RandyCare: Part I

Everyone knows that I enjoy rambling about current events from time to time, but strangely I rarely hear people mention how much they miss these ramblings when I’m not around. As I assume this is simple absent mindedness on the part of my friends and family, I thought I’d write up some of my thoughts about health care in the US and how I would choose to reform it in that utopian alternative reality where my opinion mattered.

I originally intended to make this a single post, but it started to get to long, and I wouldn’t want to deprive our readers of all this great material, so I decided to break it up into 3-4 posts.

Part I: Problems

While I’m really more interested in writing about a hypothetical health care plan, it probably wouldn’t make much sense without a little bit of background on what I think the major problems are. I’m not going to go into a whole lot of detail, as these issues are probably familiar.

1. End of life care

a. We spend huge amounts of money on end of life care for benefits that are minimal compared to the costs. People should naturally be allowed to spend their own money on heroic end of life care for the elderly, but the socialization of this care needs to be seriously reconsidered.

2. Defensive medicine

a. Contrary to popular perception, money paid out in medical malpractice tort claims is a minuscule part of overall health care costs. On the other hand Defensive medicine practices (such as excessive testing) create significant amounts of waste (waste = costs –benefits). Health care providers (doctors) have an incentive to over test and over treat as it provides both protection from lawsuits and increased revenue.

3. Pharma patent system

a. Pharmaceutical companies have learned how to game out current patent system by maintaining patents on legacy drugs, and have focused huge amounts of innovation of medications that can take the most advantage of the patent system. We need to incentivize innovation both more efficiently, and more broadly. We need to motivate innovation beyond medications that are taken regularly for a patents entire life.

4. Emergency care

a. Emergency room treatment has become both the safety valve for the poor who can’t afford medical care, and the source of bankruptcy for middle class people. Emergency treatment needs to be accessible without being abuseable.

5. Catastrophic care

a. Catastrophic health care costs have become a major cause of bankruptcy for middle class Americans. Catastrophic health care costs is one area of health care that it does make sense to deal with through a traditional insurance model. Catastrophic health insurance is relatively resistant to moral hazard problems, costs can be effectively mitigated though risk pooling, and everyone is subject to the risk.

6. Incentives

a. The common disconnect between the entity that pays for health care (often an insurance company or the government) and the patient who recives the care can create inefficient incentives for potential patients. There are a lot of ins and outs when it comes to the economics of incentives, and I don’t want to go into details, but it’s definitely an important issue to keep in mind.