Doctor’s Orders: Take These Prescriptions and Call Congress in the Morning

Posted on November 20, 2013 by

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My colleague Jeffrey Haymond has written a nice blog concerning cronyism in the Obamacare debacle.  I am addressing a different but equally important problem—where do we go from here?

The Affordable Care Act (now the favorite title for liberals), known popularly as Obamacare is under increasing criticism.  Republicans and conservatives are in the forefront of the attack, as well they should be.  But one of the criticisms of the conservatives, and one which could hurt, is their failure-or perceived failure–to propose an alternative health care reform measure.  Now whether the health care market was in crisis before is a barely open question.  Certainly costs had been rising rapidly before Obamacare.  But at least some of that increase must be attributed to the technological advancements and innovations in the health care market.  Citizens of the United States have the best health care in the world, and that level of quality as well as quantity (availability) costs big money.  The insurance market itself contributed to increasing costs as consumers might use their insurance for every insignificant problem (reports of taking children to the emergency room for colds, for example) with the knowledge that the insurance provider would pay a large portion of the cost.  And of course government regulation in abundance was and is present.

Whatever the causes, and there are several, Obamacare is not promising to remedy the cost problem, or, if it, does, at a different and higher cost in terms of consumer choice and quality of service.  So where does that leave us?  The choice is not between the former market and Obamacare.  There is a “third way”—reform of the existing market to make it a better market for all.  So below I have been so bold as to suggest what I consider to be a few of the most beneficial reforms that could be made.  You will of course forgive me for not being completely comprehensive.  And you may wish to add to my proposals. Some will not like a few of them.   I welcome comments.  Nevertheless, I offer what I have.  Finally, I have limited the list mostly (but not completely) to reforms that Congress can or should undertake.  Of course the states should be free to experiment, but the reforms proposed here would make for a freer market and therefore would be appropriate measures for the national legislature.

Reforming the health care market:

  1.  Mandate that all insurance consumers are legally allowed to purchase insurance from any carrier in the United States, meaning outside their respective states (the now well-known “cross state lines” theme).  This would of course effectively abolish state restrictions which control who can and cannot sell insurance in a state.  In the process, competition would be substantially increased, leading to greater choice, lower prices and better quality of the insurance coverage.  That is the market at work.  It also puts the lie to the criticism that previously the insurance market was too free and needed government intervention.  In fact that market was and is not free enough to produce what consumers really need and want.
  2. Eliminate any and all restrictions on the insurance “package” that may be purchased.  That is, no company would be required to offer a minimum coverage level.  All levels would be determined by consumer choice and company decisions to supply.  If I want only certain items to be covered by my insurance, I get to make that choice and pay the appropriate price for it.  If I want the full package of comprehensive and catastrophic coverage, I can get that too, at a higher price if I want to pay it.  If I want no coverage, I am allowed that choice as well—but with the caveat that my choice determines my payment responsibility.  If I can’t afford the cost of health care down the road, I must still bear it.  That opens a question:  Would we refuse to treat those who chose no insurance?  No we would not, but they might be paying on their debt for a long time.  That was after all their own choice.  But what about the elderly or those who have no real hope of living, but who individually or through relatives wish to prolong expensive treatment?  Would we allow them to die?  If they had purchased insurance that covered such costs there is no problem.  If not, no, we do not allow them to die (unless they themselves have requested no heroic measures to prolong life).  But it must be made clear that a hospital would be able legally to collect on that debt even if it meant the estate of the deceased and that insurance companies would not be required to cover those expenses.  Remember the previously living person made that choice.  But that problem does lead to another proposal.
  3. Congress could make it easier for hospitals and doctors to take “charity cases,” to continue to treat a person even after their insurance has stopped covering.  This is already done, but the tax incentives could be improved. I suspect that many doctors and hospitals already do treat such cases, but we must make it a desirable choice without forcing it.
  4. “Unbundle” the provision of insurance from employers so if they wish, consumers may purchase their own insurance, apart from the employer.  This is of course controversial given the current industry structure which requires numbers in a risk pool.  But if the other proposals are implemented this would be only a minor issue.  I would not eliminate company-provided policies, but would add a degree of choice and competition.  It might also force company-financed plans out of business, but if prices are lowered for consumers, that would be an acceptable trade-off.
  5. Allow nurses and other health care workers to perform more functions traditionally reserved only for physicians (this is happening but not fast enough, given lobbying efforts against it).  Contrary to some dire predictions, such a move will not undermine quality of care.  Physicians already do too much and are over-burdened in some cases.  Patients would not have to wait for procedures and decisions as long and costs would be lower.  This would be welcome relief I would think.
  6. Reduce overall regulation of health care industry and ancillary industries.  Details are impossible to provide here, but one example comes to mind in the pharmaceutical industry.  Get the FDA much more out of the way so that it expedites approval of new drugs and other items that can save lives.  State regulations must also be addressed.  For example, regional or state commissions established to approve medical devices (for example, CAT scanners, etc.) should be eliminated.  They frequently are “captured” by existing providers and reduce actual competition, raising costs and reducing choice and availability.
  7. Address what is meant by a “pre-existing condition.”  Insurance companies typically refused to cover a condition that existed before the insurance policy took effect.  Currently there are several different ways to define what is pre-existing.  I would use a modified objective test:  a pre-existing condition is one for which an individual has been treated (but NOT been given just advice) prior to purchasing insurance. Then I would allow insurance companies to offer policies that incorporate these conditions into the policy.  If one eliminates he pre-existing condition completely, then there is no real insurance market at all.  People simply wait until they are treated or about to be treated and then purchase insurance.  The pre-existing condition issues can be resolved by overall lower health care costs.
  8. Allow insurance companies to cover any and all possible treatments, with the ability to adjust insurance costs to those individuals accordingly.  But either consumers would be required to state their preference when purchasing insurance or companies would be allowed to adjust costs if the consumer demands an unusual treatment at a later date. 
  9. Provide incentives to states to admit more students to medical schools.  This includes eliminating the AAMC as monopoly  accreditor and the influence of state American Medical Association groups from pressuring legislatures to limit enrollment.  Of course, I am not suggesting that more students be admitted just to get more in.  Only otherwise qualified students should be admitted and a medical school should not reduce its quality of preparation by admitting more students.  But conditions for admission should be enhanced.
  10. Tort reform:  Tort reform should be encouraged for the states, and if necessary, incentivized by Congress.  No state should be forced to adopt a uniform cap on awards or a specific category exclusion, but measures could be taken to decrease the power of the American Bar Association to stand in the way of reform.  Ideally, damage awards should be limited to measurable losses, extended over the relevant time period and adjusted for average annual past inflation over a given period. “Pain and suffering” and “emotional distress” ideally should be excluded, but at least capped.  Controversially, it would seem better to eliminate jury trials for tort cases, but this might not stand legal scrutiny and I might be overly dogmatic here.

These are only a few of many possible reforms.  Conservatives need to begin to advocate and articulate positive reform now.  They cannot afford only to point out the negative aspects of Obamacare, as bad as they are.  Perhaps this preliminary set of reforms can stimulate real discussion.

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