Health Care Fantasia

Megan McCardle has some sane thoughts about health care. This isn't my area, but I've given it some thoughts. They are not necessarily sane or feasible. But I think it is interesting to compare your inuition of what would work well in a better world with the menu of policies that actually get offered. So here's my crazy (not Cato-approved!) plan.

  • Decartelization.

This is bigger than people understand. Without recourse to any actual data, I believe that the state's grant of monopoly privelege to certain official certifying agencies has a lot do do with the high cost of health care. Besides creating artificial scarcity (and therefore huge rents for M.D.s), the certification cartel violates our natural liberty to cooperate. The more I think about this, the more it ticks me off. You don't need a Ph.D. in mechanical engineering to change a muffler any more than you need a M.D. to set a broken arm. You just need to know how to change a muffler or how to set a broken arm. Here comes an arumentum ad maternum… My mom was a nurse for twenty-odd years. And my mom knew what she was doing. There is no reason she should not have been able to diagnose basic illnesses, prescribe drugs, set bones, etc. etc. No reason. At all. My sister is just starting her M.S. in nursing courses (she's a BSN). And, of course, the AMA is trying to strictly limit what services nurse practioners can offer under the law. So, the AMA is evil! And I would think so even if it was no skin off my sister's back. There ought to be a guy, Manny, say, who does stitches. You cut your arm and you go to Manny's stitches joint, which flourishes because Manny is the best at stitches. Manny leaves no scar! Ever! Moreover, he's cheaper that some guy who spend years learning about the biochemistry of the human body. What does that have to do with stitches!? Why isn't there a Manny's Stitches Joint! You should be able to get a degree from the University of Phoenix in knee replacements. Just knee replacements! Why can't you?! Because the AMA is evil. M.D.s are monopolists and welfare queens, and preventing a huge infusion of high-quality low-cost health care providers from coming to market. SHAME! If anyone attempts to say that our current system resembles a “free market,” point out that in a free market you wouldn't have to buy a massively expensive indulgence from the Church of Medicine in order to sell health services.

  • Abolish the FDA

Of course!

  • Real insurance markets!

I don't understand what passes as “insurance.” I complained last year that social security isn't really insurance. Well, by and large, health insurance isn't insurance, either. I want a real, very very lightly regulated market, that charges each person based on their real expected cost of coverage. Family history, ethnicity, weight, job, what you eat, whether you smoke, whether you live in a city or in the country, excercise, etc. all goes into the actuarial hopper. Mormons should pay less for insurance. They should! Deregulate. Yes, it sucks to be an overweight black male smoking underwater welder!

  • Health Care Ideas Future Markets

A source of free, highly reliable information about the most effective treatements. If you want to know if a treatment A, which costs half as much, works as well as treatment B, check the ideas markets.

  • Google (or whomever) Diagnostic Services

Statistical prediction rules” [pdf] generally do a better job than real doctors at diagnosis (just by curve-fitting). Enter your symptoms, and the computer will ask you a few more questions, and then will tell you what you have with greater accuracy than some jackass with a God complex who spent $200,000 to get a blessing from Johns Hopkins. A quick search of the ideas markets and open insurance company databases will provide a menu of drugs and treatments by price, probability of curing or ameliorating your symptoms, alongside a map showing where in your area these are offered with user satisfaction scores of all these establishments (“Gash on your arm? You need disinfection and stiches. Try Manny's! Avg. 4 3/4 stars from 26,734 users”) If we had a real market in health services, it would be possible to make huge amounts of money providing people with this kind of service. Which is a good reason to have a real market in health services.

  • Big HSA

Allow people to save lots of tax exempt money that they can spend on health care, which will be a lot cheaper in a competitive market for services. If you are poor, a percentage of your negative income tax payment is automatically deposited in your HSA.

  • Force people to have a catastrophic insurance plan.

I don't love it, but in general I think systems that make people internalize costs are better than ones that allow them to foist them off on other people. Our choice seems to be forced internalization vs. forced externalization of responsibility. So I choose the former.

OK. Now here we go into the fun stuff. If we have real, risk-sensitive insurance markets, and we're forcing people to buy catastrophic health, like we force drivers to have collision, we're going to end up in the following situation: a non-trivial portion of the population will not be able to afford insurance, and a non-trivial portion of the population will be uninsurable.

So, you can't afford insurance. What then? There are two reasons you can't: (1) You're plain poor; (2) Your policy is super-expensive. I haven't thought this through yet. But the rough idea is:

  • If you're poor, the government buys you a policy in the normal cost range. If you're not necessarily poor, but you can't afford your policy, because you're risky to insure, you become, from the point of view of the state, uninsurable. Or you pay the premium for the most expensive policy you can afford, and the state tops you off. It depends.

The uninsurable people are the most interesting problem. The premium for a burning house is the cost of the house. When the price of your premium equals your actual medical bills, there's no point in having insurance. Now, remember, we're imagining a beautiful world in which medical services are decartelized and the costs are lower, and insurance premiums reflect the real expected cost of medical services on a competive, non-monopolistic market. Our prices convey real information, which is what prices are for. Inability to qualify for insurance puts you in a new legal category: insurance exempt. If you are insurance exempt, you have two choices for financing your health care. One, pay for it yourself. Lots of people who are uninsurable will be wealthy enough to simply pay for health care out of their own pocket. Two:

  • The Federal Medical Rationing Service

You're insurance exempt, and you can't afford to pay for health care out of pocket. Sorry! But don't worry, we're the government and we're here to help. Unfortunately, we're the safety net, and the safety net simply is not as good as things get. Here at the rationing service, we're clear about what it is that we do: rationing. The Rationing service is funded by annual appropriations in the general budget from Congress. Since the 2009 Balanced Budget Amendment passed, Congress can't appropriate more than next year's projected revenues (except with a 2/3 plurality in both houses, and an OK from more than half the state legislatures.) So what the Rationing Service has to work with is a function of (1) our budget, which is a function of political trade-offs sensitive to the size of next years projected revenues (is it more important to subsidize ethanol or give more to the Rationing Service? Choose!), and (2) the number of people falling under the aegis of the Rationing Service.

What we do here is examine your case, examine the treatment options available to you on the roiling competitive market for healthcare services, or at your nearestl HRS facility, and offer you a voucher for an amount that will buy you the best treatment you can get relative to the Rationing Service's budget constraints and principles of prioritization. With the voucher you will be given a menu of qualified treatments. We will include on the menu some qualified treatments that cost more than the voucher. If you are able raise funds from other sources (family, church bake sale, jar at the local McDonald's), then you should feel free add those funds to your voucher to by a pricier approved treatment. You will not get a voucher for the most expensive treatment. But because there is a real market, you also will not have to wait in line (unless you choose to use a HRS facility). And you can use Google Diagnostic Services yourself (which, to tell you the truth, is mostly what we do), and you will often be able to find excellent qualified treatment for less than your voucher. You are free to put the savings in your HSA.

Rationing is less of a burden in the context of a real market. Our limited funds go a lot further. And you will not feel as bad not getting the very latest, most expensive treatments because the market will generate information that will make it quite clear just how little additional value you would get for the extra cost. You don't feel like a second class citizen driving a ten year old Honda when it still looks pretty good and can get you from A to B just as well, and in almost as much comfort, as this year's Mercedes. We give you vouchers for the health equivalent of ten year old Hondas. But they work. The crazy thing about the old system is that you couldn't buy the health equivalent of a ten year old honda even if you wanted to! New Mercedes or nothing! How foolish we were then. There would simply be no way we would have a big enough budget to help all the insurance exempt in a world of nothing but new Mercedes. Either people would die waiting in line, or the debt would detroy us! Here at the HRS, we're proud to part of a system that is both high-quality and sustainable.

And that's pretty much it! For most of the population, this system gives them all the blessings of genuine market: high quality at low prices, an insurance market with prices that convey real information about risk (providing a real incentive to become healthier in order to decrease your risk and premiums), plentiful cheap drugs (your insurance company will require you to tell them when you start taking a drug, since drugs could make you sick, and the way they adjust your premium will tell you whether it is safe to take it), cheap, extremely accurate diagnostic and treatment information. And for the rest of the population, the market makes a rationing system in which the uninsurable receive quality care possible. Our problem with health care is, at one level, the same as our problem with education. We don't have enough imagination to see that a system that unleashes the power of imagination would have a huge payoff. It is “too important” to be “left to the market.” So important that we leave it to a system sure to fail instead. Oh well. May the enlightenment one day arrive.