Monday, August 17, 2009

Health Care Is Not Simple

naked_economics.large I just got through reading an economics book. It’s given me insight into how all things dealing with money (or trade for goods) works.

I’ve decided to take what I’ve learned and many of the theories I’ve hypothesized and post them here for the whole world to see. Or at least the 1 or 2 people that stumble upon my meager blog from time to time.

In my simplified world of healthcare there are 102 people classified in 4 ways:

  1. The first type of person is the Doctor. There are 2.
  2. The second type of person is the one that makes less than 5 dollars a day. It’s possible this person makes nothing per day. There are 20 of these. They are the poor.
  3. The third type of person makes more money than they know what to do with. If you want to put a hypothetical number to the dollar amount we’ll call it 100+ per day. There are 20 of these.
  4. The last type of person working class or middle class whatever you want to call them. They make up the majority. In this example 60.

Now, for the situations.

Doctor Decides How Much To Charge:

Doctor 1 emerges and says, “I’m the best thing available. I’ve got the best education and access to the best facilities. I charge $50 for initial visit and diagnosis. And I have an easy to read malady rate table. Common Cold is $20.”

Doctor 2 emerges and says, “I may not have scored in the top 2% of my class, but I’ve got the best people skills. All estimates are free. We’ll treat all colds for $10 and the special this week is buy one get one at lesser or equal value for free.”

Obviously most people are going to go to Doctor 2. Doctor 2 will be very busy and Doctor 1 will have more time to care for his wealthier clients.

Obviously the system is slightly flawed because not everyone will have access to the same health care. The wealthier people could theoretically get more personal and better care.

20 people will get little to know care. 20 people will get the best care and 60 people will shop around for health care. The poor suffer. The rich and the doctors are very happy. The middle class are probably better off.

Healthcare is free:

People are calling the doctor all the time. Every morning, 20 people wake up with the sniffles. Since healthcare is free, they call the doctor. I don’t know who pays his salary. It doesn’t matter. There is no way free healthcare is going to work.

No matter how much money you make, you’re going to have to wait on the doctor because there are not enough doctors to go around when it’s all free.

To combat this you could make it easier to become a doctor but then the quality of healthcare will decline. Doctor’s salaries will decline making the best and brightest folks choose professions as auto mechanics.

Even if a doctor had the best intentions, eventually after the 900th call about bad allergies, they will become numb to the calls and quit watching for the occasional severe malady.

Everyone (all 100 of us) will get the same health care. The rich suffer and the doctors suffer the most.

Invent Insurance:

Now we have this idea of health insurance. It costs $10 per day. However, the Insurance companies have to make their money so they aren’t going to insure someone for $10 per day when said person is pre-disposed to heart attacks.

At $10 per day you’ve already ruled out the poorest people so there are 20 people already unable to get insurance. Of the 60 middle class people some are struggling because depending on where you are at $10 per day could be a significant bite into your paycheck.

Insurance isn’t going to pay the doctors what they ask. They’ll force the doctors to become part of their network. Obviously the doctors will strive to become part of the network else they’ll be stuck working on the 20 rich people who don’t get sick that much anyway.

So now people are paying Insurance and the doctors. They have to pay the salaries of all the employees and the Insurance Company (as well as the huge CEO salaries) and they have to pay enough to cover salaries at the doctor’s office.

The poor get no health care. So there are 20 with no means for health care. The doctors are happy and the insurance companies are happy. The rich are always happy except when it’s free.

Let The Government Take Care of Us

We’ve decided to let Uncle Sam take care of us. He’s raising taxes so that everyone has access to health care. Now the poor are getting free health care, the middle class and the rich are paying 10% of their salaries for health care. Most people are paying well over the $10 per day for their government health care because they have to make up for the folks that aren’t paying at all.

You’re back to the health care is free idea. Or nearly free. How else could you promise to provide health care for everyone when some make no money?

Everyone’s got insurance. The poor are happy. I don’t see how anyone else would be appreciative of this plan. The government would have to pull off a miracle of economic engineering which has not happened since… Well, has not happened.


There is no fix for health care. They keep saying we are spending too much money on health care. I’d say that’s because we are paying for these huge insurance conglomerates and the huge salaries of their executives.

There are some diseases that require maintenance. Diabetes is the biggest example I can think of. Without drugs and regular doctor visits, you can’t expect to stay healthy.

  • Insurance guarantees you can keep your regular visits if you have a job or can afford to pay your monthly insurance premiums and your co-pays.
  • Free health care or government run health care means you can keep your regularly scheduled visits but at a lesser quality of service. You’ll have to work harder at staying healthy and probably spend a lot more time waiting in line.
  • Doctor’s Decide means you decide too. However, if you lose your job or can’t afford the doctor’s visits or drugs for some reason, you may be in trouble. Not even doctors can manage the price of major health malfunctions.

There is no easy solution. Do I think health care needs fixing? Yes, yes, a thousand times yes. Do I trust the Obama administration to do the right thing? No, no, a thousand times no. I don’t know what the right thing is. Do you?

If Obama would go through government spending line by line and get rid of the pork, then I’d change my mind on this. He said he would do that before he got elected and he’s made a few meager stabs. I’m waiting for him to hit meat and start digging. Thus far, it seems he’s been adding to the fat with a good healthy does of bailout blubber.

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