The US healthcare system is broken. More and more people I know are no longer able to obtain health insurance. The cost of healthcare is soaring out of control. More small businesses are able to supply health insurance to their employees. Meanwhile the hospitals in our area are all expanding and adding new advanced capabilities. What's going on here?
First of all let's get some historical perspective. Hospitals used to be run similar to charitable organizations. Many of them were sponsored by religious organizations and established to help people in the region. Then president Nixon signed legislation that established HMOs. After this hospitals began to operate much more like for profit organizations. One problem with this is that in most parts of the country there are probably only a few major healthcare providers. This gives them essentially an oligopoly. These large hospitals are mostly interested in competing for patients with the best insurance coverage. If a patient has great health insurance they can go to an advanced hospital and receive the best healthcare technology can provide.
We have two major health care providers in our region. They are competing for the patients who have the best insurance. In many ways their services are duplicated with advanced computer controlled operating rooms and surgical robots with 3D tracking systems. This is some very advanced technology for a small community. As long as you have great health insurance you don't have to worry too much...
So let's take a look at the health insurance in the US. My high school economics teach used the following example to explain insurance. Suppose I offer to give every student 5 extra credit points but one student at random will lose 50 points. Will you accept this offer? Of course no one wanted to risk losing 50 points so we wouldn't. Then he told us the catch. We could have pooled the points together and taken the average of the points. As long as there were more than 10 students we would average out to have bonus points. The more people who are participating the better insurance works.
This is an OK example for a high school class but lets make it more realistic. First of all you are getting any extra credit you are paying money to the insurance company. The insurance company is a for profit organization. If they insure people who are likely to get sick then they won't make as much money. So they hire the top mathematicians called actuaries to calculate who is most likely higher risk. Any high risk people are deemed uninsurable and they are not allowed to participate. If you have a pre-existing condition then coverage for that condition is considered un-covered by insurance. This all results in the insurance system breaking down. The insurance companies are really only interested in selling insurance to the people who don't need it.
Many young people who are at a much lower risk for health problems go without insurance. Once they experience a health problem they are going to find that they are either uninsurable or that the pre-existing condition is not covered. The other problem this creates is that there are many people who are participating in the risk but not participating in insurance. If they are treated at a hospital and incur large expenses that they can't pay then the hospital passes on those costs to other patients. So basically it results in the insured paying for the uninsured. The insured are paying the cost for the uninsured. As more and more people are considered uninsurable, insurance costs increase and more people can no longer afford insurance. This creates the spiral that will eventually bring an end to the current system as insurance and health care costs spiral out of control.
Wait there's more. The baby boom represents a large aging population. As people get older they will require more health coverage. Many baby boomers have had employer supplied health insurance during their careers. As they enter retirement they will be relying on Medicare and Medicaid, tax payer supplied health coverage. The smaller population of younger people will be required to support this large aging population in retirement. The younger population is not going to like this.
The increasing costs of insurance also blocks technical innovation. It is very difficult for a small start up company to compete with large companies in attracting employees because it they can't afford to provide health insurance to their employees.
So what would a possible solution look like? Many other countries have government run health care institutions and their populations are highly satisfied with their health care. I never hear about protests in England, France or Canada trying to privatize health care. They protest other things but not this. In fact they realize just how ridiculous our system is. I think it would be good to have a health care system in the US that rivaled Canada's.
When President Obama was elected I did not believe he would be able to pass the much needed health care reform bill. Many democrats effectively sacrificed their careers supporting this bill. The bill takes care of several of the serious problems surrounding our current healthcare system. One of the most important provisions is the ability for anyone to obtain insurance.
The main provision that most people are opposed to is the one that requires everyone to have insurance. This is really important for the entire system to work but this is probably the main reason the bill is controversial. People don't like to be told by the government that they have to pay for something. A public option would probably have been better.
Who is opposed to this bill? Obviously insurance companies would have to insure high risk patients again and this may reduce their profits. Hospitals and insurance companies see this as a move towards government control of the healthcare system.
This is what is needed (even though it won't get done, at least not until the situation gets much worse): Medicare, medicaid should be paid out of general tax revenues. Basic medical coverage should be provided out of general tax revenues. This will result in an increase in taxes but corporations and individuals will no longer have to pay anything for health insurance. Local hospitals must be brought under government supervision and health facilities will be added only as needed. For example if you have an PET machine and it is not fully utilized you don't need to have a second one. Most health coverage will be provided through these government controlled organizations. We need to provide basic health coverage to all of our citizens.
For more information see the following discussion: http://lorenzlammens.com/2009/09/05/a-historic-perspective-on-health-care-reform/
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