Hawaii's Chilling Preview of Health Care Mandates

Why are so many willing to change policies? Perhaps free is just too good a price, but even with that they can't be too happy with their existing coverage's cost/benefit value equation.

If Hawaiian parents are rationale economic actors, there may be more than 1 lesson to learn here.

As I taught my class today (for the umpteenth time), health care reform is a cultural and political problem, not one of medicine and economics. In reality, the type of health care system in a country (assuming at least basic and essential care) has little to do with the majority of health care needs. It only really affects the margins. That's why all the stats about health outcomes being equal despite the U.S. paying double. We pay so much for convenience and marginally beneficial end-of-life care - something other systems have forgone. I doubt that our American fast-food and litigious culture would stand for waiting 3 months for an MRI instead of 24 hours. Watching grandma waiting in pain 18 months for a hip replacement. We just aren't wired that way. 

Does everyone remember the outrage in the early- to mid-90's directed at the evil HMOs? Denying care? Not paying for certain drugs? Gatekeepers? Rationing? What happened? Politicians made hay demonizing HMOs and these practices.Well, what do you think Canad/Euro universal health care is?! Not to mention minimal malpractice lawsuits with loser pays rules. The only thing that makes their systems feasible is that they free-ride on our Defense Dept. and pharmaceutical industry's R&D. We don't have that luxury.

Government-run health care works, only if the society agrees that they are willing to accept standard treatments (as opposed to cutting edge) that are adequate for 90% of cases, relatively long wait times for all but routine care, and high taxes. Canada and Europe have decided that that is OK, and they are satisfied.

This is why I say that if you want to reform health care, you'll have to reform the culture first in order to make it work - regardless if a Can/Euro system or free-market system is instituted. Much like when a large company completely changes their computer system. They don't just install it one day and tell everyone to use it. There is a training and learning curve that needs to be overcome. Now imagine trying to do this with 305 million people of varying degrees of ability.

Politically, the Can/Euro system is the most politically viable for a few reasons:

1. Most people only know "good and cheap."
2. It is a passive system as opposed to the active consumerism model; therefore, it will have less of a learning curve.
3. 50% of people can vote for it while only paying 3% of the taxes (i.e. free-riders), and are more likely to put up with inconveniences for "free" health care.
4. Guilt.
5. Belief by those that feel guilt that they will be able to circumvent the system and get the best care immediately anyway.

Take home to tell everyone with whom you have this health care debate: Health care reform is a cultural and political problem, not one of medicine and economics. 

Perpetuating the canard that "market-based solutions" don't work in health care by siting the U.S. system is a fallacy (usually perpetuated by government control advocates). The U.S. does not have a market-based health care system, and hasn't for about 70 years, which is why, along with cultural reasons, expenditures are so high.

Actually, "market-based solutions" work perfectly in health care (e.g. Lasik surgery); unfortunately, almost none exist in the U.S. due to the overregulation and government involvement (Medicare, Medicaid). Even the competition aspects of Medicare Part D have brought down premiums ~40% from expected since 2006.

To state that Canada has long wait times "not because of rationing but because of a shortage of healthcare professionals" is to not understand rationing. A shortage of "healthcare professionals" is one way in which they ration. Plus, why do you think they have such a shortage? Wage controls, maybe? The market response to a shortage would be to increase wages to draw more professionals, but they couldn't due that because it would increase costs -- i.e. rationing.

Children ages 0-18 are the cheapest to cover because they are relatively healthy other than accidents. So any universal system (single-payer or not) will receive the same benefits. The problem becomes teenage pregnancy rates and prenantal care -- of which these girls do not adequately avail themselves even when it's free (cultural) -- which creates a vicious cycle that includes government dependency.

Indian heart surgeries and eyecare is comparable if not better than that at US hospitals and cheaper! Hence, the advent of medical tourism -- a market-based solution -- whereby "people who live in one country travel to another country to receive medical, dental and surgical care while at the same time receiving equal to or greater care than they would have in their own country, and are traveling for medical care because of affordability, better access to care or a higher level of quality of care."

This is what licensing instead of patent protection (a market-based solution) has wrought in Europe:

According to EFPIA, The Pharmaceutical Industry in figures - Edition 2008 (p.4), "the benchmarking competitiveness report released by the European Commission in November 2000* highlighted two main trends: 1) the European researchbased pharmaceutical industry is losing competitiveness with respect to the US industry; and 2) there is a process of concentration of R&D into North America. 

"The United States has become the dominant player in the pharmaceutical sector. Whereas R&D investment in Europe grew by 3.3 times between 1990 and 2007, the corresponding increase in the U.S. was 5.2 times. According to the 2000 competitiveness report, 'North America has become the main locus of innovation in pharmaceuticals, to which European companies turn to get knowledge.' The report notes that the concentration of research and innovation in the U.S. is 'worrying because Europe risks to be relegated into the fringe of the industry, surviving and even thriving through imitation, generics, marketing, but giving up a large share of the value added and becoming dependent on the USA for the development of new products.'”

So you see, market-based solutions work perfectly in health care, when they are permitted.

First of all, I am assuming that you have given me the time to acculturate society to the new system, including the legislation changes it would require (i.e. FDA, tort, tax, and state reforms). This goes to my thesis that health care reform is a cultural and political problem rather than a medical or economic one. Tax equality alone for individual and employer-based coverage would go a long way.

When I say "perfectly," I mean "as expected" -- i.e. as well as any heavily regulated and litigated specialized service market can (within given constraints); nothing is truly perfect. It could, however, be done as cheaply as a universal single-payer system but with more choices. Some large multistate private insurers overhead (10-15%) approach that of single-payer coverage providers (5-8%). The extreme overheads you always hear about 35% for private insurers is for small firms; the 2-3% by Medicare excludes administrative costs that are allocated to other governmental agencies as well as regulatory compliance and patient services with which CMS doesn't have to contend. 

The usual outcomes measures - life expectancy, infant mortality, etc. - do not have as much to do with the type of system and money as you may think. My criteria is one of value (quality divided by cost) as determined by evidence-based classical economic evaluations (i.e. cost-effectiveness, cost-benefit, cost-utility). The first things to fall out would be expensive treatments (especially drugs) of marginal effectiveness and/or benefit (think production vs. concept cars). They would become rare as they wouldn't survive except as research until they became economically viable. This takes more elaboration as this is the crux of the model, but you can think of it as superior (or normal) and inferior goods in Econ 101.

Just eliminating the dead-weight loss from government passthroughs and redundant regulation by eliminating state-centered insurance regulation would significantly decrease the cost of care. Imagine if the ~$600 billion that is spent just on Medicare and Medicaid each year was directed to a private system. That $600 billion immediately becomes $840 billion just by eliminating the estimated 40% dead-weight loss of government. I suppose dead-weight loss and redundancy in the private sector is the criteria that I am leaving out if I understand your question right.

As for all populations, I believe that certain special population pools would need to be created for service-intensive patients such as the the severely mentally retarded, some catastrophic diseases, and some basic safety net coverage. This could be done through a consortium of secondary insurers, but would be something that would be appropriate for some governmental funding.

Incidentally, I believe that basic and essential health care should be a right; and I am for a universal system as long as the government has next to nothing to do with it. There would be two exceptions:

1. Emergency/trauma services, which would be run as a public good similar to police and fire services. Other acute care services would be covered by the private system.
2. A health care informatics infrastructure would be funded on the federal level, similar to the interstate highway system in the 50's, and the hydroelectric infrastructure in the 30's.

These are appropriate governmental functions.

I tried to answer your questions briefly yet fully without elaboration. If you have further questions, or maybe I didn't answer your questions by way of misinterpretation, let me know. Health care reform is my area of interest, so I am more than willing to educate or be educated on the topic.

I was at the four seasons and think it's some of the best hotels hawaii has to offer especially after having gotten hurt body boarding they were extremely helpful with getting a doctor to my room.

Isn't a usual argument that national health care would be much worse as far as response time and quality of service? If that's the case, why would people drop their private insurance? Is it that private insurance isn't providing equal to what people think their service is actually worth?

Additionally, I'm surprised Hawaii didn't put a cap on the free health care.. ie only allow parents making under a certain amount to be able to enroll in this program.

 And they eat it up with a silver spoon. The plan that ended did not end healthcare for all of Hawaii's children. Happily there is still universal healthcare for all in Hawaii,.Adult or child. Everyone can choose between  several healthcare providers who compete, like Kaiser, HMSA, and Alohacare. At the same time, private medicine is still very profitable. Private insurers are making massive profit on denying peoples benifits. Only in Hawaii, if your private insurer denies you because you made a mistake on your paperwork, or they call your condition "pre-existing" , or whatever reason, you can switch to universal coverage and still get treated. A good friend of mine was denied treatment for his cancer. They said that he had made a mistake on a form, and his policy was cancelled as soon as he filed a claim. He is just finishing up radiation and chemo and his cancer seems to be gone. In Hawaii,  there is very little opposition to universal coverage, even from the extreme right. Once it saves a loved ones life its hard to maintain such opposition. 

 You will never see a truthfull story about public healthcare from America's corporate controlled media, they have a vested interest in opposing it. Before you believe any story about Hawaii, talk to \someone who lives here, Almost everything you see in the media about Hawaii is lies. From Dog the bailbondsman-phony-bounty hunter who sets felons free, so that the police have to keep re-arresting the same criminals, to gay marriage, which never happened in Hawaii eeven though the media paniced the country with stories about gays getting married here.

 The truth is out there, but have to look for it. If someone is telling you what you wnt to believe it is probably a lie.

 Just ask anyone who lives in Hawaii, they will tell you the truth. All children and adults  are still covered under Hawaii's universal healthcare program.