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Toward a (More) Multipolar Health-Care System
I have for years argued that most people would be reflexive free-market capitalists if not for their experiences with a handful of businesses: airlines, banks, cable and Internet providers, etc. At the very top of this list is insurance companies. “The trouble with socialism is socialism,” as Willi Schlamm famously put it. “The trouble with capitalism is capitalists.” These [baroquely ornate string of expletives deleted] insurance monkeys are the capitalists Willi Schlamm warned us about.
Congress, responding to years of outcry against “surprise” medical bills, is about to do what Congress does, which is make things somewhat worse by giving the people what they are clamoring for.
Medical bills and medical insurance can be perplexing and exasperating. They often are random-seeming. My mother’s last stay in the hospital lasted several weeks, some of them in cardiac intensive care. The bill that came was absolutely staggering, about ten times the annual salary she’d earned at the end of her working life. But she spent the last part of that working life employed by the state, so she had excellent insurance at practically no cost, and so instead of being saddled with a ruinous bill she could never hope to pay, she received a check equal to about a year’s pay. It was a welcome outcome, but an absurd one. I have more stories of that kind, as I am sure many of you do. I suppose I am the kind of sucker insurance companies like: I have a high-deductible plan in case I get hit by a cement truck, but if I need a COVID test or an eye exam, I generally use the insurance card that says “American Express” on the front of it, sparing myself the Kafkaesque horror of engaging with the insurance bureaucracy.
Surprise medical bills most often come to people who have received medical services under the impression that these were covered by their insurance only to find out that some portion of the tab — or all of it — is landing on them. The New York Times: “Patients go to a hospital that accepts their insurance, for example, but get treated there by an emergency room physician who doesn’t.” People coming into emergency rooms often are not at that particular moment very much inclined to carefully scrutinize paperwork of any kind.
What’s worse, as the Times reports, is that in such situations “doctors often bill those patients for large fees, far higher than what health plans typically pay.” Note that this is the opposite of the experience of many patients who choose “concierge” medical care, “concierge” being what the boys down in marketing came up with as a substitute for “cash up front.” Many (though by no means all) medical services provided on a cash basis are offered at a lower price than the one quoted to insurers, in part because medical practices that simply will not look at insurance cards need not employ an expensive staff of clerks to look at insurance cards (and manage insurance records and have long stupid maddening extended telephone conversations with insurance people) and pass along some of this savings to their patients — who, because they are paying out of pocket, have an opportunity and incentive to comparison shop.
That “concierge” model — a functional market with lots of buyers and sellers and competition — is, in most cases, the ideal way medical care should function, and the presence of such a functional market is one of the reasons so many Americans have much better experiences with cash-only dermatologists, cosmetic surgeons, etc., than they do when they have a heart attack or cancer. That latter category of care — care for severe injuries and serious or chronic disease — provides a basis of skepticism for the market-oriented approach to health care. Patients in those situations, the argument goes, have no negotiating power as buyers — faced with a choice of paying or dying, they will pay (or at least agree to pay) whatever is asked. And so, that argument goes, either prices must be set by a third party such as government, or payment must fall to and be negotiated by a third party, such as government or an insurance company. Much of the debate about health-care policy in the United States ignores the problems of third-party payments and instead turns its attention to the question of which third party should make the payments: insurance companies or government.
There are times when third-party payments for medical care are appropriate. Health insurance, properly understood, is not a medical product but a financial product, a hedge in which patients pay a premium to manage certain financial risks associated with medical need. Risk management is a benefit worth paying for: The wise man who dies at 100 without ever having had to file a hospitalization claim understands that his premiums were money well spent; the foolish man thinks he got ripped off. Paying for insurance is something like saving for retirement: It is a way of redirecting a portion of income from the prospering times, when it is not acutely needed, to the hard times, when it is acutely needed.
“Social insurance,” the traditional liberal model for providing publicly supported medical benefits, applies the insurance model to society at large, with the state acting as insurer. This is a model fundamentally different from the state-monopoly model of British and Canadian experience (in spite of what our ignorant progressives claim, most of Western Europe does not rely on national single-payer systems), and it has some virtues apparent even to such committed free-market thinkers as F. A. Hayek, whose libertarianism made room for government programs “providing for those common hazards of life against which few can make adequate provision.” The social-insurance model as practiced in high-tax Scandinavia is a way for young, healthy, working you to make provision for elderly, sick, unemployed you.
The United States is, judging by the actions of political leaders in both parties, utterly committed to maintaining a worst-of-both-worlds situation. The Left talks up the state-monopoly model, but no politician of the Left, including Bernie Sanders, the socialist from Vermont from Brooklyn, has put forward a serious proposal to pay for such a thing. (Avoiding such difficult discussions is the reason for all that umbrageous moralistic talk about health care as a “right.”) And it is impossible to imagine such a thing’s being intelligently administered by the federal apparatus: Consider that the U.S. government already is laboring under more than $50 trillion in unfunded liabilities for Medicare alone, or about 2.5 times GDP.
Republicans still talk about free markets and consumer choice, but under the influence of populism they cower at the prospect of reforming the entitlement programs and align themselves with Barack Obama et al. on the matter of “preexisting conditions,” which they insist that we cover with insurance even though such a thing is a logical impossibility. (Insuring against preexisting conditions is the equivalent of making a bet today on the 1984 Super Bowl, but Washington is convinced that it can monkey with the odds and the terms of the wager in such a way as to make that a sensible proposition.) They understand that third-party payments are a problem (your insurance company and your doctor both have economic incentives that are different from yours) and that the health-insurance market itself has a layered-on third-party problem because it has for so long been shaped by employer-based plans (your insurance company and your employer both have economic incentives that are different from yours). Most Americans who have insurance still get it from employer-based plans, and that is something that could be addressed — but Republicans will not touch it, because doing so would mean getting rid of a tax subsidy dear to middle-class people and upending the current health-insurance arrangements of a lot of Republican voters.
The grievously misnamed Affordable Care Act was in part inspired by the excellent Swiss system of health insurance, but with a characteristically dysfunctional American twist: without proper enforcement, without credible financial commitment, and with administration that might be described as anything but Swiss. But the ACA was in some sense almost inevitable: Democrats, frustrated by the persistent post–Great Society failure of their efforts to sell Americans on big, expensive new social programs, have in recent decades leaned on regulation instead — using employer mandates and the like to in effect create new welfare programs within employers. (This really kicked off in earnest in 1973 with Senator Ted Kennedy’s HMO Act.) The politics of this approach are attractive for obvious reasons, beginning with official cowardice: Congress or the state governments could create programs to supplement the incomes of low-wage workers, but simply mandating a higher minimum wage and mandating certain benefits allows them to do much the same thing without taxing anybody to pay for it or accounting for the expenditures. In that model, employers are both the welfare office and the tax office.
One of the long-term problems with that approach is that it does little for the unemployed poor or the marginally employed poor, whose standard of living has diverged sharply from that of the middle class. (Here, economics and mode of living are closely linked: The median income for a married couple with children is about $100,000, and the overwhelming majority of households in the top 20 percent of incomes are two-earner couples, generally married.) For reasons having to do with the parochialism and small-mindedness of the American intellectual classes, we spend a great deal of time talking about the shocking net worths of Silicon Valley billionaires and the big bonuses of Wall Street sharks, as though the poor were poor because Jeff Bezos is rich. In fact, the benevolence of the affluent professionals who dominate the country politically and staff its major institutions is directed largely at themselves, which is why we are debating writing off the debts of Harvard-educated lawyers rather than talking about the social and economic failures of, say, Milwaukee, and how these affect poor people, who rarely write New York Times guest columns or testify before congressional subcommittees.
To return to the beginning: The “surprise” medical-bill rule is one more little bit of effort to use business regulation to service the interests and demands of the politically important classes. And, as often is the case, those interests will be served by making the health-care system a little bit worse than it already is. Here, that will happen by forbidding doctors, hospitals, and certain other providers from billing patients at all in these situations, obliging them instead to charge insurers. This will have the effect of reinforcing still further the centrality of insurance to the medical system. As the Times reports, a Congressional Budget Office study finds that the new law will reduce the incomes of doctors and other providers, in part by imposing a mandatory arbitration regime on them. The loss of bargaining power and income “would happen to providers that both do and do not send surprise bills, because taking away the option would reduce their leverage in negotiating contracts with health insurers.” Which is to say, a law that purportedly was meant to bring insurers to heel has in fact strengthened their economic position.
What the United States needs is not a British monopoly-style system or a libertarian free-market fantasy or the Democratic dream of Scandinavia on the cheap, but instead a more multipolar system than the one we already have. Ideally, this would include health insurance that functions as insurance, i.e., as a financial product for risk mitigation, not as a dues-collecting membership club for medical care; an intelligently designed and administered form of social insurance that would see to the interests of those who cannot see to their own, including poorly provided-for children, the disabled, and others; and, perhaps most important, functional, consumer-driven markets for both health insurance and for health care per se, with most non-emergency care purchased out of pocket, the same way Americans pay for cars or mobile phones or Netflix rentals. There are some obvious challenges to getting that done: our generally incompetent public administration; bad political incentives; complicating economic realities (including the fact that such a large share of health-care spending happens at the end of life and for patients with chronic conditions); inertia; stubbornness; and the surprising stupidity, alternating with piggish intelligence, of American corporate management.
Or, we could pass another dumb law every time somebody complains about something.
Words About Words
Grawlix is the comic-strip term for using punctuation marks to represent profanity, for example: %@$&*!. The word comes to us from Beetle Bailey creator Mort Walker, who coined it sometime in the 1960s. Grawlix has fallen into disuse: Mostly, that is because we simply accept profanity in print more readily today than we did a generation ago, though some publications, including this magazine, omit the middle letters: “This is a big f*****g deal,” Joe Biden said. My book The Smallest Minority is probably the most profane thing ever published by Regnery, the conservative publisher, but I think the profanity there was appropriate in context. (We disagreed over a few lines, including the first lines in the book.) But I kind of like grawlix, and I like the word grawlix, too: Professional terms of art, especially from the printing and typography world, are dear to me.
So are technical terms from sports and games. For instance, here is a description of a certain bridge strategy that stood out to my eye for some reason, via Wikipedia: “The trump coup is a contract bridge coup used when the hand on lead (typically the dummy) has no trumps remaining, while the next hand in rotation has only trumps.” I suspect I’ll find a metaphorical use for that one some time in the near future. Also this from the American Contract Bridge League: “Butcher. Colloquialism to indicate a bad misplay: ‘He butchered the hand.’” Also feels potentially useful.
All literate Anglophone people know the difference between “then” and “than.” But the then-than bust ends up in some pretty rarified places: The Last American Aristocrat: The Brilliant Life and Improbable Education of Henry Adams, a big book from a big publisher and a New York Times Book Review Editors’ Choice, contains this sentence: “His account stressed Lincoln’s supposedly awkward and ungainly carriage before the poised Governor, whose education, experience, and patrimony, the younger Charles suggested, deserved a better reception then [sic] they received.” (Please feel free to not send me examples of my own typos. I know about them.) My point here isn’t to embarrass the author or his publisher but rather to emphasize that everybody needs an editor.
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Home and Away
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I recently watched The Professor and the Madman, a film I enjoyed very much. (I like stories about friendship, an underappreciated necessity.) Watching the scene in which the editor of the Oxford English Dictionary is abused by his superiors for the bad reviews his dictionary has received in the foreign press (especially in Le Figaro), I felt a little envy. I enjoy our modern conveniences and do not suffer much from sentimentality or nostalgia, but I would like to live in a world in which the OED is the subject of contentious reviews in the popular press. I think of the legendary riot that greeted the first performance of Rite of Spring at the Théâtre de Champs-Elysées: I am anti-riot, most of the time, but there is something to be said for a culture that riots over Stravinsky.
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