Health-care reform

Competition or chaos?

Fuss and bother over setting up health exchanges

See article

Readers' comments



Blood and Iron

Well, one problem is that any number of regulations appear to conflict with other already existing regulations. To wit, the law requires small businesses to offer insurance to their employees, at a "reasonable" price. "Reasonable" is defined as 9.5% of an employees income. Not the employees' salary, their income. This means that a business must quiz employees about, say, their investments, or second jobs, etc. This conflicts with a current regulation on the books stating that that is unfair to ask these questions (I think the law has unfair in the title, that's where I'm getting it from).

Honestly, although it wouldn't have passed, and while I personally oppose it, a single payer system would have been more logical and better than this mess, which no one seems to quite understand how to make work.


Why is there so little discussion about the effect on healthcare costs of the incredible high barriers to entry that health care providers face when trying to establish a practice in any of the US states? Why US hospitals cannot hire the best and brightest doctors from the rest of the US and the world, in the same way that Boeing, Microsoft, etc. can hire the best and brightest engineers no matter their location? I find state-level licencing requirements for doctors very close to those state-granted monopolies of yore. Why the government thinks that Boeing can hire and control the work of countless engineers who perform extremely complex tasks and who can potentially kill scores of passengers if their job is not done to the highest standard, but apparently thinks that no corporation can set up a governance structure that ensures that only the good doctors are hired and that they deliver high quality healthcare no matter where they studied or practiced before, is beyond my understanding. Given how much money medical associations give to politicians, I wonder if the main motivation behind those state-level requirements is to keep doctor salaries artificially high, not quality.


Healthcare isn't a right. I have the right to force someone to let me speak, to let me vote, to let me worship. I do not have the right to force someone to give me their goods or services. That is theft. Healthcare is indeed an emotional topic, but that is precisely why it is wreaking havoc on U.S. public finances.


Sounds like a system designed by a social worker lawyer who never met a payroll in his life and only had exposure to bureaucratic systems all his life! In other words, CHAOS. It will take a 10,000,000 lawyers 100 years to "fix" it?

wilfred knight

........The welfare state has failed in Britain.
The welfare state has failed in Europe , which is broke & bust.
The welfare state of Massachusetts 'popular' healthcare is bust despite the massive , massive subsidies paid by every other American citizen to fund this fiasco- it is NOT self-sustaining on Massachusetts taxes.
...'Exchanges' and the Economist's sneeringly dismissive 'fuss & bother ' analysis, is a smokescreen code ,which Obama admitted from the get-go, as a means on the path to cripple private insurance , so he can impose his Washington run dictatorship on healthcare on every US citizen to make them beholden to the state, and the Democratic party. His fascist idea of 'change'
Try digging a little deeper next time Economist.

J. Kemp

Is it really "health insurance"?

Or is it perhaps something which insures the ability of the medical profession, the drug and device industries, and hospitals, un-gated access to an ever-larger portion of America's GDP.

Imagine this: if America's lawyers were permitted to offer "legal help" to any person who they could convince into believing they needed it, and then provide as much in the way of "services" as was suggested by contemporary professional standards (such standards being set by the legal profession of course), while these ever-so-helpful lawyers could send the bill onto someone else, not the recipient of the legal services, pray tell, what percent of America's GDP would be accounted for by legal bills today?

Surely as much as is accounted for by "health" care.

There are many medical procedures, drugs and devices which are desperately needed, life-saving in their impact, and a real godsend to humanity.

And then there are those which make up the remaining 50% of medical spending in America.

That, dear Americans, is the problem.

Yukon Dave

More lower grade doctors are better than less high quality doctors that end up practicing drive by medicine. The fact is a majority of doctor visits only require the knowledge that most nurses possess. Increased visits to lower grade doctors would allow more attention and prevent more severe illness. With the price so high, and the drive by practice of 5 minutes of face time, less people see doctors.

The fundamental problem with US healthcare is the price of doctors. The American Medical Association makes it so hard to become a doctor that many have to build up massive amount of debt. This is why so many US doctors are foreign born and learn in their respective countries. Many would argue that we have a system of diminishing return.

Doctors that are 60 years old left medical school in the 1970's and did not have to do what modern students must do today. If we lower the amount of work required such as what we required in the 1970's we will gain a greater number of doctors.

The fact is a majority of doctor visits only require the knowledge that most nurses possess. Lower the cost of doctors you will increase the number of visits and prevent more illiness.


The article notes that Price Waterhouse Coopers estimates that 97% of the people signing up for health insurance through the exchanges will be 1st time buyers of health insurance. I think that this estimate is way too low. About 25 million people in the US have individual health insurance policies. During the health care reform debate, it was noted that people who have health insurance and like it can keep their current insurance. The problem is that if you keep your existing insurance and don't buy through an exchange then you won't be eligible for the federal permium subsidy. Subsidies are available for people with an annual income of less than 400% of the federal poverty level which would currently be single people with annual incomes of up to about $43K (even higher when certain types of income are excluded). Consequently, I expect that millions of people who currently have health insurance will buy through the exchanges in order to access the premium subsidy.

On a side note, regarding PABankers statement that he has the right to "force someone to let him speak" - not true. the 1st amendment of freedom of speech only applies to the actions of the federal government which was extended to state government in 1868 with the passage of the 14th amendment but doesn't require that non government bodies extend the right of freedom of speech.


I still don't understand how an exchange is suppose to be inherently better then what we have now. Now private companies directly sell insurance subject to state and federal rules and restrictions, with exchanges we'll still have private companies offering insurance subject to state and federal rules and restrictions, only indirectly and with subsidies... How does adding an extra layer or two of bureaucracy to this process make it better in any way?


Of course we could repeal healthcare reform completely and give it another shot in another 30 years or so. Or we could try to remove employer based care and naively hope that wages increase to offset the loss of benefits. What a mess!

Is it too late to create the public option? Now that the details of these "exchanges" are emerging, the public option seems like a pretty good deal.


Please allow me to share my experience as a provider in a "single payer" system that "controls cost" and "uses generics" and even "rations care" to a certain extent. It is the VA health system in the US. While it is staffed by many good and dedicated people, it is government administered and ultimately is run according to bureaucratic standards. That is, real efficiency is frowned upon, management is bloated and often territorial, and patients are often overlooked. Just sit outside the entrance to a typical VA clinic at 3 PM and you will probably be run over by the hoards of employees fleeing when "day" is over. That is not to say that excellent care does not happen or that excellent staff don't exist, It's just that like many bureaucracies, maintainence of the bureaucracy seems to be the primary directive.


The insurance contract is its own little social contract - a person gives something up to buy into a collective good. Compelling everyone to buy into one isn't necessarily bad.

As a thought experiment:

Imagine if every school in America was a private institution, but when a kid showed up asking to learn, the school had to teach them for the day. The government decides (quite rightly) that this is an insane arrangement.

The government would have three options: Establish its own education system, compel parents to pay their dues, or allow schools to bar children if their parents don't pay.

The first would be massive undertaking with the potential to bankrupt all of the private schools (and, to step outside the thought experiment for a moment, not a very good way to provide a top-notch education). The third option would be barbaric. The second option is the only one that could really be implemented.

Going with the second option, the government compels parents to enroll their children in one of these private schools. Such a system could work - indeed it could be far better than state run public schools, but do do it for 330 million people at once?



the health system problem is insolvable in a country like US - to big to complex to divided on any given issue to be able to make any reasonable decision. Add to it complexity of the issue itself and you will see that not only majority of citizens in any western country but badly educated and indoctrinated into belief that 'free market does all itself best' US Americans are plainly unable to comprehend the stuff.
Also the way this complex and divisive stuff is 'discussed' shows that the solution is impossible. The standard approach would be to:
1. analyze what the problem is,
2. brainstorming on solution,
3. produce the solution,
4. see how it works, goto 1 if there are problems
This all in time boxed manner so that people stay focused. This already fails at the rules of the game i.e. how to discuss the issue and its solutions as there are some that would not accept opinions of others (these communists or right wing or whatever). Then it fails at each stage of the process starting with 1.

This actually would be funny if it did not have a serious consequences for all independently on what happens. Happily US is going to fail financially at some point anyway just confirming its 3rd world status. The question is when 2020? IN August?
The really funny part is what happens then with Chinese economy. But that is another story albeit closely related due to financial implications as well the way it was badly handled by US citizens, their gov and their corporations.
God save America as their citizens won't


Inter-state health exchanges?

Many states won't let you purchase health insurance from a foreign insurer (foreign, in insurance lingo, means an out-of-state insurer, alien refers to an out-of-country).

One reason that this is a complete fustercluck is that insurance is still regulated almost entirely on the state level. I am not sure why - it is a clear cut case for the commerce clause.

I am all for ObamaCare, but it is possible that he (and everyone else) has underestimated the magnitude of the acid trip which is the insurance industry.

wilfred knight thread writer(YD) claims we only need young inexperienced nurses, not wise old Doctors, as anyone can practice medicine.

...Bless you if you need a neurosurgeon !

Partial brain transplants and brain stem cell implants are here to stay , best of luck with young nurse practioner
---now where do you cut this man's brain ???? oh! oh! what's all this bloody stuff ???- Doctor? Doctor? Doctor ???.
Welcome to your grave YD.

Liberal Coastal Elitist

@Yukon Dave: I agree with you when you state that: "More lower grade doctors are better than less high quality doctors that end up practicing drive by medicine."

Also, the AMA is a monopolistic, anti-competitive force. They have lost many court cases regarding their anti-competitiveness. In '38 itself, they lost a Supreme Case decision, in '86 they lost against chiropracters, and again in California. This destructive for has ARTIFICIALLY LIMITED THE NUMBER OF MDS IN THIS COUNTRY, AND NOW, WE'VE OUTSOURCED EDUCATION TO DEVELOPING NATIONS.

Let me clarify what I mean here in all-caps. About 25% of our MDs in the USA are foreigners or foreign educated. These people went to much more inexpensive MD schools in China and India, and now they are practicing here. This is, in effect, outsourced MD education. WE CAN EDUCATE OUR OWN AMERICANS TO BECOME MDs, but the AMA hasn't raised thenumber of matriculants much in 30 years, although this is changing for the better these days. Our population has increased substantially from 1980 to 2010, but the number of graduating MDs only increased from around 16K/year to 18k/year. We now have a few more MD schools opened up, such as Hofstra.

Another thing that the AMA has done is that they limit how many residency positions there are. There are about 100,000 residency positions, and this number is controlled by the LCME which falls under the AMA.

My friends, there are issues that I'm very befuddled about this whole residency issue and specialization and all that.
1. On one hand, we hear that 70% of our MDs are specialists and 30% are generalists/PCPs, but this figure should be inversed. As a result, PCPs/Generalists are over-worked. However, I posted a question on an MD discussion group to see if specialists were over-worked, and they all said YES, and they cursed me out as well :) So this proves that we have not only a shortage of PCPs, but of MDs in general!

With the passage of Obamacare, 20% more people will become insured and seeking medical care, but our supply of doctors will be same. INCREASE HOW MANY MDS WE PRODUCE BY 44% (20% MORE TO ACCOMMODATE THE INCREASED NUMBER OF INSURED SEEKING HEALTHCARE AND ALSO 20% BECAUSE THEY COME FROM ABROAD WHEN WE HAVE NEEDY ASPIRING MDS HERE IN USA WHO WANT TO HEAL ---> 1.2 * 1.2 = 1.44 --> 44% MORE MDS).

2. The residency program makes no sense to me and to internists and residents themselves. They're not good at admitting what they don't know :) We know that there is an acute shortage of PCPs and Family Docs. Also, every year there is an exchange which "matches" 4th year MD students with the specialty and training of their choice. This is called Match Day. However, a disproportionate number of these kids go into specialties like surgery or whatnot. In a free-market system, if we had a shortage of manpower in one area, then there would be a concomitant increase in job requisitions to fill those positions up, but in the MD field, this is not the case.

Please explain this to me.

3. Also, residents are a watershed of revenues and "that Medicare subsidies for training residents simply provide surplus revenue for hospitals which recoup their training costs by paying residents salaries (roughly $35,000 per year) that are far below the residents' market value." (From Wikipedia). WE NEED TO STOP RESTRICTING THE RESIDENCY AND INCREASE MD STUDENTS IN THIS COUNTRY. LET FREE MARKET DICTATE THAT WE NEED MORE PCPS AND FAMILY DOCS.

wilfred knight

....LC Elitist asked for an explanation as to why more MD grads go into specialties, rather than general medicine -- General Practice or Primary Care Provider,at the match, if there is a"free market system".

.... well here is your explanation Liberal Coast Elitist:
1)..... there is NO free market system duh!
the govt sets -fixes fees- arbitarily low through Medicare RVS, which the insurance companies giddly copy.
Compare with ball players making $10k an HOUR/$16,000,000.00 a year.
And Primary Care gets paid crap - same old same old ,there is not enough medical dollar in society to pay them.
2).For anyone with a brain, general medicine is so boring that it is often a practice of last resort.Specialty is where the action is.


>ObamaCare will do little to address these problems.

Not intended to. It is intended to provide coverage for those who don't have it.


Latest blog posts - All times are GMT
Car technology: Turbocharged
Schumpeter 3 hrs 58 mins ago
Gun laws: Prayers and pistols
Democracy in America July 11th, 17:43
Daily chart: Justice on trial
Graphic detail July 11th, 13:40
Technology and fashion: Storming the maisons
Schumpeter July 11th, 10:05
Financial literacy: Back to basics
Free exchange July 11th, 10:01


Products and events



