Wednesday, August 26, 2009

We Need More Liberty In Health Care

Our current health care system is “an edifice that is fundamentally unsound,” yet most approaches for ‘fixing’ the system “will put yet more patches on the walls” of the edifice “and then build that edifice higher.” So writes business executive David Goldhill, a self described Democrat, in this Atlantic Monthly article.

The article is provocatively titled How American Health Care Killed My Father. Goldhill describes how his still working 83-year-old father went into “a well-regarded nonprofit hospital in New York City” with a case of simple pneumonia, only to become infected in the hospital with sepsis. Goldhill watched over the next five weeks as “a wave of secondary infections, also acquired in the hospital,” killed his father.

“My survivor’s grief” writes Goldhill, “has taken the form of an obsession with our health-care system.” Although not a health care professional, he has done loads of research and interviewed people from various facets of the industry. This has led him to the conclusion that the system is deeply structurally and unnecessarily flawed in ways that are completely unacceptable.

It is commonly claimed that we have the best medical system in the world. That may be correct in some ways, but it ignores extremely serious failings. After noting that our American hospitals manage to cause about 300,000 entirely preventable deaths every year, Goldhill asks, “How did Americans learn to accept hundreds of thousands of deaths from minor medical mistakes as an inevitability?”

Goldhill is amazed that no one is focusing on the root causes of our health care system woes and that most efforts to improve matters will invariably make matters worse. We are continually spending “more money just to keep the system from collapsing” — to simply give us more of what we have, including flaws. The root causes Goldhill cites include:
  • A wasteful insurance system.
  • Distorted incentives.
  • A bias toward treatment.
  • Moral hazard.
  • Hidden costs and a lack of transparency.
  • Curbed competition.
  • Service to the wrong customer.
The article is one of the best descriptions I’ve ever seen of what ails our health care system. Although the article is very long — nearly 11,000 words long — Goldhill doesn’t waste words. It is worth reading it at a rate that permits deep absorption, since nearly every sentence is packed with value.

Throughout the article, Goldhill explores the various “structural distortions” of our “heavily regulated, massively subsidized [health care] industry.” He repeatedly calls for more power being transferred to the patient by returning the patient to the status of consumer for most health care transactions. He anticipates and takes on most arguments against such a model.

Goldhill notes, for example, that a typical 22-year-old starting a career can expect to put out nearly $2 million over the rest of his life in total health care expenditures, including insurance premiums, co-pays, Medicare and Medicaid, and non-covered expenses. When someone asks how people are supposed to be able to afford to pay for most of their medical care out of their own pocket, he asks, “Well, what if I gave you $1.77 million?”

Since Goldhill does address most concerns about a more free market in health care, please don’t even think about posting criticisms of such a plan until you have read and completely digested every single word of Goldhill’s article.

Being a Democrat, Goldhill would like to see the Obama health care proposals do some good. But he knows they won’t. Rather, he suggests that government centric health care reform will end up creating such an untenable situation that Americans (and their politicians and industries) may finally cry uncle and consider real health care form. He writes:
“The most important single step we can take toward truly reforming our system is to move away from comprehensive health insurance as the single model for financing care. And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers—by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care—we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.”
Something commonly said at meetings where I work is that it’s fine to air complaints, but that doing so carries with it an imperative to offer ideas for solutions. Goldhill doesn’t fail in this regard. He suggests a system that is very close to Kevin Delaney’s Medical Savings and Loan concept. He even describes the role of the Healthcare Advocate. But, as one might expect from a self-described Democrat, Goldhill expects a lot more government involvement than does Delaney. It is possible, however, that Goldhill’s plan might be more politically feasible. He says:
“A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care—with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.”
Like the Medical Savings and Loan, Goldhill’s plan would provide three tiers of funding:
  • Catastrophic insurance that all Americans would have to get. This would have to be truly catastrophic insurance with such a high threshold that “only a minority of us should ever be beneficiaries,” kind of like fire insurance.
  • Post-tax health savings accounts (HSA) with mandatory minimum balances adjusted by age. Most of our health care expenses, including end-of-life expenses, would be paid from these funds.
  • Automatic credit for ‘gap’ expenses that exceed savings up to the catastrophic minimum. Such credit would essentially be borrowing against future HSA savings.
While Delaney would have the catastrophic insurance privately provided, Goldhill thinks that it would have to be provided by the government. He also seems to suggest that HSAs would have to be provided by the government rather than being privately provided.

But what about those with chronic health problems and the poor? Goldhill’s plan would add a lower catastrophic minimum for those with expensive chronic health issues and would mandate automatic direct government funding for lower-income Americans who can’t fund all of their catastrophic premiums or minimum HSA contributions.” It’s not that Goldhill can’t see the moral hazards involved in this kind of welfare; he just thinks that it is the most feasible way to make the best of a bad situation.

Goldhill admits that, being a human designed plan, his system isn’t perfect and would not solve all of our health care system ills. And he says it would take a generation to gradually but fully implement such a plan. But, he asserts:
“I believe my proposed approach passes two meaningful tests. It will do a better job than our current system of controlling prices, allocating resources, expanding access, and safeguarding quality. And it will do a better job than a more government-driven approach of harnessing medicine’s dynamism to develop and spread the new knowledge, technologies, and techniques that improve the quality of life. We won’t be perfect consumers, but we’re more likely than large bureaucracies to encourage better medicine over time.”
While I can see inherent value in many facets of the outlined plan, it seems to me that Goldhill glosses over the inevitable lobbying that would ensue, seeking to continually expand the catastrophic coverage to include all kinds of issues and expenses. I have problems with required minimum HSA balances, but perhaps this might be a price to pay in exchange for a freer system.

One thing that is for certain is that the current medical industrial complex would pull out all the stops to kill this type of proposal. These folks are the real “defenders of the status quo.” And they’ve got a heck of a lot of lobbying power. Just check to see who is funding most of the current government-driven health care campaign. They’re not even trying to keep quiet about it.

In the current political climate, I doubt that anyone with any amount of clout in either major party would even bother to give Goldhill’s proposal the least cursory glance. But perhaps Goldhill is right in thinking that after we have managed to utterly devastate our health care system, Americans will finally become willing to consider a market model similar to that which has brought us efficiencies, innovation, and reduced costs in so many other facets of our lives. I hope I live that long.


RD said...

Moral Hazard is the most Luddite argument that can be made.

If you increase the cost of basic doctor visits through the use of very high deductible insurance plans you will decrease the disease detection rate, No you will CRASH the disease detection rate.

The cost difference between early detected cancer and late detected cancer is more then enough to pay for thousands of basic doctor visits.

We can ether have the system pay a small amount for things like thyroid medications or we will end up pay hundreds of thousands of dollars in hospital costs when they collapse.

18,000 people die every year in the United states due to lack of medical care, These people are an example of "Moral Hazard". Do you even have a clue how much these people cost us because they don't have access to basic care on a level they can afford before their disease becomes untreatable, Instead we wait for them to collapse and pay for their end of life care which is vastly more expense then basic things like doctor visits and thyroid medication.

Bill Moyers on human face of health care

Bill Moyers has 3 examples of people that had treatable disease that was cheaper to treat early rather then late. 2 of the people Died due to treatable diseases for which they could not afford the medication, or the needed treatment.

All together those 3 peoples care ended up dropping over $700,000 dollars on the American tax payer, All 3 cases could have been treated early on for less then a $100,000. At $200 per basic doctor visit we could have payed for 2,600 basic doctor visit's in the cost difference of these 3 people if they had proper care from the get go. And $200 is a very high estimate of what is costs to have a basic doctor visit.

If anything people don't see their doctor often enough, Disease prevention and early detection is a huge cost saver.

RD said...
This comment has been removed by the author.
RD said...

Bill Moyers update on that episode

Scott Hinrichs said...

Your argument for increased state coercion in the name of public health falls flat. There are plenty of ways to deal with public health issues that do not involve massive state controlling programs and extreme restriction of human liberty. It is ridiculous to suggest that huge bureaucratic systems can do better for people what they can reasonably do for themselves. Nor do our bureaucratized systems achieve the public health benefits cited as support for such systems.

The entire issue comes down to a question of human liberty. Either you trust people to generally handle their liberty responsibly while accepting that some will not. Or you believe that bureaucrats under the control of the ruling class can better manage people's lives (and health) better than they can themselves.

All other arguments are merely fodder used as support for one of these two views. Each side can appeal to 'facts' and authorities to support their view, but it all still comes down to the nature of one's belief regarding human liberty.

RD said...

I didn't advocate for any particular solution in the last post. I advocated against a bad one.

Sickness is the ultimate remover of liberty. Joe from the Bill Moyers show had his liberty removed the moment be became sick, First he was layed off, and then his employer provided private insurance was dropped. And this is after he payed into that employer provided private insurance for decades.

Joe would still be alive if he was lucky enough to live in a country that has universal health care(again not advocating any particular model).

Their are 18,000 Joe's that die each year due to lack of health care. How do we get their liberty back? What about the liberty of the 2 Million health cost related bankruptcy's that happen each year, And 78% of these bankruptcy's happen to people who had insurance at the onset of their disease.

If their are private models that would maintain the public health lets hear them.

Scott Hinrichs said...

Under Goldhill's plan, Joe would very likely still be alive today as well. The bureaucratic system that prevented his ability to get care would not exist.

You can quit citing Moyers, who is simply an apologist for the leftist-statist viewpoint. That is like someone on the right citing one of the rightwing radio talk jocks. People on the right do this all of the time, of course. But it only sells well to those that already share their viewpoint.

While Joe may have lived had his situation occurred in one of the universal coverage nations, the national health services and courts in the UK and Canada have found that their systems kill many more people and cause untold pain and suffering through top-down rationing, lack of access, and widespread shoddy practices. Save 18,000 'Joes' and kill a million others. What a great trade off.

As Goldhill notes, the current US system unnecessarily kills over a quarter of a million people each year. The common trait of all of these systems is that they are top-down big government programs. The US system mixes in a heavy dose of subsidized corporatism.

The system Goldhill suggests would also achieve universal coverage, but would mix in a lot more liberty. I find it telling that some that also want universal coverage are opposed to a universal system that offers more individual more liberty. I can't say that I agree with everything Goldhill suggests. But I think he offers some very useful ideas that ought to be part of the public debate on this issue.

By the way, I disagree with equating liberty with wealth. Liberty, as understood by the classical liberal thinkers of the 17th-19th Centuries, is freedom from state sponsored coercion or the threat thereof.

Modern progressives have twisted the meaning of that term to mean freedom from economic want. In essence, liberty is equated with wealth under the concept that when one is economically limited, liberty is restricted.

Thus, liberty is no longer the freedom to think and do as one wishes within the confines of one's capacities as long he doesn't infringe on other's abilities to do the same. Rather, it becomes being economically secure even if the individual is forced into such behavior by the state. Freedom of conscience is forcibly sacrificed to economic comfort. (Many 'conservatives' would do the same for supposed security from international violence.) The idea that an individual might not have what many consider their basic material needs met and yet be free is anathema to this way of thinking.

This is a truly Orwellian word usage for the term liberty. Indeed, I am reminded of what Orwell wrote in his dystopian novel 1984 that one of the official slogans of government was, "Freedom is Slavery." This is the message that is sent when one equates liberty with economic security.

RD said...

Goldhill's plan does nothing for the poor, Joe made less then $16,000 per year MSA is a quaint idea for someone like him.

Goldhill's plan doesn't take into account the nature distortions of the health care "market", instead choosing to blame all of them markets problems on government or insurance company's.

Goldhill's plan creates a large buy in for basic coverage, and a larger buy in before one can receive advanced care.

Goldhill's plan doesn't take drug patents into account in his "market" speculation about consumer price pressure(you need more then 1 maker of a drug for this to work).

Goldhill's plan doesn't account for the unemployed or people who lose their job due to sickness. Lose of income would still mean lose of insurance.

Goldhill's plan doesn't address the problem of the insurance industry and the hospital industry consolidating into each other(You know IHC owns the hospitals covered in its insurance).

Goldhill's very high deductable insurance will destroy disease detection rates and explode costs due to people delaying going to the doctor about thing they don't think is urgent.

Your comment about NHS and Canadian single payer is untrue, They both have statistically higher life spans, better health outcomes, and lower infant mortality.

Bill Moyers is a democrat that can't be argued, Its not the same as quoting Hannity, I would have to quote Keith Obernman to be comparable. Bill Moyers has also had a very upstanding news reporting career above reproach.

Again I am not advocating for any particular system/model. I am advocating against a bad one. I won't discount the possibility that their is a Market solution, But i sure haven't seen anything that comes close.

I have seen zero indication that Joe would be alive under Goldhill's plan.

Scott Hinrichs said...

What part of "by directly subsidizing those who can’t afford care" do you not understand? Those are Goldhill's words.

I am right about my claims with respect to the systems in the UK and Canada. Consider this London Telegraph article that explains how the NHS found "cruel and neglectful care" of one million patients. Consider the Canadian Supreme Court's 2005 ruling that the universal system was increasingly providing only a waiting place in line rather than actual care.

I've got to agree with you on the IHC thing. A few years ago I was in the ER of an older IHC hospital while my son's broken arm was being set. A new (replacement) IHC hospital was under construction a few blocks away.

The doctor setting my son's arm was not happy. He kept running into problem after problem: a dull blade on the cast saw and no replacement blades with the unit, inadequate supplies, etc. He kept muttering that each of these problems was a violation of current regulations.

At one juncture his frustration reached a climax. He shook his finger and exclaimed, "It should not be allowed for hospitals to be owned by insurance companies!"

The doctor went on to describe in some detail the problems inherent in this kind of incestuous business relationship while he worked on my son's arm.

In IHC's defense, they frequently note that they have one of the best treatment systems, highest patient satisfaction rates, and lowest problem rates of any medical system in the country. However, I disagree with IHC defenders that this justifies the firm's government favored anti-competitive business model. One of the things that government should be doing is ensuring proper competition.

Regardless, I'm sure that regardless of any evidence that such a system does not achieve the benefits claimed, you will still continue to believe that increased health care bureaucracy and reduction of individual liberty is better than any system that enhances such liberty. I will continue to believe the opposite. We will simply have to agree to disagree.

RD said...

Goldhill would directly subsidize very high deductible insurance not health care, being unable to afford the deductible is the same as not having insurance as far as these people are concerned.

Goldhill does not make insurance mandatory so even with subsidy their are many who won't take it.

Goldhill does not break apart the monopoly shape of health care as it is

So you will trust random news papers but not upstanding organizations like the WHO, and the National Institutes for Health whom have ran studies on the matter?

And again I am not advocating for any particular solution, I am advocating against a bad one. Let me repeat that I am not advocating for a government ran solution while I think that is a perfectly workable solution, I believe that are perfectly workable market solutions as well. The Swiss system is an example for a functioning market solution given its illegal to profit off the basic plans there and their market is very well regulated. If such a system where past hear I don't know how long it would last due to a certain party's disdain for any regulation on any thing for any reason no matter how necessary it happens to be.

y-intercept said...


I am not sure what universe you are in. Increasing deductibles doesn't increase doctor's fees. It forces direct negotiations between doctor and patient ... which would lower them.

People who self fund care are actually more likely to seek preventative care.

If a person has a medical savings account they still have money for care after they are laid off.

Joe salary was $16k a year plus benefits. If his benefits were a health savings account, instead of insurance, he would have had more resources for his care.

BTW Scott, a nice informative article. Clearly we have something majorly wrong in our society with so many people like RD unable to read and comprehend basic text.

RD said...

Do your seriously think that Joe would have anything left in his MSA after his initial $35,000 dollar hospital stay? Especially considering the Goldhill plan would involve the first $20,000 dollars(his deductible) Being squarely in his lap.

If by some act of charity his hospital stay was simply written off how long do you think that MSA would pay for the medication he will need for the rest of his life? Medication that costs over $400 dollars per month, And Don't pretend the market(or government) can fix this one the mine field of patents and complex chemical property's of many medications will never bring them down to the Walmart price.

MSA's fall completely flat in the face of continuing care needs.

Now you are true the cost of doctor visits due to consumer pressure might go down a little, The doctor I use is a cash only doctor that costs $60 per visit, of course if you need any tests, Medications, procedures that can quickly go up well into the range of unaffordable.

And for further reference Doctor visits are about 10-12% of health care costs in our current system, far from serious problem and still less then what we pay insurance company's for administrative and profit related costs.

y-intercept said...


First I really want to thank you for actually reading something instead of just blindly reciting the talking points fed to you by Moyer.

I gave up on responding to comments from progressives because their comments rarely are related to the post.

A worker who had $3500 a year deposited into a health savings account would have $35,000 (plus interest). Insurance premiums run around $6k a year... so he would have had more. BTW, the evil employer who created the $16k a year job an additional $2k a year in payroll taxes in punishment for creating the job. Over 10 years that would be $20k paid into a system that is supposed to provide disability benefits.

I do agree that $35k is not enough for security. My proposal (The Medical Savings and Loan) adds an interest free loan onto the savings account. The Medical Savings and loan would give a person about $50K in buying power before they needed to seek third party assistance.

The important thing happens on the cost side. Were Joe spending his money, he probably would have gotten the care he needed for far less than the $35K.

I worked in government health care and was sick at the amount of money wasted. For example, the $317K/year job held by Michelloe Obama at the University of Chicago Hospital did nothing to improve care. There's tens of thousands of administrative jobs like that lining the system.

The National Health Service of Great Britain is the third largest employer in the world with a shockingly large number of political pay off position.

Anyway, a system with health savings accounts and loans would give people at the bottom of the social ladder about $200k in their lifetime. People in the middle class would have about $300 to $600k. $600k controlled directly by the individual will be optimized and would be equivalent to about $1.2 million of care bought through insurance.

You are correct that this does not cover all health problems. What the medical savings and loan does is to cover the majority of the people allowing charity and social services to identify and handle those people who fall outside the norm.

I realize that people want a silver bullet than can handle all medical conditions. The very nature of life means that that ain't gonna happen. The idea that there must be one system that handles every single problem is called totalitarianism. It has been tried and it has failed repeatedly.

RD, thank you for actually reading the post. You have gone further than most progressives.

RD said...

I suppose I am a bit progressive leaning.

If we run your numbers on the basis of having no insurance and only having the MSA, Then we need to adjust our assessment of Joe. Remember that isn't the only one covered here he has a wife and a couple kids, We also need to adjust for the replacement of insurance cost based on the growth rate of its cost.

In 1991 health insurance premiums where around $100-$200 dollars per month (maybe $400-$600 after employer contribution) and in 2001 the premiums around about $300-$400. So it would be better to figure that accounts investment would start lower and grow over time with inflation of the cost of health care. I don't have any numbers on costs before 1991 so thats as far back as I can eye ball the account size from.

so lets figure
1991 to 1996 at $150 per month
1996 to 2001 at $300 per month
2001 to 2009 at $500 per month
We can also calculate a %3 interest rate payed to this account.

Before you read the number I will prefix several things about this number, This assumes no periods of unemployment, This assumes their are no prior medical needs of the covered individuals, Child birth costs are not removed from the account(Joe had 2 kids), This does not remove any money for standard things like yearly physicals, Colonoscapies, any medications taken etc.

According to my calculations the account given the above criteria would have around $67,936.46 in it.

It is very unlikely that the account would actually get that large, In fact medical issues early on like child birth would remove a lot of the compounding effect of interest and shrink the end number considerably.

If you paired a MSA with very high deductible insurance the MSA contribution would be far less and the account much smaller.

In any case this method of "self insuring" is highly biased against disease happening later in life rather then earlier in life. If Joe had an issue before the account could grow much he would be screwed.

As to the Idea of Medical loans, Sick people are bad risks No one is going to loan a cancer patient $50,000 grand let alone the often $300,000 + grand it often costs. If that individual dies or can't work for extended periods of time, has a poor paying job, is close to retirement age the chances of that loan being payed back are close to nil.

If charity care worked well Joe would still be alive, I don't buy that is being anywhere near reasonable.

I still don't buy health care can work without a comprehensive insurance risk pool of some type.

RD said...

My mistake that would be $89,786.80
Forgot to change the year total for the last block of years from 5 to 8 =p

y-intercept said...

My experience is that low income people are not served well by pools. Pools tend to serve the insiders of the pool better than outsiders. Poor people are generally outsiders.

High deductible insurance is of little use to the poor.

So the best way to help the poor is to give their control and guideance over the resources they have and to create supplemental systems to help provide care.

I don't think we can ever find a satisfactory formula that will work for all catastrophic and chronic conditions because these conditions tend to be unique to the individual.

There is also a great deal of abuse of supplemental systems. Some intentional, some not.

In the Goldhill case, the hospital ended up charging the insurance company $600k in a failed attempt to fight a disease that the hospital caused. That is a pretty nice reward for what would have been a lawsuit against a smaller firm.

Some problems, such as alcoholism and drug abuse, seem to create conditions where self-destructive people end up consuming all of their resources. If there is not a simple formula, then the proper approach is a diversity of social services and charities that attack the problems and solve those problems which they can.

The formulas that we try to create (especially those at the federal level) seem to create perverse incentives that undermine what we want to accomplish.

I was a progressive, but turned and realized that the best way to really progress medical care is to create structures where people had direct control over their health resources, with a diversity of supplements for those whose experience falls outside the norm.

RD said...

I won't disagree about the quality problems in US hospitals.

I agree with you on very high deducible insurance.

The Federal government and most States tax cigarettes and alcohol to cover programs like medicaid and direct subsidies to hospitals in order to cover their costs.

And I also agree that insurance risk pools private/public or other wise distort incentives.

Most of this distortion could be solved with Health care warranty's which reduces costs as well (win win). The rest of this could be solved by a breakup for vertical ownership in the health care industry(this would be high controversial among lass'e fair republican's and is probably my progressive side getting the better of me again!).

One of the things that I believe absolutely be in any reform past is universal access to health care, Their is no reason this isn't doable under a market based approach. I do worry about the long term quality of any regulatory framework setup to make such a thing work given the back and forth nature of American politics.

Scott Hinrichs said...

RD, I still don't understand how you can complain that Goldhill's plan wouldn't provide universal coverage. Although I don't necessarily agree with all of his methods, he would force everyone to have universal catastrophic coverage. Plus he would force everyone to have a health savings plan with age adjusted levels of savings. Subsidies would cover the gap for those that earn too little to properly fund the HSA. Plus all HSAs would come with a built-in self loan instrument that would cover the gap between the savings and the catastrophic coverage.

Force, force, force. (That, incidentially is where I have problems with Goldhill's plan.) It all ends up creating 'universal' coverage. But at least it would remove third parties from the most common health care interactions. As y-intercept notes, this could not help but decrease costs and increase quality. That's how economics works.

RD said...

HSA's are generally a bad investment, No I am not argu'ing against savings being a bad idea, or having a tax free account of some type. It has alot todo with the interest rate difference between what a savings account can obtain and what a good investment manager can obtain.

Insurance company's invest your premium's returning between 8%-20% per year, the difference between that and the 1.5%-3% that savings account can return is a phenomenal amount of difference.

Both MS&L and Goldhill plans are highly bias'ed against the young(18-35~), retired, continuing care needs individual's, and relapse situations. Like any savings/personal investment account It needs time to build up. In the example numbers given above the MSA takes 5 years to reach the first $10,000 that may sound like alot but that isn't anywhere near whats needed for a major medical event(even in 1996 dollars). That example is also given from a total investment in a MSA instead of an insurance plan meaning under the Goldhill (VHDI)very high deductible insurance it will be much less.

If we figure that VHDI will drop the cost of insurance by 30% taking insurance from a cost of around $12,000 to $9,000 and we invest half of the difference into an MSA after 10 years you would have $17,467.68 in the account almost enough to cover the deductible. Of course the list of assumptions to this number is the same as my list above for the MSA only plan. I can also need to that list that the deductible would likely go up with the inflation rate.

Medical loans are a unworkable idea, No financial institution anywhere will loan sick people money, its a bad risk. The default rate would simply be to high.

Nether plan realistically address post retirement care, continuing care needs, or fix incomes that don't rise with inflation.

And no thats not how health care economics work, the health care market is grossly skewed market filled with atypical behaviors cause by the nature of disease, need for risk pools because of costs involved, and yes the government to.

Primary care doctors are abandoning ship, because specialist care is far more profitable, reconnecting the market here is going to make the problem worse. Increased upfront costs to the consumer will decrease early disease detection rates and end up costing more on the backend likely leaving insurance rates unchanged or worse.

Anonymous said...


Thanks for posting the link to that article. It took a few days before I had time to read the whole thing but I agree that nobody has any business joining the health care debate until they have read that article. They can agree or disagree, but ignorance is not acceptable.

I'm not sure what part RD is missing (perhaps Goldhills suggestion that the government might pay outright for routine doctor visits for every person in the country or is there something RD is seeing that you, y-intercept, Goldhill, and me are all missing) but if everybody had catastrophic insurance + medical savings + a guaranteed loan to cover the any gap between the two and if that coverage were paid for by government for people who were financially unable to pay for it how could that system routinely fail to help those like the people profiled by Moyers.

Think about it. $1.77 million between 22 and 80 adds up to over $30,thousand dollars a year per person - that's what we're spending right now and most of the cost is hidden to us. If we provided that same level of financing in the in the consumer-centric model outlined by Goldhill there should be no problem paying even the $700,000 bill incurred by those three people. ($700,000 is only 7 years worth of current costs for those three people so unless they represent 15% of the population the cost is still manageable.)

RD said...

Your numbers are off, in your example of 22 to 80 that being 58years at $125 per month would result in around $230,000 dollars at 3% interest not $1.7 million dollars.

Both of these numbers are still bad however because they don't account for inflation. inflation will increase the monthly input while decreasing the value of each dollar in the MSA. At double the current national average interest for an MSA about 3% your money is still loosing value.

I used the annuity equation.

And remember $230,000 may sound like a big number but it takes years to build up to that. It also depends on continued payments into the account which is unlikely for most people after age 65.

As to loans I will cut and paste myself.

Medical loans are a unworkable idea, No financial institution anywhere will loan sick people money, its a bad risk. The default rate would simply be to high.

RD said...

A resent post on

Pointing at a study at UCLA shows the outcome of debt in medical care. I must say its a very interesting read.