Healthcare Reform

This is the last week of November. Naturally, the shallowness of short-term electoral rhetoric is giving way to long term philosophical commitment on populism. The most important document yet on that count has come from the Senate Finance Committee Chairman, Max Baucus. The Senator, a Democrat from Montana, hopes to set the reform agenda for 2009 and his choice of issue is healthcare reform!

Senator Max Baucus has released his white paper on Healthcare Reform.

The white paper itself is quite good for a political document — in that it captures all the pain areas that a typical payer or provider would have as talking points at any trade event. In fact, the white paper has built a case up for a structural change in the delivery mechanism for improving efficiency. And correctly identifies the issues that escalate the cost of healthcare in America. Further, the Senator mentions that preventive health is possibly an answer and admits this can be achieved only by aligning incentives to outcomes.

However, Senator Baucus is a politician. That means, he will ignore the fact that the aligning of incentives means making insurance companies more efficient and possibly leaving some of the population out or hiking their premiums. Since he cannot say that, he goes on to make the case for a health coverage council and a Medicare buy-in option. If a politician wants a Medicare buy-in option, to the lay person who does not understand how the details of insurance works, it appears that reducing the age to 55 is hardly useful. After all, Medicare has the most lopsided demographic a payer can get — in this case the government happens to be the payer. So, one might as well offer anyone to buy their way in — so that younger people come in and restore some sense of balance in terms of the median age. Would that be called Socialism? So he does not let that happen.

An efficient system of insurance means that an individual gets the choice and the overall sample remains insured for a long time across a wide demographic. The obvious answer to this is a default government program which will be inefficient. The next answer is to completely eliminate the reason for most of the imbalance — namely an insurance plan for an entire nation that is tied to its employer. This will be too radical. It appears, the answer then is, chopping insurance to sub segments and selling multiple covers to the same individual. Depending on one’s ability to afford. That is otherwise called CDHP and is already starting to happen — in a small way. The downside is, some will be allowed to die.

Morality as an argument cannot be met with efficiency. Which means, all governments in all countries must be socialist.

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