The solution of medical problems must finally rely on commercial insurance
Due to the recent restatement of free healthcare from Russia’s health minister, the pubic angrily questioned why government in China can’t provide free medical service.
In fact, the free medical service is not something new in China. Before SOE reform in 1998, the urban medical system was similar to “being free of charge”: it was enterprises that paid all the medical expenses of employees in SOEs. What results were generated by such a practice? On the one hand, enterprises were unable to bear the heavy burdens; on the other hand, because the employees needn’t to pay any fees, so they treated unserious illnesses with great care, and were willing to go to hospitals even when they didn’t have any illness. On the other hand, because the patients had to go to designated hospital, then some institutions -- for example, the Public Medical Service Office got the power to seek privileges, just like the saying on someone’s microblog, i.e. “patients must beg them for seals for being hospitalized, transferring to another hospital, delivering hard-to-get medicines and carrying out big medical examinations.” Hence the closer to the authority, the more medical resources can be occupied.
In fact, free lunch appeals free riders, and finally leads to the unsustainability. In those years of China, the free dining halls without limit led to the great starving. And the free medical care of urban employees finally led to that factories were unable to bear the heavy burdens, and the declining competitiveness of SOEs.
There is no free lunch. In general, the cost of such free medical service actually is supported by all taxpayers. Taking the Russian free health care as an example, the fees of medical care are paid by the medical insurance premiums of all employees being on the job. Because of the increasingly heavier burdens brought by free health care, now the insurance premium rate paid by employees has risen from 3.1% many years ago to the present 5.1%.
Why the medical expenses will be higher and higher? The reason is just the same as the public medical care in our SOEs in those years. In fact, for all countries where such medical treatment is being implemented, the medical expenses will inevitably increase, and there is no exception even in the U.S. that is known as a highly market-oriented country. Though up to now the system of medical care insurance that covers the whole people has not yet been established in the U.S., now there are no easy burdens for each employee being on the job.
In 1965, the amendment of Social Security Act was passed by the United States Congress, and the Medicare that served the elders and the disabled and the Medicaid that served the low-income population were decided to be established. Though Medicare was only for serving the elders, the burdens were extremely heavy: according to the estimation of the Green Book of the House of Representatives, from 1966 to 1980, the expenses of Medicare doubled every four years. By 2007, its expenses had reached 440 billion dollars, occupying 16% of the whole federal expenses. According to the estimation of the Budget Office of the Congress, by 2015, the number will rise to 735 billion dollars, and by 2020, it will be over one trillion dollars. If the expenses of medical assistance are added, the percentage of the expenses of Medicare occupying the gross domestic product will reach the level of 6.6%. How to bear such a huge amount of expenses? The most possible way is to raise the payment percentage of each employee being on the job.
A report of CATO shows that in order to deal with such huge expenses, the U.S had to increase dozens kinds of new taxes in nearly 50 years after the birth of such a plan. More importantly, “Medicare has caused each generation of people to get an amount far more than that they have provided for their elder generation from their descendants.” Why will they get an amount far more than that they have provided for their elder generation from their descendants？There are two reasons here: one is that with the progress of medical technologies, human longevity will be more longer, therefore the medical expenses that the next generation has to pay more and more money; the second is that there is no motivation for hospitals to control relevant fees, and the bureaucratic system also has no motivation to control hospital expenses, so finally the expenses will increasingly expand.
Then, what kind of mechanism can control the rising expenditure? In my view, the intervention of insurance agencies may be an option. Insurance companies can find out the possible treatment fees for each kind of disease through market surveys. Once the diseases related to the types of insurance that have been bought for the insured occur, due to the reason of economic benefits, the insurance companies have the motivation to control the fees, and a clear expectation will be made for the treatment fees of the patients. At the same time, communications will be carried out with hospitals in the process of diagnosis and treatment so as to reduce unnecessary expenditures. Because there is the resource of a large number of patients at hand as the bargaining chips, hospitals may discuss with insurance companies on the diagnosis and treatment fees for certain disease, and reach a fair and just price to avoid the phenomenon of excessive diagnosis and treatment as far as possible.
Since it’s all the case of paying by oneself, what’s the difference between insurance company payment and government tax revenue? Firstly, the insurance is not compulsive -- many people are in good health, so they are unwilling to insure; secondly, you may choose this insurance company, and you may also choose another company. At least in theory, in order to gain more clients, each company will force hospitals to improve medical service quality and lower the prices.
Besides the above advantages, the biggest advantage of building such system through commercial insurance lies in that it can ask those people with the same preference pay the same fees, and avoiding free riding. What if there are people who cannot afford to buy insurance and see a doctor? According to introduction, almost all hospitals in the U.S. cooperate with various charity organizations to specially solve such problem. These charity organizations decide the degree for paying your bills according to the income of patients, and they even don’t care the nationalities and green cards of the patients. As charity organizations solving the problem of medical treatment, it means that the costs are paid by people who are willing to pay.
But even so, the society will still encounter unaffordability, yet this does not mean that the system is unfair, because we are unable to exhaust all possibilities, and some people may be doomed to bear the result. Though this may offend many people’s feelings, I still have to say, “Sorry, this is your misfortune.” Under the constraint of limited resources, this may be the reality that we have to face.
Originally published on www.chengdu.cn | 2013-10-14
