Health Care & the WSJ

As a general rule, if you find yourself in disagreement with the Wall Street Journal’s editorial page, you are on the right path.

Yesterday they published an article by Scott Gottlieb attacking the proposed "public option" as part of the reform of the health care system. He warns that the public option will force other, private plans out of business and result in doctors making less money and consequently in patients having to wait longer for medical care. Now, "force" is an interesting choice of verb. The "public option" is just that, an option. If it is less expensive than the private plans, people probably will choose it precisely because they are tired of paying so much money to the private plans. But, no one is forcing anyone here.


Secondly, it is difficult to see how the reduced overall health care costs the country needs will be achieved by private plans. They haven’t done so yet. The problem here is that as long as profit is built into the system, there is a perverse incentive for a doctor to increase costs: The more therapies and tests and drugs a doctor prescribes, the more money he or she will make. And insurance companies do not reward doctors for good medicine. They reward them for cutting costs which creates a different, and potentially difficult, incentive for a doctor.

Perverse incentives abound in the current system, but that would change if we could take the profit motive out of the system. Critics worry that this is the ultimate objective of President Obama’s plans, to create a universal system that is not tied to the market and its rules. Others of us find that scenario exciting. It is too soon to tell whether the final legislative bill include the public option, or not. But, as Catholics, we do not share in the idolatry of the market that characterizes the editorial pages of the Wall Street Journal. That idolatry has poisoned our health care system for long enough. It is time for the patient, America, to find a different medicine.




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9 years 8 months ago
Whether you call a plan "public" or "private", market forces will be in effect.  History and many studies have shown that you will not win when you fight market forces.  Our current system and the proposed "public" system will still pay health care providers for services.  The market forces will be in play.  Health care providers will tend to try to do those things that pay better and avoid those things that pay little.  This is usually not in the best interest of the patient.  In a "public" system, government administrators set the pricing.  The market force in play with the administrator is to either win re-election or to keep their job.  This influences the "pricing".  This is usually not in the best interest of the patient. I usually agree with the WSJ.  I disagree however that physicians will be at a disadvantage in the "public" system compared to the "private" system.  Right now there is intense market forces in the "private" system to compete for patients.  If a patient calls for an oncology consultation (for instance), the oncologist will often see that patient within a working week.  In a "public" system the large physician groups will lobby those government officials and administrators to set up work hour restrictions and guidelines concerning what is reasonable and timely.  This might be 2 weeks, 3 weeks, 4 weeks...depending on the success and power of the lobbying group.  Just like teachers, police officers, firefighters and other government workers, even though they work for the public interest, their benefits continue to improve (as well as their salaries).  I don't think doctors need to fear the "public" system.  Their lives most certainly will get better (take for example the medical resident work restrictions). I do think that patients need to have a healthy concern about the "public" system.  I am all for an overhall of health care in this country.  We need creative minds to come up with a market-respecting system that somehow puts the incentive on the health of the patient rather than the reimbursement of a service.  One such system is the "Voucher" system proposed by non-other than Rham Emmanuel's brother Ezechial.  I am not advocating for this Voucher plan but it makes infinitely more sense than a "public" medicare for all.
9 years 8 months ago
It is a misnomer to say single payer health care will drive profit out of the system.    Single payer will be run like Medicare.  The responsible agency will solicit bids and the winning bidder will process some or all of the claims with public money.  They will get a fee, including profit, for doing so. There are two ways to put in single payer.  The first is by law.  The insurance lobby makes too much profit to make that happen.  The second way is to take advantage of industry drives to expand profit, which will lead to consolidation under health care reform with its expected requirement to cover everyone regardless of preexisting condition.  This will lead to one of three things happenning: 1. industry consolidation as the bigger companies eat the smaller ones; 2. financial bailout as costs go up faster than revenue in a competitive market where no one can exclude high cost patients; 3. the offloading of expensive patients to governmentally sponsored funds.  All three of these circumstances will lead to government funding and or control, since monopoly providers will become so heavily regulated that they will in essence be single-payer government run health care. The only way to really cut cost is to force consumers to pay more if they use more - or let them keep money and pay less if they use less.  You can't do that with comprehensive insurance unless you make comprehensive very expensive and make employees pick up the difference.  For market mechanisms to really work, everyone must be on a level playing field, which would mean universal adoption of high deductible insurance with Health Savings Accounts.  This would force the rationing of care to those who saved enough money by not using to get the care they want when they need it.  New patients who get sick will do without care until their Health Savings Account has money in it - although this can be ameliorated by adding a Flexible Spending Account where you get your entire entitlement up front.  The key to not making people worse off is to make the Health Savings Account plus the Flexible Spending Account equal to the catastrophic deductible.  The other needed to reform is to make it seemless so that you only need to scan one card to access all three accounts, which will be billed as appropriate to the purchase (which means the purchasing system must also be smarter - which will cost money).  If people don't use health care, the amount that they contribute to their Flexible Spending Account will go down (assuming you reform these to let the money carry over - or at least let a portion of it carry - making some go away forces people to get preventative care rather than watching their money vanish). If enough people start spending less money or spend on cheaper products, the total cost of health care will go down as suppliers lower their prices to take into account weaker demand.  The chances that everyone with comprehensive insurance will give it up are very meager, however - especially in this pro-union administration.
9 years 8 months ago
Idolatry of the market? In the Wall Street Journal? Are you reading the same publication? I see no such idolatry in connection with health care or any other reform issue. I see respect for, admiration and advocacy (normally, expressed only on the three WSJ editorial pages, unlike the anti-market, statist slant of the New York Times frequently embedded within its news articles) of what Pope John Paul II called the free economy, including the profit motive. Markets allocate scarce goods and services with an eye to efficieny. Does this characterization of the Wall Street Journal's market "idolatry" make any sense given the full page interview this last weekend with New York Archbishop Timothy Dolan, a strong advocate of market mechanisms like vouchers for school reform? Finally, I offer this quote on Catholicism and the free market: "Although no competing school of thought has yet to match the explanatory power of free market economics, there is still a need to subject economic theory to moral evaluation." [Encyclopedia of Catholic Social Thought, Social Science, and Social Policy, p. 880.] Perhaps Mr. Winters might define what "poisons" have infected our health care system, and leave aside the red herring of market idolatry when doing so.


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