Interesting, I think the interest in such CHCs through block grants is logically that they avoid the expensive middleman that is the insurance industry which unnecessarily drives up costs. It seems generally less expensive for a government to provide a service directly, like the U.S. Postal Service's mail provision (which operates for just $1 billion per year), as opposed to a complex system that operates through insurance like today's healthcare system (which operates at $951 billion per year, 25.95% of the U.S. Budget).

Healthcare

571 Medicare 530,346 14.46%

551 Health care services 329,766 8.99%

703 Hospital and medical care for veterans 54,528 1.49%

552 Health research and training 32,494 0.89%

554 Consumer and occupational health and safety 4,586 0.13%

Total, Healthcare 951,720 25.95%

http://www.gpo.gov/fdsys/search/pagedetails.action?granuleId=BUDGET-2013-TAB-5-1&packageId=BUDGET-2013-TAB&fromBrowse=true

However, a government socialistic agency is always prone to operating with less cost efficiency and quality than a private sector counterpart simply because employees lack the incentive. They are paid regardless of quality through government subsidy in a system so complex and bureaucratic that those involved at any step of the chain are rarely held accountable. Furthermore, the promotional opportunities in a government system too often are uncorrelated to performance and based simply upon service time; you get what you pay for, employees motivated simply to survive in the system rather than provide quality service.

To make such a system imitate the private sector would require providing an incentive for companies and their employees to perform quality work in order to not only receive more pay but to remain employed at all. A block grant system would need to be structured competitively based on consumer feedback to imitate the private sector.

I designed a piece of prospective legislation in 2010 as an alternative to the healthcare bills then being proposed which sought to accomplish exactly this, using a block grant system to fund hospitals who voluntarily elect to provide government healthcare services.

http://www.slideshare.net/Jzyehoshua/vital-healthcare-act

The essential design involved a block grant system paying hospitals with higher Cumulative Rating Averages more money and keeping them in the system as government healthcare providers. These CRAs were achieved through voting machines in hospital lobbies in conjunction with a card similar to Canada's Care Card for quick access to healthcare and subsequent voting when leaving the facility. The goal was to provide some form of statistics-based rating system contingent on consumer feedback to achieve the same result as a competitive private sector market in keeping hospitals accountable.

Even aside from all of this however lies the challenge of finding medical personnel who will perform the services, as we've been experiencing a nursing shortage due in part to a dearth of nursing instructors. Said instructors can make more as nurses than instructors without the added cost of education to become instructors. Government needs to provide added incentive, perhaps through salary and financial aid subsidies (which were also addressed in the legislation I authored), to get more personnel into the medical profession. The qualifications for medical personnel could also be relaxed slightly as well to get more physicians certified, as an alternate possibility.

There is also the matter of tort reform driving up cost. These frivolous lawsuits, or in some cases not-so-frivolous as caused by doctor overwork and consequent mistakes, affect the insurance costs for doctors and nurses, costs that are then passed on to the consumer. Ultimately the Democratic Party will be opposed to addressing tort reform since one of their biggest donor industries is lawyers/law firms, and will block any tort reform that could occur.

www.opensecrets.org/industries/totals.php?&ind=K01

Joshua, thanks for the expert insight and observations. You covered a lot of ground and summarized the issues nicely. Regarding the "government vs private sector" approach, in most sectors of commerce, the free market system seems to provide an automatic process for weeding out poor quality providers (vendors) and rewarding higher quality vendors. For example, customers eventually stop going to auto repair shops that are either overpriced or perform a lousy job (or both). Unfortunately, the health care system in the U.S. is not a "free market" because insurance pays directly for about 90 percent of the cost of health care and the patient pays for only about 10 percent, thus shielding the patient from the direct real cost of his/her health care expenses. Of course, the patient pays a large insurance premium every month but that amount does not directly correlate with a specific office visit, MRI, or hospitalization. The alternative to private sector, government controlled health care system, has the disadvantages of any government agency or program (as you pointed out): complacency, inefficiency, burdensome administrative processes, expanding bureaucracy, and failure to foster innovation. We see each of these undesired consequences (to a more or less degree) in almost all socialist health care systems worldwide. The advantages of course are universal access, consistent coverage and benefits applied without bias towards all, and (generally) lower per capita health care costs. So each approach has its advantages and disadvantages.

Ultimately I think the problem stems from flaws inherent in monopolization. Socialism essentially involves a government monopoly, whereas anarchic capitalism tends toward a private sector monopoly. In either situation, the result is inevitably a lack of the competition which would otherwise drive increases in quality, cost efficiency, and accountability.

Furthermore, I still maintain that operating through the insurance industry involves unnecessarily funding an extra industry. Rather than just paying for the healthcare itself, you are now paying as well for the insurers who provide the go between service. You are additionally increasing the bureaucracy and system complexity, essentially reducing accountability since it will be more difficult for regulators or the public to keep track of what is going on and keep the system accountable.

A single govt controlled health care system simply replaces multiple middle men (who have a profit motive and competitive incentive for efficiency and customer satisfaction) with a single middle man (with no incentive for efficiency and no incentive for customer satisfaction). This is economics market fact, not opinion.

Should we expect conventional market forces to drive healthcare efficiency and quality in the same way as in the commercial sector? In this paper the authors highlight the problem by pointing out that healthcare customers aka patients are in the difficult position of 1. not being able to understand the product ie what really is a high quality value for money healthcare service as defined by their unique needs 2. they are sick and therefore in a very vulnerable position, 3.health outcomes are probabilistic and can't be warranteed. Perhaps market forces can assist in the general practice setting, but can we really expect patients in acute settings to be able to vote with their feet? In the UK the use of public reporting on the quality of their hospitals did not significantly alter where patients went- the primary determinant turned out to be proximity so even taking cost out of the equation, patients did not choose to go to the highest quality care institution given the choice because of other factors more important to their situation. It is not just the layer of insurance that complicates patients being able to drive quality improvement via market pressure. Healthcare is a very different animal to car servicing or buying clothes. Furthermore, large and successful commercial enterprises have sophisticated methods for measuring customer sentiment and responding. I think healthcare is along way behind in this.

In my opinion, we can do better by promoting a more empirical approach to quality measurement and engaging with the natural competitive nature of our medical community. Research shows that health/medical practitioners inherently wish to excel and provide the best care for their patients. I think we need to respond to patient sentiment, but this might be better expressed and measured through the use of patient reported outcomes (PROs) and QOL tools combined with more extensive clinical registry use and Outcomes reporting, which has been shown to be very effective in improving care. This also moves away from the government vs private funding debate because the improvement process is integral with the health service regardless of funding source (although no doubt pay for performance incentives, etc are part of the equation).

PS. In Australia we have an evenish split between private and public (government) services and from my experience those in the public system work at least as hard as those in the private system with the added burden of the more complex and less elective cases. Public scrutiny of the public health service via media analysis is fierce! Bureaucratic inertia is a problem, but because our academic and teaching hospitals tend to be public, arguably this sector tends to implement leading edge technology and perform more clinical research.

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Dear Dr. Susan E Smith

Good contribution

Dear Dr. James Bowman

Useful contribution

Dear Dr. Joshua Zambrano

Good contribution

Dear Dr. Joshua Zambrano

very very nice contributions