ObamaCare: The Good, the Bad, the Ugly, and the Ignored – Part 5

This series on ObamaCare (as embodied by the July 14th, 2009 version of H.R.3200) has been overtaken by events. President Obama in his speech before Congress on 9/9/2009 asserted a willingness to make changes to “his plan”. He reiterated many portions of H.R.3200 but indicated a reluctant willingness to make changes to get a bill that can pass.

As a result, I will curtail my analysis of H.R.3200 and instead discuss reforms that could improve health care and health insurance for some without screwing it up for everyone else; Reforms in the spirit of the Hippocratic Oath, “First, do no harm.”

The Ignored
1. Increasing Supply: - If between 10,000,000 and 50,000,000 people not currently insured become insured after some fashion, the demand for health care will increase. Yes, they already get health care thru hospital emergency rooms, but their consumption of health care will increase after they are insured. That’s the point of giving them insurance coverage in the first place.

Regardless of the form taken, the eventual health care reforms will cause rationing unless the supply of health care is increased. Prices will go up or waiting times will lengthen.

What it needful is an intentional opening up of medical schools of all types and encouragement for people to go into medical fields.

Identification of best practices and assistance in communicating them throughout the medical community will also help increase the net supply by making existing capacity more productive

2. Tort Reform: - Putting caps on civil malpractice judgments will not only reduce the direct costs of health care providers by reducing their liability insurance premiums. It will also increase available medical capacity by reducing the amount of unnecessary “defensive medicine”.

Tort reform does not mean eliminating malpractice suits. It does mean eliminating or capping punitive judgments over and above actual damages. Wronged patients must be compensated for their real damages including lost wages, but a malpractice suit should not be equivalent to winning the lottery.

3. Increase Health Insurance Competition: - Positively authorizing interstate commerce in health insurance will immediately create a market of between 1,000 and 1,500 health insurers competing against each other in all 50 states. Today, individual state regulations require insurers to be licensed by the state of the insured. They also require certain unique sets of coverage in each state. For these reasons most state health insurance markets have only 5 to 25 licensed health insurance competitors.

Increasing competition from 25 companies to 1,000 companies will assure real competition, real price pressure, and real productivity improvements. Increasing competition by one “public option” competitor will have little effect as competition (not counting the effects of the proposed tax incentives that would encourage employers to drop private health insurance plans in favor of paying an 8% additional payroll tax).

Still more ignored but actually useful reforms remain for future posts.

Links to Other Topics in the Special Report: Universal Health Care