Health Care Debate Ain’t Over, Part 2

We are going to need the public option after all.

The argument against a “public option” health care plan, and it is a valid concern, is that it would cost too much. Unfortunately for the naysayers, they again didn’t do the math (or did it and ignored it because it did not support their argument—this is called confirmation bias my friends and we all do it).

Let’s just use the round figure of $9000 per year for health insurance for a family of four (up from just half of that 10 years ago). This is close to the correct amount, but the exact figures aren’t important in this argument. What we are talking about is whether a government program would cost more than that $9000 to deliver the same service. It is that simple. Let’s start by recognizing that 20% of the total annual premium constitutes insurance company profit and overhead, so we remove that and we are down to $7200 that was spent to actually deliver health care. Now government based health care (e.g. Medicare) has 2% overhead (amazingly, the same overhead as the insurance industry had in the 1960’s!) and no profit so we need to add that back. We will call it $7350. This is the actual cost of the services plus overhead that $9000 in insurance premiums is providing.

So, the question is: Are you willing to pay $7350 more taxes to keep that $9000 in your pocket? No, really? Are you stupid or do you just think I am tricking you? Hey, most of us are willing to pay a realtor 3% of the selling price to sell our homes, but would you be willing to pay 20%? Why are we so willing to pay 18-20% of our health premiums to fill out a few forms and write a check?

Actually, with this argument I have short-changed the advantages to a public option system. The argument isn’t just about the cost, it’s about quality of service, too. Consider what the federal government’s VHA (Veteran’s Health Administration) accomplished when it adopted computerized record keeping. By computerizing pharmacy records they were able to compare the drugs prescribed with the health outcomes. They then adjusted their system to only include the drugs that actually worked. And, no, not just the cheapest ones! Because patients are with the VA forever, they discovered that cheap drugs that don’t work are way more expensive than expensive ones that do! But, doctors can override the computer system and prescribe non-recommended drugs, but that act comes up in their annual performance review. “Why did you prescribe a drug that doesn’t work as well? Oh, a drug company paid you to do it?” Interesting discussion, that.

For those of you who don’t want anyone or anything getting between you and your doctor when making your health care decisions, consider the fact that in addition to the health insurance companies being wedge firmly between you and your doctor, the bulk of the information doctors get on drugs is from pharmaceutical salesmen. These salesmen, who make quite nice salaries, are also allowed to sponsor trips for your doctor to speak to meetings of doctors as to how well those drugs he’s prescribing work . . . all expenses are paid, of course, and there is a stipend, of course, and . . . get the picture? The VHA system deliberate got between doctors and patients and nurses and patients as a check on mistakes. (Have you ever tried to read a written prescription from your doctor? In the VHA system, they have to be typed into a pharmacy request, resulting in instantly better communication.)

As part of the pharmacy system, the computer won’t allow a drug to be given to a patient until the patient’s ID number is typed or scanned in and the computer check against the doctor’s recommendation. In this manner the VHA has prevented tens of thousands of drug administration errors. A big deal? Well, independent hospital studies indicate that the rate of drug administration errors in ordinary hospitals is one, per patient, per day of stay! This is huge!

The opportunities for quality improvements are manifestly high. Private hospitals who have enacted quality assurance programs have, more often than not, either killed the program or they ended up closing their doors. The reason? The quality assurance efforts hurt their profits tremendously because of all of the unnecessary procedures that were no longer being billed. Some hospitals lost so much money not charging for services not needed that they went out of business. I’ll say this slowly so it has time to sink in: in the current system increasing the quality of delivery of health care results in a decrease in profitablility, so why is a profit motive good for your health?

So, do we need a public option? Or should we stay with a system built on good, old private enterprise? You choose.