Business
What Is The Solution For American Health Care?
By Marc Kramer, For The Bulletin
I read a book recently written by Dan Perrin and J. Patrick Rooney entitled America’s Health Care Crisis Solved that I thought was very insightful about the current health care problems we are facing as a nation and how they can be solved. The following is an interview with Mr. Perrin, who is the president of the Health Savings Account Coalition.
Marc Kramer: Why did you write this book?
Dan Perrin: We wrote the book to prepare the ground for the health care debate now underway. Our book is one of solutions, not think-tanky – understandable language with understandable solutions.
MK: Why has insurance become so expensive over the last 20 years?
DP: Fundamentally, America’s insurance inflation is related to the third party payer system, in which both insurers and hospitals are protected by anti-trust exemptions. Third parties pay the bills and the patient does not understand the price nor does price enter into their decision making process. Fundamentally, this leaves the patient asking for every possible service and the best care without constraint, from hospitals that can charge whatever they want with no governor on their costs.
The fiction that better care is costing more is exposed as a fallacy by the cosmetic surgery market. Prices have increased with the rate of inflation and care has continued to get better with substantial innovations. Lasik surgery is a great example of better and better results with lower and lower costs — the way the market is supposed to work.
The other problem with the health care market is the massive government interference and disruption, not just at the state level, but also at the federal level. The continued cutting of doctor payments is just forcing the money to be made up in the non-governmental market. The government is rationing health care services by forcing doctors out of Medicare and Medicaid. Government spending in health care services is a one-trick pony: the only way they know how to control the demand for their subsidized product, which radically increases its demand, is to ration care by parsing funds. That is all government knows how to do and that is why when the government finances health care, there is rationing, there is always rationing.
MK: We keep reading that there are 1,200 health-care insurance companies in the U.S. and that they should be allowed to compete in every state to induce competition to lower costs. Are there really 1,200 health care insurance companies that can sell in all 50 states?
DP: Yes, they should be able to compete but they cannot because state governments will not give up their jurisdiction, making it more expensive to write policies for every state.
MK: If not, how many insurance companies can actually sell nationally?
DP: Very, very, very few insurers are in every state, in fact, I am not sure there is one.
MK: What do you think of the various foreign systems that cover everyone such as Canada, England and France?
DP: I think they are alien to the American cultural experience. Like Health Maintenance Organizations (HMOs), which were a private sector system of rationing by denying access to care, the Canadian and British and French system do the same – but their citizens want the government to make their decisions for them. Americans absolutely hate that. And any attempt to impose this type of system will fail.
MK: Should the system look to reduce pharmaceutical and medical device companies?
DP: What should be done in the case of all these payments: to doctors, to hospitals, to pharmaceutical companies, to medical devices is that the individual patient should be given the funds to make their own rationing decisions. They will take into consideration the benefits they will get from whatever product or service at whatever price it is offered at, and they will control health costs and inflation — just like in the cosmetic surgery market. For big bills and big health issues, insurance would cover the costs.
MK: Would capping financial rewards in malpractice suits actually reduce medical costs?
DP: Yes. In addition to the uncontrolled consumption on the part of the patient who is making decisions without any consideration of cost — which is fundamentally immoral, and driving health inflation and our national debt – doctors are doing tests and procedures they know are not necessary, but do them anyway in case they are sued. Guess who pays — everyone, in higher doctor costs and higher insurance premiums to pay for those higher prices.
MK: Why are pharmaceuticals cheaper in other countries than they are in the U.S.?
DP: Prescription drug costs are cheaper in other countries because they control the prices – but access to the most effective drugs is denied in virtually every other nation. They pay less for less effective drugs and the U.S. market is funding the world’s research and development costs.
MK: With all of the proposals that are floating, which proposal makes the most sense and why?
DP: Proposals to end exclusion from coverage because of pre-existing conditions will only work through high risk pools. These high risk pools could be funded by taxes on insurers.
The Health Information Exchange — as designed by the U.S. Congress and the White House — will impose government controls on every health plan within five years and you will be able to buy only certain categories of plans — all of which are defined by the Federal government.
Americans will not put up with it, if it passes, which I doubt. Proposals that allow the individual to be given the resources to fund their own care make sense — so the uninsured would get monies to be insured.
But the temptation to take over the health care system by the government is so great that the Democratic Congress cannot simply solve these problems, they are using them as an excuse to over-reach politically and, therefore, these proposals are in trouble politically.
Perhaps after these reforms fail in Congress, they will focus on solving the problems of pre-existing conditions and insuring the uninsured, without the government takeover.
These focused solutions would pass Congress and we can all move on from a divisive and pitched battle that is disrupting the entire political system and hogging the nation’s agenda because the proposals being considered are politically unsustainable. And pride on the part of those proposing them are forcing the public and the nation to go through the current tortured machinations.
Marc Kramer, who is the author of five books and faculty member at the Wharton School of Business at the University of Pennsylvania, is a serial entrepreneur.
Marc Kramer: Why did you write this book?
Dan Perrin: We wrote the book to prepare the ground for the health care debate now underway. Our book is one of solutions, not think-tanky – understandable language with understandable solutions.
MK: Why has insurance become so expensive over the last 20 years?
DP: Fundamentally, America’s insurance inflation is related to the third party payer system, in which both insurers and hospitals are protected by anti-trust exemptions. Third parties pay the bills and the patient does not understand the price nor does price enter into their decision making process. Fundamentally, this leaves the patient asking for every possible service and the best care without constraint, from hospitals that can charge whatever they want with no governor on their costs.
The fiction that better care is costing more is exposed as a fallacy by the cosmetic surgery market. Prices have increased with the rate of inflation and care has continued to get better with substantial innovations. Lasik surgery is a great example of better and better results with lower and lower costs — the way the market is supposed to work.
The other problem with the health care market is the massive government interference and disruption, not just at the state level, but also at the federal level. The continued cutting of doctor payments is just forcing the money to be made up in the non-governmental market. The government is rationing health care services by forcing doctors out of Medicare and Medicaid. Government spending in health care services is a one-trick pony: the only way they know how to control the demand for their subsidized product, which radically increases its demand, is to ration care by parsing funds. That is all government knows how to do and that is why when the government finances health care, there is rationing, there is always rationing.
MK: We keep reading that there are 1,200 health-care insurance companies in the U.S. and that they should be allowed to compete in every state to induce competition to lower costs. Are there really 1,200 health care insurance companies that can sell in all 50 states?
DP: Yes, they should be able to compete but they cannot because state governments will not give up their jurisdiction, making it more expensive to write policies for every state.
MK: If not, how many insurance companies can actually sell nationally?
DP: Very, very, very few insurers are in every state, in fact, I am not sure there is one.
MK: What do you think of the various foreign systems that cover everyone such as Canada, England and France?
DP: I think they are alien to the American cultural experience. Like Health Maintenance Organizations (HMOs), which were a private sector system of rationing by denying access to care, the Canadian and British and French system do the same – but their citizens want the government to make their decisions for them. Americans absolutely hate that. And any attempt to impose this type of system will fail.
MK: Should the system look to reduce pharmaceutical and medical device companies?
DP: What should be done in the case of all these payments: to doctors, to hospitals, to pharmaceutical companies, to medical devices is that the individual patient should be given the funds to make their own rationing decisions. They will take into consideration the benefits they will get from whatever product or service at whatever price it is offered at, and they will control health costs and inflation — just like in the cosmetic surgery market. For big bills and big health issues, insurance would cover the costs.
MK: Would capping financial rewards in malpractice suits actually reduce medical costs?
DP: Yes. In addition to the uncontrolled consumption on the part of the patient who is making decisions without any consideration of cost — which is fundamentally immoral, and driving health inflation and our national debt – doctors are doing tests and procedures they know are not necessary, but do them anyway in case they are sued. Guess who pays — everyone, in higher doctor costs and higher insurance premiums to pay for those higher prices.
MK: Why are pharmaceuticals cheaper in other countries than they are in the U.S.?
DP: Prescription drug costs are cheaper in other countries because they control the prices – but access to the most effective drugs is denied in virtually every other nation. They pay less for less effective drugs and the U.S. market is funding the world’s research and development costs.
MK: With all of the proposals that are floating, which proposal makes the most sense and why?
DP: Proposals to end exclusion from coverage because of pre-existing conditions will only work through high risk pools. These high risk pools could be funded by taxes on insurers.
The Health Information Exchange — as designed by the U.S. Congress and the White House — will impose government controls on every health plan within five years and you will be able to buy only certain categories of plans — all of which are defined by the Federal government.
Americans will not put up with it, if it passes, which I doubt. Proposals that allow the individual to be given the resources to fund their own care make sense — so the uninsured would get monies to be insured.
But the temptation to take over the health care system by the government is so great that the Democratic Congress cannot simply solve these problems, they are using them as an excuse to over-reach politically and, therefore, these proposals are in trouble politically.
Perhaps after these reforms fail in Congress, they will focus on solving the problems of pre-existing conditions and insuring the uninsured, without the government takeover.
These focused solutions would pass Congress and we can all move on from a divisive and pitched battle that is disrupting the entire political system and hogging the nation’s agenda because the proposals being considered are politically unsustainable. And pride on the part of those proposing them are forcing the public and the nation to go through the current tortured machinations.
Marc Kramer, who is the author of five books and faculty member at the Wharton School of Business at the University of Pennsylvania, is a serial entrepreneur.
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