I’ve known Scott Kamena going back to College Republican days of long ago. These days, Scott is an accomplished optometrist in Livermore, in the East Bay Area (that probably has a lot more ‘gravitas’ to it as a reunion than being, say, a website publisher). Anyways, Doctor Kamena has penned a thoughtful and comprehensive commentary centered around the current health care debate taking place in Sacramento, and I am very pleased to present it below. It’s a bit lengthy, but this is a difficult subject, requiring more ‘column inches’ to really approach in a meaningful way. I should probably mention that Scott has decided to throw his hat into the (crowded) ring, to replace GOP Assemblyman Guy Houston (click on his ad on the right to find out more about that).
Health Care Plans Miss The Point
by Scott Kamena
The legislature’s effort to reform health care and provide better access to Californians is admirable and necessary. But while Democrats focus on “financing schemes” (read: new taxes) for insurance for everyone, none of the plans being considered address the real reason health care is sick: it’s outrageously expensive. Health care costs in California are skyrocketing and any health care reform that doesn’t address this fact is worse than worthless. It’s downright harmful.
Business owners were practically giddy this year when they found out their health insurance premiums would only go up by an average of 7.7% nationally and 8.7% on California. Why? Well, after health insurance rates had risen by as much as 15.8% per year in California each of the last few years, just slowing the increase feels like a rate cut. But it isn’t really a cut, and it still hurts. Employers used to cover their employees’ premiums completely. Now, unthinkably high rates have forced businesses to make employees pay ever-higher shares of these premiums. That is, of course, if the company hasn’t cut its health plans altogether—an increasingly common reality.
Please hear this and believe it: too many Californians lack health insurance for no other reason than because it’s too expensive. Small businesses can’t buy it for their employees, big businesses move out of state to keep from paying for it, and average families trying to get by just can’t afford it. Any attempt to increase the number of people insured without reigning in healthcare costs will just make this problem worse. Let me explain why.
Californians view healthcare as a right. It’s up there with the freedom of speech, the pursuit of happiness, and even eating and breathing. Californians want to be able to choose their own doctor, have convenient appointments, be tested with the latest diagnostic equipment, get a second opinion when the diagnosis is grave, receive the most advanced treatments, and take the latest and greatest drugs. And they want it all for free. I don’t blame them. I want that, too. I especially want it for my children. The problem is the free part. Modern healthcare is expensive.
And it’s getting ever more expensive. is at the cutting edge of medical and pharmacological technology. There’s a reason people come here from and the (where healthcare is free) to have heart surgery. But the research involved with those advances is extraordinarily costly—not to mention the liabilities associated with bringing new technology to market (they are essentially unlimited)!
Insurance does nothing to lower these costs. Quite the opposite, it increases them. When insurance is paying the bills, there is no incentive on the part of the doctor or the patient to control costs. When your life is at stake, money should be no object. But what about when you have the common cold? Should you really be taking the latest antibiotics that cost $10 per pill? (Viruses that cause colds are immune to antibiotics, but doctors often prescribe them because patients like to have some kind of treatment). In my own line of work, eye drops for allergies can cost anywhere from $6.00 to $75.00 for a 5 milliliter bottle. Antibiotics vary from $8.00 to $85.00 per bottle. If someone has a corneal ulcer (a sight-threatening condition) then I will prescribe the best. But if they have a run-of-the-mill bacterial conjunctivitis (a common, usually self-limiting condition), do I really need to break the bank? Having insurance pay for it makes it tough to say, “No,” to a patient with a red, painful eye staring at me in my chair. It also eliminates any incentive for patients to shop for doctors based on price.
So insurance companies drive up their premiums to maintain profits in the face of these rapidly increasing costs. If we put everyone on insurance (like the Democrats want), this situation is just going to get worse. That is, unless we do something to contain costs. So how do we do that?
Here are some controversial ways to reduce healthcare costs. Many HMO’s currently use them, but (to date) none of the plans on the table in the legislature’s current Special Session include any of them. I do not support any of these measures, either.
1) Reduce consumption of healthcare by making people wait for appointments, testing and treatment. Downside: People’s conditions can worsen while they wait.
2) Assign people doctors based on availability. Downside: Patients can’t pick their own doctor and doctors don’t have to do a good job to attract more patients.
3) Limit access to the most expensive treatments and medications to those who truly need them. Downside: Who decides who really “needs” anything? Some people will suffer from getting less treatment than they need.
4) No second opinions. Downside: Even though doctors really are almost always right when they make a diagnosis with confidence, mistakes are made (sometimes infamously).
5) Limit insurance company profits. Downside: This just isn’t possible. If you try to squeeze the insurance companies, they’ll squeeze patients by limiting one or more of the items above.
6) Require insurance companies to charge the same premium regardless of age. Downside: Young people will simply drop their coverage in the face of much higher rates and the general belief that they’re not likely to get sick.
Each of these measures has serious downsides. But all is not lost. There are a number of market-based reforms that some (mostly Republican) people are beginning to advocate that can go a long way toward curtailing healthcare costs for individuals and employers.
1) High-deductible or “catastrophic” health insurance. Insurance plans that require the patient to pay the first $1,500 of medical costs per year cost hundreds less per month than no or low deductible plans. If you put some of these savings in a medical savings account (MSA, see below) then you are financially prepared for a health crisis.
2) End “use-it-or-lose-it” status for Medical Savings Accounts (MSA’s). MSA’s are special accounts in which you can save pre-tax dollars and spend them on medical costs. Right now, any money you don’t use in a given year is lost. Fix this problem, and more people will save money for health care crises.
3) Offer routine medical exams for free and/or with a tax credit. It is axiomatic in healthcare that the earlier a disease is detected, the less expensive it is to cure. Unfortunately, people often inadvertently let diseases go undetected for months or years. Letting people get a routine medical exam for free or giving them a $50 tax credit will encourage people to get checked. Insurance companies should even consider lower premiums for people who consistently stay on top of their routine care.
4) Increase costs for bad decisions. Right now, life insurance companies charge higher premiums for people who smoke, but health insurance companies only charge based on age. People should be charged more for their monthly premiums or have higher deductibles if they make poor life choices or wait too long to seek care. This way, they may change those behaviors or, at least, shoulder a bigger burden for their personal decisions.
5) Train more primary care doctors and charge them less for schooling. When I graduated from optometry school in 1999, I paid $4,085 per year, the same undergraduates at the University of California paid. Now, it would cost me $18,930.50 per year because UC tacks on a “professional fee” for all its health care professionals because, theoretically, they’ll have more money to pay it back later. They are considering doubling that fee. We shouldn’t punish people for working hard and getting accepted into these programs, and we shouldn’t put them in so much debt that they charge us more for their services! We also need to assign more residency slots at California’s five public medical schools to primary care physicians because they are in such short supply.
Many observers like to point to medical liability as being a driver of health care costs. While it is easy, and sometimes appropriate, to beat-up on trial lawyers, California‘s Medical Injury Compensation Reform Act (MICRA) has been very effective at holding down health care costs associated with abusive lawsuits. We should not increase the MICRA cap and we should prevent lawsuit abuse, just not in an effort aimed primarily at cost control in health care.
All of these measures will substantially lower healthcare costs, and none of them should really be controversial. We must try reasonable, market-based reforms like those outlined above before implementing the radical, economy-killing reforms the legislature is currently considering.
Universal healthcare has failed everywhere it’s been tried. The reason is that its implementation instantly and automatically eliminates the incentive for doctors and patients to control costs. Health insurance is the fastest growing cost, by far, for California businesses and families. This is the most important issue in health care. If we don’t address it, we won’t just be killing our economy, we’ll be killing ourselves.
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This entry was posted
on Thursday, October 4th, 2007 at 12:00 am and is filed under Blog Posts.
