Naive Solution to The Growing Healthcare Problem

The public insurance option won't really work since it doesn't treat the core problem with the system. There is no fair market for goods. The market hasn't found the price for physician services as goods. Whether they are contractors, or employees, or whatever isn't the problem.

The typical solution when a monopoly is overpriced is that a competing firm enters the market to challenge the current cost structure. They may succeed, they may fail, but the change the market, imperceptibly at first, but ultimately they can revolutionize the system. This is currently not possible due to insurmountably high costs of entry. To create a completely new vertically integrated healthcare provider is ridiculously expensive due to the insane legal, legislative and incentive environment. No sane businessman would touch this system, even with its high profitability.

The government is still the solution to the problem, just not by applying a band-aid 1,990 page insurance triage. The current generation of AMA Lobby supporters, physicians, etc... are not going to approve any change to the way the system works. It is just to lucrative for them. In a free market economy, they would be destroyed by their shareholders if they didn't. The only thing left in this particular industry is for the government to directly compete with them.

Instead of aid, legislation, and obscure and complex incentives, allow the government to create an entity that directly recruits Med Students and offers them high salaries, about 30~50% more than the current average being offered by other providers. Even at that salary rate, probably somewhere around $300,000 per year, the costs of running this system would be a minor fraction of the currently allotted 2020 national healthcare bill. The costs would diminish continuously, in much the same way as a normal company's costs diminish as they innovate in efficiency.

Sign the students, and any other professional physicians to long term contracts, between 5 and 10 years. Basically treat them like athletic talent. Take all legal responsibility away from them, take all of the management tasks away from them and give them the ability to just work on the problem, the patient. This focus alone should improve outcomes by 25%. The key to this is to completely ignore the current incumbent provider community, unless they want to work within the system.

Then, within this particular structure, put students directly to real meaningful work with senior students or physicians, not the hazing that happens currently. Provide clear decision support systems that provide recommendations as opposed to CYA legal blah, mandatory treatments and tests. This will help to create some consistency, since you are putting less experienced Doctors in front of patients in some cases, but it will allow stars to shine.

Then, let them innovate, allow them to submit ideas to improving workflows and efficiency and take them seriously. Let these students own, drive, and change the organization. This will go a long way to retaining talent. Secondly on top of their plush salaries, offer them a bonus structure that is tied to what we as a country ultimately want. Solid outcomes at an efficient cost. Give them software tools to easily see the outcome of an individual patient alongside the cost to the system. Quarterly provide meaningful bonuses for improvements in either efficiency or outcomes. These two things should be equal. This will facilitate a dynamic environment that is responsive to changes in COGS basically, but where docs can make the choice to burn a bit more money if they think the outcome would be better. Keep the choice with the physicians, not with the bureaucracy. The in-the-trenches physicians still, and will always, know better than any non-practicing doctor or legislator what needs to be done. Keep the decision support systems transparent so that prosumer patients could question the logic of the decisions that the physician is making on their behalf. Use email and telephone to actually talk to people and answer questions. That would cut down on probably 15% of office visits.

For the first few years, this would be fairly expensive, but the effect on the market would be swift, and within 10 years would drop the cost of healthcare dramatically. The first effect would be to incent people who would have chosen other careers, but that want to help people live better lives, to seriously consider going to medical school, instead of making a web startup. The pool of talented, caring, individuals would increase in med school.

Another significant effect would be that competing providers would have to drop their costs, and change the way they pay doctors to be competitive. Medicare, along with all of the other insurance providers would prefer sending patients to this vertically integrated nationwide clinic / hospital system. Their cost structures would adjust to reflect this, plans allowing patients to see any physician would be probably 20x the cost of going to the government's clinic.

Malpractice insurance would increase hugely in cost since most doctors coming out of med school would opt for this deal and not need it, since demand would not be there, costs would likely increase for those physicians not working for the system.

If the fees are higher, the physician's cost for service would be significantly greater and the average person could not afford a plan that would cover them. If the provider were super awesome, they could probably scare up enough high-end clients to have a comfortable lifestyle and create a few jobs by doing it the old-way, but these places would be health boutiques basically and not mainstream.

Since most of the procedures from these places would not be covered by any insurance, consumers would have to directly pay. Even with the boutique health providers, the direct payment for services rendered would control costs.

Physicians would have to reduce their margins in order to retain patients, some hospitals would innovate and be able to attract quality talent at a lower cost, some may go out of business, but ultimately providing an alternative like this would force the market to function properly.

How would we pay for this? Obviously we'd have to raise taxes. However, we would be paying for a functional system that would start to dump money back into the hands of business owners in the form of dramatically reduced plan costs to the business, and consumers. Those returns would dump into the GDP since business and consumers would be likely to spend money on other goods and services.

I don't personally like deficit spending, but it could be funded that way, over 10 years the system would more than pay for itself.

Basically this is single payer healthcare, but in the most American way possible. You introduce an innovative, well capitalized competitor to the monopoly offering better service at lower prices. The market then will do what it does best, seek efficiency and profits. TANSTAAFL, we'd have to pay up front, but we'd create millions of jobs, fix the system, and once again be a model for the free-market system. Ultimately it would make sense to IPO the company and let it ride, but that would have to be after 20 years or so, and it would have to be regulated as heavily as a California utility company, but it would be an independent company that others could compete against. The goal is just to return the efficiency and sanity of the free-market to healthcare. I, in my naivete can easily make proposals, but I think this just might work.

The Obama Administration and Labor Unions

One of the things that I am not thrilled about with the Obama administration is how tightly the democrats are bound to the labor unions. One of the first questions I asked when I was a kid learning about the unions was, "Wouldn't that make fewer jobs and hurt entrepreneurs?" The answer to that question, from my teacher, was that in the early 20th century companies treated their workers awfully, and that there was little to no choice in the types of companies you could choose to work for and that someone needed to stand up to the big companies. I agreed because I was 13 or whatever.

Now, however, I have a different opinion, first of all, it isn't the early 20th century any more, and we do have government regulations about working conditions. Having worked in many different industries, I have even for a time had my own company, my current opinion is somewhat complicated, but I can enumerate.

First, that labor unions, in their current configuration, demolish job creation, and inspire automation. This has the obvious effect on society. The current configuration of a union is usually to pay dues to a larger union that hires labor lawyers who will sue a single company to get whatever for the specific employees of the given company. The problem with this part is that the benefits, occasionally help all workers, but typically only help the union workers at a specific location. This creates a conflict of interest within the union. Unions usually claim that they are out for all of the workers in the world, but realistically, they are out for their fellow workers at a specific location. So certain companies or sectors will suffer under high wages for relatively low productivity, especially since the unions frequently block adoption of technological innovations that would make companies more efficient, I.E. GM, all airlines, medicine, etc...

If unions were organizations like the EFF that instead of picking specific issues at specific companies to go after, but instead were trying to better the lot of all workers everywhere, and get the government at the state and federal levels to improve protections and conditions for laborers, then perhaps I could get behind it. But to me they appear to be self-serving organizations who exist only to enrich themselves.

It limits companies to a particular definition of what a company is and how it should be organized. One of the things that will keep the world in recession at this time is protectionism. Unions have been notorious protectionists. Not just in the United States, but everywhere. For some reason they seem to think that if you make stuff, you don't really need for anyone outside of your region or country to buy it, or perhaps they think that it is OK for them to make stuff and sell it abroad, but the consumers in their market should only buy from them. This sort of double standard is insane and dangerous with the current scale of the world's economies.

If labor had its way, there would be 2 percent growth continuously in every industry all around the world, basically matching the increase in the population, jobs would be inherited from parent to child, and everyone would have a job, but no one would have an opportunity to really change things.

If my company has half workers in another country, and another half temporary or contract workers in the US, and I am an unprofitable startup, how in the world am I going to pay or negotiate contracts with all of them. Why would I want to, as the head of the company I am just trying to make a profit, and make sure everyone keeps their job. If I had to pay full benefits to everyone, domestic or foreign, I would never get my company off the ground. What is more likely, I wouldn't even try, that potential entrepreneur would just fold into some other company pressing widgets and never try out his fantastic invention, because the startup costs would be too high in an over-regulated environment.

People are freaking out right now about the economy, but really over-regulation is not the answer. We have gotten where we are because of the relative freedom of our markets, and the great rewards of taking risks and having fabulous success. Sure I am frustrated that a handful of individuals caused good, solid companies to fail and basically undermined the entire system. But you can't have the fabulous standard of living that most of us enjoy without that risk.

There are things we can do short of socializing the system, I think some degree of moderation is necessary and I am not really seeing that from the initial overtures from the Obama administration. I'd like to see a bit more pragmatism about labor, and the oversight of the industry in general. One simple thing, instead of punishing banks by limiting CEO pay and whatnot, which is just plain stupid, would be to incentivize the regulators the same way. When they discover a 162 billion dollar fraud ring, give them a piece of that, say 1%. You'd see some of the best and brightest getting into the regulatory circle. The best part is that you would have big business watching the regulators, to make sure they didn't trump up charges, and on the other side you'd have the regulators watching big business. It sounds like a stalemate to me, which is what you really want to have.

I think a return to big labor, protectionism, and limiting the entrepreneurial environment is a huge mistake that our children will complain about more than inflation or deflation. The ability to have a big idea, and do whatever you can to nurture that idea to become a world changing phenomenon is too important to get wrong. Without that, I fear for not just the U.S., I fear for humanity.

There are some big problems out there, and the best minds need to see the reward for solving those problems. Having a living wage, or guaranteeing pension, those things are much smaller than that. If there is a problem with the wages, the state and federal government should fix that, if there is a problem with hours, the government should fix that, if there are toxic working conditions, the government should fix that. Labor should turn their guns away from businesses, and lobby congress for the problems in the labor market. If they feel that people should only work 37.5 hours, get a law passed, don't pester the poor business owner about that. If you get everyone involved in voting on this stuff, it is much less likely to happen once it is put under full scrutiny.

The reality of life is that everyone should not get paid the same amount, everyone should not have the same standard of living, and all workers are not equal. It goes back to what all of our parents told us. Life is not fair, we shouldn't expect it to be. If you don't like what your company is doing, leave and start your own company, make your own choices. That is what it means to have free will. That is why, allegedly, we go around the world fighting, to allow people to make their own choices. We shouldn't blow up someone because they are limiting the choices of their people, while doing the same thing at home. That would be just as hypocritical as the previous administration.

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