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July 31, 2008
Thoma v. Kling on health care finance
Mark Thoma started the discussion, then Arnold Kling took issue, then Thoma responded to Kling and then Kling responded to Thoma (Megan McArdle chimes in, too). Before you know it, the posts provide a very good overview and debate of the basic issues confronting health care finance reform in the U.S. Ah, the wonders of the blogosphere!
Several additional observations:
1. By and large, American consumers of health care are woefully ignorant regarding the true cost of health care. Call it the legacy of two generations that embraced employer-financed, third-party payment of health care costs. That legacy has largely insulated the consumer from shopping for the basic health care services that fits their particular budget and circumstances. Any health care finance reform that does not rely at least in part on the consumer market to control costs will likely be even costlier and less satisfying than the current system.
2. Due to the risk of loss inherent in the private health insurance market, a substantial government-finance component is always going to be necessary in even a health care finance system that relies on large amounts of private health insurance. Pre-existing conditions, costs beyond even catastrophic illness and injury, the need for mobility in labor markets and cost of private insurance for the elderly are just a few of the risks that are difficult (perhaps even impossible) for private insurers to hedge and still provide an affordable product. Government-financed insurance and reinsurance fills in these gaps.
3. Any reform of the health care finance system will not be successful in controlling costs unless or until a consensus is reached on a fundamental issue that most Americans do not even want to discuss -- i.e., the basic level of health care that every individual in the U.S. is entitled to receive regardless of cost. What level of care is an insolvent, uninsured, illegal immigrant entitled to receive? How much care should we be willing to subsidize to extend the life of a seriously-ill 90 year-old? A terminally-ill 50 year-old? These are thorny issues, but they must be addressed if we are ever going to achieve a coherently-financed health care system.
You can rest assured that the questions addressed in subparagraph 3 above will not be topics in any Presidential debate this fall.
Posted by Tom at July 31, 2008 12:01 AM
Comments
The answer to #3 is obvious: whatever it takes, and as defined by the recipient. And because society is unwilling to say otherwise, there can be no 'solving' of the health care/insurance problem.
Posted by: steve sturm ![[TypeKey Profile Page]](http://blog.kir.com/nav-commenters.gif)
at July 30, 2008 9:30 PM
Big T -
As we have discussed privately before, I believe that the issue of health care in America is like an atypical triple Venn diagram, where there are three circles representing Quality, Cost, and Accessibility. Each of the circles intersect with the other two, but there is no place where all three come overlap.
In other words, you can have high Quality and unlimited Access in health care, but it would be at a high Cost. This is the model of traditional private insurance.
You can have high Quality and low Cost, but you have to limit Access to the care. This is the HMO model, also used by the unsuccessful Oregon experiment.
If you want unlimited Access and low Cost, then Quality will suffer. Medicaid, and increasingly Medicare, are examples here as more and more physicians are choosing to opt out of these programs as reimbursements continue to fall.
The Gordian knot of this problem is figuring out how to maximize all three components of this issue. I certainly don't see any of the current leading politicians addressing this.
Posted by: jim bob at August 1, 2008 6:29 AM
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