The Healthcare Debate and Critical Thinking

March 23, 2010

Now that our elected political idiots are through wrestling with the healthcare alligator for a bit, pundits from both sides have stepped into the ring for round two.  In the one corner stand those who wish to assure us the bill is manna from heaven; the other corner has us lining up for a lethal dose of socialism and financial ruin.  What the political idiots and pundits lack is critical thinking regarding healthcare.  They simply stoke the fires of preconceived notions.

Critical thinking involves more than understanding a particular position or even all the positions of a subject.  In their book, Critical Thinking, Richard Parker and Brook Noel describe the process as “the careful, deliberate determination of whether one should accept, reject, or suspend judgment about a claim and the degree of confidence with which one accepts or rejects it.”  In other words, the process of critical thinking considers all the relevant facts to determine their importance, if any, on the outcome.

With that in mind we come to healthcare.  Our first problem comes in defining what healthcare means, are we talking about the level of care or simply its cost?  They are not the same thing and in the end, have little to do with each other.  As the current bill’s primary purpose addresses issues related to cost, that seems a logical place to focus.  We need to understand what drives up the cost of healthcare in America and how to reverse the trend.

Of course, there is more than a book’s worth of material regarding the various reasons healthcare costs rise so dramatically.  Rather than cherry-pick a few items to support a view, it is better to boil them all down into a few categories.  There are two broad categories that breakdown into subcategories, costs that add value and costs that do not.

Again focusing on one area, the obvious goal is to eliminate the costs that add no valued to healthcare.  A great example of such a cost is the profit paid to the insurance company’s shareholders.  A for-profit company has a responsibility to make a profit.  It is why shareholders invest in the company.  This profit is the subject of fierce debate, President Obama even called it record-breaking in a June 2009 press conference, a statement PoltiFact.com calls false, by the way – (click here to read).  Rather than addressing the issue directly, both sides use profit as a political football used to score points.

What is not debated though is insurance companies make a profit.  That adds to the direct cost of healthcare.  Industry wide, net profits average around 3.3%.  According to the Center’s for Disease Control and Prevention (CDC), in 2007, private insurance paid for approximately 36% of all healthcare costs in the U.S. (click here to read the full report).  Using their 2007 expenditure number of $2.2 trillion, that means the insurance companies’ profits works out to about $27.3 billion or $82 for every man, woman, and child in the United States, even the uninsured.  A non-profit insurance system would save both citizens and businesses that $27.3 billion per year.

At first glance, a non-profit, single payer system would seem an option worth undertaking.  This is where critical thinking comes in.  Are there any examples of single-payer systems set up by the federal government currently?  Yes, the National Flood Insurance Program.  As their website put it:

“In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves.  The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP.  Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.”

While no system is perfect, NFIP provides a cost-effective means for renters and homeowners to protect themselves from flooding related damage costs.  Critical thinking demands we look at the latter part of the statement in detail – “Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.”  The government program provides a service but requires individuals and communities to take basic precautions to protect themselves and reduce their exposure to flooding.  This reduction in exposure is key to reducing costs.

A non-profit, single-payer system will work for healthcare but the same prudence and risk aversion needs to apply.  To put it simply, we need to take care of ourselves, lose weight, stop smoking, and keep in reasonable shape.  By concentrating on prevention with tools like routine check-ups, we avoid the logarithmically higher costs of the post-onset of illness treatment.

The insurance industry’s profit is only one example of critical thinking applied to healthcare and by no means is it examined in full.  Rather it illustrates how applying the process to a problem leads to solutions, and there can be more than one for a particular problem.  It removes rhetoric from the equation and allows for merit-based debate.

The passing of the current bill is only the beginning of the process.  Over the next few years it will change and undergo metamorphosis into a totally different law.  What is needed now is less political fear-mongering and more critical thinking.  Only then will we have a bill that is effective and adds value to our lives.  Otherwise we will end up with another in a long line of useless government programs.

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