On the economy and healthcare

Last night Frontline was about the national debt; next time they’re tackling healthcare, but they also touched on it last night. One commenter noted that fixing health care is really the most important item in stabilizing our economy long-term. With all the aging baby boomers, “everything else is a footnote.”

Mike, working in the insurance industry, hates that part of the job. He thinks, and I agree so far, that the way to transition from our current system to a workable universal system without further damage to the economy is to nationalize the health insurance companies. I think that makes a lot more sense than nationalizing the banks. Banks are in the business of making money; health insurance companies need not make a profit from the illness and suffering of our citizens and everyone else paying into the system, only to take the chance that they’ll STILL lose their home, livelihood, and financial future in the event of a serious illness or accident. I like Mike’s idea that the insurance companies stay intact but are transitioned from dictating care to managing health information systems. I realize it’s not really an either/or choice between the insurance companies and the banks, and there are likely infinite details I haven’t considered. I’m no economist, but some things are glaringly obvious to everyone – we need a big change.

Schmutzie recently wrote about her struggle with anger and depression and what it has taken to come close but not close enough to finding real help within the Canadian health care system. I don’t idealize universal health care; I realize that no system will be perfect, and it’s always only a matter of time before loopholes are exploited. However, wouldn’t a great way to fund a new universal (or whatever word wouldn’t turn off the conservatives) system be a new sin tax? On….wait for it…marijuana. It’s high time (har) that we decriminalize it, legalize it, and tax the shit out of it. Obama already issued an order to stop the raids and arrests in medical marijuana clinics or whatever you call them out in California, which is a step forward. Can you imagine the joy in the streets the day people could walk into a gas station or pharmacy or liquor store and just purchase a pack of joints, or whatever configuration is deemed good enough? Of course, it would still be illegal to drive under the influence, and there are another ton of details to consider here, but I think it’ll happen eventually. On that note, it’s lunchtime, and I kind of have the munchies. The legal kind, anyway.

I think I’ve forgotten to make one of Mike’s finer points – here’s hoping he’ll chime in in the comments along with everyone else.

ETA: Here are some powerful images related to the drug trade and the ongoing violence in and near Mexico: The Big Picture.

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5 thoughts on “On the economy and healthcare

  1. suntzusays says:

    I’m aware there are arguments circulating to nationalize the banks (or certain banks). That’s not what Geithner proposed to do the other day, and it’s not what many economists propose to do (though Krugman at NYT is pretty prominent in the pro-nationalize camp). Besides, other than AIG, most of the big banks seem to be more or less recovering (their stocks went soaring upward, profits have mostly returned, and the housing market that underlies much of the mess is bottoming out, thanks to a smartly played mortgage refinance policy). So no, it’s not an either/or type problem, simply because it doesn’t look like there is a pressing need for one of those two things to happen. We’re more likely to be nationalizing the automobile industry than the bankers at this point. I have buried in my blogs a long diatribe detailing using a tax/subsidy system to penalize “unhealthy” items (generally smoking, alcohol, narcotics, the things we call “sin taxes”) and use the profits to subsidize preventive health care or things like local farms to lower the cost of “healthy” foods. People can do much for themselves like gym memberships or nutritional plans, or make use products/programs to quit smoking or drinking (even where they don’t always work, the effort may be helpful in the long run). Funding things that can be done but often aren’t willing to be, like offering preventive care in low-income neighbourhoods instead of going to the ER also seems like a useful purpose for the tax stream coming off these things. There are businesses that, in order to control their internal cost of providing medical benefits to employees, have begun running out bonuses for employees that do things like lose weight, join a gym, quit smoking, etc. That’s going to be critical to build into any system and for whatever reason, it’s not built into the present health insurance system. They can make safe and continuous profits off of a healthy population using preventive care essentially by lowering their actuarial risk to have to make a payout on more expensive health care claims. They don’t. I guess it’s not as exciting as paying for invasive surgery techniques performed by medical specialists (which sounds like a cheaper choice for the company, a surgerical procedure or an expensive experimental drug to clean out someone’s arteries, or having those arteries stay pretty clear to begin with). But it doesn’t seem like that’s a business model that offers long term profitability without denying most of the coverage, more or less what regular insurance does by haggling every time it has to write a check. Sooner or later if consumers figure out that they cannot use your product (in this case, the insurance), they won’t buy it. This I suppose has long been the problem with medical insurance. It’s designed exactly like other insurance. It’s intended structurally for us to only use insurance when it would present a financial calamity, like when the house burns down or a car is wrecked. One cannot use car maintenance as an analogy (as many idiotic right-wing pundits do) because fixing your car’s engine regularly won’t stop the car from being smashed in a head-on collision where we would actually need the insurance. We buy warranties usually to help with the cost of regular repairs, and that’s a totally different financial industry (a heavily subsidized one at that by auto manufacturers). In other words, the type of things that are unexpected and catastrophic expenses for which insurance is designed are useful for medical insurance to cover, but that’s about all it seems to cover. This sort of thing doesn’t make sense for health care because there are very few medical scenarios that cannot be prevented or prepared for through proper primary care (which is like regular maintenance). And it seems like primary care provision is the one significant difference between us and the rest of the developed world. It might be possible to still use a market system of providing health care (without outright nationalization) by creating things like standardized plans, risk pools for keeping individual costs down, and appropriately incentivizing the provision of primary care over specialists. And there’s a couple plans circulating in Congress to attempt to do this (HAA proposed by Wyden I think is one of them). Considering how politically toxic the word “nationalizing” has been on this subject, we may have this as a viable option in the middle ground between some sort of laissez-faire alternative that doesn’t seem to operate on market economics anyway (because of extreme transparency problems presented by employer provided care and the third party payee essentially controlling the quality and delivery of care). I’m pretty sure we’re not going to go straight from where we are (which nobody seems to know where that is) to nationalized insurance, just because it’s political. The one thing that makes the most immediate sense is to provide a means to transition from employer provided care (and the tax advantages that come with it) toward individualized care (and move the tax advantages if we’re not going to nationalize it). That at least addresses some of the transparency problems of cost. Economics might dictate that either nationalization or some strong market reforms could work, but it agrees the current as is is broken. And it definitely agrees that resolving the underlying cost problems of health care in this country is central to the long term economic health of it (although most economists still put the education problems ahead of it, as do I).

  2. suntzusays says:

    There is also a distinction between decriminalization and legalization. There are several states that have already decriminalized regular marijuana, not just medicinal use. It’s just not well known because the feds still arrest or harass people anyway. And in our present anti-drug culture, it’s probably a smart play to keep that sort of reform quiet. There are foreign policy ramifications as well (where is most heroin grown…Afghanistan, who runs most of Columbia, the narcotics cartel FARC, what happens at our borders with Mexico…). So it’s not just us that benefit by creating a tax income stream from even a quasi-legalized market.

  3. Whoa. I’m going to have to re-read your first comment at least once.I kind of meant that as a progression. First, we’d have to decriminalize and enforce federally (not let the feds arrest/harass), then we could talk formal legalizing and taxation. I was thinking that it’d be best to take one drug at a time. Pot’s generally benign enough (as far as physical addiction, psychological is a whole ‘nother thing) that it’d be a good first step. I don’t know how you’d go about dealing with cocaine or heroin or the like. That seems a bit more dangerous.

  4. suntzusays says:

    I have no problem with a legal market for heroin, but we’d probably have to organize or regulate it along the lines of licensed suppliers (who then assess the tax). Generally in Europe that’s done for addiction maintenance like with methadone clinics here. Only they often use heroin directly in say, Switzerland or even the UK. Most of the legalization advocates recognize this would have to be a long-term progression, if at all. And most people are less comfortable with the idea of a legal market for cocaine or heroin. I only support these because the illegal market offers so many societal problems (crime, poverty, addiction, overdoses, drug quality/safety etc) over the potential cost of having a few more drug addicts more randomly distributed instead of concentrated in particular subcultures of society. It’s also a lot easier and cheaper to deal with those two (and other hard drugs) as subsidized medical problems (through tax collection on sale of the product) than legal ones through interdiction, detentions, for sale and possession, and raids on the supply chain. There’s too much money involved for these tactics to be anything more than at best temporary disruptions, and an excuse to mark up the profit margin. It does appear there is some movement toward a legal market for marijuana, at least for medicinal needs. But that’s pretty far from where we might begin extracting some societal benefits. Mexico’s drug cartels make about 70% of their money off of pot distribution. Think they’d still be making that much if we could produce it domestically and legally? How well equipped and how easy would it become to bribe and/or fight their way in with smuggled goods if their funding is effectively cut down to a third?

  5. More interesting points. I’m too foggy today to respond properly. Maybe after a nap, if I can convince myself that’s worth taking a few hours of personal time and escaping.

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