From: forda@gtephx.UUCP (Andrew Ford @ AGCS, Phoenix, Arizona)
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
Organization: gte
Date: Fri, 11 Sep 1992 17:18:33 GMT

In article <1992Sep9.160508.23711@alchemy.chem.utoronto.ca>, golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy) writes:
> In article <JASON.92Sep9114044@ab20.larc.nasa.gov> Jason C. Austin <j.c.austin@larc.nasa.gov> writes:
> >-> 
> >-> Real reform would ultimately not cost anything since the elimination
> >-> of the waste in the system would pay for the increased coverage for
> >-> the poor.  Even if the US were only able to achieve an efficiency
> >-> comparable to Canada's, the second most expensive system in the world
> >-> next to the US, it would amount to $200 billion dollars in savings 
> >-> in private/public dollars.  Americans should be talking about the
> >-> health care dividend...not the peace dividend...which is peanuts
> >-> in comparison.
> >-> 
> >-> Real health care reform would also make a huge dent in the federal
> >-> budget deficit, improve business competitiveness, labor force mobility
> >-> and efficiency, and remove one of the barriers which keep people
> >-> from moving off welfare into the workforce.
> >-> 
> >-> Gerald
> >
> >	I don't believe either of the Health plans are the answer to
> >making Health care more available.  Any doctor will tell you, the
> >biggest expense for them is liability insurance due to the
> >sue-the-doctor frenzy and the big settlements juries have been
> >awarding.  There was mention of this at the Republican convention, but
> >unfortunately it has not received the attention it deserves.  
> 
> Even with the sue-the-doctor frenzy out there, there is $200 billion
> dollars in potential savings in administrative waste even before you
> get to the need for reforming the legal system.  The main difference
> between what actually gets spent on health care in Canada and in the
> US is the wasteful bureaucratic overhead in the US.  If you want
> to reform the legal system and go after non-effective treatments
> and surgery and unneeded excessive testing, there is even more
> money to be saved.
> 

A real-world case: my wife's OB/GYN made about $80,000 / year
(5 years ago).  His malpractice insurance was $120,000 per year.
Over half of his $1,500 delivery fee was for malpractice insurance.

The real problem is the insurance companies: they profit from big
settlements.

First, you have to understand how insurance companies make money.
It is illegal for them to make much of a profit on premiums (the
gov't regulates how much they can make on premiums -- some bureacrat's
idea of protecting the "helpless masses").  However, insurance 
companies are allowed to make profits on their reserves.  Reserves
are the monies that the inusrance company keeps to pay claims: the 
level of reserves is determined by the estimated amount of claims
which they will have to pay in the coming year.  

The insurance companies say "it's cheaper to settle a frivilous
claim instead of paying."  This is true, *if* you look at only
one claim.  The problem is that if insurance company A pays
Billie-Bob $5,000 which he should not get, Billie-Bob goes and
tells 50 friends and neighbors.  Then 10 of those folks try the
same trick: and when they win they each tell another 50 people.
Pretty soon insurance company A is paying 5,000 $5,000 claims 
a year.  

Over time, lawyers learn that there is money in frivilous claims,
so they start dedicating there time to finding and filing 
frivilous claims.  Pretty soon the courts are clogged with
suits, and the insurance companines are paying out billions of
dollars per year in frivilous claims -- all because it's 
cheaper to pay a single frivilous claim than it is to fight it.

Oh, but they'd go out of business if they operated that way!
In a free enterprise market, yes, but this is a gov't regulated
market.  What happens is that each year the dollar amount needed
for settling frivilous claims goes up.  Each year the insurance
company is justified in increasing their reserves.  Each year
the insurance company collects more interest from investing 
those increased reserves.

The solution?  (A) reduce gov't control.  set minimum reserves
and don't bother with premium or profit caps -- let the free 
market do its job.  (B) protect right of the insured to 
dispute a claim.  Today, the insurance company has the right
to simply pay a claim if they choose: pass laws forcing the
company to fight if the insured feels the claim is frivilous.
(C) make the lawyer and the plaintiff liable for all expenses
if the defendant can show in court that the suit is frivilous
(using the same standards for getting a frivilous suit 
dismissed).



-- 
"25 States allow anyone to buy a gun, strap it on, and walk down the street with
no permit of any kind: some say it's crazy.  However, 4 out of 5 US murders are 
committed in the other half of the country: so who is crazy?"   -  Andrew Ford
gtephx!forda@enuucp.eas.asu.edu  OR  !uunet!samsung!romed!enuucp!gtephx!forda