MUSINGS # 30

DeJaVu, 2.

By Emil Steinberger

The increased costs of medical insurance discussed in “Musings” #28 became a major segment of total medical care expenditures. In recent years the cost of medical care spiraled out of control; furthermore the increasing cost of health insurance, partly reflecting the increased cost of medical care, began to affect seriously the finances of private businesses that provided the health insurance policies to their employees. Matter of fact, in a recently published book Lee Iacocca states: “Our once great companies are getting slaughtered by health care costs”. This situation led companies to contract seriously health insurance benefits and played an important role in the creation of large blocks of uninsured population (particularly children). Between the administrative costs of health care insurances and cost of the bureaucracies in medical care-dispensing institutions, like hospitals, clinics and various forms of offices, we waste in the state of Texas alone $98 billion. In response to this crisis, current presidential candidates offer various proposals for creating a “better” health care system. The three presidential candidates offered three sets of proposals. Each dealt primarily with the issue “Who will pay” rather than with the issues of “What to pay for, how much, why, ultimately how and to whom?”

Currently we have four government administered and funded “Health Care” systems: Medicare, Medicaid, the VA Administration, and the U.S. Military. They cover a substantial segment of American population. Thus, at least theoretically, the primary and the fundamental issues deal with the delivery of adequate medical coverage to the remaining population groups.

In response to this issue the presidential candidates propose a variety of solutions and Senator Clinton proposed even, among others, a government “mandated” purchase of private health insurance policies by the people, where necessary with financial help from the Federal Government---a plan she calls the “American Health Choices Plan”. Interestingly this “Piece de resistance” of Senator Clinton’s health care program is considered by Karl Manheim, a professor of Law at the Loyola Law School in Los Angeles, to be unconstitutional.

Senator Clinton’s medical care plan rests fundamentally on five pillars: “1. New coverage choices (private) for both, the currently insured and uninsured. 2. Lower premiums and increased security. 3. A stimulus to promote shared responsibilities. 4. Effordable health coverage for all. 5. A fiscally responsible plan that honors our priorities.”

The plan addresses primarily the issue, “Who should pay” with an oblique implied answer, “Private insurance companies” spiced to taste with nebulous promises of “Effordable and quality coverage”, “Increased security”, “Responsible plan”, etc. (all that provided by private insurance companies?!)

Senator Obama’s plan differs somewhat from Senator Clintons proposals as summarised very briefly by Robin Toner of The New York Times: “Senator Barack Obama proposed a major overhaul of the nation’s health care system today, aimed at covering the nearly 45 million uninsured Americans, reducing premium costs for everyone else, and breaking what he asserted was ‘the stranglehold’ that the biggest drug and insurance companies have on the health care market.” There is no specific, effective proposal how to break the “stranglehold” or how to “reduce the premium cost”.

In addition his proposal includes a requirement that “employers either provide private health coverage to their employees or pay the government a set proportion of their payroll to provide it.” I assume that with this money the government will purchase private health insurance policies for the uninsured employees. It strikes me that this part of the proposal bears remarkable similarity to Senator’s Clinton “American Health Choices Plan” except for adding a government intermediary under certain circumstances.

Senator John Mc Cain believes, according to a speech given in Tampa at the University of South Florida, that health care in America "Should be available to all, affordable, and not limited by where you work or how much you make." He wants to accomplish this task primarily through private channels, and with minimal government intervention. The latter would deal primarily with reforming the tax code, providing tax credits and with “restoring control of the health care dollars to the patients themselves” (?!). Senator McCain’s proposal identifies numerous health care issues that are in need of being addressed but in a very diffuse fashion. Harvard Business School professor Regina Herzlinger, a leading proponent of consumer choice in health care, says McCain's plan is both "not enough and too much."

Obviously, the above brief comments do not, by any means, even pretend to summarize the proposals of the three candidates. It is not the purpose of my comments to analyze the highly complex plans proposed by the three candidates to fix the existing health care system, (or lack of it). However, even with this minimum body of information it is possible to conclude that each of the proposed plans addresses primarily the question: “Who will pay” and promises to influence the insurance companies to be ‘reasonable’ while carefully skirting any direct involvement by the government in supporting the cost of the health care expenses or exerting a pressure on private “Health Industry” in respect to prices for their products, or the cost of medical care insurance or the cost of actual delivery of medical care in hospitals, etc..

Any attempt to face the medical care problem dilemma requires first the reality of facing the reasons for the dilemma and a job to analyze the various facets and factors of the steadily escalating costs of medical care. A knowledgeable analysis of these facets and factors will have to be made before the decision what should be done about these issues and the decision that will pay for the care. Secondly we must determine what do these costs cover and decide what part is absolutely necessary for providing essential and reasonable medical care to the entire population, not necessary in the most luxurious style.

I am not an economist trained in the sophisticated aspects of economics, specifically economics of the medical care delivery process, however I did spent close to fifty years in practice of both academic and private medicine in our country, and had extensive experience serving as a consultant to variety of national and international health and biomedical organizations, as for example the National Institute of Health or the World Health Organization. Furthermore, I had six years of personal experience with the pinnacle of socialized medicine, the medicine in the Soviet Union, as well as close experiences with medical practice in a number of countries in Europe, and Asia.

These experiences tempt me to suggest certain fundamental principles for slightly modifying our medical care system that may satisfy needs of the different political flavors in our country and needs of a greatly diverse socio-economic population. See my next “Musings” for the gist of these temptations.

The author can be reached at: esteinberger1@comcast.net

Can be perused at: http://esteinberger1.home.comcast.net/~esteinberger1/