Organization: Penn State University
Date: Fri, 11 Sep 1992 16:18:41 EDT
From: <DGS4@psuvm.psu.edu>
Newsgroups: alt.politics.bush
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
 <1992Sep10.001658.1498@CSD-NewsHost.Stanford.EDU>
 <92253.211911DGS4@psuvm.psu.edu>
 <1992Sep11.183305.27890@CSD-NewsHost.Stanford.EDU>

In article <1992Sep11.183305.27890@CSD-NewsHost.Stanford.EDU>,
andy@SAIL.Stanford.EDU (Andy Freeman) says:

I've deleted some earlier posts to clear up the clutter.  I hope this
doesn't cause confusion....DENNIS

>I'm discussing a no-overhead payer system in competitition with
>existing payer systems.  Let's call it "Andy's No Overhead Health
>Care".  It runs according to the theories of the "insurance companies
>and existing health care payer systems steal money away from people"
>folk and doesn't do those things.  It merely channels money from
>consumers to providers, with no overhead.

The problem is that if providers only accept ANOHC, then you have a
single payer system.  If not, then ANOHC will either go bankrupt or
it will become Andy's Just Like All the Others High Overhead Health
Care.  If the provider wants to treat patients from multiple payers,
then the provider and payer must set up a system to track patients and
their payers.  That is what causes the high overhead.  It becomes even
more costly when each system is different.  Any payer who does not
set up an administrative system to track patients is in danger of
being gamed by the other payers and providers and will go bankrupt.


>It's absurd to think that there's much cost in delivering money to the
>providers, so the fact that ANOHC has to send its own checks doesn't
>matter.

It does matter, if the provider is accepting patients from other payers
and Andy wants to identify his patients from other patients.

>group-average health care costs (the risks) are predictable.  (The
>fact that the costs change doesn't affect their predictability; change
>can be predicted.)  If Shea thinks that's a joke, how does he explain
>the predictions of the various health care advocates?  (They're
>telling us that the US will pay x in year y.)

Even those predictions have been off by several hundred dollars in
when they have been made less than 6 months into the future.
Mistakes of that size spell bankruptcy for an insurer.

>Risk variance decreases rapidly with increasing group size (assuming
>random selection).  Therefore, ANOHC doesn't have to be extremely
>large to "work", if it can work at all, if the theories of the
>"overhead is both significant and easily eliminated" folks are
>correct.  Moreover, the saved overhead provides a cushion, so a little
>more variance can be accomodated.

ANOHC will work great.  Every provider will have an incentive to
overstate care given to Andy's patients, because Andy isn't keeping
track through an administrative system of who is giving care to his
patients.  I urge you to start this company immediately.  I'll join and
collude with every physician I know to scam you.

Multiple payer=high administrative costs, unless the payers adopt
a single administrative system.

Explain to me how you are going to "channel money to providers" without
keeping track of when your insureds visit providers, what care was given,
how much it costs, etc.  Explain to me how you are going to have no
overhead when you have to mail checks to 700 different physicians every
month.  Explain to me how you are going to have no overhead when you have
to market your plan to consumers.  Will you keep no records of how your
insured have used care?  Will you keep no record of how close they are
to meeting deductibles or maximum benefits?  In a typical 10-20 person
pool private health insurers tack on 20% just for administration and
another 8-10% for risk.  THose drop to 4 and 1 percent in a group of
10,000

Getting rid of high overhead costs IS easy.  Get rid of 3,000 insurance
companies requiring 6,000 hospitals and 600,000 physicians to keep
track of individual patient costs in 3,000 different ways.  Put everyone
in groups of 10,000 or more at least for some basic benefit package.
Both of those, however, proabbaly require some public intervention, since
what is privately rational is not necessarily or always the most
efficient.  It is privately rational for each insurer to spend enormous
amounts of time tracking patients.


Dennis Shea
Newsgroups: alt.politics.bush,alt.politics.clinton,alt.politics.elections