I’ve gotten into a debate elsewhere on the Internet about the inefficiencies of our health care system. Something is inefficient if it wastes money, time or effort in order to achieve a goal. The ultimate goal of health is to “live long and prosper” as Star Trek’s Spock expresses it. As I’ve shared already we are now 38th in the world in life expectancy, yet by far the leader in health expenditures per capita after controlling for purchasing power.
The eye-opener is not so much that we are 38th, though Americans are often accustomed to being the leader on anything we deem important. There is not that much of a difference in life expectancy between us and the 37 countries above us. The point is there is a huge difference in costs for mediocre results. We have as inefficient a system by definition as there possibly can be.
We also have largely a privatized system, at least in comparison to many of the 37 countries above, and despite what you might have heard from some of the leading think tanks, our system has become increasing privatized since the seventies. Socialized health costs since then have gone up by 13x, privatized health costs by 25x. Given these statistics, the burden of proof should lie in defending the privatized elements. There is one privatized element in particular that leads to such gross inefficiencies as ours: privatized health insurance.
Excuse me while I dip a bit into economic speak. A free market involves a private, uncoerced exchange between individuals, facilitated by a free flow of information. As a quick aside, corporate economics conflicts with free market economics on all those counts (again, despite what you might hear from the leading think tanks), but let’s just keep that in the background; it’s insurance that we want to focus on. In a health insurance exchange model the individuals that an insurer least wants to provide a “supply” of insurance to are the people who would “demand” it the most. For this reason, individuals are insured as part of a group. In economic speak this introduces in positive and negative externalities. In laymen’s terms there are many inefficiencies inherent in the system because of the irresponsible behavior the model causes.
Patients do not have to be as responsible with their health because their costs are not commensurate with their behavior or illness, but with their share of the group cost. Doctors and hospitals do not have to be as responsible with their tests or treatments, either in regards to their real need or actual costs, because what they order is not commensurate to what any individual can supply, but what the insurance group can.
Meanwhile, a close bedfellow to “insurance” is “lawsuit.” Once again, in the group model your health is not dependent on how you live your life as much as what the group can do for you. The group (also referring to a doctor’s insurance group here) has deeper pockets and greater means for either pursuing or defending lawsuits, and lawsuit costs and benefits go up accordingly.
The person I was debating was defending insurance companies as providing a necessary actuarial function, and that they provide this function at a lower cost than “inefficient” alternatives. That point in itself can be challenged, yet the bottom line is if there are a greater number of health issues being tackled because of the irresponsibility of a group model it matters little the efficiency of handling each issue. Actuarial costs are expanded greatly in a group model because of the expansion of incidents that need to be processed from irresponsible behavior.
The increased occurrences of irresponsible behavior places an increased demand for controlling what is going wrong, ironically leading to greater bureaucratization of a privatized system. Decisions are not being first and foremost where they need to be, unless perhaps you live on an island. This leads me to a book my friend Sandy recently recommended to me. You should at least check out the reviews for:
Island Practice: Cobblestone Rash, Underground Tom, and Other Adventures of a Nantucket Doctor
