Reforming healthcare

I've come up with a way to completely reform healthcare and make it more affordable and more effective. It won't happen, because doctors and insurance companies would hate it.

I am going to be talking about old-fashioned general practitioners here, mostly family/general practice and internists. These are the kinds of doctors that most of us use as 'our' doctors.

Each doctor would be assigned a certain number of patients in certain age groups. 25% would be 18-35, mostly young and fairly healthy. 50% would be 35-60, middle-aged with some problems. 25% would be 61+, some with more problems than others. For sake of argument (and smaller numbers) lets give this doctor (let's call him Dr Paul) 150/150/50 patients from each group.

Furthermore, these patients pay Dr Paul every month for their healthcare. First group pays $25 a month, next group $50, and the last group $75. This makes Dr Paul about 15,000 per month or 180K a year. Not a bad pay rate huh?

Ah, but there is a catch, a huge one. Dr Paul gets paid only as long as a patient is healthy. I'll explain more as I go on.

Let's say you are a 30 year old man, about 20 pounds overweight. You don't smoke, but you drink every weekend and you don't exercise much at all. You come in not feeling well and Dr Paul finds that you have marginally high blood pressure. Now today, the doctor might tell you to lose some weight and write you a prescription for high blood pressure meds. Now though, the doctor doesn't want you to just take meds. Because meds are paid for by the doctor. After all, you're sick and he's not healing you!

So, Dr Paul is very much into prevention. He will talk to you about diet, about exercise. He will refer you to a dietician and a fitness trainer. Since these are people he would need a lot, he would have set up either individually or through a physician's organization (like a businessman's organization) to have set referral fees to people like this. This sort of payment for referrals would apply to all types of specialists, from physical therapists, massage therapy, acupuncture, chiropractic, surgeons, and other specialists.

Now this may sound strange, but think about it from a fair market point of view. If you are a surgeon, you are not going to get any patients (mostly) except by referrals. And if you charge too much, you aren't going to get many referrals and therefore, not make a lot of money. And if you are Dr Paul, you want someone who will do a good job, but also not charge you too much.

That's the problem today. Doctors don't worry much about how much things cost, or even how much it costs their patients. That is unlike any other type of business, where cost control and efficiency is very important.

Continuing our example, if you do need blood pressure medication, Dr Paul won't just automatically give you the latest, greatest (and most expensive) medication. There are a lot of slightly older medications, with less side effects and yet still are about 80-90% as effective as newer drugs. And cheaper. Again, the doctor would have an agreement with a pharmacy for them to buy in bulk and pass on the savings to the doctor.

Remember, it is now in the doctor's best interests to keep you healthy. So Dr Paul will have to follow up with you, see how the diet is working. encourage you to work out. It won't just be handing out a copy of a diet, a prescription and 'see me in 3 months'. There have been some experiments with many caregivers doing ongoing followup and the patient's outcomes are much, much better.

Now, to followup about getting paid while the patient is healthy. If you do come in with something short term, like a cold or blister, or broken finger, the doctor will take care of it and you keep paying your regular rate. But to take our example patient, the first month after his complaint and diagnosis of high blood pressure, the payment remains the same. Then the payment goes down, if the complaint continues.

2 months - 90% of payment
3-4 months 80% of payment
5-6 months 70% of payment
7-9 months 50% of payment
10-12 months 35% of payment
13+ months 20% of payment

There would be much more detail than this of course. But I think you can get the general outline from this.

Barbara

New York State of Mind

Lately, I've been hearing this song behind various news reports online and on TV. I really liked it so I looked it up online. It's from a song called Empire State of Mind by Jay Z and Alicia Keys. It's almost like 2 separate songs, one a rap part from Jay Z (which I hadn't been hearing) and the amazing chorus from Alicia Keys. It's the chorus I just love. Here are the lyrics from that part:

New York, concrete jungle where dreams are made of
There's nothin' you can't do
Now you're in New York
These streets will make you feel brand new
Big lights will inspire you
Let's hear it for New York, New York,
New York

The hook is wonderful and the way it's recorded, well, I just love it. If I were 20 years old again, this chorus would inspire me to move to New York and make my life there. I'm way past 20, but it's nice to dream anyway.

Barbara

Social Security - Big changes

The next big government program I want to talk about is Social Security. Notice the capital 'S'. This indicates an 'important' program. It takes in and gives out a huge amount of money yearly. It has grown out of control and needs to be scaled back. And no, I will not promote throwing widows and orphans out on the street.

First, the Social Security (SS) tax rate needs to be increased. Not sure how much, perhaps about .5% every two years for the next 15 years. We simply need more money in SS to cover those who are receiving benefits.

Next, the never mentioned means test. Here is my proposal: right now, based on your total income some of your SS benefits can be taxed, up to 85% of them. This needs to continue, with a higher breakpoint, say $100K in total income, you pay taxes on 100% of your SS income. Then we need to extend this. You would continue to pay tax on 100% of SS income, but that income would be reduced by percentages as your total income increases. At a point of say... $250000, your SS would be ended. If your income were to be cut for whatever reason, you could reapply to start receiving some or all of your benefits again.

I would also raise the earnings limit for payroll taxes back to its 20-year average level. And all government workers, federal, state and local would be required to pay into SS.

These changes would result in enough money to pay benefits to those who really need them. Those who don't, will make do without them.

Oh and one more change. The SS Trust fund will be left alone, completely. No current or future federal government will be able to use its surpluses, on paper or in reality, to offset deficit spending or to make their budgets look better. 

Barbara

(Some of the information in this post was gathered from this link.)

Required changes in the military

I've been reading a lot lately and I want to put out some of my thoughts, and then a final essay on all I wrote about.

The United States needs to drastically cut back its forces. Pull all our troops out of South Korea, for instance. South Korea is a wealthy, highly advanced technological country. They have better broadband access, they have cell phones that make ours look like toys and they have money. We would be willing to sell them arms if they want, and if they can pay. They can certainly afford to defend themselves, even if they can't spend all their time surfing the Web and playing Go anymore.

Troops we have in Europe should be pulled out. I can see the point of keeping the military hospital in Germany open and certain airfields, but that's all. We don't need to have ground troops in those countries. The risk of war there is pretty much nil, and again, they can afford to guard their own countries. There is no longer a need for us to do so.

The war in Afghanistan.. use various forms of intel and focused use of Special Forces units to keep track of Al Qaeda and leave. It's not up to us to make them a democracy, if that is even possible, which I personally don't believe it is.

We are pulling out of Iraq and within a few years, we should be gone completely. Once that is done, cut back on the military, reduce spending, focus on R&D, having a smaller, more effective force. The military should only be used for direct threats to our soil, as it was envisioned to be. We cannot afford to police the world, nor is it our job or our destiny to do so.

Let the National Guard be again, a 2 weeks a year, one weekend a month force, which helps out it's state in times of disaster. That is what it should be used for.

This is the first step. This will help stop the outrageous spending on defense, cut back on big systems we don't need and focus on making our soldiers even more effective and deadly, but with the fervent hope that they will never be needed.

Barbara

The New Mises Academy

This blog is about learning and right now, in particular, learning Austrian Economics. The wonderful mises.org has just announced a Mises Academy. There is an article about the context of this announcement. They are already offering a class that sounds very interesting. It is about understanding the business cycle. This Academy is definitely something to keep your eye on!

Mental exercise is important too

Everyone knows that they should eat right and exercise. Whether we do it or not, we know that we should. Something people don't think about as much is mental exercise. Especially as you get older, you need to 'use it or lose it'. If you do the same things every day, your brain, like your muscles, can get lazy. I use a website called lumosity.com to do brain exercises and I have noticed a definite difference. The need for mental exercise is also why I continue to try to learn new things. I've studied Latin, and learned to knit. Now I am studying Austrian economics and keeping my brain agile while learning. What are you doing to keep your brain fit?

Third lecture home study course

The third lecture in the Mises University home study course is called 'Mises in one Lesson - history of Economic Thought' given by Murray Rothbard. Total time is 56:38.

He starts out with a very brief history of the Austrian school, mainly that while the founders of the Austrian school of economics were, very naturally, Austrian, there are not so many now. Most 'Austrian' economists are now of course, from many other countries.

He then talks about Human action. Austrian school is based on individuals doing things, most other schools of thought focus on groups or aggregates.

When Carl Menger was working, the predominant school then was the classical school, Smith, Ricardo, etc. He gives examples of their thinking.

Rothbard then gives an analysis of the main points of Austrian economic thought. (This is not complete, just the points I wanted to remember.)

1. Purpose of production is consumption
2. Start with consumer demand and work backwards to factors of production
3. Make value judgements in marginal units
4. Not quantative, but value is subjective
5. Time preference - we want things now, not later
6. Earlier phase of production = higher order of goods
7. Entrepreneurs are very important

He then talks about Mises Theory of Money and Credit (Note: I have not read this book yet). Again, Rothbard covers the main points of this book.

1. It integrated micro and macro economics
2. applied marginal theory to money and credit
3. only real use of money is exchange
4. fractional reserve banking is basically fraudulent
5. increases in money and credit causes price increases and messes up the capital structure
6. increases in money supply increases interest rates
7. results of recession (a natural process) washes out imbalance between capital and consumer goods
8. necessary liquidation process, if government interferes, this prolongs the recession

These last points are obviously applicable to our current financial situation.

This was another excellent lecture, with a lot of information.