Will Marre’s Radical Solution to Health Care
July 1, 2009 by Will Marre
How does paying $25,000 a year for health care sound? According to the Consumers Union that’s what the average family will be paying in 15 years if we don’t do something now (See Myths on Health Care in USA Today).
Some issues that impact our lives and our children’s future are so big that it takes an extended article to say what needs to be said. Health care is one of these issues. I worked in the health industry for eight years consulting with two multibillion-dollar hospital groups with sterling reputations. I worked with many great people who wanted to do the right thing in the right way. But our health care system is so goofed up and so internally competitive with doctors, hospitals, drug companies and insurance companies all hammering each other for a piece of the hurricane of money blowing through health care. I use the term ‘hurricane’ because the money we spend is a storm of waste.
According to the Consumers Union, $500 billion/year is wasted in ways that frequently hurts our health instead of helps us.
I present my idea as an idea-starter rather than a complete plan. One thing for sure, tweaking the status quo will not work. We need something far more radical….
Yes, according to our Congressional Budget Office, the biggest threat to American’s quality of life is…you guessed it…our bizarre health care system. We all know by now that the U.S. has the most expensive, least effective health care system among all developed nations. In the richest country in the world, we all too frequently see canisters in grocery stores asking for hand-outs to pay for cancer treatments for a child whose working parents’ insurance doesn’t cover treatments.
With 47 million uninsured and at least 100 million more of us increasingly under-insured, no fair-minded person can claim our current system works. The cost of inadequate coverage has reached the ridiculous.
My own family’s policy, which is a high-deductible monstrosity full of coverage limitations, has increased in cost by 40 percent in the past 2 years. And no we haven’t had any major illness or accidents.
Although there are many players in health care we could blame for contributing to our problems, the private health insurance industry is the one that is most problematic. That’s because our large health insurers are worried that their core business model is ill suited to help today’s consumers.
They have already spent $22 million trying to scare the public into thinking that socialized medicine is coming with its inevitable mediocre care.
Meanwhile Congress is coming up with some super-expensive half-baked compromise that is likely to make things more complicated, more expensive and subject to future corruption in ways currently unimaginable. Either way, the middle class is likely to wither due to massive taxes or massive direct costs that may even be more than taxes.
What’s needed is something far more radical, daring innovation that revolutionizes health insurance as it reduces cost and complexity.
- First we must bury the idea that health insurance is an “industry” or a business. The profit motive works great for giving incentive to commercial genius to create iphones but it gives incentive to all the wrong behavior when we’re trying to create an all citizen access to health care.This isn’t hard to understand. Profit arises from the difference between premium income and overhead costs and health claims. Thus insurers are rewarded for only insuring the healthiest people and paying as few claims as possible. So that’s exactly what we get. Today our health is brutally rationed by the insurance industry. Increasingly numbers of people simply can’t get health insurance ironically because they need it. We also get claims denied and benefits arbitrarily limited after we’re ill by armies of insurance company employees who earn bonuses by keeping payouts limited. It’s called mis-aligned incentives. The companies selling insurance profit the most when they deny me the benefits I thought I was buying. That is unfixable. No amount of regulation will match the problems that mis-aligned incentives cause.
- Government cannot effectively administrate an expanded Medicare-like bureaucracy to cover all American’s in an effective way. Government bureaucracies grow proportionately less efficient and effective with size. Costs will soar and service decline. Government bureaucracies are exceptionally poor at promoting high operating performance because individual workers are not systematically incented to excel. We all know this. I am not suggesting all government workers are lazy, rather that all bureaucracies, public or private, are poor at rewarding merit.
- The solution is something new. Something called Civic Enterprise. A Civic Enterprise uses the efficient disciplines of business to achieve social goals at the highest possible quality at the lowest cost. This is achieved through totally aligning incentives. Here’s how.A Civic Enterprise for American health care would function as an all citizen non-profit co-op we all own. It would operate the way large corporations self-insure. Every citizen would be eligible for a universal level of humane benefits. Every person would have a deductible equal to 3 percent of their income so they would seek the lowest cost provider for minor sicknesses and injuries. This would motivate low-cost, high volume free market providers like Minute Clinics to thrive. (This 3 percent is not a tax. It wouldn’t be a cost to people who didn’t get sick or injured.)The co-ops insurance benefits would be administered by regional centers whose employees would be incented to get the most people enrolled and well served with the specific treatments that conform to best practice guidelines. Six sigma measures for quality and efficiency would be embedded into the system so co-op employees could earn substantial bonuses for providing excellent and timely service. Good performers would be rewarded and poor performers weeded out. The main business driver would be to provide the best coverage to the most people to increase citizen health.
- All citizens would have the opportunity to take online or in-person health education classes. Doing so would result in lower deductibles.
- Funding would come from dismantling our Medicare bureaucracy and new health taxes on all products that contribute to poor health. These include manufactured food and beverages whose primary ingredients make us fatter, clog our arteries or trick us into thinking we’re hungry. Also taxing polluters who contribute to lung disease and cancer also puts the tax on the modern sources of environmentally caused illness.
Yes of course there will be screams from the businesses that profit and prosper from promoting risky behavior, make fake food or foul our air and water. These taxes are not anti-business. They simply reflect the real economic costs of producing certain products. Government’s legitimate responsibility is to tax private companies for the social costs caused by their operations.
In a market economy everyone needs to take responsibility for their impact on the health of the total marketplace and that means the impact their product or their production process has on society’s health. It’s only fair. So go ahead and make your cigarettes, Twinkies and coal plants, but you and your consumers must pay for the health consequences you are creating. That’s as pure a market-based economy as I can imagine.
The bottom line:
Let’s all get on the same page. If we align our economy and our incentives toward promoting health, self-reliance and taking responsibility for all our actions, we can solve our health care crisis. We need to focus on performance rather than profit. If we let business-as-usual cut off real innovation that we need, we’re headed into a Grand Canyon of quick sand.
What’s the best thing we can do? Get in our Senator and Congressman’s face and demand real solutions that improve effective care, universal access and hold down costs. ( Write Your Representative or Contact Your Senator.) Engage with the White House and President Obama in today’s Town Hall on Health Care Reform.
Postscript:
Some Things that Make No Sense
- That we get health insurance through our employment. It’s a burden to our economy and few of us work for companies that provide insurance. Get employers out of the health insurance system. We need to get our insurance directly and everyone should be covered.
- Don’t pass a law requiring we individually buy health insurance from a private, profit-motivated insurance company. None of them put my interest first. Comparing this to mandatory car insurance is absurd. I choose not to have a car. I can’t choose not to have a body. Enroll me in an effective non-profit Citizen Enterprise plan.
So what do you think? The more constructive ideas that bubble up, the better our solutions will be. So let’s hear your ideas.
You can also read some of your ideas/comments on my previous post, “Who Will Pay for Healthcare.” Thank you for your insightful thoughts.
Engage with us by posting your comments/ideas. Engage with us on Facebook and Twitter
This is an interesting idea. I was just thinking along the same lines as you with respect to the root cause of the issue: i.e. making health care a for profit industry is a misalignment of intensives. I believe this is not only true for the insurance industry, but the medical profession in general. If a doctor’s only incentive to be a doctor is money that makes it much less likely that he will be actively trying to provide the best care possible – especially if they are a specialist.
[...] better care of ourselves because we have the energy to do it, things might change. The best way to solve the cost prices in health care is to get a whole lot [...]
Nonprofit is the answer. This is nothing new. Hospitals and insurance companies used to be nonprofit (in the 50s/60s and before).
You are right-healthcare is not a business that should make money off people. It is a necessity.
Here’s the naysayers:
#1 Lobbyists: They must get out of the picture
#2 Lawyers: Healthcare isn’t a lottery. Frivolous lawsuits should get thrown out immediately. Use negotiation to resolve cases.
#3 Inefficiencies: Look at the entire system. Centralize. Reduce duplication. Establish standardized treatment guidelines (with flexibility for exceptional cases) that, if doctors follow them, will not permit lawsuits. Doctors must overtreat now or they will be sued. Despite popular opinion, lawsuits do harm doctors by forbidding practice privileges at hospitals and inability to get malpractice insurance.
#4 Drug companies: Allow only new drugs that provide significant benefit. Reform and expedite the testing process while keeping safeguards. Make TV advertising of drugs illegal. Mandate cost reduction.
#5 Everyone must be covered or those who are covered will pay for them.
You are so right in your comments about the mis-aligned incentives of the current health insurance industry and the ineffectiveness of the Medicare bureaucracy.
Details of the design of your suggested Civic Enterprise need to be developed. Why should this be “an all citizen non-profit co-op we all own”? That sounds like government to me. Why not allow private entrepreneurs to develop these service organizations?
The general approach you suggest is excellent. It is very hard to imagine our Congress voting for such a complete change in anything. Could this be accomplished with incremental changes?
Wow, Will you are so wrong!
I usually like your posts, but this one is so off base I can’t even believe it.
Millions of Americans are uninsured because they are healthy and simply don’t want to buy insurance, it is their choice to be uninsured.
Millions of people in our country are uninsured because they are here illegally. Escort illegal aliens out of the country and the problem of insuring those millions goes away with them.
Under-insured? What is that? I think it is another name for someone who has health insurance.
‘…tax private companies for the social costs caused by their operations’? Gosh, how simple, why didn’t anyone think of that before?
Tell you what – If you can name a product that doesn’t have a tax on it – I will eat said product!
We’ve got so many taxes on so many things already, the last thing we need is yet another tax: Gas taxes, energy taxes, phone taxes, sales taxes, real estate taxes, luxury taxes, water taxes, cable tv taxes, excise taxes, inventory taxes, payroll taxes, import taxes, income taxes, alternative minimum taxes, alcohol taxes….and on, and on, and on.
You quoted the Congressional Budget Office, but you forgot to mention their most recent assessment of the health care debate in Washington: it will cost 1 trillion dollars to insure A THIRD of the uninsured! Simply math tells us it will cost American taxpayers over 3 trillion dollars to offer socialized medicine. What a waste of all of our hard earned money.
Proposing you half-baked co-op plan only legitimizes the truly terrible plans for Healthcare reform being laid in Washington right now.
Great vision Will! I love it! Idealistic, definitely, but it makes total sense!
Your critic Neil really drives home the idea that we need huge fundamental changes in our health care system, and really he has no argument against your ideas, just babble.
Neal, simple is good, common sense. The only problem with Will’s ideas is to break the backs of all the slime bags making all the profits in the current health care system. Those slime bags will fight with everything they’ve got to keep their pockets fat. They deserve nothing and all that $ could be used to clean up the system.
I don’t mean to call you out Neal, I just don’t see a point in your post. You don’t have a solution, you don’t sound like you even think we need a solution, and you really just sound like you want to be a helpless victim of the way the system is now and there’s no good solution. It’s much more helpful to have an open mind and try to come up with a better solution, rather then just bashing someone else’s ideas.
There is no way Will’s plan could possibly cost anywhere near the current system we have in place, and it would cover all citizens.
I consider myself to be a fairly healthy person, not using my health care insurance much at all, but it’s nice to know it’s there for me if/when I do need to use it.
Giving company’s incentive to produce healthier products, which would help everyone is another great idea.
I like the ideas you propose Will. But I think that Neal might be right though, it’s just too simple, makes too much sense, and would take too much money away from the grease balls in this country that are fighting to keep intact the current system because their pockets are being lined with all the $ flowing through it.
Many ideas are being proposed at this time. But one thing is for sure, anything run by the government will be a failure. The private market and free enterprise is our best bet.
Please think about this – everyone says that there are 47 million uninsured, but there are 260 million who are insured. Another point is that many Canadians and British people come to the U.S. for their medical care because not only does their government run socialized medicine not work but America simply has superior medicines and treatments that do work.
My Solution:
The government should require those without health insurance to visit ehealthinsurance.com . This firm examines 180 firms and offers over 10,000 health insurance products. The monthly premiums are very low for individual plans. If people are too poor to pay then perhaps we can give them vouchers. This solution is far cheaper than the Obama Plan, which is certain to lead to disaster. Why do things need to be so complicated? I have just presented a simple solution to cover all Americans.
I agree that illegals should be asked to leave the U.S. because a good number of the 47 million are not legal residents. Also a good number of uninsured are young people who are working who feel they are superhuman. So let’s get real – our current system is not as bad as the Obama controlled media (e.g. ABC News) is portraying.
Other than this, we Americans must seek reform at the Food and Drug Administration. This is one of the most corrupt and inefficient agencies of the U.S. government. They totally serve the interests of large firms and they are no longer protecting the people. There are many food companies that are putting too much sugar, salt and fats in our food and this is making us unhealthy. What has the FDA done about this obvious problem? Nothing. We also need more health classes in K-12 and we need to explore new ways to get people to eat healthy. Most sickness comes from poor eating habits. This is the true cause of most sickness and disease.
Last idea – we need to juice more of our fruits and vegetables. This is the fastest way to good health. Make sure you juice a 50-50 combo of fruits and vegetables because if you juice only the sweet stuff like apples and grapes you might get diabetes.
I trust God’s food much more than the man-made unhealthy manufactured food.
Ed Torres
Economics Instructor
eduardo.torres@att.net
I like to think I fall into the Constitutional, libertarian camp politically, but I’ve had real trouble with the Ron Paul solutions that emphasize free market over government. I agree with him though on one important point: “insurance” is for catastrophic events, not the routine doctor visits we use it for. You just can’t build the proper risk assessment factors in when, realistically, all of us will need healthcare….everyone gets sick sometimes. But in my view free market based healthcare got us here, although the economics were wildly perverted, and I can’t seem to stomach that as a workable solution. Until now, government seemed to me to be the only way out that would provide humane and decent treatment of people in need. I’m glad to hear your ideas on this subject Will…I think you’ve got something here. i think a non-profit system that uses free market principles and aligns incentives is fundamentally sound and achieves the goals of the Hippocratic oath (or the Geneva declaration if you prefer) to make the health and life of patients the first consideration of the system. Great job, Will! Time to write our representatives and see if we can make the right difference!
[...] really tried not to write this. I’ve said my peace on a national health care make over (see Will Marre’s Radical Solution to Health Care), but now my hair is on fire. Those framing the debate are focused on all the wrong things. We [...]