Position on Healthcare

[sting in the rafters]

Single-payer system where one can purchase additional private coverage for cosmetic/unnecessary procedures.

The primary purpose of this would be to remove the negotiation of drug costs from a private insurer who has a profit incentive to a national actor that (on paper) is directly accountable to the public. When a private insurer is negotiating with a private hospital, both parties have an incentive to charge the highest possible price to a consumer as they are focused on covering their costs. That is fine in a service industry such as construction or entertainment ; In the former the end-consumer (be it a casino, energy company, etc.) has the bargaining power and/or capital to adequately supply funds, in the latter the product is elastic, and therefore the "invisible hand" is more applicable. Nobody is dying or going bankrupt because Dead and Company plus whatever venue they're performing at charges an exorbitant premium at the gate.

 However, healthcare has such a degree of inelasticity that the B2B transaction cannot take precedent over the B2C. Ergo, a system similar to Japan's Drug Pricing Standard with specific criteria on the innovation and usefulness of a drug is worth exploring.


Of course, the question then becomes what is a necessary procedure? This requires a national health agency composed of leading medical professionals, hospital administrators, and seasoned public health officials who understand the statistics/effectiveness of a given procedure's/treatment plan's improvement of quality-of-life,  average costs, etc.


Can such a system flourish without a degree of regulatory capture?  How would a nation with an existing insurance industry handle the economic transition to a full single-payer system?  The floor is open for solutions.

[sting in the rafters]

Single-payer system where one can purchase additional private coverage for cosmetic/unnecessary procedures.

The primary purpose of this would be to remove the negotiation of drug costs from a private insurer who has a profit incentive to a national actor that (on paper) is directly accountable to the public. When a private insurer is negotiating with a private hospital, both parties have an incentive to charge the highest possible price to a consumer as they are focused on covering their costs. That is fine in a service industry such as construction or entertainment ; In the former the end-consumer (be it a casino, energy company, etc.) has the bargaining power and/or capital to adequately supply funds, in the latter the product is elastic, and therefore the "invisible hand" is more applicable. Nobody is dying or going bankrupt because Dead and Company plus whatever venue they're performing at charges an exorbitant premium at the gate.

 However, healthcare has such a degree of inelasticity that the B2B transaction cannot take precedent over the B2C. Ergo, a system similar to Japan's Drug Pricing Standard with specific criteria on the innovation and usefulness of a drug is worth exploring.

Insurance companies generate revenue by selling policies and/or avoiding payouts, which actually makes their incentives align with promoting health within the insurance pool, eliminating medically unessecarily procedures, and offering low premiums.  Private insurers have long been doing what you want done solely by public bureaucrats under the principle of "managed care."  

It is the "leading medical professionals, hospital administrators, and seasoned public health officials" you extol that are working to make medical care as expensive as possible with opaque pricing regimes, bureaucratic bloat, and  regulations designed to keep doctors' salaries high.  Hospital consolidation has given the medical industry monopoly power to dictate the prices insurers and consumers pay.

While insurers do have an incentive to want as healthy of a pool as possible, the method taken to accomplish this goal was by denying coverage to those with pre-existing conditions. Why cover someone who is a large risk for payout? Who defines exactly what an "unnecessary procedure" is? This end often leads to the very scenario that you put at at the foot at of the hospitals where A) someone pays an enormous deductible or B) leads to higher prices for prescription drugs to cover the insurance companies costs.

Indeed, hospitals have their own incentives as well to charge a higher price in order to turn a profit. This is why a transparent pricing system a la the one I described is necessary to rein both them and the insurance companies in. The "bureaucratic bloat" you describe is due to the excessive administrative costs from constant negotiating, ensuring that a patient is in-network, and so forth.


Regulatory capture is a problem I've listed with this approach. I'm imagining a system at least somewhat close to the one I deal with everyday as a cost accountant in building maintenance - we have to provide backup for our base union wages, fringes+benefits, supplies, travel, sales tax, and overhead/profit based on federal/state requirements. Our rate sheets are available to any customer upon request, and are subject to scrutinization. While there certainly is such information available in insurance brochures et al, the sheer inelasticity of healthcare places a negative externality of time on the consumer that is inherently not present in other industries.
Creating a larger pool with government oversight both reduces the overhead of operations via economies of scale as well as streamlining the processing of payment.