Thursday, June 4, 2009

Health Care or Health Insurance?

Health insurance is not the same thing as health care. No American, under current law, is ever denied health care, although 47 million Americans are reputed to lack health insurance. Warren Buffett does not have health insurance, nor does Bill Gates. Should we have a government program to insure them. Among the 47 million uninsured, 10 million are estimated to be illegal aliens. Should these folks be insured under the new Obama program? Nearly one-third of those without health insurance have more than twice the average national income of the typical American. Do we need a new program to insure the rich?

America spends 17 percent of its GDP on health care-- far more than any other modern, developed country. Other developed countries, by and large, have some form of national medical system (some with private aspects, but mostly nationally controlled). These countries decide what and when an individual can have access to health care. In England, anyone over the age of 70 is effectively denied access to surgery (at any price). In the opinion of the British government, those over 70 aren't worth saving. In most countries the government decides who lives or dies. In America, Americans decide who lives or dies.

Why is such a large part of American GDP devoted to health care? Part of the answer to that question is demographics. We have a much larger percentage of our population born to teenagers than is the case in other countries. This has nothing to do with our health care system, but imposes dramatically higher costs on the system. Older Americans are much more overweight than their counterparts in France, England, Germany, Japan, etc. This is a cultural issue not a health care delivery issue. It is well known that excess weight dramatically increases health care costs. We permit multi-million dollar legal suits any time a patient or their family feels slighted by the medical system. This is a political issue and is not caused by our health care delivery system. This imposes massive costs on our system. No such similar costs are borne anywhere else in the world. Finally, America produces the best health care in the world and that is a true cost to the system.

Various levels of government in the US, both nationally and locally, impose numerous confusing and conflicting regulations on the health care industry and on the medical industry that raise costs and lower the efficiency of health care. One example is that insurance companies are often required to insure everyone regardless of pre-conditions. In states like Massachusetts where this absurd requirement is in place, it is irrational for anyone to buy health insurance until they are actually sick. Otherwise, they are simply throwing their own money away for no reason. Other regulations force insurance providers to provider certain coverages even if the insurance buyer doesn't want them. This forces people to pay for coverage that they neither want nor need.

Medicare and medicaid add further distortions to the medical system imposing signficantly higher costs by reducing incentives for individuals to monitor their own health and eliminating incentives for individuals to shop around for the best prices. Medicare and medicaid also involve doctors and their staffs in endless negotiations and bitterness regarding reimbursements. This problem is growing steadily. Medicare and medicaid are currently estimated, by the Congressional Budget Office, to be $ 30 Trillion underfunded. Hmmmm.

In essence, the problem in the health care industry is government interference. If the market were left to provide health care, it would do it in a very efficient manner. But, given the direction that the Obama Administration is headed toward, our local hospitals will soon degenerate to the lack of accountability that has become characteristic of American public schools. The time will come, after Obama has finished his handiwork, that American hospitals will be considered unsafe and Americans will be clamoring to get their health care from private providers or in foreign countries.