Responding to Incentives

I believe that people can be intelligent consumers of health care with the right information like anything else. A big part of the problem with health care is that the true cost is not borne or known by the users of health care. While there will always be a need for catastrophic health insurance to cover unexpected events, the more frequent costs could be covered by consumers. Tax policies have encouraged "all you can eat" health care paid for by a third party. No surprise that people in this regime would consume more health care at greater and greater costs. Not only is the demand higher, there is an incentive to shift costs on to third party payers.

Given this background, I found this piece from the WSJ interesting on new websites to assist with finding pricing information for medical procedures. http://online.wsj.com/article/SB10001424052748704222704574499623333862720.html

Newspeak

This weekend I downloaded real page turner. (And the summary)

From the summary:

The Health Choices Commissioner specifies the benefits that must be made available in each year – including a requirement that each participating plan provide one basic plan in each service area in which they operate. It is then optional for the plan to offer one enhanced and one premium plan. The differences between the three main plans (i.e. basic, enhanced and premium) are the levels of cost‐sharing required, not the benefits covered. The Commissioner shall establish a permissible range of cost‐sharing variation that is not to exceed plus or minus 10% with regard to each benefit category.

The Health Choices Commissioner sounds like Newspeak to me. We'll get the choices that the allow for us to have, no more no less.

Since reading this is clearly too much of a task for one person if you're not being paid to do it, I would be open to any insights that readers of this blog happen to have.

The Public Option

I have a healthy degree of skepticism that the public option might not compete on a level playing field with private insurers. I found a publication from the American Academy of Actuaries that explains some criteria for a public plan that would compete on a level playing field.

Health Care Coverage

The spectrum of health care systems

No government involvement in health care - All hospitals are privately owned and all health insurance is privately underwritten. In the most extreme case, doctors and hospitals would not be licensed by a government agency. Treatments and pharmaceuticals would be unregulated by the government. The only regulations that would apply to health care would be laws that apply to all other industries such as laws against fraud.

Regulation of practice and treatment - Doctors and hospitals must meet certain minimum standards set by a state or federal government. In the case of minimal regulation, harmful or useless pharmaceuticals and treatments are not allowed to be sold. Warning labels for some medications or treatments may be required by the government. Regulations for pharmaceuticals could range from minimal standards to extensive testing for efficacy on a certain condition.

Regulation of prices - Pharmaceuticals, treatments, or pay for doctors may be regulated by the government in order to keep prices down.

Regulations of private insurance markets - Mandates for coverage of certain conditions and perhaps requirements for deductibles. Rates or underwriting practices may be regulated by the state or federal government. In an extreme case, underwriting is basically outlawed with guaranteed insurance laws and community rating. The insurance may be mandatory, provided by employer, or freely purchased by individuals.

Government payment for medical care - In one way or another the government sets up an insurance program. These programs could range from coverage for specific groups or for an entire population.

Government provision of health care - A state agency owns and operates hospitals. With today's current system, some hospitals are government owned such as VA hospitals or county hospitals. In the British National Health Service, the government owns the hospitals and general practitioners contract with the National Health Service.

The US has a little bit of all of these systems to one degree or another.

I will post some information on other health care systems around the world shortly.