"Lately, Yated Ne'eman editor-in-chief Rabbi Pinchos Lipschutz has been repeatedly attacking Obama's health reform push."
"Okay, so what? I mean, he attacks everything Obama says or does."
"I know, right? But one line he keeps using is that we have 'the finest health care system in the world.' It's not true."
"What do you mean it's not true! In Canada, they have to wait months to see a doctor! And now they want to go killing Grandma? I don't want any death squads taking away my health insurance... They just want a government takeover of healthcare... They're Robin Hoods who want to tax the rich and give it to the lazy!"
"Calm down, no one's hiring death squads or killing grannys. Take a deep breath. Canadians live longer than Americans and are more satisfied with their health care system. The French achieve better health outcomes, single-payer and all, and they do it for a lot less than we spend, too. (France spends 11% GDP on health care vs. 16% here in the U.S. - and our GDP is higher to start with.) Even in socialized Israel, life expectancy is more than 2 years longer than it is for Americans. Out health care system is not so hot.
"What he really means is that the United States has the best health care technology. It is home to some of the best doctors. It sports facilities capable of carrying out the most cutting-edge procedures. It invests in some of the most aggressive life-sustaining treatments. It is the site of some of the most advanced medical research. However, it is not the best health care system. All those things stand as an indictment: Why isn't that spending translating into better outcomes?
"The system is broken. The components may be there, but the system isn't working as it should. When politicians discuss comparative effectiveness, they aren't actually saying 'let's pull the plug on grandma because we decided it's too expensive to let her live.' They are saying, 'Gee, we've got all these great medical technologies, let's find out which ones I should use.' Because under the current "fine system", they just throw one thing after another at an illness and just hope one of them works. That's why you can have the greatest medical capabilities and terrible outcomes.
Comparative effectiveness is more like saying, "Let's figure out which drugs are good for melanoma and which are good for melioidosis. Let's stop wasting money doing the equivalent of trying to treat cancer with antibiotics. Let's be efficient about care. And if Grandma wants to maybe try clindamycin to help reduce her blood pressure because the statins she takes aren't cutting it - yes, the healthcare system's going to have to say no. Not because it wants to kill her. Not because that treatment is too expensive. Not because she's not worth it. But because it doesn't work.
Showing posts with label policy. Show all posts
Showing posts with label policy. Show all posts
Wednesday, August 12, 2009
Wednesday, March 18, 2009
Ideology of Insurance Regulation
"Insurance is about the accurate pricing of risk." Jane Orient in The New American
So take 10,000 people, each with a 1% chance of incurring a $10,000 charge. You'll probably end up with about 100 people suffering the charge, or about 1 million dollars of pooled risk. If you charge $100 to each of the 10,000 people you can protect everyone from a devastating $10,000 charge with a relatively affordable premium. You might tack on about $5 a piece for your profits.
This is insurance. You knew that already, I know. The punchline is that each person effectively pays for his own risk. That is, if the risk wheel were spun over and over, the amount each person pays as a result of incurring the fees would about equal their premiums.
On the other hand, when you pool people with different levels of know risk and charge everyone similar premiums, you are no longer selling a true insurance product according to Dr. Orient's definition. Take 10,000 people. 5000 have a .5% chance of incurring the $10,000 charge. 5000 have a 2% chance of incurring the same charge. Overall, you have about a million dollars of risk in the group. But if you charge each a $100 premium, you're effectively overcharging those with lower risk and undercharging those with higher risk.
The question becomes: Is this fair?
So take 10,000 people, each with a 1% chance of incurring a $10,000 charge. You'll probably end up with about 100 people suffering the charge, or about 1 million dollars of pooled risk. If you charge $100 to each of the 10,000 people you can protect everyone from a devastating $10,000 charge with a relatively affordable premium. You might tack on about $5 a piece for your profits.
This is insurance. You knew that already, I know. The punchline is that each person effectively pays for his own risk. That is, if the risk wheel were spun over and over, the amount each person pays as a result of incurring the fees would about equal their premiums.
On the other hand, when you pool people with different levels of know risk and charge everyone similar premiums, you are no longer selling a true insurance product according to Dr. Orient's definition. Take 10,000 people. 5000 have a .5% chance of incurring the $10,000 charge. 5000 have a 2% chance of incurring the same charge. Overall, you have about a million dollars of risk in the group. But if you charge each a $100 premium, you're effectively overcharging those with lower risk and undercharging those with higher risk.
The question becomes: Is this fair?
- Makes insurance affordable for high-risk individuals
- Unfairly penalizes low-risk individuals. In fact, it effectively takes a valuable product off the market.
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