Wednesday, June 24, 2009

Watching health care

By now, I think the news that the US government spends more per capita on health care than some countries that do have universal coverage should be new to nobody. It's been true for quite some time.

The odd public-private loosely regulated but subsidized system we have, it almost seems designed for maximum inefficiency. There is a certain level of fixed demand that the government pays for through Medicare and Medicaid, creating a nice disconnect from competition; there is a serious informational gap between consumers and the facilitators (insurance companies), where the facilitators are considered essential. There's also the systematic denial of benefits to "risky" consumers in order to have a better margin.

Every insurer has an incentive to generate paperwork - as much as possible in order to delay payouts as long as possible or prevent them; providers want additional paperwork to help protect themselves from lawsuits - around which another insurance industry has sprung up; malpractice insurance is a major part of the cost of a practice.

And then consumers themselves are often ill-informed on actual costs and benefits of services. The cost of not getting a regular checkup gets to be quite high in the long run; saying when it exceeds the cost of getting one is a difficult calculation if you aren't trained as an actuary. So when I look at health care, I see a large collection of opaque boxes that all eat money. Even the experts can only figure out how to look at some of them.

It can be fixed many different ways - whether leaning heavily on the private sector (regulated tightly between employers and insurers with a government insurance program covering those not required to have private insurance) as in Japan, or whether working wholly through the public sector, as in Sweden, but it's going to take a dramatic change; and because markets want to be conservative, that change is going to be difficult. And it's going to kill some corporations.

But I'd rather have dead corporations and bankrupt insurers than dead people. And that's what we're getting out of it now.

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