Organization: Penn State University
Date: Wed, 9 Sep 1992 15:05:52 EDT
From: <DGS4@psuvm.psu.edu>
Newsgroups: alt.politics.bush
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
 <1992Sep9.134621.19407@alchemy.chem.utoronto.ca>
 <1992Sep9.180602.24891@CSD-NewsHost.Stanford.EDU>

In article <1992Sep9.180602.24891@CSD-NewsHost.Stanford.EDU>,
andy@SAIL.Stanford.EDU (Andy Freeman) says:
>
>In article <1992Sep9.134621.19407@alchemy.chem.utoronto.ca>
>golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy) 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.
>
>Not so fast.  There's no guarantee that a single-payer system will, in
>fact, have less waste.  (There's also no guarantee that a single payer
>system will have lower malpractice costs.)  The expense problems with
>the US system have little to do with the payer system.

Order the recent critique of the Bush proposal by Ken Thorpe down at UNC.
He documents the growth of health care costs in 4 states (New Jersey,
Maryland, and two others) who have, in essence, adopted single payer
systems in hospital care by requiring the use of DRGs by all payers.
The growth rate of each state's health care costs since adoption of
a revised payer system have all fallen below or just above the growth
rate of income in the state.  In the 46 other states the growth rate
of health care costs have averaged about 11%, while income grew by about 4%
per year. A nice quasi-experiment of single payer systems right here in the
U.S.


>I note that any provider can basically decide on how much it wants to
>spend on overhead (read "waste").  People who think that a much lower
>overhead system is possible in the US without changes that have
>nothing to do with payer systems can prove that any time they want.

You note incorrectly.  You should do some studying of health care
business practices, particularly the arrangements between providers and
insurers, the literature on monopoly conditions in medical care and
insurance markets, and the importance of uncertain medical judgement.


>Such a proof consists of establishing a health care payer that does
>things "right".  That will drive the evil wasteful companies out of
>biz, lower health care costs (the savings can be spent on the poor or
>returned to the customers), and make a lot of money (which can be
>spent on other good acts) for the people who do it.  That sure looks
>like a moral obligation, so I really doubt people who insist that its
>possible yet are unwilling to risk their money to prove it.

Read some economics.  Certain conditions in health care markets (the
presence of uncertainty, monopoly power, externalities, asymmetric inform-
ation, etc.) indicate that such an innovation cannot occur without
public intervention.  There are many things which, if undertaken individually,
are doomed to failure (national defense, for example).  Public systems are
the only way of providing such services.  Insured medical care may be one
such service.

Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.
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