Thursday, June 25, 2009

More Thoughts on Reforming Medical Care

Actually, it is not the medical care that needs reform or that people are talking about reforming. It is the payment for delivery of medicare care that people insist needs reforming. The medical care in the US is superb - if you have insurance or are independently wealthy.

President Obama insists that he can save money by having a government run insurance system. The savings will come from efficiencies of scale. The problem is that "government effeciency" is an oxymoron.

Reducing the costs of a process entails two things. The first is efficiency - doing thing right. Effeciency is concerned with doing something in as few steps or with as little effort as possible. Touch typing is more efficient that "hunt and peck." (I and am very glad I took a typing class my freshman year of High School!) Government bureaucracies are notoriously inefficient.

The second way to get cost reduction is effectiveness - doing the right things. Here is a possible cost saving from government payment for healthcare. By eliminating or reducing the "defensive medicine" that doctors often do in order to defend against malpractice suits, we can reduce costs. The problem is that there is no guarantee that the defensive medicine will stop or that malpractice suits will slow or cease.

Another issue of effectiveness is fraud prevention. Private insurance companies are very diligent about finding and preventing fraud. After all, fraud affects the "bottom line". Government programs, such as Medicare and Medicaid or the VA, are nortorious for fraud and waste. The idea that the government will be more diligent about fraud than a private insurance company is not one that is borne out by experience.

Right now, the government runs several health programs such as Medicare and the VA. These are not well loved by either providers or by many of their patients. I propose that the current administration show us it can create efficiencies of scale and increase the health care outcomes by first fixing these programs such that people look forward to being on Medicare or going to the VA. Next, we can let the government employees (including Congress and the congressional staffers) use these programs exclusively for their care. After we get these programs in order, and our elected representatives have shown their trust in them by using them for their own care, then we can look at expanding government run care to the rest of the nation.

Phil Snyder

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