The Most Effective Cost Control Mechanism is Market Forces
They keep saying that they’re not trying to nationalize our health care. In fact, Obama promised that if you liked your doctor you could keep your doctor with the new Obamacare. Of course, that decision won’t be entirely yours. For your doctor may choose to drop you. And if they keeping cutting Medicare doctor reimbursements, doctors will finally say enough is enough. I’m outta here. No more Medicare patients. Which could force you to find another doctor. Even though Obama promised that wouldn’t happen.
There’s a lot of talk about controlling costs in Medicare. And there’s only one way to that with the current system. You pay doctors less. Which they are always trying to do. Is that fair? Put yourself in their position. Would you keep seeing patients? After doing what so few other people do (go to college, medical school, serve an internship and a residency after racking up huge student loan debt that has to be paid back at the same time you have to pay ever rising medical malpractice insurance premiums leaving you with little money to enjoy the first decade or so of your new medical career)? Because some government bureaucrat says you’ve earned enough money? All the while no government restrictions are placed on public sector pay and benefits? To add the ultimate insult to injury, a lot of those same bureaucrats telling doctors that they’ve earned enough money and should be happy with what the government deems is appropriate will no doubt make more than the doctor. With far less training. And far less responsibility. Which just ain’t right.
They like to blame the doctors for the runaway costs. But they’re not the lone scapegoat. They also blame the pharmaceutical companies. The hospitals. And, of course, the great ‘big bad’ in the health care industry, the insurance companies. Whose costs keep going up. Greater than the rate of inflation. So the runaway costs in the health care system must be their fault. Because they’re greedy. It can’t have anything to do with the system we force them into. Where third party payments shut out all market forces (the person receiving the service isn’t paying the bill), thus eliminating the only effective cost control mechanism. And introduces government. Making health care a public good. Where non-health care government bureaucrats determine fair pricing, supply and demand. And you know where that will lead to. To the here and now.
Labour fights against Market Forces for the NHS in the UK
Government bureaucrats don’t like privatization. Or market forces. They’d rather manage things. Because they’re smarter. Narcissistic. And they covet that money and power. They want all those tax dollars funding health care to go through their fingers. And having people dependent on them for their health care makes that a whole lot easier. So when conservatives try to introduce effective cost mechanisms, liberals push back. In the US. In Canada. And in the UK (see NHS bill to ‘substantively’ change, says Oliver Letwin posted 4/16/2011 on the BBC).
Labour wants the plans for the NHS in England, which encourage more private sector competition, to be scrapped.
Under the shake-up, GPs are also to be given control of much of the NHS budget.
To cut costs, reduce wait times and improve quality of the NHS, the UK is trying to decentralize the NHS. Give more decision-making authority to the general practitioners (GPs) in the local communities. Letting the local health care providers in the communities they serve determine how to best spend the NHS money. Which, of course, is anathema to Big Government liberals. Such as Labour in the UK.
Liberals fight against Market Forces for the CHA in Canada
Wherever you find national health care, you’ll find bitter partisan debate over the money paying for that health care. Except in Cuba. Or North Korea. Luckily, for them, there are no opposition parties. And no one complains about anything. For they know better. But Canada has a national funded health care system. And opposition parties. Which can get pretty nasty when they’re trailing in the polls (see Liberals drop gloves with attack ad on Harper’s ‘secret’ health agenda by John Ibbitson posted 4/16/2011 in The Globe and Mail).
Conservatives are reacting with fury to a Liberal attack ad that accuses them of harbouring a secret agenda to cut health care funding if they obtain a majority government.
“The Liberal ad uses some of the dirtiest tricks in the book — including twisting words out of context and deliberately altering dates to make old words appear recent,” Tory campaign manager Jenni Byrne wrote to party supporters in reaction to the new attack ad.
In America, the go-to strategy is to threaten Medicare. In the UK it’s the NHS. In Canada, it’s the Canada Health Act (CHA). The reason is, of course, the sheer size of this budget item. If you’re trying to cut a budget deficit, that’s where you do it. Cuts elsewhere just won’t be big enough to matter. And everyone knows it.
If Mr. Harper is given “absolute power,” the ad warns, he plans to cut $11-billion from the federal budget. “Where would Harper’s cuts leave your family’s health?” the narrator asks.
“The stakes are too high. Vote Liberal.”
So you threaten certain death for you and your family should the opposition get elected. While all the time promising yourself to cut the deficit. Which, of course, you won’t. For it will require cuts in health care funding. And you’re not going to do that. For there will be another election. Eventually. Sure, it makes you a hypocrite. But a hypocrite with a job.
The Conservatives do plan to cut government spending as part of their own plan to balance the budget, but they promise to do so without reducing transfers to provinces, including health transfers.
It is true that the Liberal government of Jean Chrétien cut funding for health care in the 1990s as part of its efforts to eliminate the federal deficit. Once the budget was balanced, the Paul Martin government signed a ten-year accord to increase funding by six per cent a year. The Conservatives, when they came to power, honoured that commitment, and pledge to continue the arrangement, as does Mr. Ignatieff.
Anyone living near the Canadian-US border only knows too well the consequences of painful health care cuts. When doctors and nurses get pay cuts, they scoot across the border for higher paying jobs in the US. Which makes Canadians’ long waits for health care even longer. This is the ultimate consequence of national health care. Cost problems you solve by rationing services. Whether in the UK. Canada. Or the USA.
Massachusetts: Blueprint for Obamacare
We have Obamacare now. Maybe. We’ll see. There’s a popular movement to repeal it. After it was snuck through Congress. By the time people learned what was in it (long after Congress voted it into law), the majority of the population didn’t want it. It’s a big reason why the Republicans won back the House of Representatives in the 2010 mid-term elections. For the people felt betrayed by their representatives. So they fired a bunch of them. Except Nancy Pelosi. Who the good people of San Francisco reelected with like 80% of the vote even though her national approval numbers as Speaker of the House were closer to 10%. Which makes it clear that the San Francisco district she represents is an anomaly in the American fabric. Where the people think against the national grain, so to speak. But I digress.
Anyway, before Obamacare there was Massachusetts. And their little experiment in universal health care. Which now covers every man, woman and child. Well, almost. Only 98% are covered. That other 2% are the state’s Republicans. I’m kidding, of course. I don’t know who that 2% is. Except that they must be the most unlucky sons of bitches ever to live in Massachusetts. To live in a state where everyone gets free health care and they still get bupkis. Imagine how that would make you feel.
But even there, in that universal health care utopia, they have a problem. They gave health care to everyone (except that unlucky 2%, the poor bastards) but they never figured out how to pay for it (see Massachusetts, pioneer of universal health care, now may try new approach to costs by Amy Goldstein posted 4/15/2011 on The Washington Post).
Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control. He is proposing a new way of paying for care that would try to propel changes in the way it is delivered. It would give lump payments to teams of doctors responsible for almost all the care of a group of patients, with bonuses for saving money and dispensing high-caliber services that keep people healthy.
Interesting. Sort of going the route of the GPs in the UK. Decentralizing the health care system. After they just centralized it.
Massachusetts in 2006 created a health insurance exchange, a requirement that most residents carry coverage and subsidies to help them pay for it — central elements now in the federal law. As a result, 98 percent of the residents here are now insured, the highest rate in the nation. But the state’s first round of health-care changes devoted far less attention to medical costs.
“We did access first,” said state Senate President Therese Murray (D). “Now we have to figure out how we afford that.”
Oops. No doubt during the debate for universal care the opponents said something like, “Are you out of your minds? You have any idea what something like that will cost?” Which, of course, the proponents replied, “Don’t worry about it. We have a plan.” And that plan was apparently to get the law passed first then figure out how to pay for it.
Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.
Despite the consensus, huge questions loom: Who should be part of the new medical teams? How would the idea work for most doctors who practice alone or in small groups? How much clout should the state wield to blunt the ability of powerful local health systems to drive up costs? And, importantly, how heavy a hand should the government use to compel change?
Fee for service is NOT the problem. It’s never the problem. If I want to hire a contractor to build a deck in my backyard, I’ll ask some contractors to quote their fee to build a deck. If the prices are $15,000, $10,000 and $5,000 for identical services, guess who I’m going to hire. Now, for the sake of argument, let’s say that each of these prices are fair prices for each of these contractors because of their cost structure (e.g., one may have his office on the beach and pays ten times as much in property tax as the others and therefore has to charge more).
Now in a system where the government steps in to make prices fair, let’s see what happens. Say a bureaucrat gets three quotes and determines the fair price is $10,000 (the average of the three). So the contractor who quoted $15,000 now has to build decks at $10,000 and lose money, eventually going out of business. The contractor that quoted $5,000 will get rich making over a 100% profit on each deck. And me? I’ll end up paying twice as much as I had to for the deck. This is what happens when you don’t let the market set prices. You get a mess.
In the pressure-cooker of medical costs in the United States, Massachusetts offers a particularly vivid example. The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.
“The growth is outstripping every single measure of society’s ability to keep up,” said Glen Shor, executive director of the Commonwealth Health Insurance Connector, which runs the insurance exchange.
So much for the theory of an insurance exchange being the panacea Obama claimed it would be. For whenever has a bureaucracy been cost efficient? Never. It’s impossible. You can’t manage an economy and do better than market forces. It’s never happened yet in human history. So why do some people (i.e., Big Government liberals) still think they can do a better job? Oh, but we must remove filthy, nasty profits from health care. This ‘public good’ deserves better. It deserves the tender love of a caring government bureaucracy. Not some evil corporation trying to maximize profits. Of course, look at what happens when these corporations do just that. Stuff we like and want to buy is plentiful and inexpensive. But God forbid if we do that to health care.
Some doctors are embracing the new way of working. David C. Pickul is the medical director of the physicians group affiliated with Lowell General Hospital, in an economically bruised community about 30 miles northwest of Boston. The group is in the third year of a five-year “alternative quality” contract with Blue Cross involving a hub of 70 primary care doctors and a looser group of 200 specialists who are responsible for 20,000 HMO patients. The team now has a financial incentive, Pickul said, to track down patients when it is time for their mammograms or for eye exams for those with diabetes. Under Blue Cross’s quality rating, Lowell has soared the past two years.
Blue Cross is not alone. At Partners HealthCare, the famous Boston-based medical system that dominates health care here, Massachusetts General Hospital has been conducting a Medicare experiment in which nurses are assigned to coordinate care for about 2,500 older patients with multiple ailments. The experiment, which began five years ago, so far has reduced hospital re-admissions by one-fifth and cut medical spending by 7 percent.
“Frankly, the market has already . . . responded,” said Gary Gottlieb, Partners’ president and chief executive. “There is enough momentum for us to do this without instrumental regulation” by the state.
The governor and some other officials disagree. The need to lower costs, they say, is urgent enough that the government should step in, and they have been laying groundwork.
Financial incentive? Isn’t that another word for profit? And this pursuit of profits has done what? Improved patient quality? Reduced hospital readmissions by one-fifth? And cut medical spending by 7 percent? Amazing what will happen when you let the market respond. What a success story. But they want to do what? Step in? To lower costs? After the market lowered costs already by 7 percent? You got to be kidding me. Whatever happened to if it ain’t broke don’t fix it?
And Alice Coombs, president of the Massachusetts Medical Society, is especially concerned about physicians who work alone or in small groups, older physicians who might choose to retire rather than switch or new doctors who might leave for other states.
And how do you solve that problem? With compulsory medical service. Which universal health care coverage gives you. If you worry about doctors opting out of a new cost-contained system, you make it impossible to opt out. You simply nationalize health care. Letting the doctors know, yeah, they may be miserable and unhappy with the new system, but you’ll be just as miserable and unhappy where ever you go. So why move out of state? For any where you go, we’ll be there. Understand? So just keep curing the people and stop your bitching.
Sure will make all that medical school, internship and residency worth it, won’t it?
The Song Remains the Same
Liberals everywhere want to expand the size of government. And a national health care is the holy grail of government expansion. But everywhere it’s tried the same thing happens. Cost and wait times increase. Quality decreases. And services are rationed. Most people (especially liberals) want to blame the greed of those who work in health care. So they come up with new ways to manage and control costs. Which inevitably adds yet more layers of bureaucracy. Which benefits liberal governments. At the expense of the taxpayer. And patients’ health.
But nothing they try works. Costs keep going up. For good reason. Because the problem is not the greed of the health care people. It’s the health care system. There are no market forces in it. Which is the most efficient cost control mechanism. Of course, admitting this is an admission that Big Government has failed. And liberals can’t have that. So they fight. Demonize. And scapegoat. And try to scare the bejesus out of everyone by saying conservatives want to cut health care funding so they can kill your family.
Whatever the name, whatever the country, the song remains the same. Conservatives will try to cut deficits by reforming the biggest budget item. And liberals will fight them every step of the way. Ultimately giving us a health care system with greater costs, longer wait times, lower quality and rationed care. As demonstrated everywhere in countries with a national health care system.