Second, The Law of Unintended ConsequencesBack to the Blog »
August 22nd, 2009
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It’s my position that an overwhelming majority of Americans support the idea of universal healthcare or, more specifically, the idea that it is a good thing for all of us to have comprehensive, affordable health insurance coverage. I call it my Golden Rule of Health Reform.
In fact there is some decent poll numbers that support this idea, including 69% in a May CNN poll ,and 65% from Rasmussen in June and 63% back in March. In it’s purest, most theoretical form with no strings attached I am sure that the number is 95% of the population or more. How can health insurance for all be a bad thing with no costs or other policy tradeoffs to be considered???
Ahhh, but we live in the real world, and a real-life political scenario where costs like taxes are considered and potential trade-offs about quality, access, government intervention etc. get added to the mix, support plunges. Today, support in the polls for the specific proposals under consideration is below 50%…and falling…
As some great philosopher once said, ”Reality Sucks”… But how can this be??? If we all embrace the Golden Rule of Health Reform, what drives the numbers so low?
The answer lies in The Law of Unintended Consequences:
The law of unintended consequences, often cited but rarely defined, is that actions of people—and especially of government—always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.
More accurately, it is FEAR OF UNINTENDED CONSEQUENCES that kills much of the popular support for universal healthcare.
Healthcare is about the most complicated public policy issue there is. Have a look at a couple of the diagrams that have been floarting around to demonstrate the complexity of the current and proposed systems:
CURRENT SYSTEM (click on map to enlarge)
Current System (www.satvathealthcare.com)
PROPOSED SYSTEM –HOUSE BILL (click on map to enlarge)
Proposed House Plan (from Republican Staff vis Washington Post)
Why would anyone be concerned that proposed changes to the system might have an unexpected impact in other parts of the system?????
Drawn from Adam Smith and the “invisible hand” of the competitive market, the public’s fear of unintended consequences is based on the invisible, unknown and unanticipated forces that government intervention brings to the market. Here’s a very plausible scenario as it relates to healthcare reform:
1. The proposed “public option” or government plan offers better benefits at a lower cost than private insurers.
2. The lower cost are achieved by capping the reimbursement rates for medical procedures at 120% of what medicare allows, vs. an average of 140% paid by private insurers in a given region.
3. As a result of this 20% pricing advantage, benefits are 5% better than average private plans while premiums are 15% lower.
4. As a result of these very favorable consumer conditions, the government plan becomes the most popular plan, saving money for businesses and providing affordable coverage for previously uninsured.
5. As a result, businesses are able to resume hiring employees and hospitals and providers are able to get reimbursed for care provided to the previously uninsured. With the governments purchasing power, rate increases are capped at the CPI because reimbursements to providers increases at only the same 2.5%.
6. With the increase in the insured population, and per the contracting terms with the government plan, providers are required to increase the volume of patients in order to avoid long delays. They also need to see 20% more patients in order to achieve their previous income levels.
7. Over the course of a decade, incomes earned by Doctors declines by 10% in real terms, while their volume of patients has increased 20%. Increasingly, services are being provided by Nurse Practioners hired to assist with the volume of patients.
8. With declines in income and the added stress brought on my managment responsibilities and the higher volume of patients, the number of applicants to medical schools starts a steady decline. And the average GPA and test scores of those admitted declines as the best and brightest students pursue careers in fields that offer higher incomes with far less post-graduate education and training.
The bottom line is “Mission Accomplished” for healthcare reform: lower healthcare premiums, better benefits and universal health insurance coverage.
But the system looks far different than anyone anticipated, and there are many new problems associated with access to care, quality of the care and the freedom, choice and overall medical experience enjoyed by patients.
These are the unintended consequences, and it is our collective fear of these unknown and unanticipated changes that turn ouroverwhelming teoretical support for the Golden Rule into the more tepid, cautious attitude that is reality for most of us.
Posted by Bill in Healthcare Reform, Unintended Consequences
