From: Mix <mixmaster@remail.obscura.com>
Date: Wed, 29 Oct 1997 22:30:04 +0800
To: cypherpunks@cyberpass.net
Subject: Private Health Care [On topic, please read.]
Message-ID: <199710291412.GAA29666@sirius.infonex.com>
MIME-Version: 1.0
Content-Type: text/plain



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Michael Sims wrote:
[Ed. note: Declan wrote?:]
> >>The free market approach won't keep medical records private.
>
> > In other words, the reason a "free market" approach may not work
> > right now is because the market isn't free.

> Declan, every part of the "health-care market" that people are
> complaining about, the parts of it that routinely and for fiscal
> reasons violate people's privacy, are completely and utterly
> dollar-driven and do not result from big nasty government making any
> laws.

This greatly underestimates the influence and involvement of the
government.

The medical profession uses the government to keep out competitors and
keep their prices high.  In many areas, the majority of the money
spent on legislative campaigns is provided by various professional
medical organizations.

The flip side is that the medical profession will have a powerful
incentive to remain in the good graces of the established political
powers, whatever they may be.

That means no weird experiments in protecting people's privacy.

Doctors are also terribly vulnerable to liability suits.  As patients,
we are unable to agree to waive most liability.  This makes it harder
to walk into a doctor's office with a sheaf of bills and ask for
service.  The doctor has a strong incentive to have everything
documented and ship shape because to do otherwise would make him or
her look poorly in court.  This may also endanger the doctor's
liability insurance policy.

And, because the medical market is tightly controlled, it is not
possible to legally enter the market as an outsider.  IMNSHO, I should
be able to consult my drug dealer about ailments and their proper
medication.  The fact is, many people have much greater rapport with
their drug dealers than with their doctors and there is often greater
concern by the drug dealer for his client's welfare, at least in terms
of obvious problems such as pain.

Similar things can be said for health insurance companies.  They are
very greatly constrained in the types of policies they can offer and
the sorts of agreements they can make with their customers.  You could
imagine an anonymous policy which opens with a medical exam which is
repeated every so often for couple of years before taking effect.
After, say, two years of good health, full coverage on the policy
kicks in.

Ironically, some states have rules very much like this, minus the
anonymity.  After a certain number of years all illnesses are covered
regardless of whether the customer had the illness previously and lied
about it on their application.  (Some states even forbid life
insurance issuers from excluding suicide for coverage for long term
customers!  Not only does this raise the price of life insurance, but
in certain instances it compels people to kill themselves "for the
good of their family". )

Given this legal environment, you would expect some company some where
to try to corner the market on anonymous health insurance.

There are a few reasons why this does not happen.

One is the extreme discretionary power of insurance commissioners.
This power is probably even greater than in most industries because
the insurance industry is, absurdly, widely hated.  No insurance
company is going to rock the boat.

Insurance regulation also creates a barrier to entry.  Many states
limit the amount of profit an insurance company can make.  These
limits are often very low and do not justify new entrants or new and
interesting product offerings.

Finally, in practice very few people choose their own insurance.  The
purchase decision is made indirectly by the company they work for.
The feedback between what the user of insurance wants and what he or
she gets is attenuated by this structure.

This structure is required by law in many places because employers are
required to provide "free" health insurance to their employees.  The
federal tax code strongly encourages companies to provide health
insurance as it is a benefit which is not taxed as income.

There is more to be said on this topic, I am sure.

Monty Cantsin
Editor in Chief
Smile Magazine
http://www.neoism.org/squares/smile_index.html
http://www.neoism.org/squares/cantsin_10.htm

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