Archive for the 'HealthCare' Category

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Quote Of The Day

“Massachusetts offers a snapshot of how giving more people insurance naturally drives demand. The Massachusetts Medical Society last fall reported just over half of internists and 40 percent of family and general practitioners weren’t accepting new patients, an increase in recent years as the state implemented nearly universal coverage.”  — Associated Press Link via John Goodman

The Path To Single-Payer

How does ObamaCare lead to Single-Payer? The steps are explained in a conversation overheard between Dennis Kucinich and Obama:

Obama: Dennis, I know you want single-payer and so do I. I’ve made that clear on numerous occasions. We both see the public option as a step to single-payer, but that’s a step too far. I can’t get it in this bill and still win.
Kucinich: Now you see why I won’t vote for it.
Obama: But, Dennis, have you actually read the bill? Don’t you see how it will lead to single payer but will just take a little longer?
Kucinich: Er, what do you mean Mr. President?
Obama: Have you heard of adverse selection?
Kucinich: Yeah, but I don’t really know what it is.
Obama: Well, here’s what Larry Summers explained to me. When insurance companies can’t distinguish between healthy and sick people, they have to price to some average of the two. But those high prices discourage the healthy from buying so and the insurance companies know this and so they have to price even higher than otherwise. That’s called adverse selection.
Kucinich: And?
Obama: Don’t you see, Dennis? The way the insurance companies handle this problem is to get information on people’s health and price accordingly. That reduces adverse selection.
Kucinich: And this is supposed to make me feel good about your bill that keeps private health insurance?
Obama: Yes, because our bill doesn’t allow the insurance companies to price higher for pre-existing conditions. So lots of people who are relatively healthy will actually game the system–not buy insurance and pay our piddling fines–and then, when they’re sick, get insurance then. The insurance companies will know this and will have to price high to account for it. Lots of people’s health insurance premiums will rise. I know I said that 32 million more people will get health insurance but I can’t know that. No one can. My bill might even cause fewer people to get health insurance as they game the system.
Kucinich: Still waiting for the good news.
Obama: What happens when insurance companies start to raise premiums through the roof? Do you really think people will blame us? Some will, but many will blame insurance companies. How many people blamed Nixon’s price controls on gasoline when they had to line up at the pump? Most of them blamed the oil companies. Then I, or my successor, will say, “Much as we’ve tried to reform health insurance, these titans of industry are unreformable. We must get costs under control. So we need a public option priced at reasonable rates.”
Kucinich: Yes, Mr. President.(bold added)

[/sarcasm] The full link can be found here. More can be found here, here and here.

Quote Of The Day

“But there is one thing of which I am nearly perfectly certain:  If we pass this thing, no American politician, left or right, is going to cut any of these programs, or raise the broad-based taxes necessary to pay for them, without any compensating goodies to offer the public . . .  until the crisis is almost upon us. I can think of no situation, other than impending crisis, in which such a thing has been done–and usually, as with Social Security, they have done just little enough to punt the problem down the road.  The idea that you pass a program of dubious sustainability because you can always make it sustainable later, seems borderline insane.  I can’t think of a single major entitlement that has become more sustainable over time.  Why is this one supposed to be different?” — Megan McArdle, on the impending ObamaCare

Quote Of The Day

“We’ve been arguing about the health care bill, in all its many iterations, for more than a year. Along the way, liberals have made a lot of predictions about what its passage will mean for America — for our health care system and our health, our economy and our long-term solvency. It will be interesting, to put it mildly, to see if they end up coming true.” — Ross Douthat, on the recent passage of the healthcare bill

British HealthCare Rationing

One of the strongest argument against single payer is that government rationing is the worst kind. The British healthcare system is an example:

DAMNING reports on the state of the National Health Service, suppressed by the government, reveal how patients’ needs have been neglected.

They diagnose a blind pursuit of political and managerial targets as the root cause of a string of hospital scandals that have cost thousands of lives.

The harsh verdict on the state of the NHS, after a spending splurge under Labour between 2000 and 2008, raises worrying questions about the future quality of the health service as budgets are squeezed.

One report, based on the advice of almost 200 top managers and doctors, says hospitals ignored basic hygiene to cram in patients to meet waiting-time targets.

The full article from the Times is here.

Quote Of The Day

“I spent the morning writing about the Bush administration’s failure to anticipate the long-term costs of the Iraq occupation, which have reached $1 trillion and counting over the last eight years. With health care reform, there are no such illusions: We have good-faith estimates, sometimes downplayed but never hidden or dismissed, of how much this legislation will cost across the next two decades and beyond. And the Obama administration, to its credit, has done what the Bush administration never did, and proposed ways to offset every dollar (and then some) of new spending. But even acknowledged and potentially offset, the cost matters. The health care bills would lock us into trillions in required spending (private as well as public), required taxes, and necessary spending cuts at a time when our economy is stagnant, our fiscal situation parlous, and our need for flexibility immense. The supporters of this reform have convinced themselves that there’s no other way — that it’s go big, or go home. But I wish there weren’t quite so many  dollars riding on their bet.” — Ross Douthat, writing in the NY Times in favor of a smaller healthcare bill

Price Controls And ObamaCare

The strongest argument against universal and single-payer healthcare, IMO, is the argument that they inevitably lead to price controls. And as any student of economics knows, price controls are detrimental to many things we like about healthcare. Things like technological innovation, pharmaceutical innovation, and quick access are all harmed when price controls are implemented.

Advocates of ObamaCare have assured us that nothing in his bill calls for, nor will lead to price controls. They promise that the United States is different and will not need price controls.

Lucky for us, we have a natural experiment: the Massachusetts healthcare reforms are the foundation to a lot of ObamaCare. And they prove exactly what the critics of ObamaCare have been saying:

Last month, Democratic Governor Deval Patrick landed a neutron bomb, proposing hard price controls across almost all Massachusetts health care. State regulators already have the power to cap insurance premiums, which Mr. Patrick is activating. He also filed a bill that would give state regulators the power to review the rates of hospitals, physician groups and some specialty providers. Those that are deemed too high “shall be presumptively disapproved.”

Mr. Patrick ad-libbed that he had “a whole bunch of pals here who are in the health-care field, and I saw the color drain out of their faces.” Little wonder. The administered prices of Medicare and Medicaid already shift costs to private patients while below-cost reimbursement creates balance-sheet havoc among providers. Now the governor wants to import these distortions to save the state’s heavily subsidized insurance program as costs explode.

Remember, per capita Massachusetts is one of the richest states in the country. If they are already looking to price controls, with only 4 years after reform, how do you think ObamaCare bodes for the country?

The WSJ has more. Arnold Kling has more.

Quote Of The Day

“If you did a simple cost-benefit comparison, the Obama plan vs. a simple extension of Medicaid, more R&D through the NIH, and some targeted public health expenditures, I believe the latter would win hands down.  And the latter seems more politically feasible too.  It avoids the mandate, the unworkable and ridiculously low penalties for those who don’t sign up for insurance, and the awkwardly high implicit marginal tax rates imposed by the subsidy scheme.  It probably involves fewer corporate and “back room” deals….When it comes to the Obama plan, the easy targets are stupid or hypocritical Republicans.  The hard target is why the plan should beat the alternative reforms I’ve outlined above or perhaps other ways of spending the money.  I’d like to see more people take on the hard target rather than the easy.” — Tyler Cowen

Republican HealthCare Points

Economist Arnold Kling gives what should be the Republican healthcare points in their upcoming healthcare summit with Obama:

1. All Medicare savings must be used to shore up Medicare. None of those savings can be used to fund new insurance subsidies or entitlements. Medicare is unsustainable, and it is going to need every dollar that we can save, and more. There is nothing to spare for a new entitlement.

2. Medical savings accounts must not be killed.

3. Catastrophic health insurance must not be killed or heavily disadvantaged relative to comprehensive insurance.

4. All new subsidies that enable people to purchase health insurance must be on budget, rather than through insurance company regulations that are likely to result in cost-shifting.

5. The bill must provide for at least one of the following:

a. Interstate competition in health insurance.

b. greatly reduce (preferably eliminate) the tax inequity between obtaining health insurance on your own and getting it through your employer.

The full post can be found here.

Quote Of The Day

“Apparently, the administration has issued rules requiring parity for mental health treatment with other illnesses.  They’ll take effect July 1st.  If you want to know why health insurance costs keep marching upward seemingly uncontrolled, this is why:  mandating new benefits is always popular, and the government doesn’t have to pay for them.” — Megan McArdle

Quote Of The Day

“It’s really hard to get rid of bad legislation. Most people (almost everybody?) think ethanol subsidies are a loser except for the people who get rich from them directly, Archer Daniels Midland and maybe some others. But do we fix it? We don’t. That’s the way the system works. There’s a lot of inertia. It’s hard to get health care changed. And once it’s changed it’s hard to change it back. So advocating something horribly flawed as Collins and others have done on the grounds that we can fix it later is absurd. It won’t get fixed.” — Russ Roberts, on why its a bad idea to pass the healthcare bill now and ‘fix it later’

Quote Of The Day

“In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care’s dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value.” — JEFFREY S. FLIER, dean of the Harvard Medical School.

Quote Of The Day

“I think it’s pretty clear at this point that no bill from our Congress is going to meaningfully “bend the cost curve”.  Every time I argue that cost control seems unlikely, I hear that no, the Senate bill is going to make some serious inroads into delivery system reform.  Well, according to the CBO, the savings achieved by Subtitle A, the main delivery system reform part of the bill, are trivial–not really distinguishable from zero, when you consider the uncertainties inherent in the estimates.” — Megan McArdle, on the recently released CBO report

Quote Of The Day

“What is frustrating to me is that many people would agree that the Massachusetts health experiment failed, and yet that is the experiment that is being used as the model for the current bill. The original promise in Massachusetts was that by eliminating the “free-riding” of the uninsured and by setting up an efficient government insurance exchange, insurance costs would go down. Instead, insurance costs there soared.” — Arnold Kling on the current healthcare bill

Dont Copy Europes Healthcare

So says a European:


A Healthcare Plan I Could Support

If Republicans were being responsible Republicans, this is the alternative they would argue for:

Here’s a better alternative. Let’s scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.

Specifically, the government would give each individual or family a voucher that would permit taxpayers to buy a policy from a private insurer that would pay all allowable health costs in excess of 15 percent of the family’s income. A typical American family with income of $50,000 would be eligible for a voucher worth about $3,500, the actuarial cost of a policy that would pay all of that family’s health bills in excess of $7,500 a year.

The family could give this $3,500 voucher to any insurance company or health maintenance organization, including the provider of the individual’s current employer-based insurance plan. Some families would choose the simple option of paying out of pocket for the care up to that 15 percent threshold. Others would want to reduce the maximum potential out-of-pocket cost to less than 15 percent of income and would pay a premium to the insurance company to expand their coverage. Some families might want to use the voucher to pay for membership in a health maintenance organization. Each option would provide a discipline on demand that would help to limit the rise in health-care costs.

My calculations, based on the government’s Medical Expenditure Panel Survey, indicate that the budget cost of providing these insurance vouchers could be more than fully financed by ending the exclusion of employer health insurance payments from income and payroll taxes. The net budget savings could be used to subsidize critical types of preventive care. And unlike the proposals before Congress, this approach could leave Medicare and Medicaid as they are today.

Lower-income families would receive the most valuable vouchers because a higher fraction of their health spending would be above 15 percent of their income. The substitution of the voucher for employer-paid insurance would be reflected in higher wages for all.

Two related problems remain. First, how would families find the cash to pay for large medical and hospital bills that fall under the 15 percent limit? While it would be reasonable for a family that earns $50,000 a year to save to be prepared to pay a health bill of, say, $5,000, what if a family without savings is suddenly hit with such a large hospital bill? Second, how would doctors and hospitals be confident that patients with the new high deductibles will pay their bills?

The simplest solution would be for the government to issue a health-care credit card to every family along with the insurance voucher. The credit card would allow the family to charge any medical expenses below the deductible limit, or 15 percent of adjusted gross income. (With its information on card holders, the government is in a good position to be repaid or garnish wages if necessary.) No one would be required to use such a credit card. Individuals could pay cash at the time of care, could use a personal credit card or could arrange credit directly from the provider. But the government-issued credit card would be a back-up to reassure patients and providers that they would always be able to pay.

The combination of the 15 percent of income cap on out-of-pocket health spending and the credit card would solve the three basic problems of America’s health-care system. Today’s 45 million uninsured would all have coverage. The risk of bankruptcy triggered by large medical bills would be eliminated. And the structure of insurance would no longer be the source of rising health-care costs. All of this would happen without involving the government in the delivery or rationing of health care. It would not increase the national debt or require a rise in tax rates. Now isn’t that a better way?

That is by Harvard economist Martin Feldstein. The full article can be found here.