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Universal Health Care

This started as a private email, but i figured why not blog it...

Broadly, there are four different categories of "universal health care".

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#1 The first is a government mandate that every American must somehow buy insurance, maybe with a subsidy or tax break for Americans who can't afford insurance. This would be similar to how car insurance works. Everyone would have to buy health insurance in the same way that everyone (who drives) has to buy car insurance.

So the benefit of this system is that everyone will have insurance.

One downside is that we will have to pay more in taxes to support those that can't afford it. This might pay for itself though, because right now if people don't have insurance they don't go to the hospital until they are very sick and at that point taxpayers still have to pay for it. By making sure everyone has insurance, people who are sick are likely to see a doctor sooner before they get so sick that it becomes very expensive to care for.

Another downside is that this doesn't do anything to address the cost of insurance. If you are paying a lot for insurance, you will still have to. And if you lose your job, you will have to find a private insurance company, which is likely even more expensive than what you get through your job (and/or you will have to prove that you are now poor enough to merit the subsidy). Health care costs are also a big burden on businesses; one of the major reasons the auto industry is in trouble is because it is having trouble keeping up with rising health care costs. The reason it doesn't improve costs is because it doesn't add any new competition to the mix. It's the same insurance companies. If anything they are now getting an indirect subsidy because the government will be giving money to poor people that has to be used for insurance.

This solution is what conservatives are in favor of.

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#2 The second is a mandate with a public plan. This is the same as the above, but instead of subsidizing poorer people, it extends Medicare to anyone who chooses it instead of making them pay for private insurance. So basically, your choices are either to be on private insurance or be on Medicare. This doesn't eliminate competition, but it actually increases it by putting another player into the mix: the government. So conservatives who say that government run programs are inefficient compared to private industry will get to see that proved out in practice. If the public option is better than what's available through private insurance, then more people will go to that. If the public option is bad, most people will stay on their private insurance and only people who can't afford anything better will be on Medicare. So it shouldn't worry conservatives who believe in the free market (but it does, and it's worth considering what that means).

So this option will make sure everyone has insurance, meaning it has the same benefit as the mandated system. Additionally, it can potentially lower costs because private insurance companies may have to lower costs in order to compete with Medicare.

The downside again is higher taxes, but that may again be mitigated by savings in early health care treatment, and furthermore due to the increased competition.

But it's important to realize that the only control the government has over the health care system in this option is through the insurance. They may dictate whether they'll cover a procedure or treatment. And they'll determine how much they'll pay a health care provider for that treatment. But that's no different than private insurance. And in this option you can always find a different insurer if you want a treatment that the government won't cover (if you can afford it).

This is the solution that the Obama administration is in favor of (in theory, although they seem to be wavering under conservative criticism).

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#3 is a single payer system. This the system used in most industrialized nations. Canada is the model for this system. In this system you don't pay for insurance directly. The government pays insurance companies with tax money. So everyone has insurance and no one has to worry about dealing with insurance companies. You don't have to fill out forms or pay a co-pay when you go to the doctor. You just go. And insurance companies don't go away. They just deal directly with the government, in the same way that weapons manufacturers deal directly with the government. In a single payer system, you can't buy private insurance. The goal is to ensure that everyone has the same coverage and rich people can't buy premium coverage while everyone else gets mediocre coverage. If you have a problem with part of the government policy - i.e., you want coverage to start including a new treatment, or you think there aren't enough doctors or MRI machines in the country, it is handled through the electoral process. You petition your representatives to make the system better, or you vote for the candidate who has the policies you support. So everyone is in the same boat and decisions are made via a democratic process.

In addition to the benefits listed for the other universal health care options, this option also gains efficiencies through consolidation. In a private system, insurance companies are businesses, and they spend a lot of their profits on advertising and marketing. That isn't necessary when the government pays for insurance, so those costs go away, reducing the overall health care cost. Also, each insurance company has its own executives (with executive pay), administrators, and other functions not directly related to insurance. A lot (but not all, since there still are private insurance companies) of that redundancy can be cut away, further reducing costs. And finally, because the government is such a large "client" of the insurance companies, it is in a much stronger position to negotiate costs. If i run a small business of 25 people, and i look at the current insurance companies available, i'm not in a good position to tell them "I only want to pay $1000 per person". But if i'm a government representing millions of people, insurance companies are more likely to negotiate with me. Like with military contracts, there is the potential of corruption.

A downside is increased taxes. The argument here is that while your taxes may increase, if you look at your taxes + health care costs before single payer system and compare them to your taxes with no health care costs after a single payer system, you are going to come out ahead. But critics argue that this isn't really the case and that taxes may increase. Another downside is that consumers effectively have no choice. If the government doesn't pay for a procedure, you can't go to a private insurance company to get it done.

This is the solution that i am in favor of (as are organizations like the Green party).

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#4 The fourth option is socialized medicine. This is the system used in Cuba and in the former USSR. In this system, the government literally runs the health care system. The concept of insurance doesn't really exist, and doctors and other health care providers are employees of the state.

The benefit of this system is that it even further reduces those executive and administration type costs. The government can also directly control how many doctors and what types of equipment are available.

The downside is that there is literally no competition and the chance of corruption is quite high, although that could be mitigated if it were implemented under a democratic government (which has not been the case in real world examples).

This is the solution that socialists and communists are in favor of.

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Everything i've said is a generalization and there's a lot of nuance within each system. But broadly speaking, those are the four categories. And when you look at it that way you realize that what Obama is trying to do isn't all that radical. We are past due for real health care reform. It is a drain on individuals and businesses. Certainly we need universal coverage, but we also need to do something about costs. A solution that only addresses one of those issues (i.e., the mandated plan) is insufficient.

Many people think solution #2 is a backdoor method of getting to #3. Interestingly, the people who think that include both people who have faith in a government run option, and people who profess to be believers in the free market. They both think that people will prefer the public option so much that the private insurance companies will eventually die out. That's true competition at work, so one wonders why free market conservatives would have a problem with it. But i think it is likely that enough people with means will prefer to stay on private plans in order to get advanced coverage. And i think that due to our slow and semi-corrupt democratic process there will be plenty of problems with the public option that will keep some people away. So i think the private insurance companies will stick around, although most likely they will have to restructure themselves according to the new reality. This is why i am in favor of a single payer option. If rich people can't get the treatment they want, they can't just bail out and use their money to go to a private plan. They will have to use their influence to get the public system improved. This helps everybody.

Single payer options actually poll very well in America. But for some reason, our politicians won't come out in favor of it. We do not have bold leaders. This is why Obama is only in favor of option #2, even though as he goes around the country to do townhall meetings he is constantly asked for option #3. He is compromising right out of the gate. The way to negotiate is to go in with something bigger than you want, and then compromise down to what you really want. Obama could have started with single payer. In my opinion he should stick to his guns and live or die by single payer. But he says he can't do that and he has to find something that's politically tenable. So he is starting with the public option. And now he can only go down from there in negotiations. You go in with a good public option plan, and you negotiate with Republicans and conservative Democrats and you come out with a weak public option plan, or no public option plan. Some people think he's not even committed to the the public option plan and he's just using that as his bargaining stick, and he'll eventually negotiate down to a mandate plan with some minor additional concessions from the insurance companies. Which would be really sad. But it's a logical alternative to the idea that he simply doesn't know how to negotiate.

This is why it's important to keep the pressure on our politicians to do what they were elected to do. They are feeling pressure on the other side by insurance lobbyists. We can't rely on our weak leaders to not buckle under that pressure. People who want a good universal health care system need to apply an equal or greater pressure in the opposite direction. As usual, they have the money but we have the numbers. So it's really a question of overcoming our apathy.

By fnord12 | May 19, 2009, 10:56 PM | Liberal Outrage