Even as we speak, a flood of patchwork regulations are being issued daily by various bureaucracies, new and old, in order to launch all the needed programs to implement the law.  This mess is getting messier and more expensive by the day.

Today the arguments for keeping Obamacare all center on the idea that healthcare is a right bestowed on everyone found within our borders.  No other nation, not even the socialists of Europe, will accept that approach.  Since their programs are taking an increasing share of their gross domestic products with every passing year, all of them are proving daily that nationalized healthcare is not sustainable.    Their only alternative to massive reform is ever more stringent rationing of health services and medicines.  In the meantime, more and more EU members are queuing up for fiscal failure and bailouts from nowhere.

So how should we approach our own healthcare problems?  First, is healthcare a right, and for whom?  Today the obvious answer is still a definite NO according to our founding principles.  If we wish to make it so, then it should be done after extensive public debate, and not on a partisan railroad in the dead of night.  But the question remains, how can our system of commerce and governance deliver better healthcare?

The first answer is that we cannot do so under the current system of tort laws and market mangling regulations that hinder delivery of medicines, medical services, and health insurance.  Second, we cannot do so with a static view of technology while ignoring its accelerating advances.  All the current approaches attempt to fit a square peg into a round hole – it isn’t going to happen.  It’s like trying to legislate levitation.

Any serious attempt to make healthcare available more broadly and cost less will require the following major components to be put in place.

- Revise medical malpractice laws to reduce the cost of practicing medicine at every level.
- Free up the health insurance market to allow insurance companies to offer all manner of policies nationwide.
- Simplify the process of incorporating new technologies into the medical industry.  Specifically, do not impede the introduction of intelligent machines into diagnostics and treatment recommendation.  Encourage the wider application of tele-medicine over the internet using low cost communications such as Skype and remote sensing.
- Reregulate the definition and hierarchy of medical practitioners allowing the market along with advancing technologies to guide who does what with what equipment.  Our current system is woefully outdated, and it discourages too many people of all ages from preparing for the limited medical practitioner slots now available.  As our country ages, the exact opposite should be happening.
- Finally, we should take a hard look at delivering healthcare through non-profit public service corporations for the poor and indigent.  I have described these on my website georgerebane.com.

Given all the European healthcare chickens coming home to roost, we should strive not to repeat their experience.  And this is doubly so as our country teeters on the edge of bankruptcy.  No socialized healthcare system has yet to sustain both people’s wallets and their quality of life.

My name is Rebane and I also expand on these and other themes in my Union columns, on NCTV, and on georgerebane.com where this transcript appears.  These opinions are not necessarily shared by KVMR.  Thank you for listening.

Comments

[Michael Anderson]

I re-reviewed your past posts about "How We Got Here" and your idea about creating a new tier of non-profit public service corporations in "Workers and Work, the Coming Crisis." There are some very good ideas here that I can support.

That being said, I ask why it is that we are here in 2011 and still without a good solution. I have been dealing with health care inequities for going on 3 decades. It's frustrating.

Here are couple of articles that might be helpful to you in understanding how people became so frustrated that they decided to support the flawed health care initiative that is Obamacare.

http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande

http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=1

[Paul Emery]

So George it seems you are proposing a system that has never been tried instead a system that has worked quite well for 60 years,The Denmark system) that you say will fail but hasn't yet and is quite popular with it's population and seems, by any measurable evaluation to be far superior to ours. Am I missing something other than your predictable response that it will all collapse because of financial insolvency? I am still waiting for some example of what you consider a good system that is in place somewhere today.

Also Todd... You never responded when I asked for details about why you feel our health care system (pre Obama ) is the best in the world.

[Michael Anderson]

Imagine what would happen if we were to de-link health care from employment!

Many workers locked into dead-in jobs in dying industries, fearful of losing their health care coverage if they change employers, stay put.

De-link health care from employment and you will suddenly have a huge pool of labor talent free to move to burgeoning industries, or even willing to start new companies!

Please explain how tort reform and selling insurance across state lines has any such momentous effect.

Thanks for re-opening this thread, Paul. It seemed to have died on the vine.

[George Rebane]

Paul, I think we sang the Danish healthcare anthem in an extensive comment thread of a bygone post; that's why this post is '... one more time'. The liberal ideology does not look ahead very well - if a social program obviously headed for a crash has not crashed yet, then the liberal judges it to be a good program. (California in the large is such a social program.) The notion that if you continue spending more than you take in (the equivalent of spending a larger fraction of your total income) then not only will that program crash, it will also crash other programs, and perhaps even worse.

Michael, I couldn't follow your logic. Of course we should de-link healthcare from employment. I thought in these pages we had crossed that bridge ages ago. What I have suggested is complementary to that; it's not an either/or.

But in sum, I am not aware of any sustainable healthcare programs the services of which Americans would accept that could serve as a model for us. When this Republic was founded, there existed very few social (commercial, class, religious, ...) structures to serve as models. We had to invent them, and we did. We will have to do that with healthcare also. And our best light is the one that has served us well before - minimally governed free enterprise.

[Todd Juvinall]

Paul I have experienced the results of America's top notch healthcare this last year and I stand behind my statements. The best example is always a personal one.

[Michael Anderson]

George,

I agree that we will have to invent our own. That's why I sent along the links from the New Yorker, which are exactly about not only inventing our own, but also reducing costs ("Testing, Testing" and "Getting There From Here").
http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande
http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=1

Sorry for not remembering that you had already tossed your hat into the employment de-linking ring. And I know there are lots of other areas in the health care debate where we would also agree, sustainability being perhaps the primary!

Michael A.

[George Rebane]

I should point out that my subsequent piece on 'How Social Engineering (almost always) Fails' goes a long way in explaining one the several significant failure modes that aflict all national healthcare programs. Here

http://rebaneruminations.typepad.com/rebanes_ruminations/2011/01/how-social-engineering-almost-always-fails.html

[Paul Emery]

Todd
Todd
The fact that you have experienced such great healthcare and my friend was sent home to die proves my point about healthcare in this country. Obama had nothing to do with his situation. The Republicans sat on their hands when they had the majority and did nothing so why should I trust them to come up with a solution now. Best in the world? Perhaps if you can get insurance. By the way Texas, the poster State for economic growth has the highest percentage of uninsured in the country -around 25%. Because of Romney care Mass. has the lowest around 5%. That's the closest model we have to Obama's plan

[George Rebane]

... and what has Mass attempted to do since the reality of RomneyCare became apparent? Did we notice any other states rushing in to repeat your celebrated 'success' of Massachusetts?

Somehow I don't think we are connecting here, and the reason is that we don't have a mutually agreed upon healthcare utility that we are trying to maximize. What should the utility be, maximize the average death age, minimize the infant mortality rate, ... ? Until we do that, we are arguing apples and oranges.

[Todd Juvinall]

You just like class warfare Paul. Life isn't fair. People have different outcomes from the same type of incident. That is life. Regarding the R's sitting on their hands. Nope. They tried to change a whole bunch of stuff and it cleared the HOR and went to the Senate. Guess what, your buds, the dems, filibustered all of it. Why would they do that Paul? Could it have been political? You need to realize that life is tenuous at best and there but for the grace of God go any of us. I am blessed in my faith and the friends and choices I have made in my life. I do my best to help people not as lucky as me. But I refuse to force my will on others in my country by forcing them to do something that is against my view of freedom. And yes, we have the freedom to be smart, the freedom to be stupid and to practice both at the same time.

[Paul Emery]

George

I don't celebrate the success of Mass. health care I only pointed out the comparison with Texas, a state that you celebrate as an economic model that California should emulate. If what we are trying to accomplish in our dialogue is a discussion of health care issues than why not look at Mass. and at least contemplate how they are able to accomplish what seems to be an admirable outcome.

Are you willing to engage in the dialogue to discover that "mutual utility" that you refer to ? I agree that unless that is an agreed upon value this discussion is pointless.

Todd

You have eloquently expressed social Darwinism as applied to health care. "That is life ......" That same argument could well be applied race and gender opportunities. I am happy that your life has been blessed with fortunate situations and opportunities.

Access to essential health care in my opinion should be universal. My friend who was sent home to die was a hard working self employed citizen who paid his taxes and could no longer afford health care. This has nothing to do with class welfare. You invented that diversion in this conversation.

Perhaps you should look at how you received your health care services and think about how that system could be extended to all Americans.

[George Rebane]

Paul, I would not have suggested it if the answer was NO.

[Michael Anderson]

"What should the utility be, maximize the average death age, minimize the infant mortality rate..."

I would say that it is nothing more and nothing less than getting the best bang for our buck. Our system is horribly inefficient, and once we fix this Number One Problem we can start to debate all of the others.

[George Rebane]

With all due respect Michael, but your response, to the extent that it represents the deep thinking of the electorate, is exactly what has gotten us to where we are and continues to promote people talking past each other. And such fruitless conversations ultimately lead to greater polarization because it removes/ignores the available tools that we can use to find common ground.

"Bang" for the buck is explicitly defined and implicitly held (in muddled heads) in more ways than we can count. The subjective definition of utility in terms of performance is the first step in systems design. It is that utility that allows the reasonable evaluation competing designs. And that is also the prime reason why politicians (in and out of office) do everything they can to avoid utility functions - the do not want to be held to account. So they promise the people, 'Trust me, I'm gonna get you the most bang for your buck.' And the people believe.

[Michael Anderson]

George, I have no problem with moving the focus of "buck banging" to locking into law democratically agreed upon utility functions, with the added caveat that this be done in a timely fashion.

[Paul Emery]

Can we start by agreeing that access to essential and reasonable health care for all Americans is imperative and is lacking at the present time?

[George Rebane]

Great, then we are agreed, at least in principle. The remaining speed bump is that no one has figured out how to come up with "democratically agreed upon utility functions". That is the prime reason (in systems talk) why the Founders gave us a republic instead of a democracy. No country's people, in the broad sense, can come up with such explicit utility functions. In a republic, the people are betting that they're at least smart enough to elect a small group of leaders who will be smart enough and principled enough to generate such functions (even if they are non-analytical) and use them to guide shaping public policy. Our record as an electorate has not been too good on that lately.

All of this becomes more critical in systems (of governance) that are 'tightly coupled' (a term of art I have defined elsewhere). And the collectivist paradigm is always to more tightly couple and control its citizens. This, of course, is the path that America and its several states have been accelerating on now for quite some time.

But then again, we have never tried to establish a broadly accepted utility to guide anything in how we make laws. What if we took just a baby step and decided to restrict federal spending to never exceed 18% of GDP? It's a loosey goosey utility, but it would test the depth of our intellectual waters and be a start.

[Michael Anderson]

My use of "democratically agreed upon" assumed the governance structure of our republic--let the bureaucrats and the scientists in their pocket come up with utility functions and then let Congress approve or disapprove.

I will also agree to the 18% of GDP figure, though we would probably have a vigorous discussion regarding which facilities and programs constitutes that percentage (-;

[Mikey McD]

No, I don't agree- "Can we start by agreeing that access to essential and reasonable health care for all Americans is imperative and is lacking at the present time?"

How much is your heart, limb or life worth? How much would you pay (or go in debt) for your heart, limb or life? How much would you force others to pay for 'your' lifestyle choices/health care expense?

I do believe that free market capitalism has directly and positively affected life expectancy/quality of life. A reformed system would do a dis-service if innovation was not rewarded, if *some* members of society were forced to sacrifice for the common good, competition was decreased and medicare was not completely revamped...

To provide the best health care value for all Americans without forcing individuals to sacrifice liberty to the collective via deregulation, competition and innovation.

[Mikey McD]

California already provides for 'low income' families to receive health insurance via Healthy Families:

"How much does Healthy Families / MEDI-CAL cost?

Members pay a premium ( bill ) each month. It costs $4 to $24 for each child, or no more than $72 for a family. Members also pay a co-payment (usually $5 to $15) when they go to the doctor or get other services. Some services are free." AND

"If your income is below the limit for Healthy Families, you may qualify for no-cost Medi-Cal. You can let Healthy Families send your application to the county office near you to find out if you qualify for Medi-Cal."

[George Rebane]

Gentlemen, I think we are making progress.

Paul, yes could agree that it is an "imperative" (but not a 'right') that America has a broadly accessible and broadly affordable healthcare industry. But whether such healthcare is currently "lacking" can only be determined after we adopt a mutually agreed on healthcare utility function. I will write one up as perhaps a starting point for our consideration.

Michael, you bring joy to my heart by agreeing to a cap on government spending. Yes, how to allocate that 18% will indeed launch a vigorous but fruitful discussion. And again, reason dictates that it be allocated according to some (multi-attribute) utility that successfully captures and maps the essentials of aggregate QOL (quality of life).

[George Rebane]

Mikey, you may have missed the thrust of this thread which is to take a 'zero based' approach to coming up with a public policy for the healthcare industry. If the (systems design) approach outlined here is followed, then a policy to maximize the TBD utility could well recommend a distributed loosely regulated industry, or a specified and tightly regulated industry, or any of a thousand points in between. In these deliberations we are not there yet.

All - as a resource that has covered much of the ground that we wish to reconquer, may I suggest an SESF report on community planning that I wrote about five years ago. At the minimum it would give us a common syntax as we venture forth.

http://sesfoundation.org/TN0605-1CommunityPlanning_060516toc(2).pdf

And regarding operational definitions of 'rights and privileges', I would offer these.

http://rebaneruminations.typepad.com/rebanes_ruminations/2010/03/rights-and-privileges.html

[Mikey McD]

you lost me. I will try to catch up later.

I think the USA is doing well:
http://www.youtube.com/watch?v=jbkSRLYSojo&feature=player_embedded

[George Rebane]

That's a great video Mikey, and goes a long way to illustrate the ranking of US healthcare when the utility function is made up of just average income and aggregate longevity.

[Paul Emery]

As far as Healthy families and Medi-CAl are concerned it's my understanding that there are no doctors in the area that will take patients with that coverage so poor families end up going to the emergency room for minor illnesses. I don't have too many details but that's what I've heard. The fact is that in this country we don't let people die in the streets so they are taken care of by some taxpayer funded facility at unbelievable rates that is somehow passed on and paid for. Because of our moral coverage it becomes a shared expense whether we like it or not so it becomes a really bad form of national health care.

Unless we are willing to not treat sick and suffering people with no insurance what else can we do but pick up the tab.

So George, in the meantime before we install some kind of system the world has never seen before that you refer to as the possible solution what do we do with the situation as it exists today other than pay the bills for the ever increasing percentage of uninsured. Please show me the utility that we need to share in this situation.

[Greg Goodknight]

Health care will be rationed one way or another, always has, always will.

I buy insurance for a number of things. I have something of a 'comprehensive' policy on one vehicle I can't afford the loss of or possible liabilities, and liability only on a couple others. I have something of a 'comprehensive' policy on my house, which I also can't affort the total loss of or the specter of a burglar slipping and falling and making a massive liability claim.

For health care, we're really not talking about 'insurance' in the classic sense. We're talking about health care bills paid by someone else. I get the impression that most folks clamoring for single payer have in mind getting the great $20K per year policies that are currently not taxed for the unions powerful enough to have negotiated, and for employees of some profitable firms, or COngress. Dream on. PlebsCare would/will be bare bones.

[Paul Emery]

Greg
I agree healthcare services will be proportioned according to the ability to pay no matter what system we have in place. I guess you can call that rationing. For example, in Europe they don't do expensive life extending surgery to people in their 80's. You can, however purchase private insurance at a rather high cost if you chose. Health care in Europe is paid for by taxes but covers everyone up to a certain level. Whether this is sustainable is certainly debatable.

We don't allow people to die where they fall in our country. So unless health insurance is universal and available to all the health care of the uninsured is paid for by someone else other than the recipient. That's the way it is today.

Health care is not something that can be paid for with a savings account so insurance is essential therefore it enters the area of public good that in my opinion makes it an issue that must be supported through government involvement.

Tort reform is certainly in order. I support some kind of universal coverage something like drivers insurance that requires people to assume responsibility for accidents caused by driving.

[Greg Goodknight]

"Health care is not something that can be paid for with a savings account"

Much of it certainly can be. The lack of fair and open pricing has a lot to do with it not being the case.

For example, during my first wife's one way trip into Cancerland a decade ago, at one of her last emergency room visits, she was briefly seen by an attending cardiologist at SNMH (Sierra Nevada Memorial Hospital for you out of towners) called in by another doctor.

His office billed us $450 for the ten minutes of his time. However, since he was 'in network', he was bound by contract to accept $120, which was dutifully paid by the insurance company.

Now, I think it makes sense for providers to contract rates with insurers for economies of scale and guarantee of payment, but I think charging individuals without insurance four times as much means there's something grievously wrong with the system.

[Paul Emery]

I agree. Certainly pay as you go is the way as long as the prices are reasonable. I don't expect anyone to pay for new brakes on my car for example. I cited in a previous post the "tick" incident that charged Blue Cross $1200 for the same service that Yuba Doc's would do for less that $200 cash at the door. Where does that extra $1000 go? Pay as you go Health Clinics have to be part of the solution. However, if you have a major problem such as my friends heart attack you're sunk without insurance.

[George Rebane]

We may be going around in circles on this. There seems to be no differentiation of the price healthcare providers charge, the elements of that price, and the cost of insurance which putatively seeks to spread the financial risk of aggregate healthcare.

We are not here trying to come up with an approach that shaves off 5 or 10% of healthcare costs. The egregious anecdotal examples seek personal reductions in the hundreds of percents. In the discussion, we should always keep in mind that the health insurance company profits are the the 3% grocery chain levels.

For example giant Aetna Insurance is still off its highs by more than 40%, has a P/E of about 8 (the market thinks it's going nowhere), and pays a dividend yield of 0.1%. Discussions that don't differentiate cost factors, and ignore such blatant realities will go no further here than they do on MSNBC.

While some people here in the US still consider that the sustainability of national healthcare is "certainly debatable", in EU countries like Denmark that debate is over. Since what they now have continues to eat an increasing annual share of the their GDPs, their governments have no choice but conclude the obvious and are seeking ways to further reduce services and increase taxes. And even then, no solution is in sight. (Also please read my recent piece on the EU financial crisis.
http://rebaneruminations.typepad.com/rebanes_ruminations/2011/01/keep-your-eye-on-europe.html )

[Mikey McD]

"Health care is not something that can be paid for with a savings account"- I have and continue to pay for all health costs via savings ('true savings' and my HSA).

I have thankfully only used the hospital 2 times in the last 8 years, both for the birth of my 2 kids.
Both paid for via savings.
Child #1- paid $700/month for top of the line employer sponsored health plan and an additional $1,500 out of pocket to reach the deductible. I figure I paid approx $9,900.
Child #2- I paid $70/month for catastrophic insurance ($5k deductible) and paid cash of $1,200 to the OBGYN, $600 to SNMH labor and delivery (the bill was closer to $2k but they gave me a steep discount when paying quickly and with cash). I figure I paid $2,640 for baby #2.

[Paul Emery]

Mikey
I think catastrophic insurance is an important part of the picture. The deductible is certainly reasonable and attainable as part of a savings account. Note that you did have insurance in both cases including employer sponsored co pay. However catastrophic insurance is way higher than that now and over 50 million citizens have no insurance at all leaving them at the mercy of some kind of public assistance if they need help. That's a huge burden to assume and is growing all the time. My friend with the heart attack is in that category and was subject to an extremely inefficient system when he was sent home to die knowing of his condition instead of addressing his problems the first time. It ended up costing $400,000 because it involved two trips to the emergency room and two surgeries instead of fixing it all at once.

With over 50 million without insurance and many of them unemployed, or in many cases under employed it's a huge burden to deal with. I'm not by any means a fan of the Obama plan, preferring a single payer system but whatever the Republicans come up with has to deal with the reality of the situation as it exists today and has to offer some relief in the near future. I don't want to debate a single payer system at this time. I'm just looking for ideas that might add to my outlook about how this huge problem can be dealt with.

Mikey, as always I appreciate you're opinion.

[George Rebane]

Somewhere in this comment stream Paul Emery asked me to come up with a specific example of a healthcare utility metric in order to explain what such a beast looks like and to, perhaps, focus the discussion a bit more. I have put such a stake in the ground here.

http://rebaneruminations.typepad.com/rebanes_ruminations/2011/01/healthcare-utility-metric-with-scriptural-underpinnings.html