On Health Care Reform

I've posted most of this before, but for the sake of completeness, here is my response when we were asked about health care reform.

The health care bill presently being discussed in Congress carefully avoids addressing the real problems with health care in the United States, and I would certainly do everything in my power to prevent its passage and to ensure the passage of a true reform bill. Yes, one out of six people in the country does not have health insurance, and this is a problem which needs to be fixed. However, Washington has shown that it has no interest in solving problems. If that was their goal, we would have had a real health care reform bill long ago. Congress is instead using this as an opportunity for advancement of ideological goals, primarily universal health care. And while universal health care is a noble goal, there are issues that must be addressed before even considering trying to implement such a thing.

The fundamental problem is not that many people don't have health insurance; this is a mere symptom. The problem that deserves our focus is instead that health care simply costs too much. With lower costs, more people would be able to afford coverage. There are a few simple laws congress could enact that would greatly lower the cost of health care in the United States. And, wonder of wonders, most of them are even within their constitutional purview! Most of my proposals are based on a report from McKinsey and Company comparing the cost of health care in the US to other industrialized nations. I go into more detail about these at my site, so I'll just give a general overview here.

The reasons for the US's high health care costs can be broken down into a few distinct categories. The major ones I intend to address include administrative overhead, prescription drug costs, physician compensation, and malpractice concerns.

First, administrative overhead. This term is vague and can mean a lot of different things, depending on who is doing the reporting. However, one clear and significant contributor is regulatory compliance. Any insurance company which does business in multiple states must expend a great deal of effort ensuring compliance with each state's insurance regulations, and these regulations vary significantly from state to state. A single federal regulatory body would greatly reduce the costs to the insurance companies, since companies doing business in multiple states would only have to keep track of a single set of rules instead of fifty. Costs to the taxpayers would be reduced as well, since the burden on each state regulatory body would be reduced to the realm of companies that operate only within that state. A federal insurance regulatory body would be justified under the interstate commerce clause, as it would only affect corporations doing business in multiple states.

Second, prescription drug costs. Prescription drugs in the United States cost significantly more than in other countries, and there are two simple tools at the government's disposal to lower these costs. First, barriers to the import of prescription drugs from other countries should be eliminated. This would bring market forces to bear on lowering costs here at home, and help end the subsidization of drugs in other countries at the expense of the American consumer. Second, prescription drug patent terms should be shortened, and the conditions of those patents altered. Patents are inherently a modification of the free market, which we accept because we recognize that society as a whole benefits from that temporary limitation. If the terms of patents do not benefit society, as is the case with prescription drugs, those terms should be altered such that they do. Patents should be on a year-by-year basis, with exponentially increasing annual renewal fees. There should be incentives to license drugs to generic competitors, thus allowing the market to lower prices further. And advertisements to the general public should once again be forbidden on patented prescription drugs, as part of the terms of the patent. The average consumer is not in a position to make informed choices about prescription drugs, or they would not require prescriptions in the first place. Advertising only distorts the market by increasing the pressure on physicians to prescribe things which may not be in their patients' best interest. Thus, advertising increases the cost of the drugs to no societal benefit.

Third, physician compensation. Physicians in the United States are frequently paid on a per-patient or per-procedure basis. Physicians also frequently share in the profits of out-patient facilities to which they may refer their own patients. Both of these situations present an inherent conflict of interest, and should not be allowed on ethical grounds. Doctors should never, ever be put in a position to profit from anything but giving their patients the best possible care, as their ethical obligations mandate. Doctors should only be paid on a salaried basis, determined by their experience and their history. I believe that this should be implemented and enforced by the AMA and state medical boards. Any doctors in the employ of the federal government should be paid in this manner as well, so as to lead the way on this issue.

Fourth, tort reform. Malpractice premiums are a relatively small driver of medical costs, but they do matter, and can be fixed. There should be time and damage limitations on malpractice suits. Some have proposed setting up malpractice courts, with judges who have the expertise necessary to understand medical concerns. This idea is worthy of further consideration. Lower risk of malpractice concerns would also reduce the practice of defensive medicine, which would further increase the savings to patients.

According to the M&C report, these laws have the potential to save every American an average of over $800 per year on health care costs, helping solve the actual problem instead of treating the symptoms. Everything I propose is within the constitutional bounds of the federal government, and none of it would increase the tax burden on anyone. No solution being proposed in Washington meets any of these criteria.

In defense of another candidate's suggestions:

I have to agree that we need to determine practical short-term solutions before focusing on the long game. If one of us was elected and proposed a bill that said, okay, no more federal government involvement in health care, just shut the whole thing down right now, absolutely nothing would come of the suggestion. Our term would be wasted. We need to suggest solutions that we can demonstrate will work, and that people at home and in congress will get behind. Otherwise it's just so much ideological posturing.

Further, not all federal involvement in health care is unconstitutional! Patent laws directly affect prescription drug prices, and tort laws affect malpractice premiums, both of which are the government's clear constitutional domain. And while the inter-state commerce clause has certainly been abused, it's easily arguable that selling the same insurance product in more than one state qualifies under the original interpretation, subjecting most insurance companies to direct federal regulation.

Yes, the federal government doesn't need to be involved in everything. Mandating that we all buy insurance is way over the line. But we have to get away from the kneejerk reaction that government involvement in solving problems is automatically a bad thing! The federal and state governments already have all the tools at their disposal to significantly improve the cost of health care in this country, it's just a question of using them properly.

Yes, there's some aspect of government regulation in that, and government regulation of the market usually makes things worse. However, there are edge cases where the unregulated market and the free market are not the same thing. The free market works because it's a feedback system; whoever provides the best service gets paid the most, and thus continues doing what they're doing. In a monopoly, quality of service doesn't matter because there's no competition. And in insurance, quality of service isn't even measured! Customers have no idea what they're paying for. In fact, an insurance company's financial incentive is to screw as many of their own customers as possible! That's not a free market at all! The government should mandate that, at a minimum, every insurance company publish how many claims they deny and the circumstances of those claims. Only then will customers be able to choose a provider based on quality of service, and only then will the market truly be free.

Government can be a place where people come together to find solutions to their problems. Unfortunately, right now it's a place where corporations come together to find solutions to their problems. But it can be more. Government is a tool, like any other. Just because it's dangerous doesn't mean you run away from it. It means you take control of it and learn to use it safely and effectively. I have to believe that's possible. If humans are somehow incapable of safe and effective governance under any circumstances, we may as well just give up now.