Guest Column
Health care debate ignores basic problem-solving processes
Rand T. Lennox
By Rand T. Lennox Retired, Strongsville
This writer has long posited that there no complex problems; there are only simple problems and simple solutions. What are called “complex” are problems that have not been deconstructed to their simple parts. When properly deconstructed and each simple part resolved, the “complex” problem solves itself.
Such is the case with the health care problem. Politicians claiming it to be “complex” have either not yet identified – or chosen to ignore – the basic parts. Solve the following three basics and the health care problem will likely solve itself:
First, the health care insurance market is defective. A market consists of suppliers and consumers whose interaction determines price. In the U.S., 49 percent of the population receives insurance via their employer, 34 percent are on Medicare or Medicaid and 9 percent are uninsured. That means that only 8 percent of health insurance purchasers are actually health care consumers. What do readers think happens to the consumer in any related negotiation?
Employer-provided health insurance is a product of World War II wage and price controls. There is no justification for its continuing. The first reform should be to have employers calculate the price they pay for each employee and increase the employee’s pay that amount, then let the employer purchase – or not purchase – a health policy of his choosing on a pre-tax basis. Costs to both parties would remain the same, but the consumer influence in the health insurance market would increase to 57 percent from 8 percent.
Markets operate efficiently when left to their own designs. Why not let them?
Second, admit that health care for the poor is not a health care system problem, it is a welfare system problem. Inflating health care pricing to cover free care is deceptive and thwarts free market operations. Government should decide – with voter input and approval – the level of health care welfare the country wants to fund and create a simple and transparent tax for that purpose. Those with money paying for others’ free care, why not let them know how much they are paying, rather than burying that number in myriad tax sources? Taxpayers’ knowing the real numbers might increase accountability and decrease political, insurance company and provider chicanery.
That reform, however, would require a dramatic increase in political transparency and accountability, commodities nearly non-existent in The Swamp.
Markets operate efficiently when left to their own designs. Why not let them?
Third, eliminate cost-shifting. For the uninformed, that’s the practice of inflating prices and manipulating discounts to distribute free care and other costs among non-recipients based on various preferences. If you’ve ever wondered why the hospital sent you a bill for $65,000 but accepted $10,000 from the insurance company as full payment, it’s because of cost-shifting, the three-card monte scheme adopted by the health care industry because of poorly thought out and underfunded government health care reimbursement initiatives.
It is impossible for any consumer to make reasonable health care choices when the prices are unknown. Honest pricing must be presented if the market is to work properly.
Markets operate efficiently when left to their own designs. Why not let them? (Sound familiar?)
But these three simple problems and reforms are not the most basic of the deconstructed “complex” problem.
The underlying theme of the three is that all of them are market distortions created by government interference in the health care system. Nonetheless, the government is now trying to add another layer of distortion.
America was able to build a very complex machine and system that put a man on the moon. It did it by using electronics experts to do the electronics, welders to do welding, propulsion engineers to create the propulsion, and pilots to do the flying. It had the sense not to let the politicians do anything but decide how to take money from the taxpayers to pay for it all.
But today, there are rooms full of politicians trying to reform a system about which very few have any expertise, and none of which has in-depth expertise. They clearly express their ultimate objective to be getting re-elected in 2018 as opposed to comprehensive health care system reform (or, for that matter, any other reform).
Let Obamcare ride for a while. Trumpcare – given the underlying system flaws – will just re-distribute the same pain. Start over and tackle the basic market distorting policies now in place, let the market work for a year or two, then tweak as necessary.
Politicians might then discover that Americans and capitalism work best when free of government interference and politicians’ career goals.
This writer has long posited that there no complex problems; there are only simple problems and simple solutions. What are called “complex” are problems that have not been deconstructed to their simple parts. When properly deconstructed and each simple part resolved, the “complex” problem solves itself.
Such is the case with the health care problem. Politicians claiming it to be “complex” have either not yet identified – or chosen to ignore – the basic parts. Solve the following three basics and the health care problem will likely solve itself:
First, the health care insurance market is defective. A market consists of suppliers and consumers whose interaction determines price. In the U.S., 49 percent of the population receives insurance via their employer, 34 percent are on Medicare or Medicaid and 9 percent are uninsured. That means that only 8 percent of health insurance purchasers are actually health care consumers. What do readers think happens to the consumer in any related negotiation?
Employer-provided health insurance is a product of World War II wage and price controls. There is no justification for its continuing. The first reform should be to have employers calculate the price they pay for each employee and increase the employee’s pay that amount, then let the employer purchase – or not purchase – a health policy of his choosing on a pre-tax basis. Costs to both parties would remain the same, but the consumer influence in the health insurance market would increase to 57 percent from 8 percent.
Markets operate efficiently when left to their own designs. Why not let them?
Second, admit that health care for the poor is not a health care system problem, it is a welfare system problem. Inflating health care pricing to cover free care is deceptive and thwarts free market operations. Government should decide – with voter input and approval – the level of health care welfare the country wants to fund and create a simple and transparent tax for that purpose. Those with money paying for others’ free care, why not let them know how much they are paying, rather than burying that number in myriad tax sources? Taxpayers’ knowing the real numbers might increase accountability and decrease political, insurance company and provider chicanery.
That reform, however, would require a dramatic increase in political transparency and accountability, commodities nearly non-existent in The Swamp.
Markets operate efficiently when left to their own designs. Why not let them?
Third, eliminate cost-shifting. For the uninformed, that’s the practice of inflating prices and manipulating discounts to distribute free care and other costs among non-recipients based on various preferences. If you’ve ever wondered why the hospital sent you a bill for $65,000 but accepted $10,000 from the insurance company as full payment, it’s because of cost-shifting, the three-card monte scheme adopted by the health care industry because of poorly thought out and underfunded government health care reimbursement initiatives.
It is impossible for any consumer to make reasonable health care choices when the prices are unknown. Honest pricing must be presented if the market is to work properly.
Markets operate efficiently when left to their own designs. Why not let them? (Sound familiar?)
But these three simple problems and reforms are not the most basic of the deconstructed “complex” problem.
The underlying theme of the three is that all of them are market distortions created by government interference in the health care system. Nonetheless, the government is now trying to add another layer of distortion.
America was able to build a very complex machine and system that put a man on the moon. It did it by using electronics experts to do the electronics, welders to do welding, propulsion engineers to create the propulsion, and pilots to do the flying. It had the sense not to let the politicians do anything but decide how to take money from the taxpayers to pay for it all.
But today, there are rooms full of politicians trying to reform a system about which very few have any expertise, and none of which has in-depth expertise. They clearly express their ultimate objective to be getting re-elected in 2018 as opposed to comprehensive health care system reform (or, for that matter, any other reform).
Let Obamcare ride for a while. Trumpcare – given the underlying system flaws – will just re-distribute the same pain. Start over and tackle the basic market distorting policies now in place, let the market work for a year or two, then tweak as necessary.
Politicians might then discover that Americans and capitalism work best when free of government interference and politicians’ career goals.