Saturday, October 17, 2009

Imagine that !

Have you heard what our President discovered?  Health insurance companies are not playing nice and are defending their turf against the proposed legislation that would hurt their profits.  Imagine that!  And we thought they were idiots born under a pumpkin.  Really incredible.

Well,consider this: Those companies are run by some of the smartest minds to come through our educational system, who worked hard to be selected to study for an MBA where they could be trained that making a profit for their shareholders is their only responsibility (I know, I am one of them) and the more they do so the better they get paid, the more Wall Street will increase the value of their stock options and your retirement fund and mine will eagerly buy their stock because they are so good at making profits regardless of how may children, adults and retirees may be denied benefits for whatever reason.  For our retirement we really do not want to know, we just want the profits.  That's how the market is supposed to work to strive for efficiency and profitability for the benefit of society in general and our 401K in particular.  That's why it will not change and should not change.

The problem is that in some area, we would like people to matter more than profits and economic efficiency, particularly when we are the people involved. That's where "government" has a different mission: people come first and no one makes a profit on people's misfortune (diseases) and tries to make all people well so they can all be productive.  For sure many smart MBAs chose this professional perspective and end up running Medicare and like programs.  It is not a case of smart and dumb (and the government's MBAs want a nice compensation too) the difference is in the perspective and the priorities. That is why every single country outside the US has implemented a government run basic healthcare safety net for all citizens at a price the nation can afford offering a level of service that society is willing to afford.

Note the key words  PRICE,  LEVEL OF SERVICE, COUNTRY CAN AFFORD.  Let's look at what that means
PRICE - what portion of total expenditures the nation can devote to healthcare.  In the US we pride ourselves of the great medical care we get compared to other countries, but that is a delusion derived by comparing the minimum that other countries (often less wealthy) guarantee to all citizens with the best that a well-insured minority of a wealthier country can afford.  The better score we give ourselves may make us feel good, but from a public policy analysis standpoint it is just a delusion.

COUNTRY CAN AFFORD -  What % of GNP (or of tax collections) should we spend for healthcare for ALL citizens?  Medicare does something similar within the limits of its budget and limited to the population they serve.   The program has been generally successful (ask an retiree)  and it shows that in general the government can do this job as competently as anyone.  This type of calculation is the realm of government and it is already done for roads and bridges, interstate highways, national defense, space exploration, scientific research grants, etc.  No one has more experience than government at dealing this with process and in the context of the electoral process (i.e. depending who drives the ship, the tax collections and the services, will vary and we affect that by how we vote).

LEVEL OF SERVICE - Given the above budget limits what procedures and "amenities" (single occupancy hospital room, TVs and telephones, etc.) should be provided to ALL at no cost?  This will be clearly lower than the lucky well-insured minority is used to, but immensely better than the little or nothing some live with.  For the lucky, well-to-do, well-insured minority there is of course the option of supplemental insurance to cover the better quality of life healthcare options they now enjoy.

Providing a high-end cost-be-damned services-unlimited system is a pipe dream no country can afford whether via a public or private insurance system.  Using that as the target is the ruse used by insurers to create confusion and stall change.  The objective should be to provide a minimum to all which is reasonable in the context of our our moral code and of  our GNP.  Above that "minimum" everyone should be on their own at their own expense as it is for everything else in life.

Should we be surprised that private insurers resist the loss of their nice franchise to make money on our collective backs?  Of course not.  If we want to provide some level of basic service to all and at the least cost the public insurance option is the only way, just as we do for roads and police and fire protection.  Those that want and can afford more can certainly do so (as thy do with toll roads and private security services).

The question we must answer as  a nation is:  Do we want businesses to make a profit on the minimum care required to fix the misery (disease) that can and probably will affect us all?  The rest of the world has answered NO for profits on health and misery as well as NO for road and police.  So far the US has said YES to profits on misery and healthcare and NO for roads and police.  Perhaps it is time to find a better answer than some implausibly convoluted variation on the theme of employer provided insurance (an irrational legacy of WWII wage controls - see prior post).

The fact that the inurers complain and do not play nice at the prospect of losing their fat franchise should be no surprise.  Let them offer supplemental insurance, there will be still a lot of fat in that franchise and let the US shed the legacy of WWII and offer all citizens a modern and rational healthcare plan.

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