googlef87758e9b6df9bec.html A Sure Word: Health Care Reform Made Amazingly Easy

Sunday, November 1, 2009

Health Care Reform Made Amazingly Easy

So the new House version of the health care reform bill has been released and it’s a mere 1,990 pages long. You can read the entire thing in PDF here. Of course, when the bill is debated on the floor and new amendments are proposed, we can easily expect a few thousand more pages to be added. Later, when the Senate bill is unveiled, it’s likely to be equally voluminous and have its own tome of amendments. If both should be passed, the two houses will meet to “reconcile” the two bills and we’ll have would be a monstrous behemoth that will include every pet project ever imagined by Democrats. Health care reform is a liberal’s wet dream.

I may not be a legislator but it seems to me health care reform could be done in an amazingly simple way. I can give you the whole outline of it right here in a single blog post. Watch – I’ll show you:

You’ve got to ask yourself, “Why is health insurance so expensive?” The simple answer is because health care is so expensive. Duh! So, the first step in bring down health insurance cost is to bring down the cost of medical care. There are a couple of simple ways to lower the cost of health care.

The first way is through tort reform. Law suits against doctors and drug companies have run amuck. Lawyers are in the business of pedaling junk-science and convincing juries to award billions of dollars in bogus claims. The risk of litigation forces doctors to shell over tens of thousands of dollars every year in malpractice insurance premiums. Additionally, doctors often more care than they otherwise might have were it not for the possibility of litigation: more tests, more prescriptions, more of everything – “just in case.”

It’s hard to estimate how much could be saved from tort reform. Some studies have suggested the cost of litigation and defensive medicine accounts for 1/3 of health care costs. Considering that health care is around 17.6% of the GDP ($2.5 trillion), any reduction realized through tort reform could translate into billions of dollars of savings.

Another simple way to lower medical costs is to increase competition among service providers. Do you know how much a visit to the doctor costs? It’s no surprise that many people don’t know. Oh sure, most people can tell you what their co-pay is for a doctor’s visit but they don’t know what the total cost is because they never see it. They visit the doctor and the doctor sends a bill to their insurance company. That’s the way it is for nearly all our medical care. So when people shop for doctors or medical care, they choose doctors based on thing like friendliness, a convenient location, etc. People seldom consider what the doctor charges unless the doctor is not in their insurance network.

Because doctors often participate in insurance networks, an interesting thing happens – they don’t compete with other doctors to charge less. Instead, they charge whatever the insurance company agrees to pay. So if the insurance company says it will pay $100 for an office visit, the doctor will charge $100 for an office visit. There is no incentive for him to charge less. It’s almost a kind of price fixing.

So what if we made doctors compete for patients’ dollars? We could make insurance available only for catastrophic events and put a portion of the consumers’ premiums into a medical savings account. The patients would use the money in the account to pay for routine medical care with the understanding that they get to keep whatever isn’t spent. In this case, the patient is concerned if one doctor charges $100 and another only charges $75. Patients would begin shopping for medical care and doctors would have to compete with other doctors by lowering costs. And since competition always drives prices down, such a plan is bound to help reduce costs.

And speaking of competition, another easy fix would be to allow insurance companies to insure people across state lines. With more insurance companies competing in every state, the competition will help keep premiums down.

Finally, if the feds are truly interested in insuring the poor, let it be done in the form of tax credits where there is a means test on the recipients’ incomes. So, an individual making less than, say, $40,000 per year would receive a tax credit for the amount of money he spent on health care. Families could earn a higher dollar amount and still receive the tax credit. This way, the government is only spending money for those who need insurance and can’t afford it. Revamping the entire health care industry to offer coverage to only a few million people is akin to swatting flies with a bazooka.

So there you have it: health care reform in less than 1,000 words – not 2,000 pages. It has all the things a conservative likes: consumer choice, competition, and less government involvement. Unfortunately, these are the same reasons why no liberal would ever support it.


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