You know I love a solid economic assessment of healthcare:
Either Americans in the higher income strata must step up to the cashier’s window to help subsidize, with higher income taxes, the health care of the most hard-working members of the lower income classes, or the United States will have to evolve toward a noticeable two-tiered or multi-tiered health care system, with bare-bones, low-tech health care for families in the bottom half of the income distribution and increasingly superior, high-tech health care for families in the upper-income strata.
– from The Health Care Challenge: Sailing Into a Perfect Storm, The New York Times
The writer, an economist at Princeton, sees what most in healthcare like to ignore: that healthcare is a commodity of which there is limited resources and that which can be quantified. The question, in economic terms, is how much healthcare do Americans need vs. how much are they willing to pay for? And how should they pay for it?
In our current model, the answer to the first is as much as possible, and to the second, as little as possible. Aye, there’s the rub.
I have spent the week in Singapore, learning about healthcare here and seeking to understand why medical tourism can flourish. I have noted that a key feature of the Singaporean system is that medical expenses are all out of pocket — whether you’re rich or poor, you still pay cash based on a sliding scale fee. That means, in general terms, more money = “better” care.
You can go to a public hospital where you will wait for 4 hours to see a doctor for $65 or to a private hospital with a nicer facility and no wait time for $100. One outcome of a cash-based system is that the prices are more closely tied to the costs of delivery. Why? Competition. You need to have a justification for being more expensive than another hospital and I must see, understand, and value that difference enough to pay for it.
In the US, we charge the people who pay cash the most money. This is just bad business. It’s like showing up in need at a hotel and having to pay rack rates – rates 50% higher than what anyone else pays. Hotels price the demand, not the supply. Meaning, whether they have 100 free rooms or 1, when you show up in the lobby, desperate, they’re going to charge you the highest rate possible.
Only unlike a hotel, you have less control of when you “show up.” You never are forced to check in because, for example, you’re bleeding out one ear.
Also, unlike a hotel, you can show up to a hospital with no money, and still get a room. This is even worse business.
A two-tiered system of healthcare is not only inevitable but it may be a positive outcome for all, as long as this is best settled from a policy standpoint.
Here’s my latest crazy idea:
- What if we offered surgery credits that hospitals could trade with each other, much in the way carbon credits are spoken about for factories?
- What if a hospital system needed to offer fast, cheap, preventative care at certain volumes, perhaps delivered via clinics located in post offices, to earn those credits?
- What if those systems that did the most clinic care could then fund themselves entirely by selling surgery credits to free-standing, doctor-run hospitals?
The conclusion is that the government needs to facilitate a dialog about the social value of health care and help bring rationalization to a market which has the wrong incentives. I think the output of healthcare should be good health. It’s not, because hospitals don’t get paid for keeping people healthy.
In the US, it is in my best interest for my tax dollars to ensure that my fellow citizens are productive members of society. The longer, heathlier lives they live, the better their economic output and great contribution back into the collective tax system from which all American derive value.
(It’s worth noting that the countries with the longest average lifespan are Japan and Iceland, both of which are island nations with limited resrouces that, nonetheless, have enriched their population. Ok, I know Iceland is bankrupt, but that’s unrelated to the productivity of their society. My point stands for much of the last 60 years.)
So, when I say I want a lot of fast, cheap, and nearly free preventative care, I am being utterly selfish. I’m saying I want America to grow, I want American to prosper, and I want my fellow Americans to live long, productive lives.
I do not think it is as expensive of a proposition as people think.