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Transcription of interview with John Goodman on August 5, 2013.
Douglas Goldstein, CFPÆ, Financial Planner & Investment Advisor
John Goodman is the president and CEO of the National Center for Policy Analysis.
He is the author of the book called Priceless: Curing the Healthcare Crisis.
Douglas Goldstein, financial planner & investment advisor, interviewed Goodman on Arutz Sheva
Radio.
Douglas Goldstein: Based on the title of your book, there seems to be a healthcare crisis.
Can you tell us about that?
John Goodman: In the United States, we have done what other developed countries have done
and we have completely suppressed the price system, we have completely suppressed normal
market forces and as a consequence, no one ever really sees a real price for anything
in healthcare.
No doctor, no patient, no employer, no employee.
All of the prices are really artificial prices and as a consequence, we face perverse incentives
in the healthcare system and when we act on these perverse incentives, we do things that
may cost higher, quality lower and access to care more difficult than otherwise would
have been the case.
Douglas Goldstein: What are the things were more honest in terms of pricing?
What would we be seeing?
John Goodman: In a real market, we would see competition.
We would see doctors and other providers competing for patients based on price and when they
compete on price, they also compete on quality, but the mistaken view of the outside world
of the US healthcare system is that we represent some [inaudible 0:01:55] of capitalist medicine,
we donít.
We are far more like the systems of other countries than anything remotely resembling
a free market.
In Canada, people get healthcare as free and in the United States, itís almost free.
We only pay 10 cents out of our own pocket every time we spend a dollar at the doctorís
office for example.
Douglas Goldstein: Whatís the difference between whatís going on here and
letís say what the proposals are for the future of socialized medicine in the United
States?
John Goodman: All over the world, healthcare is very bureaucratic, in Israel, all over
Europe.
In the United States, weíve completely suppressed normal market forces.
To see real markets in healthcare, you have to go to the periphery of the healthcare system.
Wherever you see patients spending with their own money, there youíll find real markets
for healthcare.
In the United States, they are the markets of cosmetic surgery and market for LASIX surgery.
We have walk-in clinics in the United States that charge real prices and they post those
prices, but these small little markets here and there are at the periphery of the healthcare
system.
Most of the time, when I consume healthcare, Iím spending someone elseís money, not my
own money, therefore, I have an incentive to over consume and be wasteful and on the
providerís side, the incentive is to maximize against the payment formulas and weíre all
doing things perversely that may cost higher, quality lower and access to care more difficult.
Douglas Goldstein: Arenít some of those so incredibly subjective that itís a little
bit hard to say for example as a healthcare user, I always want all of the tests done
just to be on the safe side?
John Goodman: One of the things I did in Priceless was I hypothetically went through all the
ways that I can spend your money in healthcare marketplace even if Iím not sick.
It turns out I can spend an enormous amount of money even though Iím completely healthy
but if we all did that, weíd be spending many times on gross national product on healthcare
and thatís the problem with incentives.
Douglas Goldstein: In America, there are
millions of people who simply donít have that possibility.
Arenít they cut out of quality healthcare if they canít pay?
John Goodman: Most people in the United States have health insurance and we have maybe upwards
of 50 million people who are uninsured but many of those people qualify for our Medicaid
program for low-income families and if they get sick and they need healthcare, they can
joint Medicaid, but even if they donít we have safety net institutions that provide
a care-for-free to millions of people so we do not have large numbers of people going
without needed care.
We do have people who probably delay seeing a doctor and delay the care that they need
for financial reasons but thatís a different issue.
Douglas Goldstein: I saw a very interesting study recently done in the United States where
they asked a whole lot of people what they think of Obamacare and asked them to define
what is actually going on with it now.
The fact was that very few people could really define what it was and how it was affecting
their lives.
Here we are in 2013, it was signed about 3 years ago, what really is happening with Obamacare?
John Goodman: Thatís incredibly complex and even the president himself doesnít explain
it very well so you wouldnít expect the ordinary man in the street to be able to understand
it very well.
We are setting up exchanges which I think is similar to something thatís going on in
Israel where people can make choices on an insurance plans or health plans and for the
low-average income folks, there are substantial subsidies coming from the government.
Thereís a mandate that people get insurance.
Thereís a mandate that employers provide insurance and there are many loopholes and
many perverse incentives built into this new system and people are finding out that employers
have an incentive not to hire workers and have an incentive to hire temporary workers
instead.
Employers are discovering if they hire part time workers fewer than 30 hours a week, they
donít have to provide health insurance to them.
So we have a huge shift to part time work.
People are responding to the new perverse incentives of the new system.
Douglas Goldstein: As a result of the changes, arenít there actually today more people who
are covered and more people who are getting preventative care and more women who have
access to healthcare at a price thatís more fair?
John Goodman: We know the system doesnít really kick in fully until next January.
So we donít know if a lot more people are going to get insurance so maybe that more
people will become uninsured because employers have perverse incentives not to provide insurance,
to pay a fine which is far less expensive than that insurance itself.
Individuals now that they understand that they can get health insurance regardless of
their health status with the same premium that a healthy person would pay, people have
incentives to stay uninsured until they get sick.
So we will have to wait and see exactly how many initial people get insured but there
are all kinds of perverse incentives built into the process.
Douglas Goldstein: If the concept of this was to try to cover everyone and itís really
referred to letís say a socialized medicine, what was the point of doing it through employers
instead of having the government be the one stop shop where it pays everything, why do
you have to be employed?
John Goodman: This is a Rube Goldberg contraption.
It was not put together by anyone who is making sure all the parts fit and they want to get
people insured but they didnít really care how they did it and so one way to do it is
to force the employer to provide insurance and for people who donít fit in that system,
we have an expanded Medicaid system which is for lower income folks and for people who
donít fit in that and they go on their own, they can go into the new health insurance
exchanges which what we call manage competition.
There are just different parts of the system and thereís no overriding mechanism to make
sure it all fits together and works.
Douglas Goldstein: You have millions of employers.
Why get them so involved in the system and not just have everyone sign up in the local
town hall to get health insurance?
John Goodman: Because the biggest problem in health reform is where youíre going to
get the money and employers are the source of money.
They could be taxed and people could be taxed but thereís a limit to how much politicians
were willing to raise taxes.
Most of the money thatís spent on health reform comes from within the system so itís
not coming from health side of the system.
With almost half the cost of insuring young people is going to be paid for by reducing
spending on older people under our Medicaid program.
They were just pulling money wherever they thought they could get it and the employer
mandate was part of that.
Douglas Goldstein: A lot of the doomsayers when you mention about older people losing
health benefits, they talk about this kind of committees that decide that someone doesnít
have the right to live.
Do you see thatís where we are going?
John Goodman: I donít think weíll do anything quite that cruel but we are going to move
in the direction of the British system of deciding whether certain procedures are worth
their cost and we might well be in a situation where some national committee is deciding,
drug for example, is not the worth the cost what it cost in terms of the extra month supply
that is expected to buy.
Douglas Goldstein: If you could give some suggestions for how the government could maybe
switch tracks, what would be some of the top things they should be doing now in order to
get the system set up or are there countries perhaps that we should be emulating?
John Goodman: The easiest way to get universal coverage without creating tons of perverse
incentives and without going through a shell gain is just to give every individual a fixed,
refundable tax credit in every family, a tax credit for the purchase you [profit] insurance.
I think here in the United States could have $2500 per year for adults, $8000 a year for
family of four, thatís a tax credit to apply to private insurance.
If the family doesnít want to do that, I would let them but into Medicaid which again
is our program for our low income folks but I would let everybody buy in to that program
if they wanted to with their tax credit and if people turn this down and they refuse the
tax credit, I would put the money in a local safety net institution so if they go in a
hospital and they canít pay their bills, we have money there for them.
Douglas Goldstein: What about people who are uninsurable?
John Goodman: I would give everyone a one time opportunity to become insured but I wouldnít
let them go for years without insurance and then enter the system without medical underwriting.
We wonít leave them on their own but weíre not going to let them in to this pool or I
wouldnít let them into the pool without any financial penalty.
If you decide not to insure and you consume all your income and you get sick and now you
want to be in to the insurance pool, I would charge you a hefty premium to do that so that
we discourage that kind of behavior.
Douglas Goldstein: Is this kind of similar to what Obamacare is talking about which is
they will penalize people who donít sign up for insurance by 1% of their income?
John Goodman: The Obamacare strategy has imposed a mandate on people.
The thing I donít like about the mandate is then you have to go and say what insurance
people have to buy and then a special interest gets to lobby and get their procedures covered
by the mandate.
I would rather just have the whole thing be financial.
You get a tax subsidy if you buy insurance.
If you donít buy the insurance, youíre going to pay a higher tax.
We donít really need to go beyond that.
What Iím describing is called the fund contribution where the government gives you a certain amount
of money and the market competes to see what they can provide for that sum of money.
What Obamacare does is this approach called the fine benefit where they require you to
have insurance with a lot of benefits, all enumerated and then they have to worry about
how youíre going to pay for it.
Douglas Goldstein: How can they follow your work?
John Goodman: Go to John Goodmanís Health Policy blog and youíll find all kinds of
interesting things on health policy and if youíre interested on policies other than
health, go to the www.ncpa.org website.
Douglas Goldstein, CFPÆ, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
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