WARNING: OUR HEALTH CARE SYSTEM CAN BE HAZARDOUS TO YOUR HEALTH

Last January I finally got around to getting my annual physical. Same story…in terms of overall health, I’m among the top 5% of all men my age. Other than an occasional bout of labile, stress-related blood pressure, I am in great shape. That was good news, until I checked the mail in February and found a bill for $500 from the lab that processed the blood test that confirmed my excellent health. I immediately called Employee Benefits at my college to make sure that our new health insurance covers “blood tests.” She confirmed that lab tests are covered, and explained that there is often lag time in communication between the insurance companies and providers. In short: "not to worry!"So I ignored the bill. But I kept getting more of them. So I called our family doctor’s office and asked the receptionist what she thought had happened. She had no idea. But she was sure that she had forwarded my insurance information to the laboratory. Then a few days later, I received an automated phone message from a collection agency in regard to an overdue account that belonged to “Ronald Wade.” Of course, I am “Ronald White,” so I hung up. Then it called again, and, again, etc. So I called my insurance company to check up on the status of that mysterious bill. After waiting on hold for 10 minutes, I spoke to an agent that determined that the laboratory never submitted a $500 claim, but that my physician’s bill had already been paid-in-full. Then, I decided that I’d better contact the laboratory. The bill stated that I should use the company website. I quickly confirmed that I owed $500, and I was urged to pay off the account by credit card. After about 30 minutes of searching the website, I found a phone number. I called it and I was immediately captured by one of those endless option loops. Finally, after optioning for 20 minutes, I stumbled upon the option that I wanted: “speak to a customer service representative.” Elated, I pressed option #4 and hit the “pound key.” “We’re sorry, but all of our representatives are busy assisting other customers. Please wait for the next available representative.” Then I was treated to 30 minutes of soft rock, interrupted every 2 minutes by an automated female voice urging me to remain on the line. Finally, a company representative with an Indian accent asked me how he could assist me. I read off my 14 digit patient code and he pulled up my file. Sure enough, I owed $500 to the laboratory. I explained that I had health insurance and that the insurance company had no record of the lab submitting a claim and that my physician had forwarded the insurance information to the lab. Perplexed, he read off a 17 digit insurance number and asked me if it corresponded to the one on my insurance card. It didn’t match! It had two wrong digits. He immediately corrected the typos and told me that he would resubmit the claim with the correct number. Then I politely asked him why the laboratory didn’t contact the insurance company, or the doctor's office; and how the lab could reasonably expect me to figure out that someone at the lab miscopied a 17 digit insurance number? He couldn’t answer! Then, I respectfully complained to him about the endless loops on the website and phone system. He responded: “We’ve had many complaints about our website and phone systems.” So what’s wrong with our health care system? Well, we have a four-party system: first party patients, second party providers (physicians, labs, drug companies etc.), third party payers (private insurance companies, Medicare, Medicaid etc), and fourth party insurance payers (employers that purchase health insurance for their employees.) Can you imagine a more convoluted way to provide an annual physical? Wait a minute, I have to answer the phone…I’m back! That was that pesky collection agency again. Let’s make that a five-party system. Whew! I’m sure glad I’m healthy: even if my blood pressure is now 150/90. Check out my forthcoming essay (co-authored by Charles Kroncke) on our four-party health care system system. It will appear in the summer issue of the Independent Review.

The Concept of Health Care

What is health care? Well, let’s start with the basics. First, it involves the exchange of a products and services between buyers and sellers. Second, the health care industry employs an imponderable number of sellers including research scientists, physicians, insurance professionals, malpractice lawyers, allied health professionals, product manufacturers, educational institutions, hospitals etc. For those that are willing (or able) to invest in the requisite education, these are all good paying jobs. Third, our understanding of health care has been masked by a longstanding cultural tradition that obscures its economic basis. Much of the obfuscation takes place within our language: "buyers" become "patients," "sellers" become "providers," and "health care" becomes "whatever health care providers are willing to sell you." Thus, most of us believe that “health” is something that is provided by others and that we cannot be healthy apart from a "health care system." Similarly, the concept of “disease” has become synonymous with “needing” the products and services offered by the health care industry. So a state of disease is anything that attracts buyers to sellers. Modern medicine is based upon the ever-increasing malleability of the concepts of health and disease. Even if you believe that you are presently “healthy” you still might have an undiagnosed disease, a predisposition for a disease, an early stage of a disease, or a previously “cured” disease might be coming back. Therefore, in order to remain healthy you must maintain an ongoing relationship with a health care system and its legion of well-paid providers. One of the more striking features of the American health care has been the exponential expansion in the number of actual and potential “diseases” and “providers.” Today we routinely consult with “licensed” health care providers to lose weight, fight depression, quit smoking, break an addiction (drug, alcohol or gambling), have a child, not have a child, eliminate a potential child, or die peacefully. Critics of the American health care system argue that it provides too much and that it must be refocused on providing “basic health care,” which is even more malleable than the concept of “health care.” Basic health care is whatever politicians say it is. This means that in order to keep their good-paying jobs, providers must lobby congress and persuade legislators to officially decree that their products and services are “basic.” Fortunately, if we wait long enough, every health care product and service currently on the market will eventually become “basic.” But in a free market, the concept of “basic health care” is vacuous. It is a blunt political instrument that governments use to deny some individuals direct access to specific products and services. So what can we conclude about the concepts of “health” and “disease?” Libertarians prefer to let the free market sort that all that out. The first thing that the free market will do is help us sort out what actually works and how much we’ll have to pay for it. Viva Viagra!

Health Care Reform

In the United States, there is a growing consensus that our health care system is in dire need of reform. How should we proceed? Well, most critics agree that reform must address three key issues: access (Who can access the products and services they want or need?), quality (How good are the products and services that can be accessed?), and cost (What is the cost of providing these products and services, who pays that cost, and how?). As in the case of education, the provision health care in the United States involves both public and private payment systems. “Public systems” (Medicare, Medicaid, Veteran’s Administration, and Social Security) are financed by tax revenue and private systems are financed by non-governmental payers (patients, insurance companies, charitable organizations). Where does this money go? Well, it goes directly or indirectly into the pockets of a staggering number of health care providers. Hence, these “providers” are really “sellers” of health care products and services. They include: doctors, nurses, allied health professionals, research scientists, malpractice lawyers, hospitals, research laboratories, medical schools, private health insurance companies, financial institutions (banks), credit card companies (Visa and MasterCard), public and private research laboratories, technology corporations (General Electric), drug companies, and the lobbying firms that represent all of the above. For a libertarian, the first step to health care reform is to openly acknowledge and embrace the obvious, inescapable reality that health care is about buying and selling. Because the frontline sellers (doctors, nurses, allied health professionals, researchers, etc.) are highly educated and therefore have substantial college loans to pay back, they expect to earn a substantial return on their investment of time, energy, and resources. If you are a retiree, you probably hold stock investments in corporations that sell health care products and/or services. If so, you certainly expect a healthy return on your investment. Traditionally, pharmaceutical stocks have been a staple of the most lucrative mutual funds. If you own stock in a corporation that provides health insurance to its employees you are probably concerned with the rising cost of providing that benefit. If you are an employee of a corporation that provides your health insurance you are probably dissatisfied with the access, quality, and cost of the health care you receive. So as we explore access, quality, and cost of health care, the basic problem is that it will be prohibitively costly to provide Americans with universal access to high quality health care. Therefore, in the real world, there are three possible rationing strategies: 1.) provide less-than-universal access, 2.) provide less-than-high quality products and services, or 3.) reduce unnecessary costs by increasing the efficiency of the system and/or shell out a lot more money. When health care reformers suggest any combination of these strategies, they invariably alienate stakeholder groups, which contributes to high-stakes lobbying activity. Therefore, given the current political structure in the United States, health care reform will be shaped by access, quality, and cost of hiring lobbying firms that can persuade (or bribe) government officials to ration health care in their favor. Now, what does all of this suggest about the prospects of meaningful health care reform?