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06/20/2005

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Harlan Harris

Two quick points. First, the argument that requiring employers to provide health coverage to all employees will end up being bad for the employees was convincingly made by Mr. Posner. The economic incentives are all wrong. It seems to me that the solution to this problem is that old bugaboo, single-payer health care. Employers would then stop paying for health care for their employees, and the incentives would be quite straighforward. I also liked Mr. Becker's argument for HSAs. They definitely improve the incentives for patients to be responsible for their health in ways the current system doesn't. I live in New York State (Queens), and have good health insurance. My girlfriend, however, is self-employed, making around $25K, and can't afford a standard HMO individual plan. A high-deductable plan and an HSA would be great for her. Except... New York State law prohibits insurance companies from offering useful high-deductable plans to individuals! See: http://www.ins.state.ny.us/cl04_04.htm . And no, we're not moving to New Jersey...

Finally, I'm curious how our esteemed hosts would view some of the suggestions on how to fix payments to doctors so that health, not procedures, are profitable?

David Oppenheim

The argument hear lays out quite clearly the rationale for HSA accounts. However, there is a critical piece of data missing from the analysis. That is, what portion of medical costs are connected to what we would consider catastrophic care? I don't know if Medicare provides data on spending by individuals to this level, as it is a nice large dataset, but even without it, we can be confident the percentage is quite large. Given that nearly every proposal for consumer directed health care, whether HSAs or other similar ideas, proposes to include catastrophic coverage without requiring a significant portion paid by the recipient, these proposals fail to make a substantial dent in the problem of rapidly rising health costs. When I am in the ambulance with a heart attack, I am not going to get a comparison on rates. Not only am I going to demand the best care as I near death regardless of who pays, I am doubly unconcerned with the cost because I am certainly not going to pay it, as the costs will be part of my catastrophic coverage.

Michael Porter at Harvard Business School has done some interesting thinking on a strategic framework for the healthcare system as a whole. While (as he admits) it is not complete nor simply implemented, his focus on improving access to data on outcomes in order to drive competitiveness is compelling. The competition in healthcare cannot take place on a cost comparison, as it neglects the importance of successful outcomes, and, as shown above, fails to seriously tackle the cost problem.

I continue to be resigned to a single-payer solution, although it remains a bad option, it is far better than any other.

Jim S

HSAs? Please. How much *extra* money would you have to have available to put into these accounts to make a difference if a real health care crisis hit you? Why do I say this and apparently ignore the catastrophic insurance that Becker discusses? Because it's utter B.S. when you look at how things really work as opposed to the conservative ivory tower that Dr. Becker lives and thinks in. Here's how it would really work fairly often.

Someone doesn't feel good. Goes to doctor. Spends money out of HSA for visit and tests. Tests inconclusive so more tests ordered. Spends more money. Finally has crisis, insurance kicks in but oops, after the earlier doctor's visits plus the visits earlier this year by the kids there's not nearly enough in the HSA to cover the high deductible. This is the beginning. Since he doesn't have the money the hospital turns it over to collections. It is a business first and foremost after all. He makes payments but still has his credit ruined by the past due payments. Now since in the modern world everyone wants to claim that bad credit proves something really bad about you he has a problem finding a better paying job.

I've come to the conclusion that every right wing economist should be booted out of the conservative ivory tower, forced to live at $8 an hour with a family to support and hopefully we could arrange for a nice case of amnesia so that they don't remember that the condition they are now living in is temporary.

Anonymous

A lot of people may start using HSA coupled wtih catastrophic coverage. I looked into this situation already prior to your blog. It is good I am not the only one thinking of doing this and the idea is not totally crazy. Workers today may be more stable than employers. For people who have job transitions, this may be cheaper than Cobra. It also may be better in the event of some sort of catastrophic or terminal illness incurred during a transition. It also may eliminate the worry (if applicable) of pre-existing conditions and switching jobs.

One problem regarding catastrophic coverage: where does one buy it? What companies offer the best policies? (best price, insurance company that is in great financial strength) You wrote about buying it through existing organizations. However, this idea is new to many of these organizations, and many of them are not equipped to do this yet and may be (or are) very skeptical (new) [for example, when I told my dad earlier this year of my plans to consider buying my own insurance (catastrophic and HSA) and not enroll in future company plans, my dad did not believe I was serious].

Do you know of specific organizations that currently help people find catastrophic health insurance? (an example)

Palooka

Thank you for the explaination of HSAs. I was under the impression, which is apparently incorrect, that HSA's could be used as a substitute (rather than a complement) for insurance. I am glad that is not the case, however, my worry still seems valid--that catastropic insurance will be a more suitable substitute for traditional insurance, and could therefore increase the cost of traditional insurance.

One would expect the healthy, not the sick, to be comfortable with catastropic health insurance. This, unforunately, would seem to worsen the situation for the privately insured who are chonically ill because the healthy will substitute catastrophic coverage for regular coverage because of the incentives HSA's provide. This would seem to hasten the spiraling cost of private insurance which Posner alluded to in his post. Just a thought.

Lincoln

I know a Dr.who went to Canada to work for a single payer system 20 years ago.He thinks it is a failure.
And please spareme the bromides about patient sducation.Is there actually a patient who doesn't know to watch their weight,not smoke and exercise regularly?Itisn't a lack of knowledge that is driving the lifestyle illnesses.If I knew how to get patients to change their lifestyle,I'd be richer than Bill Gates (or Warren Buffet if he's currently richer)Now a little economics.Statins have the same cost regardless of dosage.Crestor given as a 40 mg tablet with instructions to take a half pill on alternate days($21/month),a beta blober daily($8)/month) and a baby ASA /day($1/month)decrease cardiac/stroke risks by over 50%.As a side effect they statistically are linked to massive lowering of certain cancers.

Nathan Kaufman

What are your thoughts on the circulation trends at the Chicago Tribune? (if you have insight, please consider the blog njk42.blogspot.com --> the community may need your insight)

Tom

I would like Becker and Posner to tell us about the employer provided insurance they have! I know you take what you can get even if everybody cannot have it. But knowing what they have and are not likely to use would help know their policy bias. Part of the Chicago school is that individuals consistently maximize their self interest. What credability does that give policy prescriptions? How does the prescription further their interest?

Jim S

Once again a conservative raises the bromide about the failures of the Canadian system. First, it's not as bad as conservatives try to paint it. Secondly it's only one system out of many since every country in the industrialized world has a better system than we do when it comes to publicly subsidized health care.

anonymous

This posting\question is tangentially related to the discussion of retirement in Japan....

One problem in Japan may have been keiretsu- sets of companies that had interlocking relationships (management, investors, customers, etc) (see wikipedia for more). Do you any potential dangerous, large-scale forms of keiretsu in the U.S.? Is there any curent research on this?

Keiretsu probably has some advantages. And criticizing this might not be good for individual self-interest of a young person.

anonymous

edit:
Do you know of any potential keiretsu in the U.S.?

anonymous

What are your thoughts on the Chinese bid for Unocal?

anonymous


maybe it is not keiretsu in the U.S. maybe it is corporate governance?

http://www-news.uchicago.edu/citations/05/050409.weil.html

- some people get on boards or committes who have no clue.

- some people use tacit/implied quid-pro-quo for board appointments? (i get you on my board and you get me on your board)

- donating money to the right "non profits" may make certain board positions more likely?

the education system, information and buyouts in the U.S. may limit this somewhat?

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