Wednesday, April 13, 2005

Health Care

Fareed Zakaria recently wrote about how the cost of healthcare is driving up the cost of employing people in the United States and is driving jobs away. While I’ve heard the argument before, I’m surprised more people haven’t latched onto it. Maybe it’s because Democrats are squeamish about arguing that something that is a burden on corporations could negatively affect average people. Maybe it’s because Republicans don’t want to come to the conclusion that Zakaria has, which is that a universal healthcare system is good for business.

Unfortunately, universal healthcare is not the panacea that many want it to be. Yes, healthcare costs are out of control, growing much, much faster than inflation. But a universal healthcare system like, say, Canada’s, would cripple the booming biotechnology business in this country. Why? Canada has made a compromise – to make basic care available to all citizens, advance care and the latest drugs are not available to anyone. As Americans travel north to get cheaper versions of drugs that have been on the market for 10 years, Canadians travel south the get things like chemotherapy, dialysis, and drugs that have been on the market for less than 10 years. And they, like many other countries with universal coverage, have negotiated with drug companies for lower prices. The money that drug companies can’t make in other countries is made up for in the United States. If the U.S. goes universal coverage (which would probably involve negotiating lower prices for drugs), pharmaceutical and biotechnology companies would not be able to afford research because they wouldn’t make a decent profit, if any, when they were done.

There are certain aspects of healthcare that should be universal. There is a minimum level of care that provides a benefit to society as well as to the individual. For instance, universal vaccinations. It is better for everyone to be vaccinated against measles, mumps, rubella, and other infectious diseases than to risk having an epidemic of those diseases. Also, it is better for society in general that emergency rooms don’t check to make sure you have insurance before treating you, so ER’s are required to take you, insurance or no (although, there have been problems where insurance companies require that you call your primary care physician before going to the ER or they won’t cover it, leaving you with a hefty bill that you wouldn’t have had to pay if you hadn’t had insurance at all). But society needs to pick its limited. Canada chose it’s limits and is having problems. Australia seems to have struck up a nice balance, since they have a form of universal healthcare but also have a burgeoning biotech industry.

As to the cost of healthcare itself, there are several problems. First, biotech companies have a limited amount of time in which to make up for the cost of developing a drug or medical device. But because the FDA requires years of trials and biotech companies generally want to patent their technology before going into the trial stage, the amount of time a device or drug is on the market before a patent expires is small, especially when compared to innovations in other fields. Second, lawsuits are putting hospitals and doctors in a bad position, driving up the cost of their malpractice insurance, which drives up the cost of the care they provide, which drives up the prices insurance companies pay for healthcare, which drives up the price of health insurance. The medical industry could curb some lawsuits by getting rid of troublesome doctors earlier and the court system could curb some more by discouraging some of the less credible cases from getting very far. Third, I think HMO’s, which were originally intended to drive down healthcare costs, are actually driving them up. When I was getting allergy shots once a week in Richmond, my co-pay was $20. So I asked my allergist if there was any way to get a cheaper price. He said I could pay $11.75 a week if they didn’t file a claim with my insurance company. That tells me the hassle and paperwork involved in dealing with insurance companies is making the problem of inflated healthcare costs worse, not better. Paperwork, by the way, is a huge problem in the medical field. Some is necessary to keep track of the patient’s history, some is for insurance, some is for legal reasons, and some new HIPPA regulations regarding the privacy of medical records have added to the list of things that medical institutions are required to keep track of (ironically, HIPPA was meant to reduce paper work).

I think, when it comes right down to it, healthcare is expensive because it’s so complicated – and not just in the sense that the human body is complicated. There are so many people and organizations trying to make money off of heathcare – from doctors to lawyers to pure businessmen – that the shear weight of it all is bound to make it expensive. And because it is so complicated, there is no easy fix.


Blogger Jody said...

Random thoughts:

When a new electronics device comes out, you expect it to cost a lot and then to drop in price. Drugs tend to do the same. We've got really expensive new drugs and ass cheap generics.

All I really want is for companies to stop requiring me (in effect) to buy comprehensive coverage. Catastrophic coverage works out much better and doesn't artificially increase demand (and thus prices) - something I fear universal care would exacerbate.

Would be nice if medical liability reform got passed (class action suit reform has been passed). Would be even nicer if this came along with a system whereby the public could see past performance statistics for doctors.

4/13/2005 9:13 PM  
Blogger SpakKadi said...

Indeed, it would be nice if you could just settle for disaster coverage. Since I could afford my predictable medical expenses and flexible spending accounts are now available, I would have settled for disaster coverage. But I think there are a couple of reasons for insurance companies covering more than just disaster insurance. 1) Requiring everyone, even the extremely healthy, to get more comprehensive coverage lowers the cost per patient. 2) I think the original theory behind covering things like regular doctors visits was that preventative care would reduce the need for more expensive care down the line. Of course, now people go to the doctor and seek treatments for things they might otherwise have tolerated just fine because it's on someone else's dime.

4/14/2005 7:28 PM  
Blogger SpakKadi said...

Disaster... catastrohpic... meh.

4/14/2005 7:29 PM  
Anonymous diana said...

ummm...that's kind of scary that they won't take away a Dr's license when he is snorts cocaine four times a week. :P I'm going to email this to my mom. As I'm sure you know, Universal healthcare is one of her things. ;)

5/27/2005 5:12 PM  
Anonymous diana said...

I just enlarged jody's picture, and that is too funny!

5/27/2005 5:14 PM  
Blogger blaze said...

Great site very informative topics on medical insurance.
I have been working on a site about medical insurance
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11/13/2005 1:06 PM  
Blogger Belinda Gwen said...

I like your say on healthcare policy online learning masters! May you prosper SpakKadi!

3/02/2006 4:06 AM  

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