Yesterday George McGovern solved the healthcare crisis, obviated the need for any further debate, and simplified the entire problem to one line:
But what seems missing in the current battle is a single proposal that everyone can understand and that does not lend itself to demagoguery. If we want comprehensive health care for all our citizens, we can achieve it with a single sentence: Congress hereby extends Medicare to all Americans.
Those of us over 65 have been enjoying this program for years. I go to the doctor or hospital of my choice, and my taxes pay all the bills. It's wonderful. But I would have appreciated it even more if my wife and children and I had had such health-care coverage when we were younger. I want every American, from birth to death, to get the kind of health care I now receive. Removing the payments now going to the insurance corporations would considerably offset the tax increase necessary to cover all Americans.
Why didn't I think of that? How obvious, take all that money being wasted on insurance company profits, do away with the middlemen, and "voila," problem solved. Perhaps because Senator McGovern does not work in the Medical field or think too deeply about what he is writing about, such a simple and obvious solution seems plausible. A few points that the good Senator misses should be incorporated into his thinking since the details make all the difference.
First, and most obvious, Medicare is going broke. The current set-up is unsustainable. If we extend it to everyone, it will go broke more quickly. However that is really the least of the problems with the idea. The fact is that the only reason Medicare works for most people over 65 is because private insurance, private payers, and private Doctors all offer the Medicare recipients a hidden subsidy.
No Doctor in New York could survive financially on Medicare alone (unless willing to give suboptimal care, such as is available in many clinics, where long waits for tests, for specialist appointments, and for treatments are part of the lower tier medical care in America; all of this would worsen dramatically if Medicare were extended to all.) If everyone were clear about this minor detail, the extension of Medicare could work. The fact is that Physicians in New York (and I confine myself to New York because we have some of the best Medical care in the world in New York and this is the environment with which I am most familiar; I suspect the model is similar elsewhere) see every Medicare patient at a loss. Medicare reimbursement has been declining for years and does not cover the cost of treating Medicare patients. This works only as long as Physicians can make enough profit from their non-Medicare patients to be able to afford to treat their Medicare patients.
[Just to use my field as an example, it is a near impossibility for an older person to find a Psychiatrist willing to accept a new Medicare patient. I know this because I am still listed as a provider despite refusing to accept any new Medicare patients for the last 5 years and asking to be removed as a provider. I receive calls on a regular basis from patients looking for Psychiatrists who accept Medicare and they routinely complain, when I return their calls, that they have already tried upwards of 10-15 Doctors and that often I was the only one who called them back, let alone had any willingness to see them.]
Doctors who treat illnesses that are primarily illnesses of the elderly, COPD for example, are being squeezed between ever increasing expenses and the limitations on compensation by Medicare (and the many insurers who follow suit.) Many have simply opted out, some have already retired, others have joined group practices that have begun to resemble clinics, and others have left the area.
Not long ago, at a party, I was accosted by a person arguing in favor of single payer healthcare. When I told him the system could not afford single payer without rationing, he responded, with a fair amount of smugness and some delight in his cleverness, that it would just mean that Doctors would have to get less money. It did not occur to this illuminatus that if Doctors had to take significant pay cuts, accelerating a process that has been underway with Medicare for the last 10-15 years, some (often the best and most in demand) would opt out and only see Private payers, more would retire early, others would close down their practices, and others would leave the area altogether. He would have many fewer options in his Physicians, would wait much longer for appointments, tests, and treatments and would have to accept the increase in premature death and disability that would be thus engendered.
This is not some theoretical construct. It is what the people who live under government supplied healthcare have to live with in every country that has tried it; higher death rates and poorer outcomes of those diseases that kill us. (For some numbers, and to obviate any commenters repeating the wearisome and inaccurate meme that our healthcare outcomes lag other countries, please see An Unnecessary Operation: Obamacare threatens what's right with American health care , by Fred Barnes.)
In fact, the longer term outcome would be far worse. TigerHawk notes that Obamacare will specifically target medical innovation: [HT: Dr. Sanity]
The health care "reformers" go after medical technology
As we have long predicted on this blog, the health care "reformers" propose to finance at least part of the "savings" or new benefits -- it is impossible to know which -- by decreasing the rate of return on medical technology. There are many ways in which this might be done, but the Senate Democrats are proposing to do so directly, by levying a "value added tax" on medical device companies according to their proportion of U.S. sales. This tax would be without regard to profitability, so it would amount to a capital tax on start-ups and a massive income tax surcharge on profitable companies, varying as net margins do. In the case of my own mid-sized company, the tax would be the equivalent of a roughly 20% surcharge on our net income (in all likelihood raising our economic tax rate well above 50%) or 50% of our research and development budget, depending on how you want to look at it.
It would be damaging enough if this was the only way in which the Democrats would harm innovation. Government run insurance would have to set the bar at a high level for new treatments. New treatments are always very expensive, (not least because of government mandated regulations that must be met before any new treatment is approved) and government funded healthcare would be loathe to approve payments for new, exotic, and expensive treatments. The entire process whereby new healthcare treatments are introduced to early adopters at very high cost, later trickling down to those less well to do at lower cost, would be aborted. Between the decreased promise of rewards and the threat of confiscation of any rewards that would occur, including from the unreformed tort industry, few venture capitalists would be willing to sink their money into medical speculation.
Medicine is in the early stages of becoming an information science. It is following the same arc as other information technologies, with extremely expensive innovations available for wealthy adopters (eg, laser eye surgery for $5000 per eye in 2000) and a rapidly declining price making it available to everyone else shortly thereafter. (Laser surgery is now available for ~$250 an eye in 2009.) We are beginning to understand the fundamental defects in cancers, heart disease, even many brain illnesses, the entire gamut of biological errors that our flesh is heir to; to abort our progress now in the name of fairness would be unfair to all of us. We would be destroying the goose that lays the golden egg of medical progress so that we could all equally share in the roast goose; perhaps delicious today but impoverishing us all down the road.
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