Obama is moving on towards his reforms of American healthcare. The Cato Institute is mounting a carefully argued opposition to his reforms.

The existing US healthcare is, of course, bad in a number of respects. It is just less bad that British healthcare. One of the agreed faults of American healthcare is its ridiculous cost.

Here are a few ways in which the cost could, perhaps, be reduced:

1. All people could be allowed to buy the insurance they want instead of coverage dictated by their state. (See excerpt from Cato paper below.)

2. Break up the cartels that I suspect may exist in US healthcare such as accredition only by a very limited number of associations for doctors and nurses. This kind of cartel leads to many, expensive years of training which are an unnecessary expense if a practitioner is going to work exclusively, say, in in obstetrics. The customer pays for massive over-qualification. Competition in accreditation would bring down costs and allow innovative, lower-cost solutions.

3. Reduce the awards given by courts for medical malpractice. These big awards increase the cost of a doctor's insurance which, I gather, can be amazingly high. If the awards were lower, the doctor's insurance bill would be lower and the customer's bill would be lower. The laws on what constitute malpractice may well be worth revising, too.

I expect there are plenty more, major savings to be had. American healthcare could perhaps be half the price without sacrificing any quality at all.

Here is an excerpt from the Cato paper in which the policy proposals of Obama and also McCain were discussed. Here is the section on McCain's liberalising ideas:

Deregulation (mostly)

Whereas Senator Obama’s plan relies
heavily on new regulation, Senator McCain
generally calls for deregulation, particularly
in the area of insurance.
Most notably,McCain would allow people
to purchase health insurance across state lines,
a practice that is currently prohibited by state
laws. Since health insurance is largely regulated
at the state level, one of the major reasons
that costs differ so from state to state is
because of the varying regulations and mandates
that states have chosen to impose.

For example, New Jersey has imposed more than
40 mandated benefits, including in vitro fertilization,
contraceptives, chiropodists, and coverage
of children until they reach age 25.
The state has also adopted community rating
and guaranteed issue. In part as a result of this,
the cost of a standard health insurance policy
for a healthy 25-year-old man would average
$5,580 in the state. A similar policy in
Kentucky, which has far fewer mandates and
no community rating or guaranteed issue,
would cost the same man only $960 per
year. Unfortunately, consumers are more or
less held prisoner by their state’s regulatory
regime. It is illegal for that hypothetical New
Jersey resident to buy the cheaper health insurance
in Kentucky.

In contrast, if consumers were free to purchase
insurance in other states, they could in
effect “purchase” the regulations of that other
state. A consumer in New Jersey could avoid
the state’s regulatory costs and choose, say,
Kentucky, if that state’s regulations aligned
more closely with his or her preferences. Many
consumers would undoubtedly choose less
regulation. For example, young and healthy
individuals with low incomes may choose not
to buy coverage that forces them to subsidize
older, sicker (and generally wealthier) individuals.
For those risk-adverse individuals who
prefer greater regulatory protection, the cost
of those protections would be reflected in
higher premiums.

Senator McCain’s proposal would permit
this type of interstate competition. With millions
of American consumers balancing costs
and risks, states would be forced to evaluate
whether their regulations offered true value or
simply reflect the influence of special interests.
As McCain says, “nationwide insurance markets
that ensure broad and vigorous competition
will wring out excessive costs.”

McCain would also allow people to purchase
insurance through nontraditional groups. Today,
three types of organizations can offer group
insurance: employers,unions, and trade associations.
McCain would open this to other groups,
notably churches and professional organizations.

More problematically, he would also allow
small businesses to band together in “association
health plans” (AHPs) to gain benefits
from pooling their risks. That makes sense if
the AHPs can choose among competing state
regulations, but there are reasons to be concerned
over creating federally regulated
AHPs. Doing so would be a step toward
greater federalization of insurance regulation.
As costly and damaging as much insurance
regulation is today, it is at least somewhat
restrained by the fact that special
interests are forced to lobby in 50 state capitals.

Fundamental to McCain’s vision
of health care reform is
changing not just who pays for
health care, but how that health
care is paid for.Moving the locus of insurance regulation
to Washington would simply create a
“one-stop shopping” center for lobbyists.

On the supply side, McCain supports
“innovative delivery systems, such as clinics in
retail outlets and other ways that provide
greater market flexibility in permitting appropriate
roles for nurse practitioners, nurses, and
doctors.” His campaign speaks of healthcare
being offered through a variety of venues such
as “Minute Clinic, COSTCO, banks, investment
companies,hospital orhealthcompanies
such as Wellpoint, Humana or online services
such as Revolution Health, Google Health,
etc.,” with the government’s role limited to
establishing “some standards of transparency,
solvency, etc.”

He has also called for “different licensing
schemes for medical providers.” In particular,
McCain has suggested that some types of
care could be shifted to nurse practitioners
and other allied health personnel. “We need to
have flexibility in the delivery of care so physicians
can spend more time on the tasks they’re
suited for,” a McCain advisor explained.
Although most medical licensing and scope of
practice laws are a state, not a federal,
purview, there are some actions McCain could
take in this area, particularly in terms of federal
reimbursement policies.

Unfortunately, not all of Sen. McCain’s
proposals are free-market oriented.

Posted by James Bartholomew • Indexed in NHS • Reform

Comments (1) TrackBack (13)

Comments

Add a Comment