by von
There are three essential components to health care reform — or else it's not worth doing.
- Coverage. Obviously, the reform has to cover folks who are currently uninsured.
- Personal. Everyone should have access to good health care; good health care shouldn't depend on a person having a job. Health care is a personal good. Aside from this fact, the US's system of linking health care to employment puts US companies at a competitive disadvantage by subjecting them to the so-called "triple tax": companies pay once for their employee's health care, indirectly subsidize Medicare and Medicaid through those payments,* and pay higher premiums to help cover the cost of treating the uninsured. This triple tax is then passed along to employees in the form of a lower salary, and other negative effects.**
- Deficit. We pay an unprecedented amount for health care – indeed, no other OECD country devotes as much of its economy to health care as we do — and we face an enormous, and growing deficit. Health care reform should reduce both, and you should see the reduction in the budget projections. (See "bending the cost curve," below.)
Those should be the criteria for evaluating any health care reform package. Note what's left out:
- Claims that we will "bend" the cost curve. There are sensible things that we can do to try to moderate cost, and nearly every plan tries to do at least some of them. But no one has presented a test to determine whether any of them will work to the degree promised. Indeed, the CBO estimates that at least one of the reforms under debate — HR 3200, presented by the Democratic leadership in the House — will bend the cost curve in the wrong direction. Hope is not reform.
- An argument for, or against, a public option. I'm against most versions of a public option, but whether a plan has – or doesn't have — a public option shouldn't be part of the test. If a public option meets the three criteria, then the plan must be taken seriously. (What does it mean when I say I'm against "most versions of a public options"? Well, I can see the arguments for state-run cooperatives, particularly if multiple states are allowed to band together in the same cooperative.)
These three, related criteria – the impact on coverage, personal care, and the deficit — are the criteria that I propose that we use to measure any health care plan.
If you look beyond labels and rigorously apply those three criteria, I think that you'll find that the version of health care favored by the Democratic leadership in the House (HR 3200) is a bad idea. Yes, HR 3200 expands coverage to a certain extent. But, as a recent report by the CBO confirms, HR 3200 strengthens the link between employment and good health care. That's a step in the wrong direction. You should have access to health care because you're a person, not because you're employed. Linking health care to employment is also bad for business. Indeed, the legacy cost of health care is a key reason why we, the tax payers, have been forced to bail out American automakers.
HR 3200 also penalizes small businesses. Under HR 3200, a business with a payroll as low as $250,000 — that could be a family-owned restaurant or a local bookstore — either has to pay for its employees' health insurance or is subject to a penalty. Employees of small businesses should absolutely have access to good coverage. But it's a bad idea to mandate that small businesses pay for that coverage. It's not as though small business owners are currently refusing to provide health insurance to their employees because they're evil; health insurance is expensive.
Regarding the last element of the test — the deficit — HR 3200 has a disastrous impact. Even if Congress adopts the new penalties and surcharges imposed on small businesses, the surtax on the wealthy, and the numerous other complicated regulatory and tax changes hidden in HR 3200's one-thousand-plus pages, HR 3200 still adds $239 billion to the deficit over the next decade while having none of its purported "curve shifting" benefits.
HR 3200 is not a good bill. Its defects are fundamental. It should be killed, not reformed — particularly since HR 3200 is not the sole Democratic option. There are many other Democratic bills in circulation, several of which don't have HR 3200's problems. But these alternate Democratic (and Republican) bills won't have a chance to breathe so long as HR 3200 is sucking the oxygen out of the room.
The Democratic leadership in the House needs to get out of the way.
*This is because, by law, Medicare and Medicaid usually pay doctors less for any given service than a private insurance plan. Thus, to continue to make acceptable profits, doctors tend to charge private insurers more than they otherwise would. These additional charges are passed along to employers (and, indirectly, employees) in the form of higher insurance premiums.
**That employer health care results in lower cash wages is also among the findings of the authors who studied Hawaii's mandatory employer-based health care system.
UPDATE: Some minor wordsmithing.
UPDATE 2: Good. There will be no healthcare vote in the House before the August recess. That gives opponents of HR 3200 an excellent chance to kill the bill, and, perhaps, give time for the bipartisan Senate group discussed by Publius (or, as I suspect Publius hopes, a different group) to consider other options.
The perfect is the enemy of the good.
Decoupling health care insurance from employment is a fundamental change to our health care system. If you are holding out for this fundamental change then you are ignoring reality.
Incremental change is how our health care system will get better. The house bill is a step in the right direction. It isn’t the final destination.
All the criteria conflict. This is especially apparent in the critique of the employer mandate presented in this blog entry. The employer mandate goes a great length to expand coverage. Note that you leave out your 3 criteria when bringing up points against the employer mandate and don’t acknowledge that Hawaii also has one of the highest rates of coverage in America. Covering people costs money, so obviously someone has to foot the bill. The employer mandate puts part of this on businesses.
It’s possible to forgo an employer mandate and retain the coverage criteria, but not without a public option or extremely heavy regulation of the insurance industry (forcing them to offer a minimal plan at an affordable price). Plus expansion in medicare coverage. You can also subsidize lower income people but i think that’s certainly not something that’s going to limit costs. And either way, this puts costs on government which goes against criteria 3.
Very little is said on the impact proper nutrition would have on the health of the currently under-insured (and everyone else for that matter). After having watched “Food, Inc”- and seeing the point made about how poor people are left with McDonalds being their only option to feed families (and the resulting health impact of that fact such as exploding diabetes cases among the poor) because the cost of fresh fruit and veggies are just a bit more than they can spend to feed everyone- I think food stamps which are limited to staples such as rice, pasta, veggies and fruit should be a part of any health reform plan.
You can’t possibly bring the costs down without getting people on the margins to eat healthier. Just a thought.
All the criteria conflict. This is especially apparent in the critique of the employer mandate presented in this blog entry. The employer mandate goes a great length to expand coverage.
That’s false, as you implicitly concede in your second paragraph (below). You can can have greater coverage without an employer mandate.
It’s possible to forgo an employer mandate and retain the coverage criteria, but not without a public option or extremely heavy regulation of the insurance industry (forcing them to offer a minimal plan at an affordable price).
And this is false as well. For example, there are plans — Democratic plans, even — that provide for a refundable tax credit that allows individuals to purchase their own insurance (either a public option or a private plan).
Incremental change is how our health care system will get better. The house bill is a step in the right direction. It isn’t the final destination.
This is something that I’ve never understood, Blue Neponset. If your goal is to eventually decouple health insurance from employment, how is it a good first step to strengthen that link?
You can’t possibly bring the costs down without getting people on the margins to eat healthier. Just a thought.
I agree with that. A rational solution would be to increase taxes on certain unhealthy foods — something that I’d be willing to consider, but which it almost certainly DOA.
The only essential element I’m concerned with is a public option (which itself is already a compromise from single payer universal healhcare).
Without a “public option” where Citizens can get health insurance directly through the government, what the politicians appear to be doing is handing the corporate-medical-monopoly 50 million new customers.
If there isn’t a public option, it’s hard to see how anything Obama might sign isn’t a complete sell-out.
(And “cooperatives” are a joke, unless it’s NATIONAL it can’t compete because it just won’t have the scale needed or the broad national attention needed to keep it effective.)
Without a clear “public (entirely government run at the national level) option”, anything else is just a half-measure with lipstick on it.
Could you give us your thoughts on the Swiss system based on regulation of private insurers? They’ve done a number of things to bend the cost curve for their comprehensive basic plan. Among others: (1) insurance companies as a group and care providers as a group negotiate fees annually for the covered services; (2) no applicant can be turned down, (3) community rate setting, and (4) insurance companies must operate the comprehensive basic plan on a non-profit basis.
I picked these in particular because they address a number of the factors that critics point to when they assert that US insurance companies add significant costs to the system for things that are not health care: profits, expenses to avoid covering risky patients, and staff at both the insurance company and the care provider who often, in effect, negotiate whether a service is covered and what will be paid if it is covered after the service has been provided.
Without a “public option” where Citizens can get health insurance directly through the government, what the politicians appear to be doing is handing the corporate-medical-monopoly 50 million new customers.
I probably won’t be able to convince you that there are ways to handle this concern other than through a public option: your mind seems made up. Nonetheless, here’s a go: If your concern is that insurance companies have sustantial intrastate monopoly power — that is, many states have one insurance company as a primary insurer — wouldn’t you solve that problem by allowing interstate competition among insurers …. just as we do with car insurance?
This is something that I’ve never understood, Blue Neponset. If your goal is to eventually decouple health insurance from employment, how is it a good first step to strengthen that link?
The first step IMHO, is to get some sort of public option for small business. Once that is in place we can add the self-employed to that plan. Once the self-employed are covered then we can work in some kind of tax credit so people can buy in to the public plan on an individual basis. Once that happens employers will encourage their employees to buy into the public plan. After a period of time, viola! health insurance is decoupled from employment. At that point, we can get rid of the tax credit and fund the plan via normal income taxes.
Right now the market doesn’t do a good job of offering individual health care polices. They are very expensive and very limited. I don’t think that is going to change.
Also, thanks for offering a reasonable opinion about this. I don’t agree with you but I appreciate your honest argument on this topic.
Except Von, in my experience, Car and House insurance (two frequent items I’ve seen brought up as counter examples) suffer from many of the same problems as health insurance, it is just not life or death, so people don’t scream as much.
For house insurance, I can remember a couple years ago reading about how home owners had to be very careful about deciding whether or not to file a claim with their agency cause it could result in dropped coverage or drastically increased fees. Very similar to what we are discussing here.
Car insurance is a separate matter, a bit more liquid; however, how long do you think car insurance would last if the car insurers KNEW you had a bad brake system, KNEW that it would be very expensive to fix, and that it was going to be an inevitable expense? My guess is that the car insurance company would be looking for the first exit possible, same as the health insurance companies do now in comparable situations.
If your concern is that insurance companies have sustantial intrastate monopoly power — that is, many states have one insurance company as a primary insurer — wouldn’t you solve that problem by allowing interstate competition among insurers…. just as we do with car insurance?
In a word . . . no. Because allowing competition is not the same thing as having competition. There’s a reason why one element of antitrust analysis is the cost barriers to entry into the market. You can allow competition all you want, but until those barriers come down, you’re not going to have competition that benefits the consumer. Which is reason # I-forget-how-many why the public option is a important.
Yes!
I don’t post much, but I felt moved to respond and applaud Von for starting this post by laying out GOALS of health care reform…Oddly (or probably not), this has been completely lacking in the public debate the last few weeks. There has been a lot of discussion of details of the plans without any articulation of what the goals are.
In fact someone (maybe here at ObWi) recently made the claim that Obama is failing to win the health care reform discussion because he hasn’t convinced the American public of what health care reform really means for them.
Now, I agree mostly with Von’s points – especially the first two. I think the major goals of health care reform should be to ensure coverage of everyone and end the employer based health care system. The first is just common morality/decency – it is/should be unacceptable to allow people to suffer from entirely curable diseases in a society as wealthy as ours. The second is common sense (especially in the current economic climate) – not only does the employer based system place US companies at a competitive disadvantage, it also disadvantages the US economy by limiting the liquidity of labor due to fear of losing health care.
Von and I diverge a little bit on the last point. Since I don’t share Von’s libertarianism and skepticism of govt endeavors, I think that there is nothing wrong with the federal government taking on a greater share of the health care costs. I’d like to see reform lead to lowering the overall health care expenditure in the US (“bend the cost curve”), but if the federal government assumes a greater percentage of the total cost in order to achieve the goals stated above, then that seems like a completely acceptable outcome…with the caveat that it is paid for. I agree with Von that this shouldn’t increase our already outrageous deficits. However, political realities aside, this is where some hard choices would have to be made, and I would argue that if someone puts forth a plan that achieves the primary goals stated above, then it’s worth prioritizing in the budget above a lot of other things we currently spend money on.
For my own personal feelings, I would start by changing our structure of agriculture subsidies for corn and soybeans. At the outset, you save money which can be used to pay for new/additional health care expenditures. Further down the road, I think you also see huge savings in terms of impact on nutrition and health. A study out yesterday shows that obesity related disease accounts for 10% of our health care costs having doubled over the last ten years. While I’m sure there are several factors involved in the rise in obesity, my current understanding is that one of the most significant factors is the ubiquity of high fructose corn syrup which is ridiculously cheap because we subsidize it. I’m not in favor of some proposals like junk food taxes, but I think we could start by no longer subsidizing junk/fast food.
Anyway, I’ll get off my soapbox, but again, I tip my hat to Von on this post.
von, overall a well reasoned post, although (surprise) I disagree with you on some of the points.
There is no evidence that coops are likely to either a) expand coverage or b) reduce costs. Health care is not produce and the market does not work in health care as it does in other areas.
Currently, 47 states have more than 60% of their population covered by one insurance company. The company may vary per state, but that is as close to monopoly power as you are going to get.
Assuming you allow multiple states to co-op together, which in theory would reduce the costs by having a larger pool (but only in theory) are you in favor of getting rid of state regulatory powers?
Or, if you allow someone from, say, Arizona, to purchase a policy offered in Illinois because it might be cheaper, who does that person go to with a complaint.
Your are correct in that tying insurance to the employer is not the best way to go about this, for many of the reasons you indicated. About the only way to decouple effectively is to go single-payor, which is not politically feasible at tis time.
Regarding providers reimbursement from Medicare and Medicaid, yes, in most cases it is lower than what insurance companies pay. However, very few providers complain about Medicare payments because 1) it is quicker than the reimbursement they get from insurance companies, 2) they actually have a higher collection rate from their patients than with regular insurance companies, and 3) their adminstrative costs are virtually non-existant with Medicare.
Medicaid is another issue, primarily due to the high level of state funding involved. Due to financial reasons, many states are unable to pay the Medicaid bills. Of course having affordable coverage would eliminate a lot of that.
That’s a start, if time allows I’ll be back later with more.
Michael –
Let me do some research on the Swiss system. I don’t know much about it.
The first step IMHO, is to get some sort of public option for small business. Once that is in place we can add the self-employed to that plan.
OK, your theory makes some sense, Blue N. But my response is that HR 3200 doesn’t include, and thus can’t accomplish, your first step.
I don’t post much, but I felt moved to respond and applaud Von for starting this post by laying out GOALS of health care reform…Oddly (or probably not), this has been completely lacking in the public debate the last few weeks.
I thought that was odd as well, which is what inspired this post. And thanks for your contribution.
I agree with that. A rational solution would be to increase taxes on certain unhealthy foods — something that I’d be willing to consider, but which it almost certainly DOA.
If you want to wander into the realm of DOA policy suggestions, I’d say killing certain agricultural subsidies could do a lot to reduce the prevalence of some unhealthy foods.
I was with you for most of this, and I can even agree at this point that HR3200 sucks.
But this is where we part ways.
Look at your first two criteria:
Public option? Check.
Public option? Check.
I have no idea whether this last part is true or not. What nobody disputes is that right now people who are uninsured or under-insured frequently skip routine medical checkups and other preventative care because they can’t afford it. They end up in the ER later suffering from something that would’ve been easily treatable if caught early, but which is now orders of magnitude more expensive to deal with.
If everyone has access to routine maintenance health care, let alone full coverage, this problem–and the staggering cost which we bear as a result–goes away. Well, not entirely, because people are lazy. But meaningfully.
Will a public option increase the deficit in the short term? Probably. And that has to factor into the discussion.
I don’t like the idea of running deficits, but the fact is that we do it when we think we have to, when the alternative is far more costly inaction. When a foreign policy crisis threatens the country, we throw our military at it and spend whatever it takes to resolve the crisis. We may complain about the price tag, but we pay it in order to save American lives.
Contrast this with the health care debate. Every year at least 20,000 people die in this country because they were uninsured. Some studies put the number much higher, if you factor in deaths from causes that would have been preventable if diagnosed through a routine checkup. We’ve spent nearly a trillion dollars so far between Afghanistan and Iraq because some jackholes with box cutters killed 3,000 people–if any foreign enemy was causing 20,000 American deaths a year, we would spend whatever it took to defeat them.
Right now, that enemy is our own broken health care system. You will pardon me if I don’t really find lectures from conservatives about fiscal discipline particularly credible or compelling anymore, especially when viewed in this context.
So no, you don’t get to just wave your hand and declare deficit spending a deal-breaker, while simultaneously dismissing the only option that actually satisfies your other two deal-breakers.
I probably won’t be able to convince you that there are ways to handle this concern other than through a public option: your mind seems made up.
Yours too, von.
wouldn’t you solve [the intrastate monopoly] problem by allowing interstate competition among insurers …. just as we do with car insurance?
Yes, Mr Rumsfeld (I kid!), it would solve the problem you yourself posit.
To me, everything in this debate flows from basic assumptions. Here is mine:
– Efficiency and the profit motive are neither identical, nor inseparable. The main objection to the public option is very obvious, and was expressed by Sen. Snowe among others: it would lower costs too much and therefore interfere with the insurance bidnis, which companies will have a hard time competing in their traditional line. You are either OK with that or you’re not. I’m OK with it because broad-based health insurance is categorically unlike, say, car insurance, and I will shed no tears for those companies if they are eventually reduced to selling gold-plated insurance to rich people.
I wish we lived in von’s reasonable world, of reasonable people of reasonable good will, including statesman-politicians who cared more about vital public interests than midterm elections.
BTW, heavily regulating insurance companies is inadequate, since they can always be un-regulated – not instantly, but faster than a real national component could be gotten rid of.
Seeing as rising premiums will be a given until reforms happen, and that the people who are worried about premiums are very important to the economy and in politics, there really is no excuse for the republican desire to call things off until “maybe 2011”. They know that will cause trouble for the economy, but they also know it will be on the democrats’ tab in the midterms.
The only way people who get sick will be able to keep their insurance (which is to say, continue to get treatment) is for their premiums (or what they pay for them) not to go up when they get sick.
The only way to accomplish this is for people who aren’t sick to pay more than the expected value of their out-of-pocket health costs in a given time period.
Healthy people without assets are unlikely to want to purchase coverage at those prices. Hence, without mandatory coverage, the sick will continue to be dropped from private insurance, or (same diff) see their premiums rise to the point where they can no longer afford them.
I simply don’t see how you get to universal coverage without forcing healthy people to pay into the system before, or regardless of whether, they get sick.
“–if any foreign enemy was causing 20,000 American deaths a year, we would spend whatever it took to defeat them”
This has been a favorite argument throughout this debate. There are two differences:
1) The assumption when someone kills 3,000 (or 20,000 Americans) is that we should defeat them before they kill or continue to terrorize ALL Americans. Very high stakes, not to diminish the need to address healthcare.
2) Wars end, the healthcare spending we are talking about becomes a permanent fixture in the budget. Quite possibly a deficit this year becomes one next year and, in twenty years, we are having a debate about “saving healthcare”.
I just don’t think this hyperbole is helpful.
To this point Shaggy:
I would direct you to the comment by News Reference:
The problem here is the one most libertarians focus on: The government is run by people who are beholden to those who are going to get them reelected (i.e., special interests). It doesn’t matter if it’s controlled by democrats or republicans. A plan that doesn’t take this into account is, more likely than not, going to fail.
You bring up a really good point about farm subsidies. See when programs in the government fail, we just dump more money into them. See our various wars on drugs, poverty, terrorism. Just look at how much is spent per child on education in places like DC with little or no improvement int outcomes.
I cannot speak for von, but I can speculate that he has a certain skepticism about what the government can accomplish, and he tries to bring forth policy suggestions which account for that explicitly.
If we reform the health care system and increase the deficit, we’re really just solving the problem for a short period of time. Eventually we’re going to have to pay for it. It’s just honest to face these costs now, and it’s simply immoral to push them off on future generations.
I agree with decoupling insurance from employment, but I don’t see how it changes the competitive disadvantage for American business. That disadvantage will continue so long as we are paying more for healthcare, regardless whether it is through taxation and central payor, or through direct payment for employees insurance. In the end, the businesses will be either paying higher taxes, or paying higher salaries so employees can pay insurance tax. Companies with the highest payroll will continue to subsidize those with insufficient income to cover healthcare costs.
So it comes back to eating right and exercise if we want to reduce our corporate burdens.
Yikes, the new CRS report you link makes my oft-repeated point about government spending even more powerful. According to the report the US government spends about $2,684 per capita and covers about 27% of the population. Canada spends about $2,209 per capita and covers 100% of the population.
So as of 2006, the US government spends about 21% more per capita than Canada yet covers only 27% of the population. That is crazy.
For example, there are plans — Democratic plans, even — that provide for a refundable tax credit that allows individuals to purchase their own insurance
And if you’re a fan of cost inflation and putting healthcare cares rising costs on the same scale as we see for tuition, that’s certainly the way to go.
But for the most part subsidy just increases prices. That’s what makes opposition to a public option absurd on its face (even moreso when combined with opposition to an employer mandate)
We are trying to produce an outcome (universal coverage) that’s not market driven. The idea that if we just give the market money, we’ll see cheaper prices and cover everyone just doesn’t work. It’s against the laws of economics. You can’t create demand and expect prices to be steady. There has to be cost control at some end of the spectrum. Whether it’s public option or heavy regulation. You didn’t put cost control in your criteria, but healthcare costs impact the debt via medicare so it’s not something to be ignored.
Basically it comes down to this. Assuming we seek universal coverage, the employer mandate expands coverage and cuts coverage costs to the government. The public option expands coverage and depending on how it works out, may or may not cost the government money (or heavy regulation in lieu of a public option). Tax credits expand the coverage but also expand government spending and have the nasty effect of cost inflation. Or we could have a combination of all these. But you can’t just do one of these things and expect everything to be solved. And if you do choose one, the tax credit idea is the worst.
OK, your theory makes some sense, Blue N. But my response is that HR 3200 doesn’t include, and thus can’t accomplish, your first step.
I haven’t read all 1,018 pages of the bill, but the summaries claim it includes a public option. That is the first step. LINK I am not sure why you think HR 3200 won’t accomplish this first step.
Sorry to double post but a few more points:
I left out the fact that we can also expand medicare as a way of dealing with coverage. But that conflicts with criteria 3 (well, so do tax credits but I didn’t want to belabor the point, like i said, the criteria conflict. That’s not a bad thing, it’s just the reason for why this isn’t easy).
I’ll say at the outset that I’m not addressing von’s post and his three-part test directly.
Instead, I’m addressing partisan Democrats who advocate support for the apparent best result that we can get out of the current Congress, which is H.R. 3200.
Even in the unlikely best-case scenario, in which the House bill emerges intact from the conference committee reconciliation with the Senate version, the results will stink — in both the policy and political terms.
The best case is unlikely because the Senate exists to weaken popular legislation. It’s the deliberative body where a man who represents fewer people than the mayor of D.C. is allowed to set the parameters for a bill affecting the personal welfare of almost every person in the country. He’s not even pretending to represent the interests and opinions of his nominal constituents, the 675,000 people of his state, but those of his real constituents, the corporations who’ve provided 95% of his campaign funding.
Without changes to the Supreme Court’s established framework of considering corporations as persons and money as speech, the terms of debate on health care and most other issues are never, ever going to be set by individual citizens.
This is the background to the current situation, where everyone from Pres. Barack Obama to Speaker Nancy Pelosi to more than half the U.S. public acknowledges that some version of single-payer offers the best prospects for actually solving the defects of our current health care system — massive and growing numbers of uninsured citizens, denial of care and coverage to those nominally insured, burdens on workers and employees because insurance is so closely tied to employment, dollar costs out of all proportion to results achieved, and crushing administrative burdens on health care providers.
These defects have created enormous political pressure for serious health reform, and — without anything in the way of national leadership — large-scale popular support for a single-payer (Medicare for all) solution.
But the scale and political power of the finance and insurance sector are so great, and the structure of our politics so corporate in both parties, that those with power in the Democratic party decided years ago that, however great the popular demand, single-payer cannot be won directly in Congress, because it means taking on the entire FIRE sector.
On the other hand, Dems have to pass some real health reform or they will be swept out as quickly as they were swept in. (The converse of this is that if Democrats manage to use significant majorities in Congress to pass health reform that people recognize as a serious improvement, Republicans will be a minority party for a good many years to come.)
So the pols and the policy wonks who work with and for them came together to figure out how to thread the needle. The solution was a reform proposal that leaves the insurance sector and employer-provided insurance intact, while creating a public insurance pool for the uninsured. The argument to the base was that this public option would be both a way of checking the power of the insurance companies and a path to a single-payer future: It would be big enough to force the insurance companies to compete on both price and cleanup of their abusive practices. If the companies couldn’t compete, they’d get out of the business.
This plan, backed by the AFL-CIO and a collection of Democratic policy shops led by the Obama-aligned Center for American Progress/Campaign for America’s Future, was sold to the activist base as the only real route to single payer. We were asked to get on board and accept that single-payer would be “off the table”: testimony shut out of the hearings and town hall meetings, legislation not costed by the Congressional Budget office.
Some of us who accepted the pragmatic need to win some health reform in the 111th Congress objected early on that it was still strategically stupid to silence and strangle the single-payer flank and make the public option the leftmost edge of the reform, as it almost guaranteed a loss before the battle began. Much better for the half-a-loafers to be able to threaten the insurers by pointing to a strong, active demand for single payer and paint their own version as the necessary compromise.
But the Obama-CAF plan had already been developed, sometime in 2007, their guy was in the White House, and he was determined to get health care reform (of whatever kind) passed this year. We were never to be shown a specific proposal and asked to fight for it — only to keep pushing for the concept of a public plan and to back the best choices offered by the Congressional committees.
Well, now we see where that’s landed us: right where we “little single payer people” said we’d be: forced to stick with crappy employer-provided insurance if available, forced to buy crappy, overpriced, abusive private insurance if our income is too high, and, on the chance that we’re eligible for the longed-for public plan, forced to wait for it, uninsured, for four more years.
No public plan will be available until 2013. Now, perhaps that doesn’t affect you personally: You’re not one of those tens of millions of us without health insurance and unable to get any due to cost or pre-existing conditions. But aren’t you a bit worried about the political impact? After all, we’re not all low-voting, low-information voters: a significant proportion, and the fastest growing segment of our numbers, are active voters who are losing their health insurance as they lose their jobs.
The public plan, because of restrictions on who can sign up, will never be nearly big enough to pose any kind of competitive threat or enforcement hammer for the insurance companies.
It is designed so that it can never be a possible path to single payer; we have the President’s and Sec. Sibelius’ word on that.
It will leave ten million people uninsured. Promises of “universal coverage” are like those for “transparency”; they involve a few showy gestures in the general direction, but with no intention of inconveniencing themselves to reach the actual goal.
“Progressive” bloggers have been enlisted for the last several years to round up and limit liberal activism on this issue, promising us that the obtainable reform would be both personally worthwhile and a political prize. That was a crock.
This piece of crap isn’t worth supporting, even if it were going to be the final result.
A lot of dedicated, wonderful people have continued to agitate for the only real solution despite being ignored, belittled, and told to STFU by supposed allies. Get ready to join them if you want to see anything change in this country.
Yes, and not surprisingly there’s a reason for that: it’s a fair point that you can’t refute.
I saw what you did there.
The idea that Al Qaeda, the Taliban or Iraq posed an existential threat to the United States–as in, were capable of killing ALL Americans–is so prima facie ridiculous that I can’t believe anyone is still willing to embarrass themselves with it.
You can leave out the “or terrorize” bit as well. It’s only in there to make the “ALL Americans” part sound less ridiculous.
If that’s your assumption, own it.
If you’re trying to make an analogy to Social Security, the truth is closer to this: in twenty years, the same bad faith arguments get trotted out by the same people who opposed the program in the first place, who then proceed to fearmonger about a nonexistent crisis all while opposing any common-sense reforms.
Wars end, but defense spending does not. You continue supporting my arguments for me: we spend more on our military than almost every other country in the world combined, over $500 billion before even taking discretionary spending into account. That’s just the normal operating budget. Our disproportionately-large defense funding is a permanent fixture in the budget just as surely as a public option. It’s a question of priorities. We’re willing to throw ridiculous sums of money at military programs because they might save American lives. We already throw ridiculous sums of money at health care in our current system, which is broken. But we’re not willing to throw money at health care in a way which would indisputably save American lives.
You keep using that word. I do not think it means what you think it means.
Overall, a good, thought provoking post.
Like other commenters here, I basically share von’s goals for health care (though deficits can certainly go up in the short term, so long as overall spending comes down in a timely manner).
Like others here, I think the public option, in general, does more for these goals than against it (except perhaps, the deficit — but like I said…).
But given this, I definitely do not think that killing this bill is the way to make these things happen. However far HR 3200 falls short, it needs to be said again and again that it’s not the last word on health care reform — the Senate still needs to report a bill*, which is likely to be very different, and there’s still conference committee. And even before the vote, there’s the possibility of amendments (esp now).
*BTW von — How would you say the Senate HELP bill does by these criteria — or at least the first two?
So it comes back to eating right and exercise if we want to reduce our corporate burdens.
Are you suggesting a mandatory lentil bean and push-up provision in the health-care bill?
Seriously, though (I don’t disagree with your general point), I think it also comes down to better cost/benefit analysis of testing and treatments. The bottom line is that provided health care has to be paid for somehow. There’s no getting around that, regardless of payment from public, private, out-of-pocket, hidden or passed-on.
The real issue is getting the outcomes more cheaply. That involves getting rid of existing perverse incentives and, probably to a far lesser degree, needless red tape. I’m not sure about profits for insurers and providers. Though, since I’d support universal single-payor, I guess I am pretty sure about profit for insurers. I don’t see what that gets anyone but the insurers and their shareholders. The profit motives for providers might be more manageable if there was an outcome-based reward system of some sort and an emphasis on early detection/treatment and preventive care.
It seems to me that without reducing unnecessary or unnecessarily costly care, someone’s profits and unproductive administrative costs, we’re going to be putting the same amount of resources into paying for health care, say, as a precentage of GDP as Sebastian points out, regardless of where the money comes from. I don’t know how any currently proposed legislation addresses those things, but I think those are at least some of the most important goals, aside from portability and universality.
Can we get the insurance companies’ actuaries to use their powers for good and help us figure this stuff out?
“who then proceed to fearmonger about a nonexistent crisis ”
Who does this exactly?
Posted by: Nell | July 28, 2009 at 01:23 PM = AWESOME!
we spend more on our military than almost every other country in the world combined
No’almost’. We spend more than every other country combined, by a long shot.
von, I agree with virtually all of this. It might be the most concise summary of the issues I’ve seen anywhere on healthcare.
I’d like to comment briefly on the “public plan”. I’m a British immigrant to the US so I’m very familiar with publicly provided healthcare and how it differs from what we get here.
A lot of the comments here favouring the public plan seem think that congress can simply enact that the public plan will cover everyone to a high level and control its costs, and that it would be so, as if a public plan would be exempt from the forces that have been driving costs up, and therefore also driving coverage down. The experience of the rest of the world does not bear this out – public payers for healthcare, even if they’re also the sole provider, have to control what treatments are allowed and impose waiting times for them in order to control their costs and continue to provide universal coverage, just as private sector insurers have to control costs in order to keep their premiums down.
The key question isn’t who takes premium payments and then pays for healthcare, but how we change the rules for doing that so that more people are covered, those people can trust that their insurance is real and isn’t going to be pulled as soon as they get sick, and the insurers can afford to provide a reasonable level of care.
Unfortunately the only way to squre the financial circle is to stop people from spending vast amounts of their insurer’s money on unnecessary or very marginal care (ie. “rationing”), and use the resources saved to care for the currently un/under insured (yes, this is “redistribution”). These are the flip-sides on von’s points 1 (coverage) and 3 (deficits) – I don’t see anyway around it. Any bill that doesn’t do both isn’t going to help. The only way to get that past the currently-insured-and-complacent crowd (which would include me if I hadn’t seen a fairer system in operation).
A public plan could do both, but only if its essentially a single-payer system, which isn’t going to happen (the public plan in HR3200 doesn’t have enough market power to impose rationing because of the tiny number of people it applies to). Since you only have to whisper “rationing” and “redistribution” to the American public to kill legislation single-payer is a non-starter, the only way to get what needs to be done, done, is something like the Wyden bill – end the employer backed system, force all the insurers onto an exchange, enforce minimum levels of coverage and no cherry-picking, pre-existing condition bullshit or recission. That way the insured are guaranteed choice and full, truthful disclosure, and insurer are forced to force patients to accept rationing because between them they have to cover everyone. A refundable tax credit for healthcare takes care of the redistribution part.
Why, using those three criteria, is a strong public option a bad idea?
Or if you’re opposed to a plan including a strong public option based on some other criteria, then I think you should modify your proposal to include those criteria. (Or, alternatively, modify your opposition to the public option.)
“Are you suggesting a mandatory lentil bean and push-up provision in the health-care bill?
”
I would suggest insurance premiums be partially based on some multiple of the Body Mass Index, or percentage body fat as compared to a norm for the individual. Maybe we could also data mine consumer purchases for unhealthy products and add some variation of a unhealthy lifestyle surcharge…buying a motorcycle or processed american cheese might be a charge, buying broccoli or running shoes might be a deduction. Beer would similarly be a deduction, since it is fundamental to human existence, and protected by various penumbra of the Constitution.
“I think food stamps which are limited to staples such as rice, pasta, veggies and fruit should be a part of any health reform plan.”
Because the more paternalism we impose on the poor, the better.
After all, we know better how poor people should spend what little money they have, and we should command and control how they spend it.
“A rational solution would be to increase taxes on certain unhealthy foods — something that I’d be willing to consider, but which it almost certainly DOA.”
Although still regressive, I’d much favor that then trying to mandate that poor people not be allowed comfort food, even if it is “unhealthy.”
If we’re going to be food police, let’s be food police on everyone, at the least, not just on the backs of the poor.
(Although it’s still, being regressive, partially on the backs of the poor, since the well-off can afford to pay such a tax, and the poor, obviously, not so much. But at least a tax is less absolutist than mandates on food stamp spending, which are already ridiculous — for instance, you can’t buy unpackaged cold cuts from a deli counter, because they’re “prepared food”; you can only buy them when sealed in a package; food stamps are filled with these sort of idiotic restrictions, which bother few people, most people not being on food stamps, or even the slightest bit aware of what it’s like to be dependent on them.)
There’s a lot that I would like to respond to, but can’t due to time pressures. I also should note that, even where I disagree with a commentator, I think that the quality of the arguments being made is first rate.
I do want to pivot off a point made by John Harrold, however. He writes:
I cannot speak for von, but I can speculate that he has a certain skepticism about what the government can accomplish, and he tries to bring forth policy suggestions which account for that explicitly.
Feel free to speak for me on that point, because you’ve nailed it. There’s a lot of focus on the alleged ill incentives afflicting insurance companies, without recognizing that the public option is subject to its own series of unhealthy quirks and distortions.
And it bears noting that I’m not viscerally opposed to a public option. I don’t think it’s the best approach, but it’s hard for me to get all good and lathered up about it. I lived in the UK for a time as a child, under a “real” socialized medicine program. (This was in the 80s, when the UK was even more “socializier” than today.) The UK’s system is a far cry from the grandma-will-be-left-on-the-ice-floe-to-die hysteria.
@ Simon K
Exactly. You can’t achieve Von’s desire for universal coverage without finding some way to “bend the cost curve.” A strong public option bends that curve. A heavily regulated insurance exchange bends that curve. Once the premise of universal coverage is accepted, opposition to things like a public option become plainly ideological.
“1) The assumption when someone kills 3,000 (or 20,000 Americans) is that we should defeat them before they kill or continue to terrorize ALL Americans. Very high stakes, not to diminish the need to address healthcare.”
No, the assumption is that we should prevent them from again killing sizeable numbers of people; nobody nowhere is in a position to “kill… all Americans,” or even most Americans, and even killing a significant percentage of Americans is solely in the hands of Russia and/or China.
Our goals in Afghanistan, for instance, however rightly or wrongly, include trying to prevent attacks that are the equivalent or greater than those of September 11th; they’re not to prevent every single American from ever being threatened.
Similarly, the goals of health care are not to create immortality, nor to eliminate all disease and injury; the goals are, well, pretty much as von stated, but essentially to greatly improve the situation for people without health care, those in danger of losing health care, and those with poor health care insurance options.
And the only way all Americans can be terrorized is if they terrorize themselves. Your claim, in short, is highly muddled, and untrue, and your analogy fails.
“2) Wars end, the healthcare spending we are talking about becomes a permanent fixture in the budget.”
Really? What are the conditions for ending “The War On Terrorism,” exactly? I’d really like to know.
“Quite possibly a deficit this year becomes one next year and, in twenty years, we are having a debate about ‘saving healthcare’.”
Fine; we’ll have that debate then; meanwhile, we’ll have tens of millions of people, and families, with twenty years of health coverage they won’t otherwise have. Sounds good to me!
“So as of 2006, the US government spends about 21% more per capita than Canada yet covers only 27% of the population. That is crazy.”
Which is why we need to change the system; this is not an argument for preserving the status quo while we debate some more what we’ve been debating since at least 1948, when Truman’s health care plan was defeated by the Republicans.
But let’s give it some more time, to work out a better plan. Why do now what we can put off another sixty years?
Remember, Obama is leading the country down the road to Muslim communism!
“If we’re going to be food police, let’s be food police on everyone, at the least, not just on the backs of the poor.”
My most fervent hope is that we get to the point where this is the most important thing we have to debate. For now, let’s not be the food police for anyone.
@Marty
I’m always suspicious of comparisons with war, but your two objections to this comparison don’t make sense:
1) The assumption when someone kills 3,000 (or 20,000 Americans) is that we should defeat them before they kill or continue to terrorize ALL Americans. Very high stakes, not to diminish the need to address healthcare.
No war has ever done away with the entire population of any country. And the entire population of the U.S. is at risk to lose their health insurance. I don’t think this is a meaningful disanalogy.
2) Wars end, the healthcare spending we are talking about becomes a permanent fixture in the budget.
In fact, America’s wars never end. At least this time, with the “Global War on Terror,” our leaders have been relatively honest about this fact. This is a war which can have no meaningful conclusion. More importantly, we have been at war or on a permament war footing in this country for the last sixty-one years.
@Nell – I agree one hundred percent with your analysis of public support for single-payer and elite efforts to insure that it won’t come about. A few comments on your analysis and conclusions:
First, Americans who say they support single payer have never been willing to vote for politicians or parties who endorse it. To a certain extent, you do get what you vote for. As I’ve said over and over again in publius’s comment threads decrying Democratic failure: the Democrats are behaving exactly as one would expect them to behave. The only thing I’m surprised about is that anyone who’s been paying attention is surprised at their behavior.
Second, real social reform tends to happen when power in the streets makes it the less scary option for our political elites. Sit-down strikes and fear of social revolution helped bring about the Wagner Act. The Black Freedom movement helped bring about the Voting Rghts Act (the bullet or the ballot, as Malcolm X put it). There’s been an extraordinary amount of organization on healthcare, but it has all taken the form of petitioning our leaders (often with publius’s fatally optimistic assumption about what they really want for us). That’s not the kind or organizing that usually brings results.
Finally, in the short run, as is so often the case in our political life, supporting the lesser evil is the best we can do. And in this case the lesser evil is the House Bill. We shouldn’t pretend that it’s something it isn’t. But we also shouldn’t be so frustrated with the corruption and failures of the system that we turn down a quarter-filled glass when the alternative is an empty one.
“A strong public option bends that curve.”
Again, (and again, and again), I don’t understand why you believe that. We already have Medicare and Medicaid. The US government already spends more per capita than Canada yet only covers 27% of the population.
If it can do so, why hasn’t it “bent the curve” already if the US government is *already* spending enough to get Canadian health care?
If it were really that obvious that the US government can bend the curve, why hasn’t it already done so? Why don’t we already have universal health care instead of spending more than Canada and only covering about a quarter of the population?
And since it didn’t, why do you think that suddenly it will be able to?
“This piece of crap isn’t worth supporting, even if it were going to be the final result.”
Nell, so the status quo is better? Or are you saying we can somehow drastically change the political environment so that in another two, or four, years we can pass single-payer? Or what? What alternative are you proposing?
Again, (and again, and again), I don’t understand why you believe that.
Mostly because the CBO says it.
Everybody who claims that there’s a Social Security crisis looming. You need a list of names?
Derek – I’m somewhat bought into the ideology that prefers a strongly regulated exchange to a strong public option. The UK national health service shares a number of un-attractive features with all socialist bureaucracies, but does in fact acheive reasonable health outcomes for almost everyone. For various reasons, though, I think its unattractive features would tend to be accentuated if it were replicated here. Something that enforces the overall model of rationing and redistribution while delegating actual execution to the private sector would seem to fit better with the American system of governance overall.
Regarding the grandma-will-be-left-on-the-ice-floe-to-die thing – I don’t think this argument can be made in good faith against rationing. It applies just as well to the current mostly-private eat-what-you-can mess if grandma omitted a pre-existing condition in her paperwork or missed a premium payment some time in 1972. A least rationing based on on medical best practice (which is what the NHS tries to do and somewhat succeeds at) is justifiable in overall cost/benefit terms.
But to respond in full to Sebastian:
A) to achieve universal coverage money has to come from somewhere to give 50 million people insurance. Either we pay for them to get insurance on the private market (expensive) or we pay for them to get a plan that costs less. If the public option has the same bargaining power as medicare or something like that then it will cost less per person to insure, which brings me to point B
B) Medicare/aid’s costs have gone up less than private costs over the years. Which suggests that putting people on these plans or plans with the same ability to bargain down prices (strong public option) would cost less than paying for them to get private insurance.
“I would suggest insurance premiums be partially based on some multiple of the Body Mass Index”
This might make some sense of the BMI had anything to do with health, but all the recent studies have been revealing that that’s a crock. See here, here, here, and here, for instance.
Similarly, on BMI having nothing to do with one’s health, here, here, here, and I could keep going indefinitely. Just google on “Body Mass index” and “flawed.”
@hairshirthedonist: Thanks. I’ve needed to get that off my chest for a while. (At first, though, I didn’t see the ‘=AWESOME’ and thought you were identifying me as a culprit in answer to Marty’s question… ;>)
Point: However far HR 3200 falls short, it needs to be said again and again that it’s not the last word on health care reform — the Senate still needs to report a bill*, which is likely to be very different, and there’s still conference committee. And even before the vote, there’s the possibility of amendments (esp now).
There is no chance — none — that the Senate bill will be an improvement on H.R. 3200 from the point of view of anyone but the insurance companies. Amendments are a Hail-Mary hope. Their prospects depend heavily on the commitment of the Speaker and Majority Leader and the rules they set up for voting. If you honestly think that amendments serious enough to repair what’s wrong with the House bill now will be introduced in House or Senate with rules that allow them to pass… well, I admire but am unable to share your optimism.
“Again, (and again, and again), I don’t understand why you believe that. We already have Medicare and Medicaid. The US government already spends more per capita than Canada yet only covers 27% of the population. ”
Sebastian, can you clarify the above for me? Why is a per capita $ figure comparison appropriate for comparing the percentage of the *total* population covered by health insurance in each country? If this is a we’re-not-as-efficient-a-government-as-Canada argument, isn’t it important that public monies are being used in the US to cover the poor and elderly (high risk/cost) pool?
Not being snarky – I just don’t understand the reasoning. I also can’t find the per capita figure you cite earlier in this CRS report – have you done some analysis to break out the total per capita spending of over 6k in the US to get that number?
Thanks
Without campaign finance reform, there’s no possible way an adequate bill can come out of Washington.
I think it’s reasonable to look to the states for better solutions and let it work its way up. What became the Canadian single-payer system started out as a provincial plan.
“No war has ever done away with the entire population of any country.”
Carthage delenda est.
But I suppose some Carthaginians got away; I think this claim might depend upon the definition of a “country,” as regards pre-Middle-Ages civilization, though, or even through today. Certainly you have lots of Biblical era populations wiped out to the last soul, and even plenty of modern tribes around the world, including Native American ones, which had plenty of the attributes of a “country.”
But I digress.
“No war has ever done away with the entire population of any country. And the entire population of the U.S. is at risk to lose their health insurance. I don’t think this is a meaningful disanalogy.”
I don’t know that any war has or not, it is the fear of the intent that is the motivation for the expense.
I think the risk of everyone in the US losing their insurance would be an equally great motivator, I haven’t seen that documented or even discussed as a possibility.
Keep in mind, I believe strongly in a public option of baseline insurance for everyone (Medicare extension etc.)
I also believe we should provide for portability and continuity of coverage through an individual payer system supported by tax credits. Specifically to separate work from healthcare.
We should make exclusion for preexisting conditions illegal.
We should pay for any and all of that out of reductions in the defense and human resources budgets.
Then we should actually reform healthcare.
“If it were really that obvious that the US government can bend the curve, why hasn’t it already done so? Why don’t we already have universal health care instead of spending more than Canada and only covering about a quarter of the population?”
Ah, that would be because Republicans consistently, for the past sixty-plus years, have successfully denounced it as “socialism” and “communism.”
I would like to go on the record now and state that I’m uncomfortable with the government having access to this level of information about anyone. Truthfully, this is one of the things that concerns me about universal health care. I really don’t want the government using: Well we pay for your health care as an excuse to micromanage every aspect of my life.
von:
I hope you’re right that killing this bill is not synonymous with killing health care reform altogether, but I’m not optimistic about that.
Carthago delenda est.
Point well taken,
CiceroGary.I should have stated my point more narrowly: no industrialized nation has ever been had its population entirely wiped out by war.
Marty’s larger point, of course, is that everyone is threatened by modern warfare, and that is certainly true. But everyone other than the independently wealthy and senior citizens–who are already covered by a “public option”–is at risk of losing their insurance in the U.S. today.
“”who then proceed to fearmonger about a nonexistent crisis ”
Who does this exactly?
Everybody who claims that there’s a Social Security crisis looming. You need a list of names?”
Not really, just a recognition that it is a long list and a nonpartisan list.
“Ah, that would be because Republicans consistently, for the past sixty-plus years, have successfully denounced it as “socialism” and “communism.” ”
How does this keep it from bending the curve? It exists, it has a huge pool, and while some costs have gone up slower than private health insurance, they have gone up in real dollars.
So, to answer my own question, we haven’t reformed healthcare law, delivery or practice.
Gary: Nell, so the status quo is better? Or are you saying we can somehow drastically change the political environment so that in another two, or four, years we can pass single-payer? Or what? What alternative are you proposing?
The status quo is one in which I will be unable to afford health insurance forever, and “pre-existing conditions” make me near-uninsurable. Actuarially, I’ll probably live another twenty years. A public plan that kicks in in 2013 means that I can hope not to be injured too badly or fall ill in the next four years, at which point I might be able to obtain insurance I can afford. So on the personal Nellometer, score that one for: H.R. 3320 better than nothing.
What it isn’t, is anything for which I’m willing to pick up the phone or go lobby my wholly unresponsive right-wing Republican representative. Comrade Webb, whose excuse for not supporting the Employee Free Choice Act is the current economic crisis (!), will probably not vote for the worst Senate bill. Sen. Warner probably will; he’s never, unlike Webb, pretended to be a populist.
The apparatchiks who readied the activist Dem base for this shearing are already saying that the problems we might have with what emerges can be fixed after another round of elections, with the election of just a few more Democrats.
The alternative I’m proposing (for myself) is to quit being led around by the nose in that particular rigged game, and get back to work doing what I did before 2001: trying to change the political environment drastically.
I’m not going to wait to see what kind of reaction voters have to health care reform that Democrats will own. I’m not going to work for or defend something I don’t believe in, a “reform” that’s the product of cynical calculations and pre-capitulation. I’m going to advocate and agitate for the structural reforms that are required to make real change possible.
If, at any point along the way, this administration had shown good faith and a willingness to expend political capital on behalf of the majority of the people who voted for it on even one of the variety of issues on which those people are counting on Obama, I might not cut myself free so early on.
I knew health care wouldn’t be that issue, though. It’s painful to contemplate the millions of people hurting worse than I am who believed it would be. I’m not going to be part of leading any of them further down the path by pretending I don’t see what’s gone on here, or pretending that I think this bill or any of its conceivable future “fixes” will solve the real problem.
“There is no chance — none — that the Senate bill will be an improvement on H.R. 3200 from the point of view of anyone but the insurance companies.”
From the criteria described above, they have — or at least have the indication of having — some advantages.
For example, though the super-secret Baucus group is talking about trying to nuke the public plan*, they’re also talking about getting rid of the employer mandate. I’ve also heard^ that there’s talk on the Senate side of taxing group benefits — which the CBO is supporting by the way**, meaning it would both reduce HC spending and decouple HC from employment.
*Maybe it’s the optimist in me, but this sounds like a long shot if they want to block it — it’s popular, and it’s HELP’s turf anyway.
**(Grassley, FWIW, was a supporter of the Wyden plan, which is more my ideal.)
Correction to my 3:29pm: H.R. 3200 better than nothing for me personally.
(For the country, for the economy, for the health of the majority of people in the U.S., and for the health of small-d democratic politics, not so much.)
Sebastian:
The reasons why Medicare and Medicaid haven’t bent the cost curve are well-known and oft-decired (principal among them being corporate protectionism and a skewed risk pool). But I’d be a lot more receptive to your criticisms if you were actually in the business of suggesting viable alternatives. To be fair, perhaps you have, and I simply haven’t seen it. Most of what I can discern from your arguments, however, simply seems to be a reflexive “government bad” response. (Which, apparently, is specific to the US government, since you correctly point out that other governments are doing it for less. Perhaps the problem, then, it’s not the government’s influence keeping prices high, but the private sector’s influence.)
Otherwise, it seems to me that Catsy wins the thread.
Shorter Nell: “Idealism rules, pragmatism drools! If I can’t have the ideal, I don’t want anything at all.”
[‘Shorter’ concept created by Daniel Davies and perfected by Elton Beard. We are aware of all Internet traditions.™]
Whoops, I posted my last comment before seeing Nell’s 03:35 PM comment. Seems I may owe an apology.
“I don’t know that any war has or not, it is the fear of the intent that is the motivation for the expense.”
Anyone who fears that, somehow, by magic, al Qaeda can, by intent, wipe out the U.S., is insane. One might just as easily wear a tin foil hat to keep the Martians from invading.
Spending money on such a cause is equally insane.
Besides, the announced intent of Al Qaeda is to provoke lots of small wars by getting the U.S. to invade lots of places and bleed us economically dry. Have you never actually read any of Osama bin Laden’s fatwas? I’m assuming you don’t actually support his plans consciously. I used to have links to them on the sidebar of my blog, but they suffered link rot. If you really need me to, I’ll look up fresh links for you to read for yourself on his strategies.
“Then we should actually reform healthcare.”
You fail to mention “covering the 47 million Americans who are uninsured” in your list of priorities.
“I should have stated my point more narrowly: no industrialized nation has ever been had its population entirely wiped out by war.”
True. Though nations qua nations have been wiped out as independent entities, at least for periods of time, of course, innumerable times (sorry, I love to wax historical, and this is a complete digression). Poland, the various “Republics” of the USSR, Tibet, the list goes on and on. (Okay, I suppose Tibet doesn’t qualify as “industrialized”; but Poland certainly did.)
But, as I said, this is a total digression.
“Then we should actually reform healthcare.”
“You fail to mention “covering the 47 million Americans who are uninsured” in your list of priorities”
I said this (first):
Keep in mind, I believe strongly in a public option of baseline insurance for EVERYONE(Medicare extension etc.) (caps added)
I think this covers that…..
“Not really, just a recognition that it is a long list and a nonpartisan list.”
It’s somewhat non-partisan; it tilts strongly Republican — during the last Bush Administration, you’ll recall that the Democrats voted down Bush’s Social Security bill and implicit claims of crisis on a strict party vote — but it’s certainly true that there are some Democrats, and plenty of Broderists, who have equally foolishly and ignorantly signed onto the “crisis” notion.
(Medicare has a looming crisis; all Social Security needs are some minor tweaks to prevent problems that won’t loom up for quite a long time in the future, and those according to questionable projections at best; even the worst case requires relatively minor fixes.)
Thanks muchly for your response, Nell. I understand your position.
“Correction to my 3:29pm: H.R. 3200 better than nothing for me personally.”
Sounds like it might be better for me, too. Couldn’t be worse, anyway.
@tgirsch: No apology needed, since you’ve acknowledged that the drools/rules post did misinterpret my views.
Which I’d shorten to:
Don’t piss on me and expect me to pretend it’s raining.
“Besides, the announced intent of Al Qaeda is to provoke lots of small wars by getting the U.S. to invade lots of places and bleed us economically dry. Have you never actually read any of Osama bin Laden’s fatwas? I’m assuming you don’t actually support his plans consciously. I used to have links to them on the sidebar of my blog, but they suffered link rot. If you really need me to, I’ll look up fresh links for you to read for yourself on his strategies.”
No need, and I am a little sorry this irritated me in the first place.
I am no fan of chasing the terrorists all over the globe expending nonproductive resources against an enemy who is completely mobile and essentially unidentifiable.
Back to healthcare?
“I said this (first)”
Thank you for clarifying, Marty.
“I am no fan of chasing the terrorists all over the globe expending nonproductive resources against an enemy who is completely mobile and essentially unidentifiable.”
It is sort of like playing “Where’s Waldo?” for hundreds of billions of dollars.
Thanks also for clarifying on this, as well.
Audrey
“Sebastian, can you clarify the above for me? Why is a per capita $ figure comparison appropriate for comparing the percentage of the *total* population covered by health insurance in each country? If this is a we’re-not-as-efficient-a-government-as-Canada argument, isn’t it important that public monies are being used in the US to cover the poor and elderly (high risk/cost) pool?”
The per capita figure is appropriate because Canada covers 100% of its population with its per capita expenditure. It is not important that the money in the US is covering the poor and the elderly, because the money in Canada is also used to cover the poor and the elderly.
One possible tweak might be that we should really compare percentage of GDP expenditure per capita. If you do that the picture improves to merely: the US government spends as much as Canada but only covers 27% of the population instead of all of it. Which still makes my point.
“HR 3200 still adds $239 billion to the deficit over the next decade while having none of its purported “curve shifting” benefits.”
Yes, because it would be very bad for the government of the Unites States to spend a fraction of one year’s defense appropriation to cover the 50 million uninsured Americans for ten years. And I’m sure that getting them out of the emergency room for upper respiratory infections and poison ivy and treating them in a primary care setting won’t save a dime.
“Bending the curve” will require completely different public policies that address our dreadful nutrition and lifestyle problems. Tweaking Medicare payments while continuing to treat millions of obese diabetics just isn’t going to do it.
Gary, “Ah, that would be because Republicans consistently, for the past sixty-plus years, have successfully denounced it as “socialism” and “communism.”
Is that a serious argument about why the US government spends more per capita than Canada but only covers 27% of the population? Did Republican rhetoric scare the naturally occuring cost savings away?
“But I’d be a lot more receptive to your criticisms if you were actually in the business of suggesting viable alternatives. ”
What? My suggestion on 3 out of the last 4 health care threads that we should just straight up extend Medicare to the uninsured and put an EITC-like sliding scale on the rates doesn’t count? Just because I keep raising it and no one cares to talk about it doesn’t make it non-viable. It might make it boring I suppose…
Sebastian,
It is not clear to me what your point *is*. No government can ‘cover’ any amount of people (greater than 1 person) with a per capita amount of dollars.
Per capita ($/person) is a rough statistic to measure relative cost efficiency.
Because Canada’s public spending is used to cover 100% of its population with some basic level of health insurance, by definition, they have a risk pool inclusive of non poor, non elderly people. Such a risk pool will be less expensive to cover per capita, than an exclusively poor and/or elderly pool, which is what public dollars cover in the U.S.
That is why I was asking where your per capita number – that I can’t find in the report – came from, and whether you are making an efficiency argument or a different argument that I’m just not grasping.
This made me lawl.
The war analogies are missing the point when talking about future casualties and eliminating an unknown threat.
How’s this: If we knew that External Threat X killed 20,000 Americans last year, and knew that they’d kill 20,000 Americans (but no more than that) next year, and the year after, and so on….wouldn’t we be willing to do some deficit spending to fight that External Threat X? Wouldn’t we be willing to band together to pay higher taxes to fund that fight (when we’re not in the midst of a nasty recession)?
I have a hard time believing that we wouldn’t. So why are we so unwilling to go to bat for those Americans that are dying due to lack of insurance?
We just ran with five or six years of deficit spending with a more or less good economcy. When the economy is good, the government expands it programs. When the economy is bad, we keep spending at the same level and run deficits.
At some point our currency will be worthless, no one will loan us money, and we’ll have not choice to cut services.
I’m uninsured, a freelance artist who works his ass off. A fate I wouldn’t wish on anyone but..
“Where will the money come from?”, people ask.
Well let’s put it this way: I’d gladly pay $200- 400 for decent health insurance. I simply cannot afford $1,200 -1,800 a month private corporate insurers demand. Because I work for myself and am following my dream to a certain extent, private Insurers think I’m a crazed hippie for not having a corporate job.
What’s wrong with this picture, in a land that extols ‘small business’ and ‘free enterprise’?
But would my monthly $400 really just be “nothing” when multiplied by millions just like me? And that’s rather steep, to be honest: people with corporate jobs and insurance don’t ever see the real costts of it, work for yourself and you sure do.
“Who’s worthy to live or die?” seems the distressing subtext of the health care debate. And it’s a damned ugly picture. This country is absolutely a hostile place to the non-rich, no matter how much we wave the flag, speak of equality, and patriotism. This country is viciously Darwinian in an ugly way, and the mass media is fully behind the corporate HMOs to destroy health care reform. Because we hate poor people. We want them to die. They deserve it for not working hard, like the powdered hosts of TV talk shows. Where are the uninsured on these Sunday panels? Nowhere. At its heart, we are a stingy, mean-spirited country.
Corporate profits above all. And mister “von”, who can’t afford a capital letter to his name, acts as if we’re going “too fast” on health care reform. He clearly has no fucking idea it’s been a plank of Democratic politics for the entire 20th century, that the voters and the people seem to want it- look it up, bitch- but you’ll never hear that on the talk shows when corporate profits are at stake. Americans are cattle to these parasites, our health and lives are their profit centers. And we put up with it.
Yeah, we’re cattle, but this might change. But “von” will always be a terrible writer spouting right-center conventional wisdom like Cokie Roberts. “Wait-this is going too fast!” Oh, screw you, some change can’t come fast enough to our ROTTEN health care system.
@John Harrold: That wasn’t true for the Clinton years.
So Arudel, you admit that you’re following your dreams. And good for you! But then you seem to imply that it is up to your fellow citizens to fund your dreams — at least the insurance involved. The implication here is that I or others like me should be a good corporate drones, so you don’t have to be. Then you move into so some incoherent ad hominem arguments about capitalization mixed with profanities that don’t actually address any of the concerns that von brings up.
That about sums up your side of the argument right?
Sebastian:
Yikes, the new CRS report you link makes my oft-repeated point about government spending even more powerful. According to the report the US government spends about $2,684 per capita and covers about 27% of the population. Canada spends about $2,209 per capita and covers 100% of the population.
So as of 2006, the US government spends about 21% more per capita than Canada yet covers only 27% of the population. That is crazy.
How embarrassed does everyone feel who responded, informatively and helpfully, when Sebastian pretended to be asking for information on this point last time? Or the time before that?
Now it’s clear Sebastian was not asking for information, nor willing to pay attention to any of the information that was provided to him.
No: he admits here that he was just trying to score a cheap political point. Sebastian is not interested in any information that could be provided that, if he paid attention to it, would undercut this silly repetitive “point” he keeps trying to make: so the solution, it seems to me, is to quit responding to his repeated “27%!” attempts to derail any serious discussion of how to fix your broken health care system… since he’s obviously not interested in your answers.
Sebastian: “Is that a serious argument about why the US government spends more per capita than Canada but only covers 27% of the population? Did Republican rhetoric scare the naturally occuring cost savings away?”
No, Sebastian, it’s a serious argument to answer this question you asked: “Why don’t we already have universal health care […]?”
@ChrisC
Thats true, but it doesn’t seem like Obama is that committed to balancing the budget either. In his defense, he’s got a lot working against him that Clinton did not: The economy he inherited is much worse. I doubt he’ll be able to cut military spending any time soon, and the costs of Medicare and Social Security are only going to become more of a problem.
Either he’s going to have to be honest and say “we’re going to have to reassess our priorities as a country.” Or he’s going to contribute to the problem by kicking the can further down the road.
I really hoped he would do the former, but I’m afraid he’s more likely to end up doing the latter. If he signs a bill that doesn’t address point number 3 of von’s, then I truly don’t believe he’s serious about governing.
“He clearly has no fucking idea it’s been a plank of Democratic politics for the entire 20th century”
Nitpick: not prior to 1933 at the earliest, I think, and not as a major campaign issue since 1948.
Which is more than long enough. The British managed to pass their National Health Service Act in 1946, after all.
Sebastian:
Did Republican rhetoric scare the naturally occuring cost savings away?
Yes. Or at least the profit motive did.
I’m pretty sure I just saw something — linked to by either Ezra or Krugman — to the effect that the 27% of the population you’re talking about represents more like 45% of the medical care — because old and poor people, who are covered by the government, get sick the most.
I had been beating the “the problem is administrative costs” drum until Gawande’s article came out, now I’m prepared to just blame the profit motive.
I’m heading back with my father to Japan for an extended stay, and I am just finishing doing the rounds of his doctors, getting information about his various ailments and having prescriptions filled, so I gain a new appreciation of the Japanese system. But I see Sebastian is doing his ‘The US only covers 27% of the population so obviously, there is no way that the US can be cost effective in covering more than that’. This strikes me as a sort of inverse American exceptionalism argment, in that Sebastian is arguing that somehow, the US cannot do what every other OECD country does now. There is a point there, in that it is American exceptionalism that brought the US to this juncture, in that (I think) the majority of the countries developed their versions of universal coverage after WWII, when the economies and infrastructures of these countries made it necessary to provide basic medical coverage to all, but the US could forgo that because rising prosperity made it easier to have people take on their medical costs. If that’s the case, perhaps the medical system is not broken enough to get the kind of change that is necessary, though after my latest dealings, I wonder how much more dysfunctional the system can get.
Sebastian:
My suggestion on 3 out of the last 4 health care threads that we should just straight up extend Medicare to the uninsured and put an EITC-like sliding scale on the rates doesn’t count?
It’s not that it doesn’t count; it’s that it actually manages to be WORSE on cost than the existing proposals under consideration. Let’s take what you already claim is far too expensive and EXPAND it to cover EVEN MORE people? How’s THAT gonna scale?
Dr. Science, as it happens, one of the eight tabs I’ve had open on my browser for the last day is to the New Yorker site, where I’ve been catching up on articles I’ve only sporadically been checking on for the past six weeks or so. I hadn’t gotten to the piece you link to, but I want to emphasize that everyone must read it. It’s that important to understanding the problems of rising health care costs, and what’s wrong with our health care system, in my ill-educated view.
Fantastic article; thanks immensely for bringing to the attention of the folks reading this thread.
Dr. Science, as it happens, one of the eight tabs I’ve had open on my browser for the last day is to the New Yorker site, where I’ve been catching up on articles I’ve only sporadically been checking on for the past six weeks or so. I hadn’t gotten to the piece you link to, but I want to emphasize that everyone must read it. It’s that important to understanding the problems of rising health care costs, and what’s wrong with our health care system, in my ill-educated view.
Fantastic article; thanks immensely for bringing to the attention of the folks reading this thread.
Arundel, since when did von say that things were moving too fast. I think you’re confusing von with Blue Neponset who said that von’s proposal to decouple health insurance from employment was too radical.
So, if you can actually read what von said insetad of going on and on with your self righteous bullshit just because von happens to be centre-right on some issues(actually, mostly on abortion only), you would actually see that von makes very good points, even if I think he concedes too much to the left.
i.e. while the poor should have subsidises health care because they are unlikely to be able to afford private insurance (although I have a catastrophic plan with AVIVA which costs me about $30 – $60 a month and gets me a 6 figure payoff if I were to die or be crippled) I dont think that the subsidy should take the form of a public insurance option. The point of insurance premiums is that they collect revenue, hopefully in excess of how much the average payoff is going to be. That’s why insurance agencies don’t take people with pre existing conditions. Those people are sure losses.
Which is why people suffer. If you get insurance when you’re young and healthy you can get a pretty good deal. However, if you change jobs in your mid forties, (as many americans do) you lose coverage with your original insurance and have to apply for insurance again (but with some other company this time). However, now, you probably have a high risk of heart attack or something, and are a greater risk to insure.
The public plan is supposed to do away with the profit motive. If, there is no need to make a profit (since everything is funded by tax dollars) why the hell shoud you have to go through the whole rigamarole in paying premiums ,processing them, making claims, collecting them etc. All that will still be present in the public option.
We could do away with the insurance framework and use some system of directly subsidising the consumer: i.e. you. Some ideas would include vouchers to buy your own insurance, or vouchers to actually just directly pay for treatment. Or maybe some kind of central fund from which you can draw money from. Or co-payments. Just covering 80%, or 90% of the cost of a tratement, or maybe 20% if you are somewhat richer.
Means testing of course has to be involved at some point in order to minimise free riding. Something a lot more like what we have in Singapore.
So, for now, a good plan would be to start taxing benefits and to get rid of the interstate commerce clauses which prevent insurance companies from operating across state lines.
The expected effects are the following
1. Insurance wouldn’t be provided by employers and would be individually subscribed to instead. i.e. if benefits are taxable, employees would prefer to get it in cash instead.
2. Employees are more mobile and less afraid to quit a job if they are not happy with it. This will drive up worker salaries
3. Competition with other insurance companies would drive down premiums and increase coverage. For this to work, some transparency regulations may have to be enacted if they are not already in place.
4. If we give the market a year, or more to correct itself, then we can see who else cannot pay for their own healthcare. Then we could devise a plan to pay for their heathcare directly. I’m not even averse to government run/ subsidised hospitals and clinics.
Murali, you are in Singapore? I’d be very interested in knowing how the system works there. A quick google suggests that they spend less than 2% of their GDP, but their indicators are as good as the US.
Singapore works largely with mandatory savings accounts (medisave), supplemented with means testing and government subsidies in government run hospitals (medisave). For some of the more expensive stuff, people can also withdraw from their CPF accounts (which is another mandatory savings account some of which comes from the employer and some from the government) CPF is more a pension alternative, but non retirees have some options in withdrawing money to buy a flat or something.Some of the payment is also supplemented by people’s own insurance as well as any basic health plans that may be found in employment contracts.
Moreover, there is also a strong culture of looking after one’s parents (and not moving away from them once you’re 18 as is the norm in the US) Hence, the elderly are often supported by their own children, while the poor usually belong to larger families who can pool more resources together.
Even so, some people inevitably fall through the cracks, but not as many as in the US. (percentage wise)
Also, public hospitals have a policy of treating the patient first whether or not he can pay. In the end the government usually foots at least some significant part of the bill for the poorer patients.
Costs are kept low because patients often have to pay at least some amount, so patients usually only see the GP if they have been running a fever for some time already.
It also helps that in terms of quality of life, we dont have that much abject poverty, even though as I said earlier, there are people who do fall through the cracks in the various social safety net.
Thanks Murali, interesting stuff.
If your concern is that insurance companies have sustantial intrastate monopoly power — that is, many states have one insurance company as a primary insurer — wouldn’t you solve that problem by allowing interstate competition among insurers …. just as we do with car insurance?
That’s fine, as long as we have good, solid national regulation. Otherwise it’s a race to the laxest state — and we’re at the mercy of their legislature and governor, a la credit cards and SD, DE.
So, if you can actually read what von said insetad of going on and on with your self righteous bullshit just because von happens to be centre-right on some issues(actually, mostly on abortion only), you would actually see that von makes very good points, even if I think he concedes too much to the left.
Get over yourself. If this is von’s attitude toward his commenters, he’ll show it.
I think Sebastian’s point, and he really does have a good one, is something like: Our government has crash landed the Cessna, and you think the solution is to hand them the keys to a 747. Why should we believe they won’t crash it? Because it’s bigger?
Putting all your eggs in one basket, bad. Handing that basket to somebody covered in yolk and shells, insane.
All these points people are making, as well as all the other points on the virtues or lack of them, in the various plans everyone is discussing, are irrelevant in light of the issues brought to our attention by Atul Gawande. Go read that piece before commenting further with your ideas on health care reform, everyone, please.
Thanks again, Dr. Science!
“Without changes to the Supreme Court’s established framework of considering corporations as persons and money as speech, the terms of debate on health care and most other issues are never, ever going to be set by individual citizens.”
IMO this gets to the heart of the issue.
Thanks Nell.
“IMO this gets to the heart of the issue.”
So is there any way to write a law about this that the Supreme Court won’t find unconstitutional, given their precedent, or do we have to lobby for a constitutional amendment?
Serious question. Either way, we’re talking very long-term work, and building a totally convincing case, and building organizations to work on lobbying and publicizing it for years and years to come.
If we take this seriously.
If not us, who?
“All these points people are making, as well as all the other points on the virtues or lack of them, in the various plans everyone is discussing, are irrelevant in light of the issues brought to our attention by Atul Gawande. Go read that piece before commenting further with your ideas on health care reform, everyone, please.”
Great article. Clearly the reform of healthcare policy and delivery is essential to affording any of the options. One of the things I am told, more often than I feel comfortable with, by healthcare professionals is that I need to remember healthcare is a business.
I might add that it is one of the reasons I am uneasy with a focus on healthcare as economic stimulus or reinvestment for economic growth.
“One of the things I am told, more often than I feel comfortable with, by healthcare professionals is that I need to remember healthcare is a business.”
This is why the profit-making aspect, as related to what’s done to/for patients, should be taken out of health-care as much as possible.
In other words, this is why a National Health Service such as Britain’s, the most “radical,” “socialist,” system is likely to be the best solution of all.
But the bottom line is that, at the least, all the medical professionals should be on salary, rather than, as is currently the system, mostly what’s essentially on a commission basis. Which is just nuts. Even long before you get to the outright crookedness of kickbacks.
Sebastian: ” My suggestion on 3 out of the last 4 health care threads that we should just straight up extend Medicare to the uninsured and put an EITC-like sliding scale on the rates doesn’t count? Just because I keep raising it and no one cares to talk about it doesn’t make it non-viable. It might make it boring I suppose…”
No, not boring, just not very relevant to the discussion of whether or not to pass the current bill. In the context of this post, it’d break von’s point 3, and in the context of reality, the Republican Party has publicly stated they’re only interested in trying to prevent Obama from passing any kind of health care reform. If they kill it, the only option will be the status quo for at least ten years. So the only question is “Will something the grandstanding “moderates” will vote for be able to be good enough to make a difference, or are they going to kill it?”
Also, I believe myself and others have pointed out problems with your proposal, such as it being easily demagouged or dying the death of a thousand cuts the next time Republicans are in office,
Steve Benen had a good short post yesterday, by the way, on how many people just don’t understand that they are already getting “government-run health care” when on Medicare or Medicaid.
Obama:
“So is there any way to write a law about this that the Supreme Court won’t find unconstitutional, given their precedent, or do we have to lobby for a constitutional amendment? “
I don’t know the answer to this.
There are a small number of organizations working specifically to change the law on corporate personhood. Most likely any progress that might be made will be made incrementally, like pretty much everything else.
The most notable recent precedent I’m aware of is Nike v Kasky, where the CA Supreme Court decided that factually misleading advertisements and letters to the editor published or written by Nike were not entitled to 1st Amendment protection. The SCOTUS considered this but sent it back to trial court, allowing the CA decision to stand.
I agree that making any kind of change like this represents more or less a sea change in the law, and therefore is likely to take many years. If it occurs, it’s a change that will be measured in generations.
My goal in commenting about it is mostly to move the Overton window on the issue, i.e., to put the idea out there that there is no particular legal or constitutional necessity for corporate personhood to exist in the first place.
It’s not an idea that, IMHO, would have ever crossed the minds of the founders (for the originalists among us). It evolved, over decades, in response to strong and determined advocacy from interested parties. Turning it around will take a similar level of diligent effort.
Thanks –
“It is not clear to me what your point *is*. No government can ‘cover’ any amount of people (greater than 1 person) with a per capita amount of dollars.
Per capita ($/person) is a rough statistic to measure relative cost efficiency.
Because Canada’s public spending is used to cover 100% of its population with some basic level of health insurance, by definition, they have a risk pool inclusive of non poor, non elderly people. Such a risk pool will be less expensive to cover per capita, than an exclusively poor and/or elderly pool, which is what public dollars cover in the U.S.”
Canada has a smaller population than the US. So directly comparing spending would make the US expenditures look ridiculously high and be useless for analysis. Therefore we look at the spending per person so that the total population difference doesn’t matter. That is why we use per capita numbers.
The risk pool issue you raise has nothing to do with it because Canada’s 100% risk pool INCLUDES the analogous 27% of people that represents all of what the US government covers.
Take pools A, B, C, and D which each represent about 25% of the population. Posit that A is the most expensive (mostly old people). The US government covers only A. Canada covers A and it covers B, C, and D as well. It does so for less money per capita than the US government spends.
The per capita figure is per capita spending over A, B, C, and D in both cases. The risk pool for per capita spending covers A,B,C, and D for both cases. It just turns out that the US government spends all of that money and can somehow only cover A while Canada spends less and covers A,B,C, and D.
“No, not boring, just not very relevant to the discussion of whether or not to pass the current bill.”
Argh. I raised it only in context because I was essentially told to STFU if I didn’t have any good ideas myself:
“But I’d be a lot more receptive to your criticisms if you were actually in the business of suggesting viable alternatives. ”
I raised it only because I apparently am not allowed to point out flaws in the current bill otherwise.
Sebastian: Per-capita is an average. The total cost, divided by the total number of people covered.
Therefore, if you cover person A, who costs $100, B, who costs $50, and C and D, who both cost $25, your per capita costs come out to $50 ($200/4).
If you alternatively, only cover person A, who costs $100, your per capita cost is $100 ($100/1).
If you cover A and B, your costs per-capita will then be $75 ($150/2).
That’s the point of risk pool spreading, the people who don’t need as much health care (right now) are helping subsidize the people who do, yes. But the same subsidies are there for them if they get old, sick, or lose their jobs.
It’s certainly possible, if not probable, that there’s still inefficiencies in what we spend, especially since Medicare and Medicaid costs are related to the overall rising costs of health care. But right now the government’s covering A, under your proposal they’d mostly be covering A and B, and the insurance companies would keep charging C and D $50-200 each for their coverage.
Sebastian,
Ok, I didn’t realize you were estimating, based on the chart, a public share of per capita spending over the entire U.S.
The U.S. appears to be awful – from a ‘cost efficiency’ perspective – in terms of public per capita ($2800), private per capita ($3300) and total ($6100) health care spending. That tells me that we’ve got a problem, independent of funding source, that is helping to drive our poor performance.
What that doesn’t give me, is a basis on which to judge whether or not the U.S. Government, in isolation, is somehow less able than Canada to run a cost effective, quality health insurance system. Tons of second order problems with this as well in terms of data definitions that I simply don’t have time to research on the OECD site.
One could in fact argue, with this same logic, that our private sector is the worst performer in terms of cost efficiency – more bloated than either public or private spending across all countries in the dataset. And all this without having to cover the highest risk pools! That is crazy!
If your argument is that the mere shifting of payment from private to public will not be 100% sufficient to solve the cost efficiency problem, I agree (especially after reading the New Yorker article, thanks all for the link).
However, I find the data unconvincing as proof that the U.S. Government could not run an effective, efficient, health insurance system.
Am I still misunderstanding your argument (publius or others, please let me know if earlier discussions have already dispensed with this – I’m relatively new to the site)?
I think Sebastian is saying that per capita, in his example, is total cost divided by the total population, covered or not. If you think his claim is wrong, then you could ask him for chapter and verse supporting. But his claim is itself pretty clear.
The per capita cost of B, C and D in the US system is ZERO to the US government because the US government ONLY pays for A.
The per capita government payout for health care is calculated across ALL of the pools in both Canada and the US.
Your objection would be valid only if I was comparing the per capita (A+B+C+Dexpenditures/#of people)government expenditures of A in the US to A, B, C, and D in Canada.
I’m not doing that.
I’m comparing the per capita (A+B+C+D costs/A+B+C+D # of people)government expenditures in the US to the per capita (A+B+C+D costs/A+B+C+D # of people) in Canada.
These are equivalent costs with equivalent pools. It is A+B+C+D in both cases. In both cases I am counting rich, poor, old, sick, healthy and young. The risk pooling objection is not vaild. In both cases I’m taking in the entire pool of the whole population of each country.
In these equivalent pools, the US total is about $2,684 per capita. Canada spends about $2,209. This calculation counts rich people, poor people, sick people, healthy people and old people.
In Canada, this government spending COVERS everyone.
In the US, this government spending COVERS only 27% of the population.
Now if I were using this figure to say that the US government was about 1/4 as effective as the Canadian government THEN you could raise the risk pooling argument (because the US government covers mostly old people through Medicare). But I’m not saying that. (Equivalent risk pooling from Canada suggests that the Medicare pool would represent about 40% or so of total expenditures, but of course the total expenditures are already higher in the US so I’d estimate the US government at operating a bit better than a 1/3 the efficiency of Canada). Which in my opinion still looks really crappy.
But in any case my point had no risk pooling problem at all. It was that the US spends more per capita than Canada. For that expenditure, instead of covering 100% of the population, it covers only 27% of the population.
One would think that it could cover the Medicare population plus the current uninsured on that. (Note I’m not even asking for 100% coverage. More like 40% coverage).
I think I understand what Sebastian is saying, but I’m not sure what message he intends to draw from it.
IMHO Audrey is right: the US private sector is *outstandingly* cost-inefficient, truly in a class of its own. Because this sector is huge, this raises prices (and lowers efficiencies) for the whole system, including the government sector. The sectors aren’t independent; we can’t expect the US government sector to be able to have Canadaian levels of efficiency when it’s embedded in a system in which none of von’s 3 principles are operating.
Seb,
On your proposal:
Medicare charges premiums, and it covers a very precisely defined population. If we extend Medicare to the uninsured, what premiums would we charge, and how would we define “uninsured”? In particular, would you be dropped from Medicare once you found a job with great health insurance? How about once you found a job with crappy health insurance?
In the abstract, I like your proposal to include more people in the fairly efficient government-run single-payer insurance plan we already have and which current participants seem happy with. In practice, by the time we nail down the details, I might grow to like it more — and you might start having second thoughts.
On your favorite statistic:
Remember hilzoy’s post titled Iceland: Special Elven Edition? The gist of it was that in Iceland, certifying construction sites to be free of elves is an actual paying job.
Now, when somebody gets paid to do something, that payment is an increment of GDP. When a construction firm pays somebody to do something, that is an increment of “construction spending”. All else being equal, Iceland’s GDP increases by $1000, and Iceland’s “construction spending” goes up by $1000, when some “service provider” collects a $1000 fee for certifying a site elf-free. Note that the “fraction of GDP spent on construction” increases just a tad, when that happens.
If over some decades it became the custom in Iceland to pay separate $1000 fees for certifying sites gnome-free, and free of pixies, and clear of fairies, and devoid of trolls, and so on, then pretty soon Icelanders would be asking why they spend a larger fraction of their GDP on “construction” than other, comparable nations do.
“We don’t have more buildings per capita,” they’d say to themselves, “our buildings are not bigger or better than other people’s. Yet we spend about twice what other nations spend, per capita, on construction. Our government’s construction spending, per capita, is already more than Canada’s total per-capita construction spending, and even so it only pays for 27% of the buildings in our country.” And they would shake their heads in sorrow and bewilderment.
The US employs 2.3 physicians per 1000 population; Canada 2.1 per thousand. The US pays not 10% more per capita, but roughly DOUBLE what Canada does, in “health care spending”. Health CARE is produced by physicians, just like buildings are produced by construction workers. For double the money, Americans buy only 10% more health CARE than Canadians do. I say that’s because we Americans include an awful lot of Magical Folk Absence Certification expenses in the category we call “health care spending”. But we are attached to our superstitious customs, and anyway the people who work in the MFAC industry have to make a living, too. So we tenaciously pretend that we can “cut costs” by some method OTHER THAN a straightforward rejection of mythical beliefs — like the one about “free markets” being the answer to everything.
–TP
The Atul Gawande New Yorker article is the same one Hilzoy linked to about a month ago on another thread. It is a great article, but not a new one for me and I would assume others here. I’m pretty sure I saved the text on my computer at home so I could refer to it indefinitely. But anyone who hasn’t read it should, as Gary has pointed out.
“Because this sector is huge, this raises prices (and lowers efficiencies) for the whole system, including the government sector.”
Except for doctor’s wages (which I suspect may indeed be a large part of the problem), this isn’t likely to be a very big factor for the inefficiencies in Medicare itself. It only looks good if you don’t analyze how you think the private sector inefficiencies operate. Is it profit? The government doesn’t have that. Is it administrative costs? Medicare’s are alleged to be lower (I think they really just free ride, but they are alleged to be lower). Is it pay per service rather than outcome? That is a feature of Medicare design, not a problem with the interaction of the private sector. Overtreatment to avoid malpractice? We can talk about that, but I’m already fairly sure you don’t want to.
I’m kind of just throwing stuff out there, because your objection is vague. But I’m fairly confident that if we drill down on it, most of the areas you’re thinking about don’t actually function the way you’re thinking.
“I say that’s because we Americans include an awful lot of Magical Folk Absence”
Great. But look at the logical extension of that to Medicare. My statistic shows that the government is apparently not exempt from looking for an awful lot of magical folk absence. So assuming that having the government take over will not lower costs unless we identify the Magical Folk Absence problem areas and get rid of them.
It already has Medicare, and is clearly not getting rid of the Magical Folk Absence problem areas.
Many (and possibly most) of the things that people around here want to call Magical Fold Absence problem areas are ALREADY not factors in government spending. Yet still the spending appears to include Magical Folk Absence problem areas because the government spends more than Canada and covers only 27% of the people.
My whole point all along is to get people to focus on what those areas are likely to be.
I know it isn’t the most common bugaboos though.
It can’t be insurance company profit. Medicare doesn’t run a profit.
It can’t be drug costs, they are to small a component.
It probably isn’t administrative costs–they are alleged to be lower. And if that was the big issue you’d see lots of doctor’s going to Medicare only practices (low administrative costs) instead of we-don’t-take-Medicare practices.
So I’d love to talk about what is causing the Magical Folk Absence increases in health care.
That has been my point all along.
The problem is that once we start talking about it, we tend to get bogged down in things that obviously aren’t the issue: like insurance company profits.
Sebastian,
I agree that that you are just throwing stuff out there, but I’m not sure why:
Pay per service is not unique to Medicare (you think they really just free ride on what? Again, what is your specific argument?).
Why is the private sector not equally accountable for the existence of a pay per service paradigm? Couldn’t the private sector have ‘innovated’ away from this to create more value for customers?
Even as a newcomer to the site, I’ve seen the discussions verifying that malpractice costs are in the low single digits as a percentage of total costs. Why wouldn’t anyone be willing to talk about that?
Why do you think the profit incentive in the private *insurance* sector is a non issue for diagnosing structural problems with the health care value chain (apologies for the MBA speak).
I continue to not understand what your “point” is. How do you think the United States should address our poor performance in providing health care?
Sebastian: Well, yes, it CAN be insurance company profits. Medicare’s prices are set in an environment that is mostly set by the insurance companies and their profits. Therefore even if Medicare keeps costs lower than the private sector does, it can still be higher than the rest of the world, especially given how astoundingly inefficient our private sector is by your own metric.
Which may not be the only problem, but things like malpractice or “defensive medicine” are not the major drivers of costs either.
Sebastian, could you please respond to this article by Atul Gawande, which Dr. Science brought up here yesterday, and which I’ve since blogged about here. Would be much interested in your views, as it seems to me an absolutely essential part of the discussion.
Thanks muchly.
“The Atul Gawande New Yorker article is the same one Hilzoy linked to about a month ago on another thread.”
Oh, I missed that somehow. Thanks for pointing that out.
Audrey, I’m throwing stuff out there because the comment I was responding to was so vague. I obviously don’t think those things explain it, because I don’t think his argument is valid. And there seems to be some vague agreement with it based on your comments and Nate’s, but a noticeable lack of specifics. But ok, I’ll wait until he (or one of you) comes up with something concrete.
Nate: “Well, yes, it CAN be insurance company profits. Medicare’s prices are set in an environment that is mostly set by the insurance companies and their profits. Therefore even if Medicare keeps costs lower than the private sector does, it can still be higher than the rest of the world, especially given how astoundingly inefficient our private sector is by your own metric.”
Again, please specify how you think this works. Prices for WHAT are set in an environment that is mostly set by the insurance companies and their profits?
Doctors salaries? Insurance companies would prefer to pay less.
Drugs? Insurance companies would prefer to pay less.
Tests? Insurance companies would prefer to pay less and less often.
Insurance Premiums? Medicare doesn’t pay those.
Other than insurance company premiums (which Medicare doesn’t pay) which prices that can impact Medicare do you believe are kept artificially high by the existance of insurance companies profits?
“Which may not be the only problem, but things like malpractice or “defensive medicine” are not the major drivers of costs either.”
Fine, so lets talk about what are…
Seb,
I don’t know how you define insurance company “profits”, but here’s how I think of them: company collects $100 in premiums, pays $80 to health CARE providers, pays $19 to clerks and actuaries and corporate officers, and books $1 of “profit”. It’s not the $1 that’s analogous to Magical Folk Absence spending. It’s (most of) the $19.
Unless I am incredibly mistaken, it’s the whole $100 that we count as “health care spending” when we calculate national statistics like “one-sixth of GDP”. If we’re buying only $80 worth of medical services with it, there’s part of the problem.
You keep not addressing MY favorite statistic: 2.3/1000 versus 2.1/1000 physicians to population, US versus Canada. To me, health CARE is dispensed by physicians. To get more total health CARE you need more physicians. We have that. But “total” health care doesn’t do any good to whatever fraction of the population can’t afford to see a doctor. We have more physician-hours available per capita than Canada does, but we manage to distribute them badly.
One reason I can think of for the maldistribution of physician-hours among our population is the highly skewed income distribution among our population. Rich people are afraid of illness and death just like poor people. They are able to pay more for “health care” in “the market” than poor people can. And really, is there anything better to spend money on than “health care” once you have enough money that you can’t spend it all on food, shelter, and consumer gee-gaws? So the price of “health care” gets bid up the way the price of Rembrandts gets bid up: rich people bid against each other, driving prices higher for everyone else.
Oh, and I did ask you for clarification on your Medicare for the uninsured proposal.
–TP
“I don’t know how you define insurance company “profits”, but here’s how I think of them: company collects $100 in premiums, pays $80 to health CARE providers, pays $19 to clerks and actuaries and corporate officers, and books $1 of “profit”. It’s not the $1 that’s analogous to Magical Folk Absence spending. It’s (most of) the $19.
Unless I am incredibly mistaken, it’s the whole $100 that we count as “health care spending” when we calculate national statistics like “one-sixth of GDP”. If we’re buying only $80 worth of medical services with it, there’s part of the problem.”
And that is the point of my Medicare fact.
Medicare doesn’t have those costs.
That is the whole reason I separate it out from the general “health care” “one-sixth of GDP” statistic.
Those factors are not present in Medicare THEREFORE they very likely CANNOT be the reason why the US government spends more than Canada yet can only cover 27% of the population.
“You keep not addressing MY favorite statistic: 2.3/1000 versus 2.1/1000 physicians to population, US versus Canada. To me, health CARE is dispensed by physicians. To get more total health CARE you need more physicians. We have that. But “total” health care doesn’t do any good to whatever fraction of the population can’t afford to see a doctor. We have more physician-hours available per capita than Canada does, but we manage to distribute them badly.”
This seems quite likely. My tentative suggestion has always been that we spend much more time and money on the last 6 months of life than other countries do. But that is strangely difficult to get good statistics on (I’d be thrilled to see good stats on it so we could investigate the hypothesis further or discard it). Or maybe it isn’t surprising, because often you don’t know the last 6 months until the person actually dies.
“Oh, and I did ask you for clarification on your Medicare for the uninsured proposal.”
Sorry I thought I answered on this thread, but it was a few threads ago.
I would propose an EITC-style phasing in of premiums. I would set the Medicare level of care as the floor level of care. Any general health insurance would have to provide at least Medicare level of care. So if you got hired at a place with care, you’d have that level of care or better available.
The premiums should be set at a high enough level that the US government’s only subsidy is through whatever we decide the EITC-level ramping up should be. That way it functions in the market and doesn’t cost the US government a ridiculous amount. If it turns out that everybody decides to just get Medicare–that is great I guess. So long as the government isn’t cheating on the premium setting.
Since people are talking up Gawande’s article, I’d like to offer a plug for his book Better: A Surgeon’s Notes on Performance. It doesn’t spend too much time dealing with healthcare economics, but it is fascinating and very well done. I particularly enjoyed the bits about how 4 WHO doctors coordinate ring immunization programs in the third world that immunize 3 million people over 3 days. I also liked his theories on why Americans do so many C-sections.
Sebastian,
From your latest Q&A:
Tony P: “You keep not addressing MY favorite statistic: 2.3/1000 versus 2.1/1000 physicians to population, US versus Canada. To me, health CARE is dispensed by physicians. To get more total health CARE you need more physicians. We have that. But “total” health care doesn’t do any good to whatever fraction of the population can’t afford to see a doctor. We have more physician-hours available per capita than Canada does, but we manage to distribute them badly.”
Sebastian (you): “This seems quite likely. My tentative suggestion has always been that we spend much more time and money on the last 6 months of life than other countries do. But that is strangely difficult to get good statistics on (I’d be thrilled to see good stats on it so we could investigate the hypothesis further or discard it). Or maybe it isn’t surprising, because often you don’t know the last 6 months until the person actually dies.”
What? In what way do you feel you’ve answered the question posed to you in the above exchange? I’m trying to figure out whether it is possible to have a productive conversation with you. I’m not sure I would bother with Tony’s question, but if you agree his question is not central to the debate, why have you chosen to respond in this manner?
Best Regards…
Without bothering to attempt a link, I think russell may have been the first to bring up the Gwande article (if that matters to anyone):
Finally, I recommend the article by Dr. Atul Gawande in the June 1 issue of the New Yorker on health care costs in McAllen county, Texas. They have the highest per-patient medicare costs in the nation, Gawande wanted to know why.
Cut and paste will get you there.
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
Posted by: russell | June 05, 2009 at 03:23 PM
or Gawande…
Audrey, I don’t think Tony P will have as much trouble understanding my response. (He may not agree with it, but we can go from there).
You still haven’t dealt with my response to you. Let’s go back to that before we deal with your thoughts on my response to third parties. Thanks.
Audrey,
When you say “I’m not sure I would bother with Tony’s question” you leave me a bit puzzled, since the paragraph you quoted from me doesn’t contain an explicit question. My best guess is that you see an implicit question there: “How do you, Seb, explain the fact that we have 10% more physicians per capita than Canada does, and still manage to (something)?”
The “something” could be two different things: 1)”spend twice as much per capita”; or 2)”not provide medical care to some people”.
I’m sincerely curious which of those forms of my implicit question is possibly not worth bothering with.
I acknowledge that in nitty-gritty discussion of the political mechanics — which Senator or Congressman is supporting which particular item in this or that draft bill — big-picture questions may have no immediate relevance. Is that what you meant?
–TP
I apologize for being so testy. I’ve gone over these exact same objections repeatedly, including in my post and its comments here.
You say “That tells me that we’ve got a problem, independent of funding source, that is helping to drive our poor performance.”
That is indeed my whole point. That is exactly what I’m trying to say.
And I’m additionaly suggesting that whatever the problem IS, it IS NOT many of the shorthand liberal responses. It is NOT insurance profits. It is NOT high drug prices. It is NOT a risk pool problem.
I’m not sure what it IS. I’ve made a few tentative attempts at it, but gotten repeatedly bogged down in the things that it clearly IS NOT. I have to clear away the brush about insurance profits/drug prices/risk pool about once a week in each new health care thread.
Again, I apologize for being testy. I realize that you weren’t present the last 3 times I tried to talk about this.
Sebastian,
“You still haven’t dealt with my response to you. Let’s go back to that before we deal with your thoughts on my response to third parties. Thanks.”
You’ve not responded to my questions – reposting for your convenience:
Pay per service is not unique to Medicare (you think they really just free ride on what? Again, what is your specific argument?).
Why is the private sector not equally accountable for the existence of a pay per service paradigm? Couldn’t the private sector have ‘innovated’ away from this to create more value for customers?
Even as a newcomer to the site, I’ve seen the discussions verifying that malpractice costs are in the low single digits as a percentage of total costs. Why wouldn’t anyone be willing to talk about that?
Why do you think the profit incentive in the private *insurance* sector is a non issue for diagnosing structural problems with the health care value chain (apologies for the MBA speak)…
——————————————-
…so I can’t ‘go back’ there (to a nonexistent response). Feel free to answer my questions at any time.
Sebastian:
For the record, I wasn’t telling you to STFU. I was telling you why I didn’t give what you said much weight, not that you shouldn’t have said it. 🙂
Audrey, please refer to the posting rules to understand the purpose of this site and the tone we try to keep in it.
“Pay per service is not unique to Medicare (you think they really just free ride on what? Again, what is your specific argument?).”
I don’t understand this question.
“Why is the private sector not equally accountable for the existence of a pay per service paradigm? Couldn’t the private sector have ‘innovated’ away from this to create more value for customers?”
I’m sure they could have. And sometimes they have. I don’t understand why that it is important to the issue. My point remains that Medicare already has a chance to be amazingly more cost-effective than the private sphere. It doesn’t seem to have actually done so–in fact it has done dramatically worse than any other country’s government health care program in that it spends as much or more as anyone else and covers only 27% of the population. I then attempt to identify possible reasons why it is so dramatically ineffective. I wonder whether or not it could be because of something inherent to US expectations of health care. At best your question appears orthogonal to all of that.
“Even as a newcomer to the site, I’ve seen the discussions verifying that malpractice costs are in the low single digits as a percentage of total costs. Why wouldn’t anyone be willing to talk about that?”
Because discussions of tort reform end in tears around here.
“Why do you think the profit incentive in the private *insurance* sector is a non issue for diagnosing structural problems with the health care value chain (apologies for the MBA speak)…”
In Medicare’s health care chain? See my response at 2:45.
Myth One: Government Health Care Is More Efficient
Myth Two: We’re Spending Too Much on Health Care
Myth Three: Forty-Six Million Americans Can’t Get Health Care
Myth Four: High Drug Prices Drive Up Health Care Costs
Myth Five: Importing Drugs Would Reduce Health Care Costs
Myth Six: Universal Coverage Can Be Achieved by Forcing Everyone to Buy Insurance
Myth Seven: Government Prevention Programs Reduce Health Care Costs
Myth Eight: We Need More Government to Insure Poor Americans
Myth Nine: Health Information Technology Is a Silver Bullet for Reducing Costs
Myth Ten: Government-Run Health Care Systems in Other Countries are Better and Cheaper than America’s
The Top Ten Myths of American Health Care: A Citizen’s Guide (.pdf)
“I was telling you why I didn’t give what you said much weight, not that you shouldn’t have said it.”
And now that you can see that I actually have given proposals both in past threads and this one, I’m sure that weighting has changed? 😉
Audrey, for the record, are you ok with the per capita figure? Are you withdrawing the risk pooling objection to it? I just want help understanding where we are in the discussion before we go off on to other topics which require that we agree on the basics.
Sebastian:
And now that you can see that I actually have given proposals both in past threads and this one, I’m sure that weighting has changed?
A little bit. 🙂 Although if you answered my question about your suggestion, I missed it (entirely possible). So again, if what we’re already doing is too expensive, which you claim it is, then how is doing MORE of it, which you suggest doing, going to help?
It is for at most 40 million people–that stat is based on anyone who has any gap in coverage at any time. It isn’t the total number of additional people who need government health care on an ongoing basis.
So it isn’t as expensive as you imagine. Furthermore since it is on an EITC-like scale, some people will be paying for it at full or near full price. That is revenue-neutral.
Third, my major objection to current proposals is not price. I object to the notion that they will SAVE money and I object to that a selling point (especially when the rest of the selling points suck).
My proposal is probably not more expensive than current ones and if it is it isn’t much more expensive, it actually covers everyone (unlike current plans), and it doesn’t dramatically screw with everyone else’s medical coverage by throwing a giant monkey wrench into everything.
And if it turns out that the government really is better at providing all this, everyone will join. Which is fine so long as most of the population is paying the real price.
Sebastian,
I’m not seeing anything in my comments that would lead you to point me towards the posting rules.
Anyway, I’ve scanned the linked post (thanks). I think our inability to connect is both one of substance and one of tone.
Substance: Because the majority of our spending per capita is private sector spending, and because even that spending is underperforming across low risk pools, I lean toward assuming that our private sector policies in this area need adjustment; that indeed, having 50% of our spending captive by the private market (look at the chart again, this is an outlier across the other countries in the dataset) might not be the right answer.
In addition, if the goal of this reform effort is universal coverage, I have the additional problem of incentives – I admit to being quite moved by Ezra Klein’s observation that private health insurance is much like having a fire department that makes money by letting your house burn down. I don’t see how one fixes this without controlling prices – and if you’re going to control price, why not just go public sector?
Tone: I’m not worried that considering a public role in reforming our system is a ‘liberal’ solution that must be avoided. Your earlier post actually makes my point (both public and private per capita spending underperform compared to OECD, hooray, we agree!), but then chooses, inexplicably, to rhetorically focus mainly on the public sector as a failure. That’s going to make debate on a centrist/center left site very frustrating for you.
I’m fine with the per capita public spending number – I have serious problems with assuming this to be a meaningful indicator of U.S. public sector cost efficiency across all risk pools. There are way too many interdependencies in our private industry dominated system to make such an assumption.
I’m willing to keep talking anyway. You?
Sebastian,
“Because discussions of tort reform end in tears around here.”
Why? If they are political tears, who cares? I’ve not seen any data suggesting that tort reform would have a meaningful impact on costs. If there’s some empirical data out there that could help, I’d be willing to be convinced.
Tony P,
“When you say “I’m not sure I would bother with Tony’s question” you leave me a bit puzzled”
Apologies, that was a disrespectful way to address your comment. I’ve not seen any rigorous analysis of geographic allocation of doctors and its relation to cost, so I would have asked for some basis (which you and Seb may have already established in earlier conversations) in order to respond. But my wording was not respectful and I apologize.
Sebastian:
But why stop at just the currently-uninsured? And how do you prevent the Hawaii problem (where people were purposely dropping health care so they could get on the taxpayer-funded state plan)?
“Substance: Because the majority of our spending per capita is private sector spending, and because even that spending is underperforming across low risk pools, I lean toward assuming that our private sector policies in this area need adjustment”
It isn’t much of a majority. It is like a 55%-45% split.
As such I suggest that there are primary factors about US health care system which end up driving up cost independent from the question of who pays for it.
“I don’t see how one fixes this without controlling prices – and if you’re going to control price, why not just go public sector?”
This isn’t inevitable. Japan, Germany and France all do better without going full blown public sector. Again this suggests that there are very important other factors.
“Your earlier post actually makes my point (both public and private per capita spending underperform compared to OECD, hooray, we agree!), but then chooses, inexplicably, to rhetorically focus mainly on the public sector as a failure. That’s going to make debate on a centrist/center left site very frustrating for you.”
Both are failures. Either one alone should be able to cover everyone. The fact that both together don’t is a disgrace.
The reason I focus on Medicare on a center left site is because the government is touted as a solution to all of these problems *despite the fact that the evidence suggests that it in fact has many of the exact same problems*. I’m perfectly happy to attack the private sector on these primary factors. It clearly sucks with them too. But I can’t even get to that until we stop the silly “it must be insurance company profits” thing which is clearly not the case. And one of the ways I can illustrate that is by noting how relatively awful Medicare is compared to other countries. *Then* we can start on the factors which are causing the problems in BOTH the private and public sphere.
If the basic problem is “we spend too much on health care” then the answer “so we need to have government take over” is a bad answer because the US government already spends as much as Canada to cover 27% of the population. This demonstrates that the government does not currently have the solution to “we spend too much on health care” because if it did, it would be covering everyone with the amount of money it ALREADY spends.
I’m perfectly willing to get to the step where we talk about the factors which appear to be causing problems in both the public and private sphere. I’ve made a number of suggestions about what they might be.
But I can’t do that until we get past the wrong ideas about what is causing the problem. Since many of the members and commenters on this site seem to believe that it is private sector inefficiencies which are causing the problem, I have to spend time illustrating that the same problems exist even in systems where the alleged inefficiencies do not exist which suggests that those are not the inefficiencies which are causing the problem.
I haven’t even gotten to that point yet. So I don’t get to talk about the important issue of figuring out what is actually causing the problem.
“And how do you prevent the Hawaii problem (where people were purposely dropping health care so they could get on the taxpayer-funded state plan)?”
Because the EITC-like sliding scale means that most of them are paying full price for it and thus have no incentive to drop it.
Sebastian:
Do you think you could sell the EITC-like sliding scale to the voting public? Sounds too complicated to me. If I had _my_ way, we’d just go single-payer and be done with it, but I recognize that’s not realistic. I don’t see how what you’re suggesting is realistic, either. I’m concerned about what can be done in a reasonable time frame. Some modified version of Wyden? Maybe. A complete change of approach? Seems to me that this would result in doing nothing at all.
“Do you think you could sell the EITC-like sliding scale to the voting public?” Why not? We have a sliding scale for the Earned Income Tax Credit. It is one of the least disliked anti-poverty programs.
I don’t understand what’s “not realistic” about it. I mean it isn’t under consideration right at this very moment, but I don’t see any larger institutional barriers against my idea that aren’t present in almost all alternative (and many worse) ideas.
Sebastian,
“I don’t see how one fixes this without controlling prices – and if you’re going to control price, why not just go public sector?”
This isn’t inevitable. Japan, Germany and France all do better without going full blown public sector. Again this suggests that there are very important other factors.”
Again, respectfully, *what* isn’t inevitable? All these countries have an overwhelmingly public solution (again, check your chart for public vs. private spending). I know from the Frontline piece (a google should suffice if you haven’t seen it) that Japan closely controls price, and suspect that the other countries do as well.
How does the experience of Japan, Germany, and France (in fact, the experience of all OECD countries) argue against a robust public option?
I don’t understand what’s “not realistic” about it.
For starters, you’re talking about expanding one of the entitlement programs that’s already being demagogued as “too expensive” and something that “threatens to bankrupt the country.” If you can’t get Republicans and Blue Dogs behind modest subsidies to help the uninsured buy private insurance, why on earth would you believe you could get them to support expanding entitlements?
And frankly, the fact that it’s not under consideration is a key part of WHY it’s not realistic, even if it weren’t for the other factors. The CW says that if something doesn’t get done by the end of October, nothing gets done at all; history seems to strongly support that CW. Why should this time be any different?
What comment of mine suggested to you that I’m against a strong public option?
Have you read my suggested solution?
I don’t understand your analytic style. You ask “what isn’t inevitable” and I’m tempted to just quote myself.
You said “I don’t see how one fixes this without controlling prices – and if you’re going to control price, why not just go public sector?”
I then gave 3 examples which are doing fine, have lower costs, and did not go into the full blown public sector (as opposed to say Canada or the UK).
I presumed you were arguing for a full-blown solution because you are arguing with me about it, and I clearly am for a robust public option.
If you are arguing for merely a robust public option, why do you believe you’re in disagreement with me?
“The CW says that if something doesn’t get done by the end of October, nothing gets done at all; history seems to strongly support that CW. Why should this time be any different?”
Well with that attitude I guess it can’t be.
Though if we are looking at historical inevitability I suppose health care reform is doomed anyway.
And why couldn’t it be done by October anyway? The kernel of the proposal is astonishingly simple. It also has the virtue of being a good proposal as opposed to a bad one.
“If you are arguing for merely a robust public option, why do you believe you’re in disagreement with me?”
From a %of spending view, France, Germany, and Japan are indeed as ‘full blown’ public option as Canada, and arguably closer to the U.K. than we are.
Never said I was in a robust disagreement with you. Started out by asking your source for a statistic (which you never provided, I had to infer it). You never directly answered that question, so I then picked up on a perceived -by me – anti public solution bias. Your written style suggests it. I’m quite open to be wrong, whatever…
So what’s your proposed solution in a nutshell? Refundable EITC for the very poor, what else?
“Since many of the members and commenters on this site seem to believe that it is private sector inefficiencies which are causing the problem, I have to spend time illustrating that the same problems exist even in systems where the alleged inefficiencies do not exist which suggests that those are not the inefficiencies which are causing the problem.”
I’m still looking forward to your getting to to the Atul Gawande points, and what you think; or did you already previously respond to that?
Fwiw, it’s obvious now that there won’t be a vote on any bill until the fall, anyway, at best.
“From a %of spending view, France, Germany, and Japan are indeed as ‘full blown’ public option as Canada, and arguably closer to the U.K. than we are.”
I don’t know what you mean by this. France, Germany and Japan simply aren’t full blown public plans. I don’t know what to say more than that. If you look at their plans, that isn’t what they are.
“Started out by asking your source for a statistic (which you never provided, I had to infer it).”
The statistic you ask for is provided on my front page post, which I linked for you.
“You never directly answered that question, so I then picked up on a perceived -by me – anti public solution bias.”
The problem with that is that contrary to your perceived bias I have written explictly in this thread that I support a public option. See for example yesterday at 4:18, today at 3:06, 4:48, 5:43, and frankly pretty much the entire last half of this thread.
I honestly don’t know what more I can do for you.
Sebastian,
I’m not asking you to ‘do’ anything for me. Thank you for directing me to your 3:06 post, which does indeed spell out your position (your proposed solution to our health care problem is to implement an EITC, and enforce a Medicare standard of care across public and private sectors).
I do have questions about this, but you seem irritated at having someone new ask you, a ‘tenured’ contributor, about your assumptions, so I will do my best to research prior posts before daring to speak to you again.
Enjoy your evening
“I do have questions about this, but you seem irritated at having someone new ask you, a ‘tenured’ contributor, about your assumptions”
In fairness to Sebastian, and it does wind up being unfair to newcomers, it does end up being very frustrating to write hundreds of posts and/or comments on a blog over several years on a given topic, but every time someone new comes along to make points previously discussed, the discussion has to start all over again.
It’s not fair to the new commenter/reader to expect them to go read a near-endless number of prior posts and discussions, but at the same time there’s a limit to how many time someone, anyone, can repeat the same points and arguments, too.
Eventually it’s unfair to both people involved. This is also another contributor to blogger burn-out, incidentally.
More use of specified tags on posts would help a bit, but wouldn’t help on finding discussion in comments without either reading whole threads, or having a system for tagging comments, as well. And making it retroactive would be nigh impossible. (I regret that I never got seriously started on tagging entries on my own blog, among many other things I should have done differently long time ago. As a result, I sometimes, after nearly eight years of blogging, can’t find posts I know I wrote, despite having excellent google fu. Let alone find old comments on Usenet from over five years of writing hundreds of thousands of similar words, arguments, and links, there.)
Gary,
Yeah, I can actually relate to this, and cut my response short for that reason (his original comment on this thread cited a figure referenced in a prior front page post, but he claimed it as validated by the CRS report cited in the current post. It was an honest confusion, I had to go find it, but whatever, we’re human)
I’m learning. Practice makes perfect.
By the way, welcome, Audrey! 🙂
Now I feel all special… 🙂
Good night Gary…
Well with that attitude I guess it can’t be.
What can I say? I’m a pragmatic realist. My Brewers could go on a huge tear, win the NL pennant, and ultimately the World Series, and I’d be thrilled if they did so, but it would be foolish of me to expect anything of the sort to have a decent chance of actually happening, still less to plan accordingly.
And why couldn’t it be done by October anyway?
Umm, because absolutely no one in any position of power has proposed anything of the sort?
Americans who have health insurance, either private or public, are more likely to gain weight or become obese, wrote authors Jay Bhattacharya and Kate Bundorf from Stanford University, Noemi Pace from University College London and Neeraj Sood from the RAND Corporation. According to the paper, which estimates weight gain in terms of body mass index, a measure of weight related to height, “private insurance increases BMI by 1.3 points and public insurance increases BMI by 2.1 points.”
[…]
Though the study found weak evidence that more generous insurance encourages greater weight gain, or that risk-adjusted premiums discourage it, there was “strong” statistical evidence that being insured increases body mass index and obesity. So, will expanding health-care coverage to drive up U.S. obesity rates to new record-setting heights?
[…]
Does Health Insurance Make You Fat?
Jesse Taylor at Pandagon, along with several commenters, have already taken care of whatever point CharlesWT — who seems to have no arguments of his own, but rather simply throws around links — thinks he’s making.
But I’ll ask the obvious: I assume you’ve cancelled your health insurance based on this study, right, CharlesWT?
It’s also worth pointing out that the much more robust “socialized medicine” in Canada and in European countries doesn’t seem to have done a very good job in making them fatter. Why, it’s almost as if there’s something completely different going on in the United States! If only we had ways of figuring out what that might be . . .
Phil, thanks for the link. The article and comments make some good counter-arguments to the WSJ article. However, it shouldn’t be surprising if there is, in fact, some moral hazard to having health insurance.
I haven’t had any health insurance for years. That’s why I make more effort, like loosing weight recently, than I might otherwise make to avoid health problems. 🙂
“However, it shouldn’t be surprising if there is, in fact, some moral hazard to having health insurance.”
I think that blogs present a moral hazard.
You can be anonymous, you bear exactly zero responsibility for anything you say, you can just blurt out any damned thing that pops into your head and noone can really hold you to account for it.
“I haven’t had any health insurance for years. That’s why I make more effort, like loosing weight recently, than I might otherwise make to avoid health problems.”
Well dude, I highly recommend you keep that up. Cause unless you’re quite wealthy, if you get seriously ill, you’re gonna either go broke or die.
Maybe both.
Agreed, I’ve been playing the odds and my luck will eventually run out. In the pass 20 years, I’ve needed medical attention about three times: twice for relative minor workplace injuries and a $50 out patient procedure. However, I’m eligible for Medicare in about three years. Whoopee!
“But I can’t do that until we get past the wrong ideas about what is causing the problem. Since many of the members and commenters on this site seem to believe that it is private sector inefficiencies which are causing the problem, I have to spend time illustrating that the same problems exist even in systems where the alleged inefficiencies do not exist which suggests that those are not the inefficiencies which are causing the problem.”
This quote picked randomly out of all quotes on inefficiency and cost so I can say:
The reason our healthcare is more expensive is because healthcare itself is a huge business, whose primary purpose is to make money. No payment system can impose on an industry the requirement to charge less at the expense of being profitable.
The desire and ability to effectively increase (or maintain) profit levels is the reason for Independent Delivery Networks, HMO’s etc. These are businesses.
The only control on the costs free market delivery of healthcare is to provide market incentivess to control prices.
Otherwise you implement government regulated delivery or simply government delivery of healthcare.
All of these options seem to miss the essential point, whatever option you provide will control costs only to the extent it can impact the profit of the providers.
For free market healthcare delivery we should have a free market payment structure perhaps enhanced to create more competitive markets(with government as one potential payer).
If we want a government as a single payer method then we will need government delivery.
Simply arguing about healthcare payment won’t solve the problem.
“The reason our healthcare is more expensive is because healthcare itself is a huge business, whose primary purpose is to make money. No payment system can impose on an industry the requirement to charge less at the expense of being profitable.”
IMO this is a pretty relevant insight.
It leads me to ask the question:
Is health care more like a consumer good, or a public good?
Is it more like TVs, tube socks, and Caribbean vacations?
Or is it more like highways, running water, and fire departments?
If we want a government as a single payer method then we will need government delivery.
I don’t see how this follows from anything you wrote before this, Marty.
Simply arguing about healthcare payment won’t solve the problem.
I agree. I also don’t see many people doing that here.
I don’t know if you read the New Yorker article Gary provided the most recent links to, but you might want to. I’m referring to the original, not the follow up, which I haven’t read yet. I’m guessing the follow up is also worth a read, but I wouldn’t say without reading it myself.
At any rate, it supports this general point:
The reason our healthcare is more expensive is because healthcare itself is a huge business, whose primary purpose is to make money.
I’m not completely sure what you mean by this:
No payment system can impose on an industry the requirement to charge less at the expense of being profitable.
Do you mean being profitable at all or do you mean being as profitable? Do you mean charge less for the very same services, or might services be adjusted to get reasonably close outcomes at lower costs?
All of these options seem to miss the essential point, whatever option you provide will control costs only to the extent it can impact the profit of the providers.
I don’t know about this or what “all of these options” are. But I think there are ways to control costs that go beyond simply reducing profits. I’d be wary of trying to implement a wholly not-for-profit health system because I think that would have negative long-term consequences for the quality of health care. But I think there can be healthy competition with reasonable profits involved so long as there’s a greater emphasis on the cost-to-benefit ratios of various health services and less on simple per-service payments.
I also think there’s a distinction missing in your discussion between individuals receiving incomes as health-care providers and businesses or corporations making profits. Both are motivations for action, but they are not the same thing. People can make handsome incomes in not-for-profit settings. (I work in one of those settings myself, though my income is not as handsome as those of others, and no one is making a killing here, but we’re not doing brain surgery or curing cancer, either. On the other hand, I’m pretty sure Gary Farber, for example, would have a hard time spending my annual income, given his previous statements on the nature of wealth.)
“I’m not completely sure what you mean by this:
No payment system can impose on an industry the requirement to charge less at the expense of being profitable.”
Changing who pays doesn’t impact prices. The two primary ways to do that are:
1) Create a more competitive environment where profit goes down due to loss of market share etc. creating both competitive pricing and business innovation
2) Set prices through a regulatory system that often creates some business innovation but tends to reduce quality of output of the commodity.
Maybe arguable, but that is what it meant.
“I also think there’s a distinction missing in your discussion between individuals receiving incomes as health-care providers and businesses or corporations making profits.”
I agree with this.
You local GP practice is not the same order of entity as (frex) Hospital Corporation of America.
“Changing who pays doesn’t impact prices. The two primary ways to do that are:
1) Create a more competitive environment where profit goes down due to loss of market share etc. creating both competitive pricing and business innovation
2) Set prices through a regulatory system that often creates some business innovation but tends to reduce quality of output of the commodity.”
I’d just like to point out that a more competitive environment quite often yields a reduced quality of output.
Buy stick lumber at a Home Depot, or tube socks at a WalMart, and you’ll see what I’m talking about.
A more competitive environment forces efficiency. *Quite often* that comes at the cost of quality.
” I’m guessing the follow up is also worth a read, but I wouldn’t say without reading it myself.”
Shorter followup (which I quoted to in my addendum here, but best to read the whole orginal): the investors in the vast profit-making hospital/corrupt physician complex in McAllen, Texas, that Atul Gawande wrote about in The New Yorker are now busily contributing more than a million dollars to the relevant Congressional folk to make sure any health care reforms either don’t change anything they do, or at worst, grandfather themselves in.
Original must-reading Gawande article, again, here.
“I’d just like to point out that a more competitive environment quite often yields a reduced quality of output.
Buy stick lumber at a Home Depot, or tube socks at a WalMart, and you’ll see what I’m talking about.”
I would suggest that in both of these cases the low cost provider managed to meet the baseline requirements of the market in terms of quality. This reduced competition for the consumer goods they sold. It didn’t provide for increased competition.
I would say that Gawande successfully largely refutes this otherwise intuitive claim. That is, maybe not as regards your own specific physician, but as regards the phenomenon of individual physicians and the culture they were trained in, and the financial position they have arranged themselves to put themselves into, and their goals in income, are amongst the largest factors in our health care costs problems, rather than it being, as one would intuitively tend to assume, overwhelmingly the fault of mega-hospital corporations (though they bear some blame as well, to be sure).
Separately, Gawande briefly looks at the way the Mayo Clinic has organized itself as a mega-medical-complex that functions in a completely different, and far more efficient, and giving far better care to patients, way, than other major medical complexes, as well.
I think we need to separate a couple of things out. I think Marty is taking a different turn from the previous discussion, but I’m not sure.
In very brief synopsis, much of the discussion on this thread has been under the assumption that insurance company profits have been driving up health care costs throughout the system. This makes some sense to me, but in almost exactly the opposite way from how it is being discussed. Insurance companies are indeed about profits. But they are about insurance company profits, not hospital profits or doctor profits or clinic profits. As such, insurance companies are driving profits in the other areas down as much as they can (which appears to be not very much). So the profit motive of insurance companies can’t really be the driver of costs in the rest of the system.
Now I’ve argued that divorcing awareness of how much things cost from the patient could be a systemic problem which leads to increased costs, and insurance certainly does that. So maybe insurance works both directions–increasing systemic costs by encouraging use, decreasing costs by seeking profits.
Marty seems to be saying something different though. That profit seeking at a provider level (hospital/doctor group/doctor) is driving health care costs. This is more possible for at least two reasons I can think of. First, it identifies an area which is actually an enormous percentage of the total, so it could add up quickly. Second, at the hospital level, there is an identifiable change that could apply–the shift from not-for-profit charity hospitals (often historically run in large part by donations from church organizations) to for-profit hospital models.
Also I’ve seen salary comparisons between doctors in the US and doctors in other countries. The difference is striking see this NYT blog entry for example.
I actually wonder if this understates the difference. A very large number of doctors (especially specialists) operate in partnership groups where in addition to their salary or fee they also have an equity ownership piece which can be very profitable. I don’t know if that arrangement is as common in other countries. I also can’t tell if that is reflected in the stats–there is talk of ‘compensation’ but when I drilled down I only saw wages, salaries, and benefits.
I don’t raise this because I’m against small corporations or partnerships. I raise it because I don’t feel like I have a good grasp of the stats in that area.
“I’d just like to point out that a more competitive environment quite often yields a reduced quality of output.
Buy stick lumber at a Home Depot, or tube socks at a WalMart, and you’ll see what I’m talking about.”
Don’t know a darn thing about stick lumber, but tube socks I know! The only reason I’m commenting about it is because of the mild irony that I usually buy Russell brand socks at Wal-Mart. (Hmmm that seemed funnier in my head).
I typically buy Russell or Hanes brand tube socks at Wal-Mart. They hold up pretty well, and I’m hard on them–typically 8 hours of indoor volleyball a week. They last about a year and a half of that, and since they were less than 10 bucks for 12 pair (though I once got excited about a sale of 12 pair for $4) I normally convert them to dust rags and boot polishers after 1.5 years and buy another 12 pair.
I wonder though if we are selecting for different things? I select for durable on hard use and cheap. But I live in California so for example thick and warm isn’t a big concern.
Audrey, again I want to apologize for being so testy. I feel like I’ve been through the exact same conversation about four times in the past two months, but that isn’t your fault.
It caused me to use short-hand references to my previous arguments which clearly didn’t help you as you weren’t present for those.
In explanation, though not excuse, it is sad because I end up rehashing the basics so I never get to deeply discuss the things I think might actually be important.
For example: does anyone have access to some good stats about spending on “last 6 months of life” or “last weeks of life”? I often hear that the European and American approaches are fairly different at end of life, but I’ve never seen anything beyond anecdote on it. Is there a good study? Or even a couple of questionable studies? Heck is there even a straight up “end of life care” statistic that is commonly accepted?
Marty:
If we want a government as a single payer method then we will need government delivery.
Umm, several Western European nations (and to a lesser extent, Canada) stand in direct contrast to this assertion.
Seb,
“Marty seems to be saying something different though. That profit seeking at a provider level (hospital/doctor group/doctor) is driving health care costs.”
This is accurately what I am saying. After reading all of the disscussions on private and public coverage costing more, long discussions about risk pools etc. It seems to be that the payer isn’t controlling the costs in any method.
I also have worked with hospitals as a service provider for about 15 years and have watched the change from underfunded, money losing operations to implementation of up to date business management turning a profit.
In addition, every doctor I go to has expanded to doing their own testing: xrays, many have scan capability and all have a lab. Most often this is in conjunction with a practice partnership, a few have made those investments for their individual practice.
It is very convenient to go to your doctor and have him walk you down the hall to the CTScan, lab and xray. What insured person would consider the extra cost?
The doctors offices are also excellent at coding service to ensure payment by both insurance companies and Medicare. An example is an out of cycle checkup, that wouldn’t get paid, is coded as a followup to the last visit, that does get paid.
And I haven’t started on real over use.
I believe that insurance premiums go up and Medicare costs go up because providers cost more.
“I would suggest that in both of these cases the low cost provider managed to meet the baseline requirements of the market in terms of quality. This reduced competition for the consumer goods they sold. It didn’t provide for increased competition.”
That’s a pretty plausible analysis.
I’d say the same thing is quite possible in health care, and I’d say it would suck.
I’m in general agreement with what I take to be tgirsch and hairshirt’s points about a public insurance option being completely compatible with private providers.
Gary, I take your point about the Gawande article, however I’d still say that the need for private local practices to be profitable, and very large scale for-profit hospital chains to be profitable, are different in their effects on the cost of health care. The common practice in the county Gawande discusses are, thankfully, not quite the norm (yet).
Also, I’d point out that Mayo is not a for-profit organization.
Sebastian, I will defer to you on the issue of tube socks from Wal-Mart.
Last time I bought socks I bought them at Marshall’s, also a bargain-oriented retailer, and they kind of sucked.
“”Marty seems to be saying something different though. That profit seeking at a provider level (hospital/doctor group/doctor) is driving health care costs.”
This is accurately what I am saying.”
Marty, I think your analysis here is spot on.
The question it leaves me with is this: why is this uniquely so in the US?
Are doctors in other countries somehow less interested in making money? Do they not also have access to, and possibly a financial interest in, labs and scanners and other technical medical facilities?
Why does profit-seeking by providers cause an inflation of costs here, and not other places?
Sebastian,
“Audrey, again I want to apologize for being so testy. I feel like I’ve been through the exact same conversation about four times in the past two months, but that isn’t your fault.”
Wow, you beat me to it! I was trying to word an apology for asking a question badly and jumping unintentionally to conclusions based on the written communications of someone I’ve never met! Sorry…
Specifically, my earlier question:
“Why do you think the profit incentive in the private *insurance* sector is a non issue for diagnosing structural problems with the health care value chain (apologies for the MBA speak)…”
Was a (poor!) attempt to raise the issue that there are structural problems across the system, and % of profit/poor incentives across all (insurers, providers) should be investigated.
When I looked at the CRS chart of HC Spending per Capita, I see that the public sector is doing most of the spending – Japan may not be a ‘socialized’ health care system, but the public funds seem to be paying for the vast majority of care.
This suggests – but does not prove, correlation isn’t causation – to me that governments are exerting price control in these countries.
I perceived your solution of putting the uninsured on Medicare (a good short term idea), as something to be done *instead* of exploring if/how more expansive government involvement makes sense to bring down cost.
Now I will go think about this some more, because I don’t know all the answers 🙂
Wierd. I worked in construction for a couple of years, and I have no idea what “stick lumber” means, as distinct from any other kind of lumber.
oops, clarifying additions in brackets:
When I looked at the CRS chart of HC Spending per Capita, I see that the public sector [in other countries] is doing most of the spending [across highly variable delivery systems]
“Last time I bought socks I bought them at Marshall’s, also a bargain-oriented retailer, and they kind of sucked.”
Ahh but there is a reason why Marshall’s isn’t doing well and WalMart is a juggernaut. WalMart is inexpensive, but most of the stuff there isn’t cheap. (I wouldn’t go so far as to say excellent quality, but they normally pull of ‘good’). Marshall’s however is just cheap.
I would say that Gawande successfully largely refutes this otherwise intuitive claim. That is, maybe not as regards your own specific physician, but as regards the phenomenon of individual physicians and the culture they were trained in, and the financial position they have arranged themselves to put themselves into, and their goals in income, are amongst the largest factors in our health care costs problems, rather than it being, as one would intuitively tend to assume, overwhelmingly the fault of mega-hospital corporations (though they bear some blame as well, to be sure).
My intent in pointing out the distinction between institutional profit versus individual income was not to show that high health-care costs were overwhelmingly the fault of mega-hospital corporations. Like russell, I was thinking very much along the lines of the Mayo clinic’s way of doing things versus the way the Texas doctors in the Gawande article did things. But policies that target the income motives of doctors may not be the same as policies that target the profit motives of corporations, though there might be some overlap.
I’d like doctors to be able to make money independently of how many CAT scans they did or how few answers they gave to patients over the phone. But the policies that would acheive that goal might not be the ones that change how corporations in the health-care business make their money relative to the quality of care they provide their customers.
I really don’t know what to think about insurance company profits. What innovations does their profit motive spur other than finding new ways not to pay for health care or to charge higher premiums? There doesn’t seem to be much connection between encouraging low-cost, highly effective treatments and the forces placed on the health-care system by profit-seeking insurance companies. Maybe I’m wrong about that.
In the business of health care, the free, private market seems to result in perverse incentives, assuming the goal is a well-cared-for population.
Googling “hospital profits”, I ran across this:
“Robust”, in this context, is 5.3% I don’t know if 5.3% would be considered “robust” in other contexts, though.
It’s not clear from the linked article just how many hospitals are claiming to be struggling but it’s completely possible that some hospitals are pulling down, for instance, 10%, while others are running at a dead loss. I’d also guess, those statistics being a few years old, that times are a little less plush for for-profit hospitals.
Oh, right. Hospitals have investments, which are currently losing them money. That kind of complicates things.
“Wierd. I worked in construction for a couple of years, and I have no idea what “stick lumber” means, as distinct from any other kind of lumber.”
Stick lumber is the long, skinny kind. Like 2×4’s.
I will not buy stick lumber at Home Depot, because I end up taking it back. It warps like a SOB.
Seb, maybe I should start buying my socks at Wal-Mart.
“Are doctors in other countries somehow less interested in making money? Do they not also have access to, and possibly a financial interest in, labs and scanners and other technical medical facilities?”
Interesting comparison here
of how doctor and hospital fees are set. Interesting that in most of these countries specialists work in hospitals and are salaried.
Interesting that in most of these countries specialists work in hospitals and are salaried.
I believe the same is true at the Mayo Clinic. Perhaps we agree on more things than it at first seemed, Marty.
Ah. See, I just think of lumber as lumber. Maybe if their stick lumber is cheap, so are their other kinds, the names of which are also not in my lexicon.
Try not to buy the lumber stamped as “green”, is a good rule of thumb. Probably you already knew that.
“Interesting that in most of these countries specialists work in hospitals and are salaried.
I believe the same is true at the Mayo Clinic. Perhaps we agree on more things than it at first seemed, Marty.”
I do not feel knowledgeable enough to present wide ranging healthcare delivery reform solutions. I would like us to be solving the problem of rising costs at the source rather than by guessing which payment method would impact the costs.
I equate systems where the government sets the rates and the countries where government delivers services as “the same”. The only model really different than that is Germany and they seem to have doctors “groups” that negotiate rates with the insurance companies (and of course Switzerland, not sure it is a meaningful comparison).
I buy lumber of all kinds at the lumber yard in my town. It’s probably slightly more expensive than the same stock at Home Depot, and it’s better.
My point here is less about lumber per se, and more about how market forces in the form of competition and a drive toward efficiency frequently result in products and services of lower quality being offered.
According to some textbook version of the free market, that shouldn’t happen. In real life, it does every day. I would go so far as to say that it’s more or less the logical end state of pure market forces.
Net/net I’m suspicious of the free market’s ability to make a useful level of health care broadly available to the population. I don’t even think it’s something that should be thought about in those turns.
Health care, IMVHO, is more like highways, postal service, running water, and fire departments than it is like consumer goods.
“Marty seems to be saying something different though. That profit seeking at a provider level (hospital/doctor group/doctor) is driving health care costs. This is more possible for at least two reasons I can think of. First, it identifies an area which is actually an enormous percentage of the total, so it could add up quickly.”
This is true, and I’ll ask you yet again if you’ve read the Atul Gawande piece, Sebastian, which speaks to this. (And I added a political footnote story yesterday to my post.)
“So maybe insurance works both directions–increasing systemic costs by encouraging use, decreasing costs by seeking profits.”
That seems reasonable, though the amounts by which it’s doing either, or where the balance lies, is unclear.
“Second, at the hospital level, there is an identifiable change that could apply–the shift from not-for-profit charity hospitals (often historically run in large part by donations from church organizations) to for-profit hospital models.”
I can imagine that you might think that would help, but it seems to me that it’s more apt to go in the other direction; I think the costs and profit-seeking incentives of for-profit hospitals and medical partnerships and medical business are far more apt to account for overall higher costs than any use of non-profit hospitals, although again I end up going back to the points Gawande made about the culture of how doctors are influenced in how they treat being key as part of all this.
“I’d like doctors to be able to make money independently of how many CAT scans they did or how few answers they gave to patients over the phone. But the policies that would acheive that goal might not be the ones that change how corporations in the health-care business make their money relative to the quality of care they provide their customers.”
I agree with all that, and Russell’s similar comments.
“Interesting that in most of these countries specialists work in hospitals and are salaried.”
That doctors and other medical professionals, whether specialists or GPs, or anesthesiologists, or whomever, be salaried, and not otherwise incentivised, is exactly one of the points Gawande makes.
And also that it’s the local medical culture that leads professionals towards increasing profits as their primary goal, rather than treating patients well, is another key point Gawande supports well. “Powell suspects that anchor tenants play a similarly powerful community role in other areas of economics, too, and health care may be no exception.”
“In the business of health care, the free, private market seems to result in perverse incentives, assuming the goal is a well-cared-for population.”
Just so.
“I equate systems where the government sets the rates and the countries where government delivers services as ‘the same’.”
But in many ways significant to most discussions, they’re not. So such equations are a bad idea, save in specific discussions where the differences specifically aren’t relevant.
If your only objective is to decrease cost, that’s easy enough to do. Decrease demand and/or increase supply.
If everyone had to pay for their medical expenses out of pocket, demand would drop through the floor. Increase supply by allowing more people to become doctors. Bypass the doctors guilds to allow other medical personal to provide services that doctors currently reserve to themselves.
If you have other objectives, besides lowering cost, such as everyone having access to at least basic medical services, there’s a limit to how much cost can be lowered if at all.
Medical technology, procedures and drugs have changed a lot in recent decades. Medical practice, not so much.
There’s a reason why Lap-Band® and Lasik procedures have dropped in cost by about 50% in the last decade while just about everything else has gone up in cost.
Russell, “I buy lumber of all kinds at the lumber yard in my town. It’s probably slightly more expensive than the same stock at Home Depot, and it’s better.
My point here is less about lumber per se, and more about how market forces in the form of competition and a drive toward efficiency frequently result in products and services of lower quality being offered.
According to some textbook version of the free market, that shouldn’t happen. In real life, it does every day. I would go so far as to say that it’s more or less the logical end state of pure market forces.”
The free market suggests that you are buying your higher quality lumber at a lower price than you would have otherwise and that a wider variety of quality is available. So depending on what you want the lumber for, there are more options. If you are building a decorative picket fence, perhaps the very cheap Home Depot stuff is ideal.
“I can imagine that you might think that would help, but it seems to me that it’s more apt to go in the other direction; I think the costs and profit-seeking incentives of for-profit hospitals and medical partnerships and medical business are far more apt to account for overall higher costs than any use of non-profit hospitals”
I gave it as an example of why I thought prices went up–so in exactly the direction you were thinking. Now I don’t know if it would illustrate that ‘costs’ were up. The cost may be the same with prices well up because they are no longer be subsidized by charity.
“My point here is less about lumber per se, and more about how market forces in the form of competition and a drive toward efficiency frequently result in products and services of lower quality being offered.”
Patients don’t, as a rule, haggle with their doctors, and shop around for cheaper doctors and cheaper costs on procedures.
Gawande:
Am I missing the comment where you’ve responded to my queries about whether you’ve read this, or have you simply not had time to read it?, which would be understandable, given the limited number of hours in the day.
“The free market suggests that you are buying your higher quality lumber at a lower price than you would have otherwise and that a wider variety of quality is available.”
Here are the brass tacks.
My local guy sells 8′ 2×4’s for $3.15 apiece. Home Depot sells the same stock in the same grade (KD) for $2.23.
It may be that my guy would sell for more if Home Depot wasn’t around the corner, but I’m thinking probably not. He’s already significantly more expensive, folks who are going to shop purely on price are gonna go to Home Depot, period.
The way it generally works around here is that contractors go to local yards, weekend warriors go to Home Depot. Contractors get a discount so the difference is less, and they get decent enough lumber that they can actually build something. The home handyman who is building a doghouse gets cheap lumber, which suits his dog just fine. Everybody has their niche, everybody makes a buck, everybody’s happy.
So far so good.
What happens in some markets is that the local guy can’t compete with Home Depot at $2.23 a stick for 2×4 studs, so the local guy goes away.
Then all you got is Home Depot. And their lumber really is not very good. By “not very good” I mean an 8′ stud will torque enough that it can’t be used to frame out a wall or door jamb that is both square and plumb.
Since that’s what 2×4’s exist to do, I’d say they were freaking useless.
I stopped buying lumber at HD because I got sick of taking studs back when, after being stored by being stacked neatly in my warm and dry basement for a couple of days, they were too warped to use.
In some places, that’s all you’ll be able to get, because HD will beat the other guy down enough on price that it’s just not worth their while to keep getting up in the morning and opening their yard.
Hence my comment about natural end points.
All of which is sort of to the side of my primary concern.
My primary concern about free market dynamics is that they will always favor the most efficient outcome, where “efficient” is measured as “highest return on resource invested”.
There are things for which that ought not be the calculus.
Highways, water supply, fire department and other public safety agencies, schools. I submit that the proper metric for things like that is not efficiency, but *effectiveness*. Does the necessary thing get done. If the necessary thing does not get done, it doesn’t freaking matter how efficiently it failed to be accomplished.
I also submit that health should fall in this category.
Nobody wants to p*ss money away, but the market model is not now, and is not going to be, a useful model for providing health care.
The longer we screw around with trying to make that model fit, the longer we’re going to keep having the same basic problem.
Which is, if you don’t have the dough, you don’t get to go to the doctor. And lots of folks don’t have the dough.
We can work around crappy lumber somehow if we need to. We can’t work around crappy health care.
Crappy health care can be better than no health care at all. After all, people do go to VA hospitals.
Crappy health care can be better than no health care at all.
So, CharlesWT, does that mean you’re not a supporter of the prominent No Health Care At All bill that everyone’s been talking about?
Phil, thanks for the link. The article and comments make some good counter-arguments to the WSJ article. However, it shouldn’t be surprising if there is, in fact, some moral hazard to having health insurance.
So then you should be able to point out the inevitable results of this moral hazard in Canada, the UK, France, Germany, etc., easily enough.
If I might suggest a small change for clarity, I think what you mean here is “where ‘efficient’ is measured as ‘highest financial return on resource invested’.”
Your point, of course, being that there are all sorts of other valuable returns besides financial returns that can be derived from resources invested.
But the other returns, in terms of children better educated, more people more healthy, highways and bridges that don’t collapse, more fires put out, more people kept safe, etc., without regard for their ability to pay are still “returns” as public goods. Your point is that we value those returns in those cases more than whether someone makes the most financial profit. (Obviously I emphatically agree with you.
“Crappy health care can be better than no health care at all. After all, people do go to VA hospitals.”
As I just pointed out over here (July 30, 2009 at 02:39 PM on the “Fighting For The Public Option” thread): “A 2008 poll by the U.S. Department of Veterans Affairs said 79 percent of patients classified their health care services as ‘excellent’ or ‘very good.'”
Lots of other standards point to, overall, with some exceptions, VA health care as being exceptionall good.
And, again, from my previous comment: “The record: A national poll conducted by the Kaiser Family Foundation in April found 68 percent of Medicare recipients were satisfied with their health care. Among those with private insurance, the satisfaction rate was 48 percent.”
Marty said: “My primary concern about free market dynamics is that they will always favor the most efficient outcome, where “efficient” is measured as “highest return on resource invested”.
There are things for which that ought not be the calculus.”
My concern around the current private market is not only Marty’s point (rationing by ability to pay), but also around the ‘efficient’ (high ROI for suppliers) outcomes that actually impose inefficiency and higher costs. For example (profound apologies – I am in process of teaching myself to do hyperlinks):
Smoking Cessation – Most people who successfully quit smoking do so by abrupt nicotine cessation (‘cold turkey’) http://whyquit.com/joel/Joel_03_32_How_do_people_quit.htm. Why then, is official U.S. policy to recommend Nicotine Replacement Therapy to all smokers who want to quit?
Treating overweight/obesity – http://www.obesitydiscussion.com/forums/obesity-surgery/bariatric-surgery-growth-market-quadruples-1345.html From the article “The number of gastric bypass and related procedures performed per year swelled by more than 400% from 1998 until 2002 while hospital costs for bariatric surgery ballooned sixfold.”
I cannot find any hard data showing that these procedures result in sustainable, long term weight loss (or even a better long term result than diet). But they cost a fortune.
The private sector can be expected to create higher costs *and* poor outcomes, unless:
1) Experts independent of political control weigh in, strongly, on policy. That is why the efforts around establishing a panel *independent* of Congress to digest and report on Comparative Effectiveness research are important.
2) A large purchaser with the incentive to control health care (not health insurance) pricing is established, in order to drive price closer to cost. Insurance companies are not making this happen, but are instead passing the increased costs on to individuals through denial of reimbursements.
Single (or a properly regulated non-profit) payer (2) without (1) will not lower costs. CE panel (1) without (2), will not be able to enforce best practices. Any bill that makes both 1 and 2 possible would be my preference. Any opposition messaging that attempts to portray (1) as ‘government wants to euthanize your grandmother’ or ‘keep you from choosing crappy food’ should be considered an attempt to maintain high costs at the expense of the health of all Americans.
By the way, thanks to all front page posters for investing time and effort in maintaining this blog. Also, does anyone have suggestions around reading that details the transition period in other countries to their current HC system from whatever they had before?
Gary –
That’s the gist of it, but I’d still say that highest return for resource invested should not be the metric.
It might, frex, cost $1M for a town to ensure that 85% of the houses in town will get a fire department response within 20 minutes. To cover the other 15% will cost another $500K.
The sweet spot in terms of return for dollar invested is covering 85% for $1M. But barring the case that the money is simply not available, the right thing to do is to get 100% coverage.
The goal is not efficiency of return, regardless of the coin in which the return is made, but to accomplish the thing that needs to be accomplished. The goal is effectiveness rather than efficiency.
Sometimes the money is just not there, but we happen to be an almost absurdly rich nation, so I don’t really buy that as an impediment. The issue for us is one of priorities and values.
I’m picking a nit here, but what I’d like to establish is that the capitalist model — optimal return on investment, regardless of the form in which the return comes — is not appropriate for public goods.
“profound apologies – I am in process of teaching myself to do hyperlinks)”
Do the following, but use a “<" and a ">” for “[” and “].”
[a href=”URL”]words you want to appear[/a]
Where “words you want to appear” appear above will be the words the link appears under and which is a clickable hyperlink.
I recommend this simple guide to tags. If my explanation wasn’t clear, go there, and scroll or do a “find” down to “LINKS, GRAPHICS, AND SOUNDS” and see the examples there.
Use of blockquoting is also very helpful:
Just again using angle brackets for the squares I use here, put what you want blockquoted between [blockquote] and [/blockquote].
To italicize put what you want between [i] and [/i].
Similarly, use “b” to bold and unbold.
That’s practically all you need to know for basic HTML. See the guide I linked to for other simple options, however.
For god’s sake, never use “blink.”
“I’m picking a nit here, but what I’d like to establish is that the capitalist model — optimal return on investment, regardless of the form in which the return comes — is not appropriate for public goods.”
I apologize for not being clear in having attempted to agree.
“Crappy health care can be better than no health care at all.”
Well, I will certainly grant you that, CharlesWT.
And since in this country lots and lots of folks get to experience both crappy care and no care at all, we are uniquely situated to make that comparison.
Gary,
Thank you very much. My learning curve will be short – but today just wasn’t the day for it.
My preference is that government stay as far away as possible from important stuff like health care. If government has a role, it should be as referee and picking up stragglers, not out front setting the pace.
“My learning curve will be short – but today just wasn’t the day for it.”
It won’t be on the test.
And you can use cut-and-paste for the formats; that might be easiest for you, or anyone, rather than memorizing even just the handful I’ve mentioned. (I barely know any more than that, myself.)
Part of being human is to continually try to balance risk against other concerns. To the degree there is any moral hazard with health insurance, it should exist in those countries since they are populated with humans. (Well, maybe except for the France.) I’m not sure how I could point out. No one seem to find the WSJ article very convincing. I had some problems with it myself.
between [blockquote] and [/blockquote].”
Are you could just go ahead and use angle brackets in your demo:
<blockquote> and </blockquote>
🙂
And now I have to balance the (grammatically risky) wisdom of this:
“Are you could just go ahead and use angle brackets in your demo”
against the logical opaqueness of this:
“Part of being human is to continually try to balance risk against other concerns. To the degree there is any moral hazard with health insurance, it should exist in those countries since they are populated with humans. (Well, maybe except for the France.)”
What shall I do?
Up thread Phil complained that I was just throwing links around instead of making arguments of my own. So I brought my cap pistol to join the artillery barrage.
My preference is that government stay as far away as possible from important stuff like health care.
What distinguishes “important stuff like health care” from “important stuff like owning nuclear bombs” or “important stuff like coining money” or “important stuff like fighting terrorism” or “important stuff like maintaining a patent system,” exactly?
Part of being human is to continually try to balance risk against other concerns. To the degree there is any moral hazard with health insurance, it should exist in those countries since they are populated with humans. (Well, maybe except for the France.) I’m not sure how I could point out. No one seem to find the WSJ article very convincing. I had some problems with it myself.
I’ll take that as a concession that the WSJ is kinda sorta full of shit and doesn’t know what it’s talking about, and also that, no, there is no demonstrable causal connection between “having medical insurance” and “getting fat,” or any other identifiable moral hazard.
I mean, if you’re so sure that carrying medical insurance has a moral hazard problem, then surely, in the countries that have cradle-to-grave, publicly-funded healthcare, you could show some kind of outcome that demonstrates this. There must be some mortality-related statistic — obesity rates? drug addiction? alcohol-related fatalities or injuries? — that shows that people are less likely to behave in a healthy manner in those countries. Right?
“Are you could just go ahead and use angle brackets in your demo”
You could if you didn’t know that Typepad is erratic about when it does and doesn’t allow using the coding to show angle brackets properly and not functionally, and when it does not allow it, on a random basis, which won’t show up in preview, just as as Typepad does so many other ever-exciting things completely erractically and unpredictably, or if, knowing this, you felt like bothering to experiment at that given moment.
“What shall I do?”
As the saying goes, “choice defines us.”
There are so many: go for a walk. Kiss a loved one. Ask for clarification. Vacuum your cat. Engage in snark. Create a piece of art. Work on a craft. Read something more intereresting. Ply yourself with intoxicants. Find something that will change your life. Take a nap. Smell some flowers. Look at the stars. Play a computer or board or card or other game. Read a good book. Find a beautiful piece of art to contemplate. Exercise. Plan some of your next week. Practice your yoga skills. Learn twelve ways how to kill a person with only a pencil. Meditate. Start a new business. Eat a nice piece of fruit. Begin a novel. Fly to Vegas, or maybe Tahiti, or Paris, or Ulan Bator, on a whim. Go on a drug binge. Be still and contemplate stillness. Change someone else’s life for the better. Take a risk. Be safe.
There are so many choices.
I live to serve, but I am not competent to choose for you. It is not for me, yr. hmbl. obt. srvt., to say, madam.
I’m sure you’ll do what’s right for you at the given moment. And try to have as few regrets as possible later.
“I’m afraid I don’t quite follow your response; could you expand on your point, please?” is a response I sometimes find useful, though.
“To the degree there is any moral hazard with health insurance, it should exist in those countries since they are populated with humans.”
Allow me to complete your thought: “all of whom have health insurance”.
Quite so. A great point, actually. Well played.
Like Phil, I look forward to your demonstration of exactly how that moral hazard manifests itself.
“There are so many choices.
I live to serve, but I am not competent to choose for you. It is not for me, yr. hmbl. obt. srvt., to say, madam.
I’m sure you’ll do what’s right for you at the given moment. And try to have as few regrets as possible later.
“I’m afraid I don’t quite follow your response; could you expand on your point, please?” is a response I sometimes find useful, though.”
There is wisdom in your post. I will consider it.
I’ll leave the statistics to the pointy-head statisticians. Perhaps someone will do a more convincing study proving/disproving the assertion.
The study in the WSJ article does have a kind of truthiness to it. Researchers have claimed to find moral hazards in other areas: Drivers of large vehicles or vehicles with air bags may not drive as carefully as drivers of small cars and cars without air bags.
The idea itself has been around for awhile:
In insurance markets, moral hazard occurs when the behavior of the insured party changes in a way that raises costs for the insurer, since the insured party no longer bears the full costs of that behavior. Because individuals no longer bear the cost of medical services, they have an added incentive to ask for pricier and more elaborate medical service—which would otherwise not be necessary. In these instances, individuals have an incentive to over consume, simply because they no longer bear the full cost of medical services.
Two types of behavior can change. One type is the risky behavior itself, resulting in what is called ex ante moral hazard. In this case, insured parties behave in a more risky manner, resulting in more negative consequences that the insurer must pay for.
[…]
Moral hazard: In insurance
Proving it in particular cases is, no doubt, difficult.
Because individuals no longer bear the cost of medical services, they have an added incentive to ask for pricier and more elaborate medical service—which would otherwise not be necessary. In these instances, individuals have an incentive to over consume, simply because they no longer bear the full cost of medical services.
OK, so, again, it should be trivial to demonstrate that, for example, in the UK, relative to the US, people overconsume healthcare services.
Which should be tricky, since most people who appear to share your political persuasions will also argue that services are rationed, and are in fact made more scarce.
“What distinguishes “important stuff like health care” from “important stuff like owning nuclear bombs” or “important stuff like coining money” or “important stuff like fighting terrorism” or “important stuff like maintaining a patent system,” exactly?”
Not sure what this point is but the answer is, except for that pesky patent system, thats what we, the people, created the Federal government to do back in the 1780’s.
“”I’m picking a nit here, but what I’d like to establish is that the capitalist model — optimal return on investment, regardless of the form in which the return comes — is not appropriate for public goods.”
This sounds good and I want to agree with it. But are we discussing insurance or healthcare?
Food is pretty essential, possibly one of those public good things, but we tend to let the free market work and then provide food stamps so people have a better chance of not starving.
Public good is defined locally for the most part. Fire fighters, public servants of all kinds have budgets that get raisedd and lowered in good and bad times. Roads get more or less potholes based on the budget, heck in the north money decides how much salt you get on the road in winter.
There are risks in using either approach to provide insurance or care. Both have great features, both have downsides. The market works, even in healthcare, if we take away public and private incentives to do it poorly.
I believe that the governments role here could actually be better as the definition, measurement and reporting authority on who provides “good” healthcare.
There are areas where us mortals don’t know who the good guys are. As trite as it sounds I look for an energy star rating as a baseline for purchases, the Good Housekeeping seal carried weight for decades. Give us ten or twelve criteria that are meaningful, outcomes to costs, and let us decide.
Very few people negotiate with their doctor, lots seek second opinions and solid rating assessment would help pick where to get that opinion.
In the end government can be a force to stifle positive competition, level the playing field to encourage it or take over. I usually favor the level playing field approach.
Not sure what this point is but the answer is, except for that pesky patent system, thats what we, the people, created the Federal government to do back in the 1780’s.
First off, you might want to read your Constitution again. Like Article I, Section 8.
Second, I’m pretty sure the Constitution doesn’t say anything about nuclear weapons, so no, we did not create the Federal government in the 1780s to do that.
Third, anticipating your objection to my second point, that means that, in fact, the government can take on duties and responsiblities beyond what the people in 1789 anticipated. Like health care.
“First off, you might want to read your Constitution again. Like Article I, Section 8.”
You are correct, I had forgotten that pesky patent system was in there, thanks for the reminder.
Conclusions [page 33]
Economic theory suggests that health insurance may reduce prevention because it lowers the cost of medical care and thereby reduces the financial and health consequences of illness. This implies that receipt of insurance will result in an increase in unhealthy behaviors like smoking and drinking. This is often referred to as ex ante moral hazard. However, previous research in the context of health insurance has not found evidence of an ex ante moral hazard effect, which is surprising because in similar contexts, workers compensation insurance and automobile insurance, evidence of an ex anteex ante moral hazard) effect from the indirect effect (physician visits) of insurance on health behaviors. Here we do so.
We study the effects of receipt of Medicare on the health behavior of elderly persons. We use both longitudinal and cross-sectional data and a similar research design to obtain estimates of the effects of Medicare. Specifically, we compare changes in health behavior preand post-age 65 of those who are (likely) uninsured and those who are (likely) insured prior to age 65. We expect the change in health behaviors of those who are (likely) uninsured prior to age 65 to differ from those who are (likely) insured, and we assume that this difference is the effect of Medicare. To identify the ex ante moral hazard effect, we estimate models that control for physician visits.
The pattern of results shows consistent evidence of an ex ante moral hazard effect and consistent evidence that physician visits result in improved health behaviors…
[…]
The similarity and consistency of these findings across genders and analyses (data, samples and methods) are notable. They provide evidence that Medicare (health insurance) is associated with less prevention as manifested by an increase in unhealthy behaviors among the elderly. The effect sizes appear to be large enough to adversely affect health. But evidence also suggests that Medicare was associated with an increase in visits to the doctor and that doctor visits are associated with significant improvements in health behaviors. Often these two effects associated with Medicare are sufficient to yield a combined effect that is small and usually not statistically different from zero.
Health Insurance and Ex Ante Moral Hazard: Evidence from Medicare (.pdf)
Moral hazard: In insurance
Proving it in particular cases is, no doubt, difficult.
This sounds like an argument against insurance in general, rather than one specific to health insurance. Either way, is this to suggest that we shouldn’t have health insurance at all? I suppose that’s orthogonal to the public/private insurance debate that is only part of the health-care reform debate. It’s hard to imagine that whatever moral hazard exists by virtue of an individual having health insurance would be of much significance. It’s not as though anyone at all is shielded from the all the costs of risky behavior with regard to his or her health. Whether I pay nothing in terms of money as a consequence of my taking risks with my health, I’m still the one whose life is at stake, I’m still the one who may have to go under the knife, I’m still the one who may be hobbled or rendered helpless or may suffer great pain, I’m still the one whose children may become fatherless. Money aside, the largests costs are there for me.
Food is pretty essential, possibly one of those public good things, but we tend to let the free market work and then provide food stamps so people have a better chance of not starving.
I loved the film Trading Places. The scene in which Ralph Bellamy is explaining the commodities market to Eddie Murphy always stuck with me. Eddie Murphy initially thinks he’s being served breakfast. Pork bellies, frozen concentrated orange juice, wheat, which is made to make bread, are all commodities. They are easily commoditized. They are made in many places in great quantity, shipped all over the world and are available from a great many sources all in competition with one another. There is high subsitutablity among various food stuffs. The basic economic laws of supply and demand apply very well to such things. The question is: WTF does that have to do with health care?
Arguments against ex-post moral hazard in health insurance:
The Moral-Hazard Myth: The bad idea behind our failed health-care system.
Is ‘Moral Hazard’ Inefficient? The Policy Implications Of A New Theory
Argument for:
Moral Hazards: What Happens When You Think Healthcare Is Free
“I loved the film Trading Places. The scene in which Ralph Bellamy is explaining the commodities market to Eddie Murphy always stuck with me. Eddie Murphy initially thinks he’s being served breakfast. Pork bellies, frozen concentrated orange juice, wheat, which is made to make bread, are all commodities. They are easily commoditized. They are made in many places in great quantity, shipped all over the world and are available from a great many sources all in competition with one another. There is high subsitutablity among various food stuffs. The basic economic laws of supply and demand apply very well to such things. The question is: WTF does that have to do with health care?”
I think this is exactly the point. Healthcare has become a commodity, delivered by many competing entities, and is in fact highly substitutable today. So the market, if allowed, will work to maximize the value to the consumer. This is a reasonably new phenomenon. Healthcare has not traditionally been a commodity. So many of our discussions based on data, even as recent as ten years ago, is skewed.
I think this is exactly the point. Healthcare has become a commodity, delivered by many competing entities, and is in fact highly substitutable today. So the market, if allowed, will work to maximize the value to the consumer. This is a reasonably new phenomenon. Healthcare has not traditionally been a commodity. So many of our discussions based on data, even as recent as ten years ago, is skewed.
It is exactly the point, but I think it’s the opposite of what you’re saying. Health care is not a commodity, and the fact that it is being treated as such is one of the problems – and one that appears to be getting worse. The market is taking us in the wrong direction and all indications are that it will continue to do so if allowed. You don’t pack surgeries up on a freighter like oranges to ship them from California to Alaska. You don’t buy futures on diagnoses. And you don’t go to the supermarket for dialysis. Nor do you buy insurance for catastrophic orange purchases. And you don’t need years of schooling, training, residency or internship to grow or sell oranges.
The stuff people learn in Econ 101 is quite useful in a wide range of areas, but not all. Linear algebra is great, too, but sometimes you need trigonometry to solve a given problem. You know what? I believe the Laffer Curve is completely valid, but I don’t think it says a damned thing about tax cuts paying for themselves in the United States in the late 20th or early 21st Century. Newtonian Mechanics don’t work so well to describe what’s happening at the center of the Sun, either.
I’m sick of people trotting out perfectly valid theories to explain things outside their applicability, and that’s what you’re doing when you attempt to apply or suggest the application of the economics of simple commodities to modern health care. It doesn’t work.
“It is exactly the point, but I think it’s the opposite of what you’re saying. Health care is not a commodity, and the fact that it is being treated as such is one of the problems – and one that appears to be getting worse. The market is taking us in the wrong direction……”
It is or it isn’t, it is being run that way by providers. So we have to change how the people doing it think about it, or treat it like they do. The problem we have is they are selling and delivering like it is a commodity and we are treating it like it is a public good.
If you are correct and the market won’t manage it then we have to have government control delivery.
I don’t have any facts on which would work better so I haven’t decided yet.
“I’ll leave the statistics to the pointy-head statisticians. Perhaps someone will do a more convincing study proving/disproving the assertion.”
Let us know when that “someone” shows up.
And yeah, I saw your wiki link. Yes, there is likely some measurable moral hazard associated with insurance of any kind. But we insure ourselves against various risks anyway.
Bully for you that you’re willing to go without insurance and take your chances. The rest of us don’t want to live that way.
Next topic, please.
“Healthcare has become a commodity, delivered by many competing entities, and is in fact highly substitutable today. So the market, if allowed, will work to maximize the value to the consumer.”
I agree that healthcare has been commoditized, and I strongly disagree that this will result in maximizing value to the consumer.
Health care isn’t made in some places in great quantities, and then shipped everywhere around the world where it’s needed. Health care is a service provided directly by one person, or set of persons, to another.
The commodity model is *not a good fit* for healthcare.
And the market model, which emphasizes efficiency and maximizing return on resource invested, will not yield higher value to the *consumer*. Because the value to the consumer is not maximum yield on investment.
The value to the consumer is being healthy.
What commoditizing health care looks like is, frex, outsourcing surgery to offshore hospitals in poorer countries like India or Mexico. We do that now.
It is cheaper, which is great for the insurer or whoever is paying. But what does the consumer do if there is a complication? A post-op infection? A mistake? What opportunity does the consumer have to consult with the surgeon before the operation?
What’s next? Online discount medical consultations with physicians in Bangalore? Walk-in discount a la carte lab tests at the mall?
How are any of those things beneficial to the *consumer*?
Commoditizing health care will make a different version of crappy health available to folks who currently get their crappy health care at the ER. It will also motivate insurers to refer folks who currently have pretty good health care to the crappy version so they can save a few bucks.
What we need is decent basic health care for everyone. “Decent basic health care” is not something that is going to be delivered as a commodity.
“What’s next? Online discount medical consultations with physicians in Bangalore? Walk-in discount a la carte lab tests at the mall?”
To be clear, both of these things exist today. It’s called remote medicine, there are many applications for it when specialists are needed in remote areas. We do all kinds of testing in walk in labs that would be much more convenient if they were in the mall so i could shop while I was waiting.
When I say “online consultation with a physician in Bangalore” I’m not talking about making specialist expertise available to a remote location.
That isn’t commoditizing the services of the specialist.
The essence of a commodity is that there is no qualitative difference between different instances of the good within a market. Paper is paper, wheat is wheat, copper is copper.
The fact that you would make a specialist’s services available remotely demonstrates that in fact it *is not a commodity*.
The specialist’s knowledge is either not available at all in a certain place, or is of sufficiently better quality that you would go the trouble of making it available in the remote location.
I agree that there are medical goods and services that could readily be provided as commodity. They are those which don’t require any particular level of individual human expertise. Vitamins. Taking blood pressure or other basic vital signs.
Once you get into areas where there is a real or potential difference in the quality of the good or service depending on who provides it, you are by definition out of the realm of commodities. I’d say that includes almost the entirety of medical care.
It takes individual skill to be a good diagnistician, or to understand how a given treatment regime is going to be tolerated by a given patient in his or her particular life situation. It takes individual skill to run many basic lab tests accurately and correctly.
These are not commoditizable items, because they cannot be rationalized to the point where there is no qualitative difference between one provider and another.
Health care is an expert service provided by humans, to humans. It cannot be commoditized.
“What’s next? Online discount medical consultations with physicians in Bangalore? Walk-in discount a la carte lab tests at the mall?”
Actually if these things were cheap and easy, that would be GREAT!
Actually, if they were cheap, easy, and of sufficient quality to insure that people actually were kept healthy, that would be great.
And that last is the rub.
“Health care is an expert service provided by humans, to humans. It cannot be commoditized.”
Replace Healthcare in that sentence with:
IT services
Bankers
Financial advisors
(and you could probably go back to tailors and hatmakers)
and you have the history of the commoditization of the American economy.
Good, cheap, ubiquitous services is the point of even BHO’s healthcare reforms. Meaningful use of EHR’s facilitates this commoditization of most primary care.
IDN’s now have segmented doctors so that the primary care doctor never has to go to the hospital, because there are full time doctors that just work at the hospital. Almost every surgery is done by surgeons who just do that every day, all day. My cardiologist doesn’t do much except decide when I need to go have a test run.
Commoditization is a reality, we may not like the feeling that it is less personal, that doesn’t mean it isn’t.
“Replace Healthcare in that sentence with:
IT services
Bankers
Financial advisors
and you have the history of the commoditization of the American economy.”
And it’s unclear to me that the commoditization of IT services, bankers, or financial advice, to the degree that those things have been commoditized, has yielded better technical services, banking, or financial advice to the end consumer.
“IDN’s now have segmented doctors so that the primary care doctor never has to go to the hospital, because there are full time doctors that just work at the hospital. Almost every surgery is done by surgeons who just do that every day, all day. My cardiologist doesn’t do much except decide when I need to go have a test run.”
Those things have all improved somebody’s bottom line.
Have they delivered a useful level of health care to the population as a whole?
Do more people have access to health care? Have medical outcomes improved? Are we healthier than we were before the trend toward commoditization?
I’m not saying commoditization isn’t happening. I’m saying it’s not a good thing for the consumer.
And I’m saying relying on commoditization to solve the problem of making a useful level of health care to the broader population is not going to have the desired result.
Health care is not widgets.
And as an aside, I’m not sure that specialization, which is mostly what you’re talking about in your comment, is the same as commoditization.
Surgeons may do nothing but surgery day in and day out but all surgeons are not the same. When you roll in for your bypass, you don’t really want it done by whoever happens to be on duty that day.
Health care is people delivering an expert service to other people. There are certainly niche areas where a commodity model can work — one nurse, or even a health tech, can take basic vital signs as well as another — but the goods and especially services that actually keep you healthy are not well suited to being provided on a commodity basis.
You wake up, go to the bathroom, and there’s blood in your urine. Or you pass out while grocery shopping. Or you lose sight in one eye suddenly. Or you wake up and it’s Tuesday, and the last thing you remember it was Sunday afternoon.
Go online and ask the good doctor in Bangalore to make the diagnosis. Nothing against Indian physicians or Bangalore, please feel free to substitute Dublin, Budapest, or Omaha.
And there’s nothing wrong with making expert knowledge available remotely. What I’m talking about here is the commodity model — the idea that all instances of some good or service are fungible, and one is not significantly better or worse than another.
So yeah, let’s go online and have a chat session with Doctor X, somewhere out there in the virtual ether. Then you’re gonna do whatever he or she recommends and that’s how you’re going to treat your malady.
You go first.
I’ve just gotten back home, with my dad in tow. Some random points that may be of interest.
Saw a Morgan Spurlock interview on my last night in the US which noted that over 19% of US medical costs are problems related to obesity.
My cousin, who is in the Public Health Service Commissioned Corps, said that the highest Medicare reimbursments are from the Texas county where the headquarters for the Scooter Store (‘Mobility is your right!’). My google-fu doesn’t turn up anything to support that, but it sounds right after seeing the scooter store commercial on every cable channel.
The GP my dad goes to is really great, and he sets it up so that the patients can get their blood drawn and have the blood work done there rather than going to another office, which is a huge boon for the rural patients he deals with. However, the WaPo article points to problems with doctors providing one-stop shopping.
The fungibility/commodity problem is interesting. The Japanese government sets medical prices nationwide, so a scan I get in Hokkaido is going to be the same price as one I get down here. I can understand why the office in NYC might have higher operating costs than one in Mississippi, but charging what the market can bear seems problematic.
CharlesWT: My preference is that government stay as far away as possible from important stuff like health care. If government has a role, it should be as referee and picking up stragglers, not out front setting the pace.
Earlier CharlesWT: However, I’m eligible for Medicare in about three years. Whoopee!
Who is going to be the one to tell CWT that Medicare is a government program?
I’d do it myself, but I fear that might constitute a moral hazard.
The government has taken money from me most of my working life for Medicare. I might as well get back what I can from it. Just because I was forced into making a bad investment I didn’t want to make, I should leave the money lying on the table?
The “Whoopee!” was sarcasm.
“If government has a role, it should be as referee and picking up stragglers, not out front setting the pace.”
I just figured that CharlesWT was calling himself a “straggler.”
Perhaps. 🙂
Oh, straggler! – not strangler…
Man, I thought there was something weird about that.