Monday, March 2, 2009

Costs - Simple Answers to Complex Questions

For every complex question, there is a simple answer – and it’s wrong.

H. L. Mencken, 1880-1956

Seek simplicity – and distrust it.

Alfred North Whitehead, 1861-1947

If you look to government for answers to complex questions, the answers are simple – more government , or more precisely, re-inventing the role of government.

I was thinking of this simple concept when reading a piece “Re-Inventing Health Care; The Role of the States” in The author, David Osbourne, is co-author of Re-Inventing Government and Price of Government and serves as a senior partner in the Public Strategies Group.

Osbourne says the the “core problems” of high health costs are really quite simple.

• Fee-for-service payments that encourage waste.

• Fragmentation of services that makes management of costs impossible and leads to administrative overheads of 25% to 30%.

• Lifestyle abuses that are creating an epidemic of obesity, diabetes, and heart disease.

The answers, according to Osbourne, are equally simple – reward competitive groups, lump their payments, and phase out those who choose not to cooperate, to wit,

• Go around fee-for-service by having integrated groups compete and be paid an annual fee for managing “cycles” of care – 9 months of pregnancy care, one year of diabetic care – or for bundles or packages of hospital care – e.g, joint replacement or heart procedures.

• Get state plans to join with private plans in competitive “purchasing pools.”

• Reward integrated groups , which are said to be more efficient, and phase out “fragmented,” independent practitioners.

• And finally, think of creating a government-sponsored Healthy Lives Trust with the power to define eventto prohiit harmful food and beverages, and to tax the hell out of them. Launch massive public health campaigns to discourage smoking, drinking, over-eating, under-exercising, and drug-use.

In other words, put Big Brother , the federal government, and his Little Brothers, the States, in charge, and all in health will be well, costs will be swell, and the independent private sector can go to hell.

My only problem with all of this is:

it won’t work, and it will compromise choice and individual freedoms in a supposedly free society.

Maybe it would make more sense to curtail the promises of entitled care, and have citizens pay more for care related to behavioral abuses, i.e, dis-incent rather than re-invent government.


Board Forum Blogger said...

I totally agree with your point in regards to the economies of scale, state plans do need to join with private plans in competitive purchasing pools, the more this happens the lower the costs of health care will be for everyone.

Health Insurance Problems

Rose said...

Really effective info, lots of thanks for the article.