Tuesday, July 10, 2012

Loanocare

Everyone is talking about health care.  What if the health care gurus discovered our ingenious system of financing legal education?  Fast forward to September 2012, when we may hear the following prime-time interview.


Katie Couric:  Americans are at loggerheads over the best way to finance our health care system.  To explore that challenge, I’m talking with Dr. Thomas Cooley.  Dr. Cooley is a respected MD and policy maker who has proposed an innovative health care financing program.  Is that right, Dr. Cooley?

Thomas Cooley:  That’s right, Katie, but I can’t take too much credit for the idea--it’s based on a tried-and-true government program.  The American public has shown that they greatly prefer debt to taxes or insurance premiums, so I’ve designed “Loanocare.”

Couric:  Why don’t you give us the basics.

Cooley:  Sure, the design is simple.  Any American who wants health care arranges for treatment.  The doctor or hospital will decide how much treatment is necessary and how much to charge.  As soon as the health care provider submits the bill, the government will pay the balance—no questions asked.

Couric:  Wait a minute.  Won’t someone review the charges to see if they’re reasonable—or maybe try to negotiate with the health care provider?

Cooley:  Not at all, that’s one of the strengths of this system.  The doctors and hospitals know what their patients need and how much it costs.  Loanocare will cut out all of the government bureaucrats and insurance adjusters.  We need to eliminate the expensive middleman—excuse me, middle person.

Couric:  But won’t doctors and hospital administrators be tempted to inflate bills to pad their own salaries?

Cooley:  Of course not.  These are respected professionals with a sense of responsibility.  And the hospitals are nonprofits; they’re not in this to make money.  Plus, the hospitals and other providers compete with one another in an open market.

Couric:  Open market?  Isn’t the number of health care providers limited?  Won’t doctors and hospitals be able to follow the leader on price? 

Cooley:  We might see some of that but I wouldn’t worry too much.  Mayo and the other top-rated hospitals have room for only a limited number of patients.  Other deserving patients will rely upon local and regional providers.  If a patient pays top prices at a neighborhood clinic, she actually benefits:  The patient gets the psychic boost of feeling that the care is as good as at Mayo.  

The overall outcomes from a local clinic may not be as good as at the top clinics, but the prices make the patient feel that she has a chance of getting the same cure that a top clinic would provide.  Most patients, of course, assume that they will be among the lucky few who get top outcomes from the lowest-ranked providers.  So everyone gets that psychic boost!  It’s fool-proof.

Couric:  Let’s talk about who pays for this treatment.  What happens after the government pays the bill?  Is that covered by taxes?

Cooley:  Not at all.  As I said up front, the American public wants no more taxes.  Instead, the bill becomes a debt that the patient owes the government.  Every patient will be able to borrow up to $20,500 in medical costs per year at 6.8% interest; additional amounts will be available at 7.9%.  Patients will repay either type of loan over ten years.  Interest, of course, will accrue from the day the government pays the health care provider.

Couric:  Those are pretty high interest rates.  How will patients be able to repay those loans?

Cooley:  The rates aren't high at all!  If you compare them to credit card rates, you’ll see how low they are.  Imagine, for example, that you’re suffering the acute pain of an inflamed gall bladder.  My clinic will remove your gall bladder for $10,000.  But rather than pay anything up front, you’ll pay just $115 per month over ten years.  This is an investment in your own future; it’s one you can’t afford not to make.

Couric:  But some patients might have trouble paying even the monthly amount, especially if they have other health care problems that come up.

Cooley:  No problem.  We’ll include an “income based repayment” alternative for those who can’t make their regular payments.  Patients will be able to stretch out their repayments over twenty years, according to a schedule tied to their income.

Couric:  But the clinic gets paid up front, right?  It’s the taxpayers who bear the risk of nonpayment.

Cooley:  That’s correct, Katie, but there’s no real risk for the taxpayers.  We know that patients who invest in their health prosper over time.  Even if they’re still sick and unemployed nine months after treatment, they’ll get better at some point.  Or they can find alternative careers that allow them to earn high incomes while bedbound!  As patient incomes increase, so will their monthly payments.  This could be a real money-maker for the government.

Couric:  I assume if the patient runs into serious difficulty, he or she can discharge the loan in bankruptcy.

Cooley:  Certainly not!  If we allowed patients to discharge health care loans, they would have no incentive to find all of the good jobs available to the chronically ill.   Debts owed under Loanocare will not be dischargeable in bankruptcy.

Couric:  What happens if patients can’t pay back the full amount of their debt, even under income-based repayment?  Won’t the taxpayers have to pick up the tab?

Cooley:  Oh, no, that’s yet another strength of this program.  If Congress decides that income-based-repayment won’t balance the books, it can revoke that option and enforce the original ten-year loan terms.  If the patients can’t make those payments, they’ll basically be at the government’s mercy.  The government could, for example, allow those patients to keep their income only up to the poverty line—taking everything else as loan repayment. 

Couric:  It seems like Loanocare will hobble many citizens with a lifetime of debt they can’t repay.

Cooley:  Katie, you really can’t put a price on your future; you need to invest even if the fees seem high.  We have outstanding health care institutions in America.  Even our night clinics and unaccredited hospitals are first-rate.  All of our clinics survey their patients annually to determine outcomes.  I can assure you that every health care provider in America has patients who leave the office alive.

Besides, you have to remember that Americans hate taxes and insurance premiums:  they would much rather incur debt.  Loanocare responds to that basic American instinct.

Couric:  One last question, Dr. Cooley.  We all know that hospitals care about their U.S. News ranking.  Won’t Loanocare encourage hospitals to raise their prices so they can bring in more dollars to buy things that contribute to high rankings?  Not every hangnail needs to be treated with laparoscopic surgery, but it seems like every community hospital wants the resources to compete with Mayo.  Won’t Loanocare just fuel that competition?

Cooley:  On the contrary, Katie, these rankings benefit many patients.  Doctors and hospitals are eager to serve patients with the best blood pressure, cholesterol, and blood sugar numbers.  We know that those patients have better long-term outcomes, which improves a health provider’s rank.  Doctors and hospitals will discount rates for these patients.  If you’re really healthy, you might get a free colonoscopy! 

Legal education has blazed the trail for us here, both in tapping unlimited federal loans and in discounting prices for the people who will end up with the best outcomes.  It’s an unbeatable combination.



42 comments:

  1. I just love it when lawprofs try to get all creative 'n stuff.

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  2. Then you must love poor predictable writing.

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  3. An ugly reality of the law school scam .... six figure student loan debt, suicide attempt, and facing homelessness.

    http://www.homelessforums.org/showthread.php?t=8649

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  4. The analogy between a sick person requiring healthcare and a SS wanting a JD after their name is pretty weak, but I get the picture...

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  5. The analogy works if you think of unemployment as a disease.

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  6. Sounds like a Conservative argument against tax and spend liberalism.

    However well intentioned, Liberal policies end up harming rather than helping, and lead to the sort of abuses mentioned in the post that the free market would naturally correct on its own.

    Time and again Bureaucracy has already proved to be inefficient, resulting in taxpayer waste etc.

    And on and on.

    Anyway, that is how the Conservative argument goes.

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  7. "Sounds like a Conservative argument against tax and spend liberalism."

    And what exactly would be wrong with that? Since the criticism is true, why quible just because you may not like the critic's preferred solution?

    At any rate, the IS a free-market solution to the law school scam. Remove government loans and allow bankruptcy. In this case, law students would have to seek out private lenders who would be willing to carry the risk of non-repayment and would lend accordingly. Schools would then have to cut their cloth according to how much and to who private lenders would be willing to lend the cost of studying. The result: only those who lenders think will be capable of repaying the loan after graduation will receive loans. Problem solved.

    You may prefer a big government solution, but there is a free market solution and it would stand a good chance of working.

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  8. Maybe under Obama Loanocare a JD that is sent to the Tantalus Debtor's Penal Colony can sit in Dr. Simon Van Gelder's neural neutralizer and have all memory of law erased from his or her brain.

    Skip to the one minute mark:

    http://www.youtube.com/watch?v=9Dmtalb7UAI&feature=related

    After that, the rehabilitated prisoner can re-enter society with a blank resume and find a job without the JD stigma

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  9. Ha Ha FOARP--4:40AM was my comment, and old Johnny is laughing on you!

    Don't forget I have listened to thousands of hours of Rush and Hannity and mark Levin and the Conservative gang while swinging a brush and roller.

    With the exception of an NPR morning show that repeats itself during the day, there is nothing else on the radio except for conservative talk.

    Maybe the Conservatives are right, but why was it that under Bush bankruptcy was taken away?

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  10. Many of us took out loans that were protected by bankruptcy. It wasn't until later that that protection was taken away, so fuck'em/

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  11. Campos must still be on vacation. Hope he will get back soon.

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  12. Don't miss the point: law schools are able to set their price to cover a slew of things that law students don't need because of the loan industry. The loan industry places all of the risk on the student and the taxpayer and none on the law school. So, the law school had no incentive to control the price UNTIL NOW. The "patients" aren't buying this year and won't be soon. Will law schools recognize that they can't keep charging the "patients" for care they don't need OR, as I fear, will they resist for as long as possible (or until Mayo reduces its price)?

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  13. Can't we bring down the cost of legal education and bridge the access to justice gap by mandating that everyone over 21 or with a college degree purchase $4000 of legal education each year and capping tuition for full-time students at 3x the amount paid by part-time students?

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  14. Thank you DJM for painting this picture with an engaging literary device.

    As for bankruptcy I think it is ironic that a school that fails will have bankruptcy protection itself, while the students screwed by the school (or the by lack of a sufficient jobs market) cannot obtain these same bankruptcy protections.

    ChicagoDePaul

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  15. @BL1Y - You forget that you would also need to stop law schools from either refusing to enroll those with pre-existing low LSAT scores, or discriminating against them by charging them more.

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  16. Dr. Cooley! Dr. Cooley!

    Is there any doubt at all that you have a fiduciary obligation to your patients?

    Do the courts or hospital accreditors have any doubt, either?

    Or how about your patients' families that depend on them, do they think you have a fidcuciary obligation to your patient?

    ChicagoDePaul

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  17. 5:12:

    BK protections were stripped from federal loans in 1998 by the Clinton admin, 2005 BK protections were taken away for private loans by the Bush admin. Both were done retroactively as well as in spite of evidence showing that the system WAS NOT being abused.

    This shows that neither Conservatives nor Republicans give a damn about educating the youth of this country.

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  18. Meant to say Conservatives nor Liberals....then again, does it really matter?

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  19. Don't forget -- the patient is sophisticated enough to know the costs and consequences of undergoing expensive experimental treatment regardless of what case studies or the hospital administration say.

    Besides, treatment is versatile in a hospital. E.g., if you're hungry, what better way is there to satisfy your cravings than with hospital food?

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  20. Also: it's a necessary part of medical care that doctors should spend a minimum of 50% of their time doing research into subjects like nutrition in outer space and homoeopathic therapies for treating the common cold.

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  21. Long time listener, first time caller.

    I hear a lot of talk of "free market solutions," mainly dealing with the elimination of student loans and allowing student loan debt to be discharged in bankruptcy. (Would these then be private loans only?)

    I also have read arguments that the requirement of an ABA JD for bar admission be eliminated, thus allowing the free market forces to shape legal educational instruction. I'm not sure I buy into this. But, it is an interesting idea.

    My personal anecdotes: I went to a bottom-of-the-barrel law school, so my experience is limited, skewed, and perhaps atypical. I pretty much had to teach myself the law, both in school and for the bar exam. I believe the "think like a lawyer" part of my education could have been effectively presented in one semester, two at the most. And this was at an ABA accredited school. Thus, I have a hard time seeing much value in the three years of legal education I paid for.

    So, I ask you, what are some pros and cons of eliminating the requirement of earning a JD from an ABA accredited law school? Would it be a disaster? Could it be worse than the status quo? Could it improve the current legal education model?

    Thanks, and I'll take my answer off the air.

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  22. Dr: Under Loanocare, we have room in our facilities for 44,000 young patients.

    Cou: Wait, isn't it the case that those 44,000, who pay so much for your care, must compete among themselves for only 20,000 doses of medicine?

    Dr. There may be a downturn in available doses of medicine, but our treatment program has the advantage of versatility. We do not simply provide health care, we teach these young people HOW to be patients. When other doctors find out that a person has been treated in our clinics, they are much more likely to provide that person with other kinds of medicine. Also, those among our patients who do not receive medicine can go solo and get healthy on their own!

    dybbuk

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  23. ^ "Could it improve the current legal education model?"

    Who cares? We don't need more lawyers. That's why there are no JOBS. People need to stop trying to be lawyers in the first place.

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  24. DJM and dybbuk:

    Thank you for giving me a smile today!

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  25. We don't need much of anything, we certainly don't need more teachers and more politicians.

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  26. @ 10:06

    We don't even need another hero. In fact, all we want is life beyond the Debtordome.

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  27. @10:16 Two go into the cage (read law school), only one comes out (i.e. with a real, FT lawyer job)! Welcome to the Dome. Abandon hope all ye who enter.

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  28. A modest proposal Professor Campos. I am sure Jonathan Swift is cheering!

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  29. Honestly this sounds better than our current (pre-Obamacare) system, where you pay in advance through insurance, then the insurance companies find a way to weasel out of paying, so you end up paying for it all with credit cards anyway.

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  30. This entire "law school scam" is a fiction of your imaginations.

    http://ethicsalarms.com/2012/07/08/the-difference-between-unemployed-scientists-and-unemployed-lawyers/

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  31. @3:34 Hello, Jack. Still refusing to bow to reality?

    I encourage others to comment on Jack's inane post comparing the virtuous scientists to the morally bankrupt lawyers.

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  32. ^^^ 3:34 and 4:39 and any following who read this: I encourage you NOT to go to Jack Marshall's `site and comment.

    All you're doing is providing him the favor of increased page hits.

    I read through all the posts and comments on his earlier blog entry ridiculing unemployed law grads. He is immune to fact and reason, so all you're doing is wasting time and providing him advertising revenue.

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  33. @ 5:07:

    You are probably right, in that going to Marshall's site is just providing him with page hits, and that he is immune to fact or reason. So I will just chime in here that Marshall is a ridiculous, clueless a-hole.

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  34. LawProf hits another one out of the park. LOL!

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  35. My bad this was DJM. Still hilarious.

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  36. "Jack Marshall" is simply a troll trying to increased page hits. Its not a serious or sincere debate going on there.

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