mind over blather

I am not at all enthusiastic about the portents for a rational public policy response to what is, by any objective analysis, an emergent – and growing – political issue.  As a matter of philosophical preference, I would much prefer a market-based solution.  Having said that, the market has failed – massively – to minimally, let alone comprehensively, address even the most basic of health-related issues.  By way of example, we have the technological means to digitize and standardize medical records – and yet the entire health care industry, from doctor and hospital record-keeping to insurance company billing, is operating in the dark ages.

In many other industries, there are ongoing efforts to eliminate waste and inefficiency – and, generally, these efforts result in higher quality and lower prices.  My first cell phone – which was permanently mounted in my car – cost around $900.  I paid roaming charges, long distance charges – and a ludicrous (by today’s standards) per-minute base rate for local (within the same area code) calls.  My first monthly bill was north of $500.  Today I get a lot more service from my Crackberry – for a lot less money.

I can apply the same model to computers.  The first computer I operated was an IBM 360 Model 40.  It filled the first floor of an office building, had a whopping 144 kb memory, and disc drives (this is when DOS was really DOS) that required a semi-annual hernia waiver to move.  We had modems the size of refrigerators that transmitted at teletype baud rates – and all of this miraculous stuff costs hundreds of thousands of dollars.  In fact, the first “portable” terminal I used was packed in a fiberglass suitcase and weighed close to 100 pounds.  I used to buy a ticket for it and strap it into the seat next to me when flying to a sales call.  The stupid thing cost around $10,000 and hardly ever worked.   Today, my laptop – around $1,200 at Costco – is hundreds of times more powerful than all of that ancient (circa 1970) equipment.

There are other models that run contrary to these examples.  The office space in which that old IBM clunker was housed rented at $6.00 per square foot.  Today it’s close to $25.00 psf.  And the BMW 2002 tii that I bought for around $4,500 in 1971 would, comparably, sell for nine or ten times that today.

And then there’s health insurance.  I started a business in the early 1980s.  One of the first things that I did was arrange for a small group health insurance plan for me, my partners, and our handful of employees.  It covered everything.  Well care.  Sick care.  Hospitalization.  X-rays and labs.  Medication.  Dental.  Eyeglasses.  It even came with a life insurance policy.  There was a modest deductible that was capped at some infernally low amount.  The paperwork amounted to two simple forms – one that had to be filled out at the beginning of every year on the first visit to a doctor – one page, front and back.  And another that was half a page – just enough room for some very basic information (name, policy number, physician’s name and address, a few lines of description for whatever the issue was, and an amount to be paid).  My family coverage (two adults, three kids) cost less than $300 per month for the works.  And it was accepted by every doctor and every hospital I ever encountered while I had it.

Today, a comprehensive policy would be four or five times that – probably more – and would likely not provide anywhere near the same coverage (in New Jersey, for example, thanks to the miracle of incestuous state regulation, medication coverage can’t exceed 50% and is further capped at some inanely low annual maximum).

All this is just by way of introduction.  What I really want to do is ask two relatively straightforward questions.

First, what, from a consumer’s perspective, is the value proposition of the health insurance industry?  I’m sure industry spokespeople have a litany of answers – all of which are based on the same kind of actuarial logic that makes casualty or life insurance make sense.  But does the same value proposition apply to health insurance?   Put another way, what value (again, from the consumer’s perspective) do health insurance companies actually add to the health care process?  They clearly don’t add efficiency, cut waste, or contain costs.  What is their value proposition to the health care consumer?

Second, why do we have government funded, government run, insurance plans for banks (FDIC), stock brokerages (SIPC), health care for retirees (Medicare) and veterans (VA) – and even potentially flooded properties – all delivered in a single payer context – but that isn’t socialism, or nazism, or part of a liberal conspiracy to hand the treasury over to the Chinese or the Muslins or some as yet unidentified third round African draft choice?  We just blew a few trillion bucks paying off the bad bets of the geniuses in our financial services industry – and bailing out the boneheads in the auto industry – but when it comes down to regular check-ups and flu shots and sick care for the average citizen, it becomes part of some alien invasion conspiracy.  Why?

Answer those questions honestly and objectively.  Put your preconceptions aside.  The answer could be to privatize everything – jettison the FDIC, dump the flood insurance program, turn Medicare over to Goldman Sachs and Social Security over to Morgan Stanley, and so on.  That wouldn’t necessarily get the government off the hook because when those guys screw up – as they invariably will (giving money to a banker is like giving heroin to an addict) – the government will still be holding the bag.  But if it makes you feel better to think that the law of gravity can be broken, have at it.  On the other hand, if you think that the gummint can do a super swell job running things – give it your best shot.  The “public option” may wind up looking like FEMA or the Army Corp of Engineers or the IRS or the Pentagon.  I’m sure there’s an agency or two or three that you can think of – the EPA, the FDA . . . the choices are almost limitless – that is the exception that proves the rule.

I haven’t changed my earlier solution, mind you.  I’m just trying to spark a discussion that doesn’t involve the kind of abject stupidity the nine twelvers – or the single payers (particularly the dim bulbs who think that’s a dating service for Pay Pal members) – have been tossing around.

Just be consistent.