Even One Word

Right now, something I've been hearing in the news a great deal is this debate about whether the government mandate for health insurance is consitutional under the commerce clause, which states (Article I, Section 8, Clause 3):

[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;

Insurance != Healthcare

The typical model by which insurance works is that an entity (let's call them, for the sake of clarity, Scrooge) agrees to provide you with funds should you so need them. You pay them a premium, which is guaranteed money from you to Scrooge regardless of if you ever need it. At some point, if you do need it, they will pay for a portion of the benefit, based on a variety of models (some in which they pay a percentage and you pay the rest, some in which one of the parties pays a flat fee and the other covers the rest, etc).

This system works great for things like homes, where you are covered in case of a major catastrophe. This also helps the people who own a majority of your home (the bank, who we shall call The Other Scrooge). As a further analogy, it works great for cars (again, securing the interests of The Other Scrooge that provided your financing for the car). But what happens if people are using the benefits more than they pay for their premiums, and Scrooge can't make a profit?

Well, this is typically fixed in the market by two things: basic supply and demand influence the value of the premium, and the pool of insured people/homes/cars consists of people who over-use and people who under-use their benefits. This means that for an insurance company to be successful, they either have to gouge on their premiums, or they have to have enough good drivers/sturdy homes/health nuts to offset all of the horrendous drivers/dilapidated shacks/chronic smokers.

This makes sense, but the real problem we see is when we try to apply the business model of the car and the home to the body.

All insurance != Same

Assume that for some reason we've passed the full measure of the mandate, and now people are required to pay for insurance. Let's talk about a majority of the cases we will have when this comes to pass: people don't have it because they can't afford it. In most cases, it will be either because they are unemployed, they make too little, or their employer doesn't subsidize enough of the cost for them to afford it. In most cases, it'll be a combination of these factors. If you are still making payments on a car, and drop your insurance, The Other Scrooge just takes your car back. Simple. If you are free and clear on your title, but drop your insurance, the state or local government will most likely charge you some fees or give you some tickets. Barring that, they may eventually confiscate your car. If you don't pay your health insurance, the government doesn't really have a means other than fining or jailing you. What else would they do, shoot you? And then who would pay your insurance? So, we have an issue where a (presumably) healthy person is now required to pay for a service they can't afford, and feel that they don't need, or else they'll be fined. Most likely, they will be fined a great deal of money (more than whatever the current premiums are) in order for the government to make it seem like a better deal to just pay the premiums. The government tends to forget that a lot of people, when given an ultimatum, will pick C; they will refuse to get insurance, and do everything they can to avoid being caught. Sure it's risky, but so is running around without health insurance in case of an emergency.

Let's talk about the industries themselves. For homes, cars, and bodies, there are a number of different levels of problems that you will have to deal with. With homes, you may have a leak in your roof. In most cases, it will need to be patched, so your insurance will pay for a roofer to patch the hole in your roof. There is an entire industry of competing roofers, and they will most likely fight over who gets the contract, and so the cost will not be inexpensive, but it will be regulated by what the market is willing to pay. Some people may not even use their insurance for this if it's cheap enough. Contrast that with the potential for your foundation to crack. In this case, you will be in a much more dire situation, as your home will eventually be completely uninhabitable, whereas the leak was mostly bearable. This is an adamant MUST FIX NOW situation, and depending on your insurance carrier, you may have to be out a great deal of money for it. But with the potential risk for this happening, how could you NOT have insurance? This makes sense, because the needs are balanced against the risks, and you end up getting what you pay for. There are also additional home warranties you can purchase for an annual fee that will cover things like your air conditioner, toilets, pipes, and other things that are gaps in your home insurance. These are almost always optional, but the market exists for them.

Let's continue this analogy into cars. Again, there are a variety of tiers of issues that will arise, but for the most part, you have two levels: basic maintenance/overall repairs, and much more catastrophic events. A third level would be accidents or events outside of normal wear and tear. The way it works now is that you need to get an oil change, or a belt swapped out, or tires rotated every so often. This is expected and recommended maintenance, and an entire industry of "quick lube" style shops exists to support it. The cost is usually relatively low, and if you keep it up, your car will last longer. Almost no car insurance companies will pay for this. You can get an additional warranties, as you did with homes, but they are more for the second tier: large mechanical failures. Say for whatever reason you blow a gasket, or throw a piston: your car is now a paperweight. Or maybe in the case of a gasket, it's still a car, but it acts more like an angry squid spewing its ink all over your driveway. Insurance sometimes covers this, but in most cases you have to have relatively good comprehensive insurance to cover issues like these. For the most part, insurance covers the third tier: accidents. Because car accidents happen so much more often than hurricanes or trees growing into your foundation, car insurance is a lot more specific about covering your car in these events. In most cases, it just makes more sense to have the insurance so that you don't end up having to pay a large sum of money for the mistakes of someone else who wasn't paying attention.

Continuing this analogy to the human body is where we see a further set of complications. Where we had about two tiers of issues with homes and three tiers with cars, now we're talking about thousands of potential ranges of costs for health issues. Let's discuss them in detail.

Although it's advised to go ahead and get a checkup and some routine tests done every year, a majority of people simply don't do it. This would be like the maintenance on a car, perhaps. But you may not get a booster shot or something that is quantifiable: you may just have your doctor tell you nothing is wrong, and send you home. This makes people feel as though it's a much worse investment: they pay for an office visit, and they didn't really get anything except a little peace of mind. Naturally, a lot of people just don't do it. This has been mitigated by the free market in a number of ways, specifically "urgent care centers" that usually staff a greater deal of nurses and mid-level providers (Nurse Practitioners and Physician's Assistants) in order to reduce their overhead. They often allow web-checkins and other methods to keep the rate of rotation as high as possible, ensuring a steady flow of customers. They also take your insurance, but they tend to cost less than a visit to the emergency room, and in some cases will even give you a discount if you don't have insurance. They also treat another tier of health problems, which include flu, strep throat, minor fractures, and other accidental injuries. But there are a host of other potential tiers of "maintenance" care. For example, pelvic exams, cancer screenings, optical screenings, dentist exams, etc. There is also the issue of the diseases these screenings find: such as cancer or an auto-immune disease that will take months/years to treat. Perhaps you suffered a previous injury and now you need surgery to fix it. Or you get in an accident and need a limb removed or you'll have a lethal infection. The important thing to note: insurance is required to pay for almost every level of this. Why? Because healthcare is expensive.

Finally, we're finding the disease!

The underlying disease in this problem is not the cost of healthcare. That's a symptom. The disease is multi-faceted and sneaky, and we can see by looking carefully that it's coming from all of the problems we just mentioned. So let's break it down and discuss each one.

Medicine has changed

In the middle of the 20th century or so, the pace of medical discovery and the ability to apply it hit a sort of even keel. Doctors were able to prescribe antibiotics and apply basic principles of science in order to cure a large portion of ills, from the cough to broken ankles with relative ease. The industrialization of our nation thanks to supporting World War II had created an entire industry ready to manufacture medical supplies and�laboratory�equipment that even rural doctors could afford. Things were working well. But let's discuss some changes since then.

1. When is the last time you saw a doctor take a house call? For that matter, when is the last time your doctor filled your full prescription right there in the office without requiring you to drive across town to a chain-owned pharmacy? The industry has changed.

2. When is the last time you heard someone prescribe bed rest to cure a sinus infection? The over-prescription of antibiotics and steroids has led to a whole new era of mutated diseases, and doctors would be considered incompetent if they didn't provide you the very best antibiotics and steroids... thus causing your disease to mutate further.

3. Speaking of incompetence, how many stories do you hear about your grandparents suing a doctor who botched a surgery? In most cases, it was assumed they did what they could, and then they moved on. A combination of entitlement culture and the rise of malpractice insurance (yet another treatment of a symptom) have led to a greatly increased risk of involving the law. And speaking of the law...

4. How many times have you had your medical provider and your insurance provider agree on the cost of something? In most cases, the bill goes out and comes back multiple times before it's settled. In most cases, the hospital�over-bills�because they know insurance is paying, and the insurance tries to underpay in order to offset their losses and try to make up a profit on the backs of the people who are paying full premiums and never use their benefits.

So, in the interest of not just pointing out problems, but providing more solutions, I'll go into some ideas.

Treat the disease!

Regulate commerce

In a free market, the value of goods and services are determined by the cost that people are willing to pay for them. Once people stop paying the market value of a good, its value decreases. This makes a lot of sense in most cases, but the underlying problem here? People will always pay for medicine when they need it. Sure, if you need a basic checkup or a physical, you might shop around. You might look and see which doctor is willing to take a little less money from you. If you have an expensive surgery that can wait a few months, you might see if flying out of the country or going to a different state will save you some money. And in these cases, the market value of the goods may go down, if enough people are also willing to do the same thing. But how many times have you been driven to the hospital with severe abdominal pain, been admitted, and then told the doctor "you know what? You charge too much for appendectomies. I'm going to drive across town and get it taken care of over there."

As a husband who just dealt with a wife going through that exact same instance, I promise you that was the very last thing on either of our minds. All we wanted was for her to be okay, because that's all that mattered. Money was the very least important thing on our minds, and to be honest I'm proud that it was the last thing on my mind, because it means my priorities aren't as messed up as I thought they were.

So, how do we protect ourselves from being completely gouged by the hospital for that good or service? The government's ability to regulate commerce is designed EXACTLY for this instance. I am in a place where the hospital (through no fault of their own) can potential commit fraud by convincing me that a good or service is worth a great deal more than it is, by making me think I have limited options. In this case, I do have limited options, and my absolute terror at losing my wife motivates me to pay any cost needed. I'm under duress, and in no shape to find a good bargain on the cost of the care. My bill for the procedure ended up being in excess of $34,000. Because I had just started a new job, my old insurance had expired, and my new insurance had not yet started. This was an oversight on the part of myself and my company, but as it turned out, I was eligible for COBRA. All the same, I eventually got the bill for the procedure before everything was sorted out, and they had said "oh, you're not insured? Let's apply some discounts."

It went to four thousand dollars. That means they were willing to mark up the cost of their medical care almost ten times because they assumed an insurance provider was going to pay it. Let's assume for a second that they were being completely genuine, and that was simply the cost of the medical care. They were willing to have me pay 11% of the total bill, meaning that the cost would be offset and an 89% share of that bill would be subsidized by someone else who had insurance. This is clearly broken.

Where does the cost come from?

• The cost of undergrad and medical school for a medical provider
• The cost of transportation for that medical provider to and from their office/hospital
• The pharmaceutical company who makes the dampco(tm) brand damp cloths charges for that product. Their cost comes from years of research and the cost to manufacture the cloth
• The cost of transporting those medical supplies to the office/hospital
• The overhead cost of keeping the office/hospital running and deffered to you
• Taxes that all parties paid, now deferred to you (either directly via sales tax or indirectly by a small markup of your bill to cover expenses)

Break it down

In most cases, the experience and specialized skillset of a doctor is a very specific tool. This is pretty well understood in certain parts of the medical community, such as surgery. A surgeon usually even specializes in specific areas of the body. Therefore, we don't ask a cardiac surgeon to provide hernia screenings to the football team that just had to do their annual checkup. Yet hospitals often have an internal medical specialist --who is capable of diagnosing the most rare and confusing series of symptoms available-- grab someone's crotch and ask them to turn their head and cough. As I said before, we're getting better about this. We have urgent care centers and "minute clinics" across the country that mainly employ mid and lower-level practitioners, who make a very fair wage (and in some cases, better than they would find at a place where expensive doctors take most of the budget). But we need to break this up even more.

There are instances in which people routinely go to a free clinic simply because they cannot afford top-level medical care and fear they may have some infectious disease. In these cases, people should be encouraged to seek the non-specific care of urgent cares centers, with the understanding that they will only be charged a basic diagnostic fee. Our system now puts a huge amount of liability on individual providers, regardless of their area of specialty. In my theoretical world, someone who just has the sniffles from working a blue-collar job out in the rain should be able to pay for a treatment with their blue-collar paycheck before it evolves into pneumonia (which would be substantially more expensive, and hard to afford on almost any salary). In addition, our idea before was that insurance is really for dire circumstances. In this example, the standard treatment would be inexpensive because so many people seek it out and pay for it on a regular basis out of pocket that it has become more affordable, and in the event of a catastrophe, emergency insurance to cover the more dangerous ills would be cheaper because the insurance company is not footing the bill for everyone's maintenance care on a regular basis.

Are these concepts complex and intricate? Not on the surface, granted. But over time, there will inevitably be overlap and confusion that results in these disparate medical disciplines requiring overlap: but let's allow that to happen. Open up sub-specialties in urgent care and the ability for people without hundreds of thousands of dollars in student debt treat the most basic symptoms, and know the proper process for elevating the system further.

Finally, I wouldn't be a programmer if I didn't say...

So, what about the symptoms?

Well, the statistics are pretty clearly showing one major trend: inconsistency. Rather than posting infographics and charts, I'll simply link you to CDC's National Center for Health Statistics. As technology improves, the amount of people able to have access to it is declining. As the nation slips further into debt, so too do our large private medical institutions. In most of these cases, the local and national government would step into to fill the gaps, but budget shortfalls in every revenue area have cut what little spare budget was available for such things. The symptoms are being treated, but the treatment is costing us exponentially more every year. Once we run out of money, the treatment goes away too, and then we're left with nothing. If nothing else, this underscores our need to get the system back in order.

Stay tuned for my next blog post, in which I'll discuss how treating the symptoms of the problems in programming and web development solutions lead to even more measurably terrible results.