The Automotive Model

President Obama says that we need health care reform in order to "bend the curve down." By this he means that we need to do something to keep health care costs from rising faster than inflation. The trouble is that none of the proposals being debated really address this. That's why we have all of the talk about rationing. As costs go up, the amount of services available to individuals will have to be reduced.

Will Obamacare solve this? No. France and Germany are close to the various public/private models being debated for Obamacare. They also come in after the US in the amount spent per capita on health care and they face the same problem with rising costs that we face. They also get less for their money. The survival rates for the most cancers range from slightly better in the US to much better for prostate cancer.

There is some talk about cutting Medicare but simply allocating less money means more rationing. This leads to human-interest stories about people being denied care and a return to previous funding.

Obama insists that the problem of rising costs is caused by greedy doctors who order too many of the wrong type of test (and not enough of the preventative tests that Obama insists will lower long-term costs). In his rush to find villains, Obama overlooks the fact that greedy insurance companies are not going to pay for unneeded tests. Obama's distrust of free markets makes him look for him to see rising costs as an indicator of insufficient government control. There are other factors, many of them byproducts of government policy.

One factor is the cost of malpractice insurance and the cost of "defensive medicine" - tests done in case of future lawsuits. Obama announced early on that malpractice reform would not be part of health reform. This kept the trial lawyers happy and they are one of the Democrats' biggest sources of money. It also eliminated a major tool in controlling costs.

A big problem with insurance is how it is handled. Most people do not buy insurance. Their employer buys it on their behalf. This came about mainly due to the progressive tax rates prior to the Reagan administration. The tax rates were not indexed to inflation so it was very easy for a cost of living increase to push someone into a higher tax rate and result in less actual take-home pay. At the time, most benefits were deductible so applying a cost of living increase to a benefit was a way of beating inflation. This gives individuals an incentive to run up their insurance costs. I know people who believe that a benefit is wasted if it isn't used so they try to get as much out of their insurance as they can.

With most people covered through their employer, insurance companies didn't have any incentive to sell to individuals. There is more profit in group sales than individual sales. This makes it harder for individuals to get insurance. This is also where a big part of the 47 million uninsured figure comes from. Anyone who is unemployed for any length of time is included in this figure.

One solution that I have seen being talked about in conservative circles is to treat health insurance like automobile insurance. You are responsible for buying your own instead of it being bought on your behalf by your employer. You would choose the options and amount of coverage that you need and can afford. Many regular things either would not be covered or would have a deductible. You don't expect your insurance to pay for oil changes, brake jobs, or new tires. Why should insurance pay for check-ups?

Many people are already doing this. They buy cheap catastrophic-coverage and pay other expenses out of pocket. This is one way of bending the curve down. If a doctor says that your headache is probably just that but that you could have a CAT scan to be sure, you are much more likely to agree if the test is covered by insurance.

This is the opposite from Obamacare. The President says that he wants more poeple being tested and that he does not want any co-pay for these tests. This represents two different points of view of medical tests. One side wants to leave the choice to the individual. The other side does nto trust the individual to make the correct choice and wants to test everyone.

Complicating this is the fact that most people are healthy so most tests are not needed. Worse, some tests produce a high number of false positives. This can lead to unneeded treatment. The PSA test for prostate cancer is an example of one that has a high number of false positives. It also detects any cancer, no matter how small. Since prostate cancer is slow-growing, a man can have it for decades without needing treatment. A review of PSA tests found that positives were often followed up with unneeded agressive treatment.

All of this should be part of the national discussion. Instead the debate is centered exclusively on insuring the most number of people and regulating minimum coverage.