Blog 59. Medicare, Medicaid, Medigap, and Affordable Whatever

The new national health insurance, officially the named the Affordable Care Act, is commonly called “Obamacare” because that’s a way to reduce a complex issue to one word. Those who angrily oppose O-care are being right by making somebody else wrong, rather than examining the real needs. Those who proudly favor O-care tout the benefits rather than examining the real costs.

Real issues aren’t simple, else they wouldn’t be issues. Real issues can’t be reduced to right versus wrong because right and wrong are beliefs. In contrast, complex issues involve causes and effects and multiple connections among those who make decisions. It’s the multiple causes, effects, and connections that make a system complex. In a complex system, a decision is an effect that generates yet another cause requiring some other decision. In the U.S., medical care is a complex system. Very.

How’s that? For example, suppose I have a sore throat. I can decide to treat myself, or to spend money for a doctor. In a simpler world, the doctor could decide how much to charge, based on the costs of his practice and the number of patients he expects to see. That’s how it was a hundred years ago. But now there are more laws governing medical practice. There are different insurance agencies that may or may not pay part of the price. The doctor may be ruined by a lawsuit if he treats a strep throat but overlooks a hidden cancer. The doctor’s decisions affect the insurance companies, which in turn affect my decision and my politics which affects other decisions. The insurance companies force the doctor to charge less for insured clients, thereby causing me to join an insurance plan, the profits of which may go into political action to reduce regulation, and increase medical prices. Things get complex when there are many indistinct (nonlinear) rules that influence decisions, such as my own rule regarding how much I will pay to reduce pain. And that rule may depend on whether I face an onerous task today.

Obamacare is a means for deciding who pays, not for solving the problem of medical prices. O-care might reduce the price of medical care to many people by getting someone else to pay the bill. But it doesn’t address the underlying issue—the price. Why is the price so large, and why is the price greatly different for different patients, and why is the price for the same treatment greatly different at different institutions? That’s the issue we collectively refuse to discuss. That’s the problem.

So what might be better?

If we developed a top-down government-run medical system, the politicians and bureaucrats might ruin the quality of care. That’s a statement about how we expect, and how we operate, government services. The civil service should have the most integrity and be the most honorable profession in the land. Instead, it’s regarded as the low-paying place to go when you can’t get a real job. So, our culture can’t let the government do it.

Another alternative is to let the market continue to run the system, whence the price will be whatever an individual can arrange to pay. The better connected a patient is, the less he pays. Unless he’s a welfare client, whence the other patients pay. Folks in the middle can’t afford paid care and can’t get free care. Our collective conscience says something about this isn’t right. It’s just how things are now.

In an unexamined alternative, we could look at the systems in Taiwan and Finland that are reported to be successful. Those systems might look like socialism, a bad word. Furthermore, such a rational approach would leave no room for being right simply by calling other party wrong, and warfare is now the American way of politics. The American myth says competition is best, and cooperation for the common good is not competition. We run our nation like a football game in which every few years we mix everything up, change players, and put the ball on the fifty-yard line. Football generates injuries; it doesn’t heal them. We need a better social myth.

2 thoughts on “Blog 59. Medicare, Medicaid, Medigap, and Affordable Whatever

  1. Keith Schick ·

    Our current health care is a mess!

    Having recently received my 50-year old colonoscopy, I don’t understand how the stated charge is around $4,000 while the rate allowed by my insurance only pays around $1,000.

    What this means to me is the cash buyer would pay $4,000 for the procedure. Since they are eliminating the insurance overhead for the procedure, it should be 20-25% LESS than the $1,000 being authorized by the insurance company.

    I can’t think of any other industry that has such a convoluted price structure! It is no wonder that companies continue to have employees pay a higher share and that O-care has had to get into the business before the industry brings down the entire economy!

    • Thanks, Keith. You illustrated my point. We need a rational cost/price structure even more than we need a scheme to pass costs from one person or insurance to another.

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