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  • What Is Not Seen

    Posted by Dan from Madison on September 25th, 2007 (All posts by )

    A few months ago the Senate Democrats here in the State of Wisconsin floated a plan to provide universal health care for all residents of the state.  The first question most will ask is “who is going to pay?”  The answer is that the plan ($15bb worth) will be funded through a payroll tax.

    The plan is dead in the water as the Republicans who control our State Assembly are having nothing of it, but in the next election there is the distinct possibility that the Democrats will win back the Assembly, and will then control the Governor’s chair, the Senate and the Assembly.

    This is the type of thing that causes business owners like myself nightmares.  I already provide top notch insurance coverage to my employees and their families.  If I am forced to pay a huge payroll tax to provide insurance, it is a mere formality that the very good coverage that my employees currently enjoy will go away.  In other words, I will be damned if I am going to pay twice.

    Add to this that my business crosses state lines, with part of the employees residing in Illinois.  It is completely unfair that they receive the good coverage, while the employees in Wisconsin will have to deal with the inevitable bloated bureaucratic mess that the state health plan will become.

    But life isn’t fair, and the employees will have to understand that.  The good news for me is that I won’t have to worry about them scurrying off to other employers – everybody will have the same coverage.  The bad news is that these are my friends and some are long time employees that I care about and I just know that they are going to get shafted by the State of Wisconsin someday for something.  I guarantee my tiny business isn’t the only one that will have to struggle to make things fair and/or equitable for employees.

    On a personal level, I have already started to look into alternatives to the state health plan.  First and foremost I am making good personal decisions (less alcohol, more exercise, watching my weight).  If I am not sick, I don’t have to go to the doctor, and won’t have to deal with the nightmare to come.  Secondly, I have begun to look into private insurance, or perhaps becoming a resident of another state while living here in Madison.  Frankly I am hoping that I won’t have to cross this bridge any time soon.

    Episodes like this always make me think of Bastiat and this essay.  Even though it was written 159 years ago it is always timely.  The thrust of it is that “the bad economist pursues a small present good that will be followed by a great evil to come…”.  The first paragraph:

    In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects.  Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen.  The other effects emerge only subsequently; they are not seen; we are fortunate if we forsee them.  (bold mine)

    I don’t have any answers to the health care problems we all have, and would love some realistic solutions from somewhere.  That cost on my business that happened courtesy of WW2 is one of my largest.  I do know one thing – if the solution is done courtesy of the State of Wisconsin there will be calamity.

    I sincerely hope that if the Democrats gain control in ’08 that this plan will not pass in its present form.  But if it does, the unseen future effects on the economy of this state will be severe.

    Cross posted at LITGM.

     

    25 Responses to “What Is Not Seen”

    1. david still Says:

      If the wsriter notes that life is not fair, then why carp at something he feels is not fair? In fct, we need a universal plan for the enitre nation and not just piecemeal plans here and there. The sort of thing–dare I suggest this–congress gets for itself!

    2. Dan from Madison Says:

      Damn – a spam and a comment I can’t understand. Not a good start for this thread. Meh, thats the internet for you.

    3. MIke Says:

      First, what is the top notch health insurance plan that is provided to your employees? Do they pay any of it? What are the deductables? etc…
      Second: you know that any initial talk about a political hot tamale is just that: talk. Why not join in the conversation and see how the common good could be served for all those who reside in the state.
      Third: your concerns are valid and fear is often the first emotion to arise but fear only impedes progress and reasonable solutions to a major problem which is health care.
      Do you believe health care is a basic right for all citizens or just for those who can afford it?
      Your reaction is thoughtful and based on your personal immediate experience. Perhaps it needs to study the issue more so as to get beyond the surface of politicalization.
      Unless we begin to seek solutions that will benefit the common good we are doomed to living a life that benefits the few at the expense of the many.

    4. Dan from Madison Says:

      Mike – We pay 100% of our employees health insurance. Without going into details, I guess you will have to trust me that the coverage we provide is very good, and according to our insurance agent far above and beyond what most employers provide.

      As far as it being “talk”, actually the Dems are deadly serious about this thing and are going to use it as a club in the next elections. They have said this themselves.

      Trust me, plenty of people have heard from me on this issue as they have heard from many, many other business owners in the state.

      “Do you believe health care is a basic right for all citizens or just for those who can afford it?”

      Do I believe health care is a basic right for all citizens? In a word, no. I will ignore the second half of your loaded question. Am I a ruthless person that doesn’t understand that there are certain circumstances where people need help? No.

      As I stated in my original post I don’t have a lot of the answers to the mess, all I know is that the insurance costs me a mint, and my employees will most certainly suffer if a giant bloated government program ends up being the solution to the problem.

    5. david still Says:

      An arguement about giant govt bloat seems to suggest that it is the liberals rather than the conservatives who build the bloat, and yet we find that the so-called conservatives (GOP) haveNOT reduced govt, have NOT reduced deficits, (have NOT made govt smaller–in sum, they have made boat central to their time in power.

    6. Dan from Madison Says:

      I agree with you David Still, both parties are to blame for major bloat. But it would be hard to imagine the GOP creating a plan such as the one I spoke about above. And they have pretty much crushed it as in the State Assembly. 2008 may be another story.

    7. Don Says:

      I don’t have any answers to the health care problems we all have

      The ‘problems’ are infinite. The resources are finite. Where were all these problems 50 years ago, 40 years ago, 30 years ago before the high tech protocols and supermarket of pharmacy appeared? People just died. We got along with it. Now that there is ‘hope’ we demand every possible action be taken to extend life. Is that extension ‘artificial’ because it didn’t exist fifty years ago? But now its a ‘right’.

      We will buy bankruptcy in our pursuit of immortality out of fear that a mere fifty years earlier was simply accepted as the full journey of our Mayfly existence on this rock wandering around the Sun.

    8. Tyouth Says:

      State universal (read socialist) health care will no doubt be, at the best, mediocre health care, one assumes, for all. Long lines, waiting lists, petty bureaucrats. I’d rather take my chances on the present current situation with institutions of insurance.

      We’d probably all be better off (no offense to those in the insurance industry – I was at one time myself – but there it is) if insurance itself was outlawed and health care costs were simply handled like the purchases of a pair of shoes or an automobile. Letting market forces determine costs would go a long way to making things affordable.

      By the way, at one time the AMA determined the number of doctors allowed to be educated and practice. This artificial limitation of providers was criticized as an artificial profit maker and a cost-increasing situation for the consumer. Was it, or is this still the case?

    9. mishu Says:

      Canadian kept telling this woman that she’s going to die and that she should get her affairs in order. Instead, she took $60,000 out of her life’s savings to be treated in India. Now, she’s in remission and expected to live much longer than what the socialist system expected her to live.

      Catherine is still outraged that the Ontario system considered her cancer too expensive to treat.

      “Too expensive? What’s your budget? What am I worth?”

    10. Lexington Green Says:

      We are moving 180 degrees in the wrong direction. Health care needs to become the competitive industry it could be. The only thing that helps the consumer, the little guy, is if the people who provide the goods and services Joe and Jane Q. Public need have to compete for Joe and Jane’s dollar. Price competition, and more importantly, competition driving the creative destruction of innovation, are the only things that work. If we go in the direction of one-size-fits-all health insurance, we will soon have a much worse, two-tier system. Most people will be stuck in the government system, which will be far worse in the USA than in Britain or Canada or other places that like socialism and are better at it than we are. The very wealthy will participate in a globalized, market-driven private health care system. To some extent middle class people may be able to take advantage of things like medical tourism to India, which will benefit greatly from the destruction of the American health care system once the government runs it, and which I predict will happen quite quickly.

      The intellectual bankruptcy of the GOP on this issue, year in and year out, is yet another source of despair.

    11. Ginny Says:

      Lex has a point. Perhaps we don’t always care about our health, but surely we believe it is important enough and the bills high enough that we would choose fairly intelligently – something I’ve seen few bureaucrats do in ways that fit my unique preferences. (I’d rather pay for cholesterol medicine than give up beef; I don’t need plastic surgery on a scar covered by my hair.)

      Insurance encourages some absurdities. The itemized bill for my second daughter’s birth included numereous circumcisions (it was as if someone fell asleep at the keyboard). That was one treatment I was pretty sure she didn’t get, no matter how groggy and excited her parents were. The hospital’s response was that insurance paid for it. I phoned the insurance company and promptly forgot about it. I don’t know if it was corrected or not. I’m sure I’d have known if we’d been paying.

    12. Lexington Green Says:

      “…that we would choose fairly intelligently …”

      People buy houses, cars, other kinds of insurance, decide where to live, what jobs to take, all kinds of major decisions. Health care decisions are no different.

    13. Shannon Love Says:

      Dan from Madison,

      Just to play devil’s advocate, you might not see that much of an increase in your overall tax burden.

      We already have an ad hoc socialized medical system. Everyone who actually needs medical care gets it whether they can pay or not. Such people usually get treated at a county facility paid for with property taxes. In principle, a big chunk of this plan would simply relocate the tax collection from county property taxes to state payroll taxes.

    14. Dan from Madison Says:

      Shannon – Yes, my tax burden may actually be a wash, but there can be no doubt that the quality of care for myself, my family and my employees will go south quickly and drastically if it is in the hands of the government.

      And I guarantee you that my property tax will not decrease even thought the state payroll tax will increase.

    15. MD Says:

      I don’t have much to add to this conversation, although as a practicing physician I probably *should* have something to add.

      *All I know is that my life is governed by the pathology fee schedules and CPT codes……88305s and 88304s and a whole string of wonkish, number-crunching, well, numbers. Feel free to read about fee schedules and CPT codes online. Prepare to weep. It’s like the tax code. Hospitals actual pay for coders to make sure the codes they code are the correct code, so they can get appropriately reimbursed. And not thrown in jail :)

      Hmmm, perhaps I should move to India and start a business where I can get images of pathology slides sent to me over the internet (or the glass slides directly. Stuff gets Fed Exed everywhere, right?) With the super low overhead, I can charge a very low amount for a second opinion (or primary) pathology diagnosis! Anyone who wants can get a rapid second opinion from a Stanford trained specialist! Okay, I’m not going to do that, I’m happy where I am, but I can imagine the pathology and lab diagnostic world moving in that way. Which means the whole credential thing might remain important, even as patients and physicians become mobile, as patients will want to know how they can trust their physicians diagnoses. I can really imagine some interesting scenarios in the delivery of health care. But that’s not the way we are moving. It’s all just re-working the tax, er, fee codes.

    16. Dan from Madison Says:

      Interesting comment MD, thank you for leaving it.

    17. MD Says:

      Oh, my point about credentialing was meant to address the commenter who brought up ‘capping’ of the number of physicians that are trained and credentialed. Yes, the training is ‘capped’, but how and why is above my pay grade, so to speak, so I don’t know a lot about the details. I have argued for training more physicians in my specialty area. We need them and we shouldn’t be afraid of competition lowering salaries. I mean, they probably would in some instances, but I can imagine that if there are more docs around they will find a way to make money. That might bring about a different set of problems, as I said, we shouldn’t be afraid of competition in our field.

    18. Don Says:

      “Catherine is still outraged that the Ontario system considered her cancer too expensive to treat.”

      In the spirit of this discussion, rather than just denounce the Canadian system, does this not show that

      1 – She had the resources to apply to that action which she deemed of most importance to HER interests. Therefore, she acted as a rational player in the market.

      2 -Her outrage is because the ‘state/people’ didn’t pick up her tab. She wanted someone else to carry her problem rather than use her resources.

      If the system was to promote ‘from each according to his ability, to each according to his needs’, it certainly fitted the case here. She obviously had the means. So is the argument really one of ‘socialism’ or more like natural old fashion greed, ‘I got mine and I’m keep it’.

    19. outraged Says:

      “People buy houses, cars, other kinds of insurance, decide where to live, what jobs to take, all kinds of major decisions. Health care decisions are no different.”

      Says who? Actually only someone with exposure to undergraduate economics would make a statement like that. (Sometimes crude undergrad microeconomics approaches religious dogma…) Health care decisions are of course, radically different from car buying. People will do anything, pay anything, to get treatment for a life threatening illness, and the medical profession’s code dictates that they will help them. When someone without insurance presents himself at the emergency room with an illness–a gangrenous leg caused by Type 2 diabetes, say– which could have been prevented or mitigated had he been able to see a doctor regularly, he gets treated at great cost and, ultimately, taxpayer expense. This is true in Wisconsin as in every other state.

      It’s rather amusing that folks are still using the spooky term “socialized medicine” or “socialist medicine” 40 years after it was used during the height of the Cold War to fight against Medicare. Which, by the way, is not a bad program, with one tenth of the administrative costs of private health insurance (though I don’t know about Bush’s prescription drug plan).

    20. Jonathan Says:

      Don: Without US private-sector medicine the Canadian system would function, from the patient’s POV, even worse than it does. What would be the backup for the US system if the USA went to single-payer? India? I suggest that a national medical system that tacitly depends on the availability of high-quality private medicine in other countries (for people with money, anyway) is fundamentally flawed.

      Outraged: Actually, only someone with a weak argument would resort to the “only someone with” style of argumentation. You are confusing two different kinds of transactions: insurance purchases and purchases of urgent medical care. It is like arguing that people are not competent to purchase their own automobile insurance because they would do anything to get treatment for the damage caused by a bad car accident. As a matter of policy, there are ways to deal with uninsured motorists without nationalizing the insurance industry, or mandating one insurance provider for everyone, or regulating the industry in the ways that the Wisconsin (and national) Democrats want to; and there are ways to improve the medical system without imposing similar, harmful policies as are proposed in Wisconsin.

      If you think Medicare is a model you are smoking dope. Medicare has exceeded its original cost estimates by orders of magnitude, and its expenses continue to soar as 1) the percentage of older people (beneficiaries) vs. younger people (payers) in the national population increases and 2) medicine becomes more advanced, variegated and expensive. Administrative costs aren’t the main problem. The problem is perverse incentives created by third-party payment. Without the price signals provided by a free market, Medicare can only control costs by rationing care, and the rationing becomes more severe as the aging population and availability of expensive new procedures boost demand for medical services. This is the inexorable logic of most third-party payment systems. The Clinton health scheme of 1994 would effectively have expanded Medicare — and its inherent problems — to everybody, and most of the other Democratic “reform” proposals, like the Wisconsin plan, are similar.

    21. Lexington Green Says:

      Jonathan said it better than I would have.

      I will not that Outraged follows the course most “progressives” take, of insulting the other person’s character and intelligence. To his/her credit Outraged does offer some argumentation in addition. But the need to always insert the ad hominen does nothing to strengthen the argument, and it lowers the quality of the conversation.

      Also, Outraged mocks the use of the “spooky term” “socialized medicine”. But the only person who used the expression was Shannon, and Shannon did not use it as a spooky term. Yet another characteristic of our occasional “progressive” commenters: Responding to what they imagine is being said, rather than actually reading it carefully.

    22. Tyouth Says:

      Outraged said: “People buy houses, cars, other kinds of insurance, decide where to live, what jobs to take, all kinds of major decisions. Health care decisions are no different.”
      Says who? …. Health care decisions are of course, radically different from car buying. People will do anything, pay anything, to get treatment for a life threatening illness,….”

      I don’t follow Outrage. You may have more money than I have and may buy a much bigger, nicer car – that’s not unfair because a nicer car can be bought with more money. Similarly for the same reasons you may be able to buy better health care.

      Something determines the differential (in this case) in the quality of health care since the best can’t be had by all. What should it be? Membership in the politburo or some special group? Relationship to the king?

      The almighty dollar may be a poor determinate of the differential in the ability to obtain goods (and health care is a “good” because it can be bought) but it seems to be the best determinate available. Top-down decision mandating by rules and committee have been seen to create economic dislocations that result in under-achievement; these type of mandates get poor results as a rule and black markets thrive. The gray solution of socialism (or communism, theoretically) will reduce the differences in health care between patients by lowering the care quality level overall and it will make good care more expensive or even impossible to get for the working middle class.

    23. Michael Hiteshew Says:

      Lex Wrote:
      We are moving 180 degrees in the wrong direction. Health care needs to become the competitive industry it could be.

      Exactly. The system(s) of regulation surrounding healthcare are what have made it so expensive. Many of these regulations are driven by the AMA, which is an industry self-protection organization like any other.

      Consider the following: What if we managed automotive care like healthcare? This may seem absurd on the face until you realize that a steering or braking failure can result in your death and the deaths of others – like your wife and children dying all at once along with you. In this way, autocare may be MORE important than personal healthcare.

      * Imagine if a routing brake job could on be performed by someone with a PhD in automotive engineering, perhaps with a specialty degree in brake design and maintenance. This is equivalent to my needing to see a PhD for a simple chest cold in order to be allowed to be prescribed common medications.

      * Imagine engine surgery were performed in an automotive hospital by a team of three or four of these PhD’s along with several BA/BS assistants? What would my engine work then cost??

      * What if most engine fluids and lubricants were only available by prescription after having my car seen by a PhD?

      My point isn’t that I’m recommending medical care be performed in someone’s garage, simply that most routine preventative care could easily be performed by registered nurses, ie those with a BA/BS in providing routine medical care. Do I really need to see a PhD for a chest cold? Legally however, no one else is ALLOWED to see. Think about that. How much would health care cost drop in nurses were allowed to go into business, open a clinic and see people in the community for routine medical care? The US military services routinely use the services of a lightly trained medical corps for medical care in the field. I wonder why? Cost perhaps? Efficient use of resources?

      Imagine transferring the current legalistic medical model to every other field. Only a PhD economist may review or modify a business ledger, assisted by BA’s or MA’s who compiled the paperwork beforehand. Imagine you needed a PhD in structural engineering before being allowed to put up house framing or build a staircase. Very few could afford to live in home. What if I needed a PhD in chemistry before being allowed to mix cement, or a PhD in metallurgy before I could pour a casting or make a weld? What would be the cost of ALL goods and services under those conditions?

    24. Ginny Says:

      I agree with Michael Hiteshew in theory.

      Still, my experience with our local managed health plan’s p.a.’s isn’t all that great and the midwives my daughter’s friends (and anthro teachers at Austin) were so high on are fine if the pregnancy has no problems, but I like women’s odds today better than in the old days.

      Maybe the training will improve as certain skills will come to be emphasized more and others less. I don’t care if the doctor doesn’t have a m.d. but I’d just as soon not spend another week away from work and in pain because an inflamed gall bladder was diagnosed as a sulfa allergy.

    25. Richard Cook Says:

      MD may have had a point. If medicine is treated like a bidness then aren’t labs, test, etc. considered back office operations? Would it not be logical to farm them to lower cost but equal quality locations? This is not a support or repudiation of the argument just a point for discussion.