Health Reform: Who Are They Trying To Fool?
The Market Ticker - Commentary on The Capital Markets
2009-07-07 11:22 by Karl Denninger
in Health Reform , 54 references Ignore this thread
Health Reform: Who Are They Trying To Fool?*
 

Health care "reform" is the current hot-button, with the Obama administration now talking about a "public" health-insurance system to "keep the system honest."

Uh huh.

Look folks, you want to know why we have the health cost problems we have?  I'll lay it out for you - in a way you can't refute or argue with:

  1. There are no published prices.  In no other line of work is it legal to do this.  Nowhere.  You can't sell someone a hot dog and tell them after they eat it what it just cost them.  You can't hire a lawyer and have him tell you "I'll tell you what this will cost when we're done."  You can't hire an electrician and have him tell you "I'll make up a bill when I'm done."  In every line of work except health care, this is illegal.  There are even laws for "major" consumer work (e.g. contracting, auto repair, etc) where they must give you a binding written estimate before beginning work
  2. Robinson-Patman makes it illegal to discriminate against like kind purchasers of goods in pricing decisions when the effect of doing so is to lessen competition.  While it does not apply to services, it darn well should.  Whether you are paying privately, you have private insurance or you're a Medicare patient if you need to have a breast reconstructed due to cancer the complexity of the procedure does not change.  Yet it is a fact that the privately-billed amounts for uninsured ("rack rate") patients are often ten times or more that billed to insurers or Medicare.  Try charging a cash purchaser 10x more for a TV than someone who finances that TV on your in-house credit facility and you would be shut down and thrown in jail.

#1 and #2 exist because of explicit efforts by the "health care" industry to exempt themselves from the laws that every other merchant of every other good and service in the United States must adhere to.

To put this bluntly the medical industry has intentionally put forward a system by which it can screw you with impunity, obtaining exemptions from the laws that cover every other area of commerce, thereby effectively forcing you to buy overpriced services you do not want to purchase lest an unexpected life event literally wipe you out.

This is an extortion racket and absolutely none of the proposals being put forward have done a thing to address any of it.

If we want to fix the health care pricing problem we can do so.  It isn't very difficult.  Here's the prescription:

  1. All health care providers must publish a price list for the procedures and services they offer and the patient must be presented, when possible, with that information before services are performed or goods (e.g. medication) supplied, consenting to the charge in each case.  All normal anti-trust provisions with regards to collusion between providers apply.  If a physician doesn't like "flat-rate" billing they're free to publish a per-hour fee much like an attorney.
  2. No physician or group may discriminate based on the form of any external payment.  If they want to internally finance procedure(s), that's fine - they can charge interest or discount for that, or whatever.  But for anyone who pays via any other means (including the government) money is money - the price may not change based on the source of payment.
  3. No event caused by your presence in a medical facility or the actions of an employee there can come with cost to you.  It is absolutely common for people to be billed for treatment of MRSA infections acquired in the hospital!  That is equivalent to a mechanic that through incompetence or even malice cuts a wiring harness in your car while it is on the rack having the oil changed and then tries to charge you to fix what he broke!

Now clearly #1 doesn't work so well when you're unconscious due to a heart attack or just wrecking your car.  But setting your broken leg or performing a cardiac procedure is something that's done for people who aren't incapacitated too, so guess what - the price is already published and thus the charge known.

This prevents the common practice of hospitals gouging private payers, it exposes prices and brings competition to pricing, and allows the free market to work.  It ends the preference for "insurance" on routine procedures.

Next up, if you want to sell "insurance" in a market you must sell it to all persons in that market, defined as an area of at least one US State.  You may discriminate in your pricing only based on age and gender - nothing else.  If you sell that "insurance" product to any person you must sell to all persons within that state at the same price, and you must publish all your plans and offering prices.

"Insurance" products that are not true insurance products may not discriminate on reimbursement dependent on where the service is performed.  The practice of requiring "in network" doctors or even hospitals lest you get "rejected" must end.  In addition pre-qualification for any bona-fide non-elective procedure must be absolutely barred as a matter of law.

Finally, all providers of "insurance" must sell a true insurance product.  Common HMO/PPO plans are not insurance - they are pre-paid medical care.  Insurance is the purchase of a contract to cover damage caused by an unexpected event.  Everyone needs health care of some form.  Those who want to sell "pre-paid health plans" may do so, but they must also offer true insurance (e.g. covering ONLY hospitalization and related events, etc.)

These changes instantly destroy the connection between health "insurance" and employment.  If you leave your job you have the absolute right to keep your health plan by continuing to pay for it.  If you don't like your health plan or move out of the state you can buy any plan offered to anyone in your state, at your choice, for the same price they pay.

All mandates to provide specific services and products under "insurance" are federally preempted.  Women should be able to choose a health plan that does not include abortion (and/or pre-natal!) services, for example, if they would never use either.  Some women (e.g. those who have chosen to have a tubal ligation!) can't use these services, yet they often wind up paying for them in their premiums.  Men should be able to choose a plan that does not cover things like Viagra - or, if they choose, perhaps they do want "ED" coverage.

If the health lobby won't cut out the nonsense and work for this sort of change to the system then I am forced to advocate for full nationalization of the entire health system, effectively placing everyone under Medicare.  This will lead to forced rationing due to cost but that's happening already, and such a forced system will put a stop to the discriminatory practices of insurers, physicians, hospitals and others in the medical field who commonly bill private parties ten times what health "insurance" plans or Medicare pay for the very same procedure, while playing "let's deny coverage any time we think we can get away with it."

It is my opinion that we should be treating those in the health-insurance lobby, including hospitals, physicians and health-insurance providers, as co-conspirators in a racketeering scheme that effectively trades on the fear of disease and imminent bankruptcy to bamboozle and screw the population, while waving around their "hippocratic oath" - something better described as the "hypocritic oath."

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