Monday, July 20, 2009

health care reform

I agree that we should reform the US health care "system."

Here are some of the reasons:

1. Fee for service insurance plans drive up costs of services and of premiums.
2. 48 million cannot afford insurance and don't get healthcare they need.
3. Preventative care should be encouraged.
4. Competitive businesses that must compete with other countries - i.e. manufacturing - compete at a disadvantage if they provide high-cost American healthcare.
5. High cost pushes down quality. We can't buy as much when something is more expensive.
6. Attaching health insurance to employment increases the cost of hiring people and therefore reduces employment.

Here's a simple plan that addresses all of these issues:

The federal government should define a set of services that it wants provided. It should comprise a fairly comprehensive offering, but more importantly be a very well defined list. Once the package is articulated a cost can be estimated. I would take a less ambitious package at this point, because a successful program can be expanded. And a basic program would help the situation immensely.

To deliver the package in the most cost-effective way, it should then hold a bidding process in each of the 438 Congressional districts. The winning bidder would be the enity that can credibly provide the specified service for the lowest price. The price would include a regular payment from the government, based on population covered, plus small co-payments from the users, designed to produce appropriate levels of use.

The cost of the program would be paid for by new taxes. These taxes should be designed to not discourage employment. OK things to tax would be personal income, corporate profits, excise taxes on goods we want people to use less, such as oil.

The entities that I envision bidding would be amalgams of existing hospitals, medical offices, drugstores, etc, depending on the services articulated, but organized under a single managerial umbrella for the purposes of delivering those services.

Each of the resulting regional health providers would be a multi-billion dollar business, but the job wouldn't be so enormous that it necessarily creates an oppressive bloated bureacracy. Think of an entity about the size of a state police force or a county school system. Having multiple providers would lead to a variety of innovations, which would then be copied around the country. The service would be offered to all comers, but would not rope in the entire health industry, so people who wanted to spend more for what they think are better services would be free to do so. But the public package would be subject to renewal every, say, five years, so that the provider would have to perform or one of the other providers would likely win the next time around.