Health care still seeks a cure

Health care is complicated business that’s for sure. Even the Swiss now admit that health-insurance scheme does not and will not work without government support. In many western countries medical care is seen not as an option, but as a human-right, nearly as important and basic to a democratic society as food, clothes and proper shelter.

America seems to be the major exception on this area. Not only do many people create havoc when a government-run policy is proposed, they are also quite reluctant to accept any scheme that forces people into buying insurance. With pro-choice and freedom in the back of their mind’s this might be no surprise, but it is foolhardy to the extreme; idealism can be blinding.

Sadly most of their attempts to solve straighten their affairs are off-target. Rather than asking themselves what it is that makes American health-care so utterly, incomprehensible expensive, they keep tripping over their own feet. And if these feet normally walk on conservative grounds, then the ideals most likely held will involve freedom of choice and as less government interference as possible. If ideals are more ‘modern’ your position will probably be located somewhere in the middle, with good intentions that get your country nowhere. For that is in a very crude sense what is now happening.

It has long been clear that health-insurance is not a choice between either more or less government, for a very simple reason: More government is not an option. The USA already spends about 16,2% of its total budget on it, whereas other developed countries such as Germany, the Netherlands and Switzerland spend 10,8%, 9,1% and 11,6% respectively. If everyone got coverage, this wouldn’t be such a big deal: Cuts would have to be made, but at least the system would be where it is ‘supposed to be’. As widely known, this is not the case. America has nearly 50 million people uninsured. More money does not mean better quality.

Its many problems in combination with faithful adherence to old principles creates more than enough pressure on the public image of politicians, so much that losing sight might mean losing your next election. A first thing that might raise some eyebrows is the wondrous question why an obligation to participate is such a bad thing. Those who can afford health-care rarely decide not to buy it. In general only those who cannot pay the price opt-out, lowering demand which in turn drives prices up. You can see where that is going, and why the burden has become 16,2%. National participation would, at least in theory, lower the costs for the whole. And with an eye towards Europe, there is enough reason to think it actually works as well.

But much will have to be done to make a decent system out of this mess. Government- and private sector should cooperate more on strategic points. Politicians should take a firm step by agreeing unanimously that insurance ought to be available for everyone, with no difference in quality, and above all for a fair price.  Experience has to a certain extent taught us that privatized businesses are more profitable, innovative and efficient than those run by the government, as any republican will kindly remind you of. So the emphasis needs to be put on transparent competition by firms, as this probably will not only please the republicans but the treasury as well. They might also have a point when it comes to government insurance-schemes, albeit for the wrong reasons, which might best be forgotten or postponed completely. Subsidies might take their place, for this sector is hard to make profitable without them. Especially if people may no longer be turned down by companies as a result of prior-known medical conditions, many will be persuaded to think that the treatment costs will outweigh incomes quite quickly.

And there are other reasons to think why government run policy is not the answer, as the Economist has also argued in the past. First is that it is both cheap and secure, without lacking the rigor of companies that seek profit. That makes it an easy option when you’re in a tight spot, but it also undermines market-functioning. In other words: Companies will suffer because of losing customers. And in any case, federal solutions can be activated if it became evident that businesses are or will not be able to regulate the market in a satisfactory way. Second is that it will probably be tied to a ‘state option’, meaning that each state can chose to adopt a government run scheme or not, thereby again undermining the system and making sure that at least not everyone will be covered. To that we will have to add a republican claim that to this date has been greatly ignored by democrats, namely the virtually non-existing cross-border competition on health-care, something definitely useful.

So far though, we still have not touched the issues that are of most vital importance if Obama wants to make the new system work: The big, gaping holes in which so much money disappears. That comes in the form of money for service instead of quality. Remarkable as it is, there is nearly no relationship at all between spending and quality. In areas where there are more hospital beds, doctors and equipment available, people will make more use of them. This pushes prices upwards. The differences in prices between hospitals are also huge. McAllen, Texas, is an excellent example of this: Each Medicare enrollee costs about $15.000, which is about twice as high as the national average. Treating people in other clinics could save millions therefore and no doubt privatized businesses with a high-number of clients would make sure this happened. Likewise with the enormous bureaucratic costs, which are said to consume as much as up to 40% of some practices’ revenues (compare this with about 5-6% in Switzerland, and you will realize that innovation and clever solutions can be found in all situations).  The way in which drugs are ordered is another feature that should be digitalized, with the use of electronic health records. This would also provide better ways for distributing the correct doses, which in turn might have a positive effect on the 17 billion dollars that are wasted every year.

The Senate, leaning towards the political right, and the House of Representatives, leaning to the left, will be busy indeed. They’re not making it easy, lest they come together and join forces. We must not get our hopes up however; for at this moment it is unlikely that anything will be delivered that are not weak compromises between private business-insurances and government-run back-up options.  You might be as surprised as I am, that two (or three, if you include the president and his support staff) collective bodies of such great political influence and stature cannot come up with a better solution, as the problems that make up the core of this crisis remain intact. More drastic measures are needed. we can only wait for enlightenment.