From: andy@SAIL.Stanford.EDU (Andy Freeman)
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
Organization: Computer Science Department,  Stanford University.
Date: Fri, 11 Sep 1992 23:32:17 GMT

In article <92255.161842DGS4@psuvm.psu.edu> DGS4@psuvm.psu.edu writes:
>In article <1992Sep11.183305.27890@CSD-NewsHost.Stanford.EDU> andy@SAIL.Stanford.EDU (Andy Freeman) says:
>>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.

ANOHC isn't necessarily single payer, although it may well have some
providers who choose to be ANOHC-only.  The distinction won't matter,
as we'll see below.

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.

ANY payer has to keep track of what's done, if it pays on that basis.
The Canadian system seems to fit that model; it doesn't pay a fixed
salary, but reimburses MDs on the basis of what they've done.  (I
"remember" that the Canadian system allows private payment too, so it
has to keep private payers from shifting costs to the govt.)

The only overhead for treating ANOHC-customers is the Canadian form.
The only "extra" overhead is the "is that a ANOHC-customer?" query.

>>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.

The Canadian system has the same problem; ANOHC will use the same
solution.

>>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.

Yet, those evil insurers aren't going bankrupt in droves.  They
can't both overcharge and lose money....

>>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.

Go North, young man.  It's been set up; it's called Canada.

What?  They have controls that work?  Then why won't they work
in the US?  If they won't, then we've found why the Canadian
system won't work in the US.  If they will, then ....

>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.

Just like the canadian system does.  There's nothing about the
canadian system that depends on using tax revenues and it has
to deal with other payers.

>Explain to me how you are going to have no overhead when you have
>to market your plan to consumers.

That's not going to be significant if the savings are as promised.

>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

Yet, the canadian system deals with these same problems, and it
either has group size 1 or group size equal to the number of
customers.  ANOHC will work the same way.  If that doesn't
work in the US....

-andy
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