Straight, No Chaser: Understanding an Actual Conservative Point of View on Healthcare

I am not attempting to speak for any group as much as I am hoping to enlighten those needing it regarding how others could seemingly vote for or support what appears to be in their “best interest” when it comes to health care.
For starters, not all Americans share the same value system. In as much as the citizenry has responsibility for our healthcare (via insurance payments, deductibles and co-pays that total thousands of dollars a year on average), it is properly described as a commodity. Among people with relatively scarce resources, consider these two scenarios:

  • Some people have higher priorities in their lives than healthcare. People who feel this way would love to spend those extra thousands of dollars on food, better education or whatever they choose. A government-mandated healthcare system prevents them from making decisions on how they spend their own money. Yes the assumption here is that they’ll never get sick, but many people are willing to accept the consequences of their choices.
  • Some people would rather manage their own healthcare. Many people do so successfully. In fact, insurance itself is largely based on the notion that you pay into the system more than you get back when you’re young and statistically don’t need healthcare (especially if you’re young and male), only to receive more than you pay into the system when you’re older and invariably going to need more healthcare. Again, there is a large group of Americans willing to accept responsibility for their own healthcare and/or health actions, if that means they can forego spending thousands of dollars into a healthcare system they largely don’t use, or if the option existed to buy healthcare on an as needed basis.

Next, there actually are legitimate concerns (that everyone seems afraid to discuss) about the cost of healthcare. If I told you there actually is $800 million dollars (roughly the amount slated for cuts to Medicare) of fat in the system, would you listen or just reflexively assume someone was trying to kill Grandma? Allow me to explain, but it’s important to point out that looking for efficiencies and savings in the system is not the same as justifying cuts to essential services as an excuse for tax cuts for the wealthy.

The amount of cash in the US healthcare system approximates $3 trillion and is over 17% of the gross domestic product (would you believe it was only 5% in 1960?). This comes to almost $10,000/year for every person in the country. It is estimated that the country that is next on the list of highest percentage of its GNP spent on healthcare is France, at about 11%. Yes, now is when I remind you that the US healthcare system historically has been ranked in the mid-thirties regarding best healthcare systems. So with that in mind, don’t tell me this great country can’t build a better system. Here are just three considerations about which those on both the left and right should be able to agree are problems.

  • Clinical inefficiency. Simply put, an ounce of prevention is worth a pound of cure. Using the ED instead of a family doctor’s office for the same presentation costs about eight times more. Also, eliminating the system of incentives for defensive medicine (meant to avoid lawsuits) would alone save almost $50 billion/year, according to the Harvard School of Public Health. In all, clinic waste accounting for 14% of health care spending, over $420 billion dollars.
  • Administrative complexity: This is so easy you should question the motives of those who haven’t brought this to pass. According to the Harvard Business School, fully 9% (about $270 billion a year) is wasted on inefficiencies in medical billing, collections, compliance and oversight. It’s the paper pushers.
  • Insurance companies: The next time someone whines about woe-is-me insurance companies, remind them that the companies participating in Medicare Advantage plans received about $170 billion, just from the government in 2015! Look at the below graph to see how well they all are doing. Have your stocks increased 1000% since 2009? The current model of paying insurance companies so much money is neither producing good outcomes for patients nor payers. Those on the left should be furious that better health isn’t included as a result of the thousands of dollars spent, and those on the right should be furious that the current system does not offer sufficient competition or transparency that could generate downward price pressure. Even more onerous, the various subsidies given to insurance companies are simply forms of corporate welfare, as multiple companies make tens of billions of dollars in profit each year.

So…next time someone talks about raising premiums on us, let’s ask about getting a better return on our investment.

If I may, here’s five simple components of what an actual compassionate conservative (i.e. even more so than Obamacare) plan would look like.

  • Freedom to opt out of healthcare insurance, with the caveat that one either participates in an “essential coverage plan,” or maintains a certain amount of financial liquidity (e.g. a health saving account) to pay for a year’s worth of projected costs based on actuarial tables. “Essential coverage” includes preventive medicine, critical care, maternal care, mental health and ongoing coverage of preexisting conditions – otherwise, it’s not really insurance.
  • Enhancement of competition, including the ability for insurance companies to compete across state lines as well as the items discussed in the next two bullet points.
  • Freedom for citizens to opt-in to a government option. Why, you ask, would this work for conservatives? Well, it’s about choice, and here’s an option. Also, the government option is the surest way to create downward price pressure.
  • Transparency in healthcare services pricing. As an example, if this existed, consumers would be able to decide for themselves if they wanted to pay for an MRI vs a CT scan vs an x-ray vs nothing for a knee sprain. Much has been made about the effects of price transparency on the cost of lasik surgery.
  • Dramatic savings earned by elimination of clinical waste and the resultant high costs of care, including the practice of defensive medicine and awarding of excessive medical malpractice rewards. Implementation of best practices in administrative processes, and ongoing crackdown on healthcare fraud and abuse (the Harvard Business School identifies these components as contributing to 40% of the costs of healthcare).

If a system was being proposed built on the above considerations by those on the right side of the political aisle, it would form the basis of an actual conservation and would result in even more cost savings, because there is in fact more than enough money already in the system to provide whatever services are needed. Imagine if you will that the US spent the same percentage of its GDP on healthcare as the second most generous nation on earth (France at 11%). That would represent a trillion dollars in savings, and remember: France provides universal healthcare with better healthcare outcomes.
Feel free to ask your SMA expert consultant any questions you may have on this topic.
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2 thoughts on “Straight, No Chaser: Understanding an Actual Conservative Point of View on Healthcare

  1. Dr. Sterling, I’m about as left of center as you can get without being a straight up socialist, but if the things you described were actually what was driving the GOP healthcare plan I could definitely get on board. Particularly the elements of eliminating clinical waste and defensive medicine (I’m having what is likely an unnecessary echocardiogram and stress test on Friday primarily because the folks who run pulmonary rehab are doing a little too much cya). I’d also love for insurance companies to experience greater competition and have more transparency in their profits. I’m all for hard working folks earning a decent living, but there’s no way anyone will ever convince me that an insurance CEO “deserves” $16 million/year in compensation. It’s ridiculous.
    I personally think that a single payer plan is the best/most moral/best for health outcomes and ultimately productivity, etc. However, I understand my views may not be universally shared. As such, a policy initiative such as that outlined above is a compromise I could get behind. It’s too bad there’s so little knowledgeable policy discussion happening in DC.

    1. Hi, Kate! I agree with your comments in total. I did this as a thought exercise to better understand and convey what those on the left might consider to be a more reasonable sentiment from those on the right, even as what I’m come up with doesn’t reflect the current proposals under consideration. Thank you for your comment and for following Straight, No Chaser!

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