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Universal Coverage Means ‘Willing to Let You Die Sooner’
I cannot disagree with Uwe Reinhardt’s response to my previous post at National Journal’s Health Care Experts blog. But his response bears clarification and emphasis.
Improving “population health” generally means “helping people live longer.”
To paraphrase, Reinhardt then writes:
If helping people live longer were our objective in health reform, we could do better than universal coverage. But health reform is not (solely or primarily) about helping people live longer. It is (also or primarily) about other things, like relieving the anxiety of the uninsured.
I applaud Reinhardt for acknowledging a reality that most advocates of universal coverage avoid: that universal coverage is not solely or primarily about improving health.
Will Reinhardt go further and acknowledge that, since universal coverage is largely about some other X-factor(s), that necessarily means that advocates of universal coverage are willing to let some people die sooner in order to serve that X-factor?
(Cross-posted at National Journal’s Health Care Experts blog.)
Filed under: General; Health, Welfare & Entitlements
Should Congress Even Try to Achieve Universal Coverage?
If the goal is to improve health, then the answer is clearly no.
Ironically, even though universal coverage is presumably about helping the sick, the Democrats’ pursuit of universal coverage demonstrates not how much, but how little they care about their neighbors’ health.
Economists Helen Levy and David Meltzer explain, in a book published by the Urban Institute, “There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on…other possibilities,” such as clinics, hypertension screening, nutrition campaigns, or even education. In the Annual Review of Public Health, they explain further:
The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions…Understanding the magnitude of health benefits associated with insurance is not just an academic exercise…it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized.
If Democrats were serious about improving health, they would first gather evidence about which of those strategies produces the most health per dollar spent. (As I recommend elsewhere, the $1.1 billion Congress allocated for comparative-effectiveness research should just about do the trick.) Democrats would then fund the most cost-effective strategies, which may or may not include broader insurance coverage.
But the fact that Democrats are pursuing universal coverage without any such evidence necessarily means that they are willing to sacrifice potentially greater health improvements to achieve…whatever else they hope universal coverage will achieve.
Universal coverage is not about improving public health. It is about subordinating health to some X-factor that supporters value even more.
Which leads to an even more intriguing question: what is that X-factor?
Financial security? (If so, would universal coverage achieve that? Or are there better strategies?) Political power? Dependence on government? Industry subsidies? The appearance of compassion?
I’d like to see that question put to the group.
(Cross-posted at National Journal’s Health Care Experts Blog.)
Why the Democrats’ Health Care Overhaul May Die
The problem that Democrats have faced from Day One is finally coming to a head.
The Left and the health care industry both want universal health insurance coverage. The industry, because universal coverage means massive new government subsidies. The Left, because that’s their religion.
But universal coverage is so expensive that Congress can’t get there without taxing Democrats.
- Sen. Jay Rockefeller (D-WV) is the biggest opponent of Sen. Max Baucus’ (D-MT) tax on expensive health plans because that tax would hit West Virginia coal miners.
- Unions vigorously oppose that tax because it would hit their members.
- Moderate Democrats in the House oppose Rep. Charlie Rangel’s (D-NY) supposed “millionaires surtax” because they know it would hit small businesses in their districts.
And on and on…
But if congressional leaders pare back those taxes, they lose the support of the health care industry, which wants its subsidies.
- That’s why the health insurance lobby funded this PriceWaterhouseCoopers study saying that premiums would rise under the Baucus bill: the $500 billion bailout they would receive isn’t enough. They also want – they demand – steep taxes on Americans who don’t buy their products.
- The drug companies, the hospitals, and the physician groups are likewise demanding big subsidies, and will run ads to kill the whole effort if those subsidies aren’t big enough.
As always, health economist Uwe Reinhardt put it colorfully:
It’s no different from Iraq with all the different tribes…‘How does it affect the money flow to my interest group?’ They are all sitting in the woods with their machine guns, waiting to shoot.
Once the shooting starts, industry opposition will sway even Democratic members, because there are physicians and hospitals and employers and insurance-industry employees in every state and congressional district.
Can President Obama and the congressional leadership satisfy both groups? My guess is, probably not, and this misguided effort at “reform” will therefore die. Again.
The Price of Universal Coverage Just Went Up
Since at least February, President Obama and other elders of the Church of Universal Coverage have labored to create the impression that universal coverage is inevitable, because a sense of inevitability reduces its cost. If interest groups think this train is leaving the station, they are less likely to stand in its way. Lobbyists are more likely to cut whatever deal they can if their clients believe, “It could have been much worse.” That’s why Obama has demanded haste: the longer the process, the harder it is to maintain a sense of inevitability.
Here’s a sampling of today’s health care headlines from the non-partisan Bulletin News, which summarizes news media coverage:
- Senate, Obama Back Off Healthcare Reform August Deadline.
- Obama Rakes In Cash For DNC, Criticizes Media Coverage Of Healthcare Debate.
- Obama’s Performance At Wednesday’s Press Conference Comes Under Fire.
- President’s Media Strategy Raises Eyebrows.
- House Democrats Consider Sidestepping Committee.
- Democratic Caucus Holds “Contentious” Meeting.
- Black Caucus Blasts Blue Dogs; AARP, Unions Also Criticize Group.
- Freshmen Senators Ask Baucus To Hold Costs Down, Praise His Efforts.
- More Criticism Of Obama.
Now that reform seems less inevitable, interest groups will be less likely to settle for a bad deal. Instead, they will be more likely to demand higher payoffs than before, because their clients believe the expected cost of alienating Church elders has moved away from “getting punished” and toward “the status quo ante.”
So, good luck paying for this thing.
Filed under: Government and Politics; Health, Welfare & Entitlements
The Ultimate Question: Freedom or Power?
Here I was, sick with worry that the questions I hoped to pose to President Obama about his health reform plan would never be answered. Thank God, Matthew Holt stepped up to the plate. Or the wicket. Whatever.
What follows are some of my questions (addressed to the president) and Holt’s responses (in italics).
Mr. President, in your inaugural address and elsewhere, you said you are not interested in ideology, only what works. Economists Helen Levy of the University of Michigan and David Meltzer of the University of Chicago, where you used to teach, have researched what works. They conclude there is “no evidence” that universal health insurance coverage is the best way to improve public health. Before enacting universal coverage, shouldn’t you spend at least some of the $1 billion you dedicated to comparative-effectiveness research to determine whether universal coverage is comparatively effective? Absent such evidence, isn’t pursuing universal coverage by definition an ideological crusade?
Sadly Michael, universal coverage is not about improving public health. If you want to do that, go teach some kids age 1–5 and build some sewage systems. Universal care is about making sure that the costs of health care are fairly distributed. Under the systems you prefer and the one we now have they’re distributed from the poor and sick to the healthy and wealthy—many of whom we both know work in the health care system. But apparently there was NOT ONE MENTION of the uninsured or sick people bankrupted by the system in the whole hour.
Holt’s categorization of my preferred health care “system” and the un-mentioned uninsured aside, he makes my point for me: universal coverage is about ideology, not health. In fact, Holt demonstrates that the Church of Universal Coverage would be happy to have people die sooner if that would promote its ideo-religious goals. I really should send him a fruit basket.
A draft congressional report said that comparative-effectiveness research would “yield significant payoffs” because some treatments “will no longer be prescribed.” Who will decide which treatments will get the axe? Since government pays for half of all treatments, is it plausible to suggest that government will not insert itself into medical decisions? Or is it reasonable for patients to fear that government will deny them care?
Why should patients fear it? We know that less intensive care is better, and cheaper primary care is better than more extensive specialty care.
So the government will insert itself into medical decisions. Gotcha. Holt is really clearing a lot of things up.
To answer his question, though, the concern is that one size really doesn’t fit all, and that the government’s rules will, shall we say, break my eggs to make his universal-coverage omelette.
Filed under: Cato Publications; Health, Welfare & Entitlements
How Much Will Universal Coverage Cost?
President Barack Obama has declared that his goal in health care reform is “expanding coverage to all Americans.” So what’s the price tag on universal coverage?
Some reformers are throwing around numbers like $1 trillion or $1.5 trillion. But according to the Urban Institute, the cost would be closer to $2 trillion.
Jack Hadley and his colleagues estimate, “If all uninsured people were fully covered [in 2008], their medical spending would increase by $122.6 billion.” If we assume that the cost of covering the uninsured will grow at the same rate the federal government assumes for all health spending growth (6.2 percent), then from 2010 through 2019, the cost of covering the uninsured would be $1.8 trillion.
That’s at a minimum. According to Hadley et al., their estimate “is neither the cost of a specific plan nor necessarily the same as the government’s costs, which could be higher, depending on plans’ financing structures and the extent of crowd-out.” Crowd-out is like collateral damange. When you’re dropping money from the sky, some will inevitably strike innocent bystanders (i.e., the insured). To ensure you hit the uninsured with $122.6 billion, you need to drop a lot more than that amount.
Thus the full cost of covering the uninsured would be closer to — and possibly well over — $2 trillion.
Are Health Care Industry Lobbyists Really Proposing to Reduce Their Members’ Revenue by $2 Trillion?
I smell a rat. Lobbyists never advocate less revenue for their members. Ever. If they did, they would be fired and replaced with new lobbyists.
The industry wants universal coverage, because that means more customers and more revenue. But universal coverage is expensive: it could cost $2 trillion itself.
If you tax your way to $2 trillion, the people revolt. If you try to “free up” the money by cutting payments to the industry, the industry revolts. Senate Finance Committee Chairman Max Baucus (D-MT) says he has reforms that will reduce health care spending over time, but the Congressional Budget Office won’t recognize those assumed savings.
So the industry may simply be trying to help Sen. Baucus cook the books by signaling, “Hey CBO – we’ll make sure those reforms work!” – with every intention of fighting those spending reductions later on.
Health Policy Death Match: Klein vs. Ponnuru
I count both Ramesh Ponnuru and Ezra Klein as friends. (I’m so post-partisan.) Why, oh why must they force me to choose between them??
Ponnuru had an op-ed in yesterday’s New York Times where he reaffirmed his membership in the Anti-Universal Coverage Club. Klein responded in a way that’s sure to satisfy his base, but I think he left the reality-based community wanting. Are you ready for the fisk?
Klein suggests that if “80+ percent of Americans . . . think the system needs fundamental changes or a complete rebuild,” then 80+ percent of Americans must support universal coverage. Hmmm, bit of a stretch. In fact, I can recall one poll where nearly one-third of likely Democratic primary voters rejected universal coverage.
Klein suggests that giving consumers the freedom to avoid unwanted state health insurance regulations would mean that Arizonans wouldn’t get coverage for colorectal cancer screening, and that there would be no mammogram coverage in Idaho. Mmm, that’s good crazy. I refer my right honorable friend to the episode where The New Republic’s Jonathan Cohn made a similar claim about mandates for prostate and cervical cancer screening. I looked up the services covered by the plans made available to the Cohn family by the University of Michigan. It turned out that six out of the seven available plans cover both prostate and cervical cancer screening — even though Michigan requires insurers to cover neither. (I offered to wager Cohn a fancy dinner that his family has coverage for both, but I never heard back from him. Foolish, really, to let me know where he gets his insurance. Klein would never give me such an opening . . . or would he?) What Ponnuru proposes is to let Arizonans and Idahoans and everyone else choose what their health plan covers. Imagine that: people rationing medical care according to their preferences, rather than the preferences of employers, interest groups, bureaucrats, health policy wonks… Why Klein clings to such regulations despite zero evidence that they actually increase access to the targeted services is beyond me.
Klein criticizes Ponnuru for proposing to replace the current tax preference for job-based coverage with a tax credit available to everyone, much like John McCain proposed during his (latest) presidential campaign. Ponnuru cites a study estimating that tax credits would reduce the number of uninsured by 20 million. Klein counter-cites one study estimating that tax credits would have zero net effect on the number of uninsured, and a second study estimating that those who transition from job-based coverage to the “individual” or “non-group” market would pay an additional $2,000 per year for an identical policy. Klein’s criticisms sound persuasive — provided you know precious little about the topic. For one thing, the two studies Klein cites are actually the same study. Pity, really. Had Klein found a second study to support his position, perhaps it would not have been quite so flawed as the one he did find. Here’s what I wrote back in September about that study’s flaws:
Filed under: Cato Publications; Health, Welfare & Entitlements
What ‘Universal Coverage’ Really Means: Higher Taxes, Government Rationing
An editorial in today’s Wall Street Journal earns that page a membership in the Anti-Universal Coverage Club.
The editors explain that the universal-coverage scheme Massachusetts enacted in 2006 is a perfect microcosm of what congressional Democrats are trying to foist on the rest of the nation: compel universal coverage now, worry about the costs later.
Massachusetts is three years into that strategy, thus its experience shows us where that strategy leads. Much as my colleague Mike Tanner predicted (repeatedly), it leads to higher taxes and government rationing. The WSJ editors write:
The state’s overall costs on health programs have increased by 42% (!) since 2006.
Like gamblers doubling down on their losses, Democrats have already hiked the fines for people who don’t obtain insurance under the “individual mandate,” already increased business penalties, taxed insurers and hospitals, raised premiums, and pumped up the state tobacco levy. That’s still not enough money.
So earlier this year, [Gov. Deval] Patrick appointed a state commission to figure out how to control costs and preserve “this grand experiment”…
To Reform Health Care, Obama Must First Convince His Advisers
In The New Republic, Jonathan Cohn makes some interesting observations about how Barack Obama’s campaign and administration approach policy issues, particularly health care.
In early January, most of Barack Obama’s senior staff assembled with the president-elect . . . It was a pivotal moment in Obama’s transformation from candidate to commander-in-chief. Obama’s advisers had taken all of his campaign pledges, factored in his promise to reduce the deficit, and put together a provisional blueprint for governing. For the first time, Obama would get a sense of how his proposals fit together in the real world.
Does Cohn suggest that candidate Obama just threw out proposals without considering their cumulative, real-world impact? That Obama launched a new administration with insufficient planning?? Perish the thought.
Obama . . . said he was mostly happy with what his advisers had produced. Investments in energy and education, plus real progress on reducing the deficit–it was all in there, Obama noted. But then the president-elect turned to his one major concern: a key item that was not, in his opinion, sufficiently funded. “Here’s my guidance to you,” one participant recalls Obama saying to the group. “Protect health care.”
It wasn’t the first time that health care had seemed to get short shrift from Obama’s advisers. Nor would it be the last. Indeed, there were moments during the transition and the early weeks of the administration when it appeared that the push for comprehensive health care reform might collapse before it had even begun. During this time, a debate raged inside the administration, with some senior officials arguing that the new president should wade into health care gingerly–or even postpone it altogether–because it would cost too much, distract from other priorities, and carry huge political risks.
Ultimately, however, these arguments failed to carry the day, and health care reform, against what occasionally seemed like long odds, managed to find a sizeable place in Obama’s budget…
The divide among Obama’s counselors was never over whether to pursue health care reform or even what it should look like in the end . . . What divided Obama’s team was the question of how to pursue reform–in particular, how quickly.
That tension stretched back to the campaign, when Obama’s political strategists advised him to soft-pedal the topic. One of them was David Axelrod. Although personally acquainted with the flaws in our health care system because of his disabled daughter, he also understood public opinion: The middle-class voters whose support politicians covet were worried about the cost of insurance, but their enthusiasm for universal coverage seemed shallow. Obama, though, always insisted on keeping health care prominent in the election.
Why so much dissension in the ranks? Partly because the nation faces much more immediate problems.
Axelrod’s anxiety hadn’t dissipated since the election. And now he had a new ally in Larry Summers, whom Obama had appointed to head the National Economic Council. One concern for Summers was the diversion of presidential and staff attention from other issues, like the economy.
But the dissension is also because Obama’s advisers understand just how difficult it will be to achieve universal coverage.
Mostly, though, Summers worried about money. Experts generally believe it will take years before better use of information technology, more preventive care, and other reforms start to yield serious savings. At least in the short run, health care reform is therefore likely to add to the government’s financial burden–during a time of rising deficits. This made Summers uncomfortable.
How bad was the dissension?
Particularly in Obama’s absence, the voices of the skeptics often predominated. “It was scaring the hell out of the rest of us,” says one of the advisers who favored more aggressive action.
Ultimately, Obama insisted on putting $634 billion in his budget to fund health care reform. But Cohn acknowledges that Obama may be over-reaching.
At a time when the economy is collapsing, perhaps Obama can’t afford the distraction of such a major policy effort; at a time when the government is pumping out so much money for other priorities, perhaps it’s foolish to incur a new obligation that, if carried out by the book, still may not pay for itself in under ten years. And, even if it makes sense to seek health care reform this year, Obama’s decision to allocate health care money now could make the budget tougher to pass–inviting an extra political fight that might make reform even harder to achieve.
Nice thing about Cohn: he may be a high priest in the Church of Universal Coverage. But he’s a darned good journalist.
This Is Why Universal Coverage Is a Religion — and Not about Compassion or Saving Lives
I was invited to participate in an email/online/sorta exchange for the Washington Post yesterday. Unfortunately, the effort was spiked after just a few rounds of emails. But rather than let my participation go to waste, I thought I’d post one exchange that I think highlights why I’m not just being colorful when I describe supporters of universal health insurance coverage as the Church of Universal Coverage. I could summarize the exchange, but I’m lazy. So I’ll just copy and paste.
I wrote:
All the interest groups are meeting with all the right politicians and making all the right noises, thus the Church of Universal Coverage says the stars have aligned for fundamental reform… Everyone is at the table right now because no one wants to be on the menu. But when the Democratic leadership makes its intentions clear, today’s love-fest will turn into a bloodbath.
Andres Martinez of the New America Foundation (who owes me a taco al pastor) responded:
I am a proud member of the church, Michael. As New America’s own recent study on the urgency of reform — which reads like a strong courtroom closing argument — noted, how can the world’s most prosperous nation afford to have tens of thousands of its citizens die each year because they lacked access to health care? Health care reform is a moral imperative, so your reference to a church (um, even if sarcastic) is appropriate…
I replied:
The Institute of Medicine estimates that every year, about 20,000 Americans die because they lacked health insurance, but as many as 100,000 die from preventable medical errors. What moral code compels the Church of Universal Coverage to solve the first problem before addressing the second?
Filed under: Cato Publications; Health, Welfare & Entitlements
Orange County Register Slams SCHIP
The Orange County Register editorializes on the State Children’s Health Insurance Program expansion that President Obama just signed into law:
Sure enough, as Jonathan Gruber of MIT and Kosali Simon of Cornell demonstrated in a recent paper for the National Bureau of Economic Research, six of every ten families enrolled in SCHIP in recent years already had private health insurance, meaning that subsidized insurance was crowding out private insurance. As Michael Cannon, director of health policy studies at the libertarian Cato Institute put it to us, “Only in government is a program deemed to ‘work’ when it covers four uninsured children for the price of ten.”
The other fallacy embodied in SCHIP (and other programs) is that providing health insurance is the key to improving the health of poor and near-poor children. Helen Levy of the University of Michigan and David [Meltzer] of the University of Chicago medical school have explored extensively the fact that improving health is more complex than generally acknowledged. It turns out that targeted programs, policies that lead to increased incomes and even improved education offer more bang for the buck than providing insurance.
Given all this, it is not difficult to imagine that the real reason to expand SCHIP is to crowd out private health insurance, and when families are faced with fewer and less affordable choices, they’ll opt for a government-run or “single-payer” system. As P.J. O’Rourke once warned us, however, “If you think health care is expensive now, wait until it’s free.”
I would say that increasing incomes, improving education, or targeted health programs may be more cost-effective than expanding access to health insurance. No one really knows, which makes adopting a one-approach-fits-all strategy like SCHIP rather foolish.
I think it’s time to induct the Orange County Register’s editorial page into the Anti-Universal Coverage Club.
Filed under: Cato Publications; Health, Welfare & Entitlements
Destination Universal Coverage?
I’ll be appearing on the Destination Casa Blanca program to share my thoughts on the State Children’s Health Insurance Program and the question, “Is this legislation the first step to universal health care?”
I’m told that other guests will include someone from the Republican National Committee and the Obama administration. The host will be Ray Suarez, senior correspondent for The NewsHour on PBS.
The program will air this Thursday night (2/5) at 9pm EST, with encore presentations on Friday (12am) and Sunday (10:30am and 10pm). Destination Casa Blanca is easiest to find on DirecTV (438) and the Dish Network (843 & 9401). Otherwise, check here.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Tips for Blocking Socialized Medicine
Prominent health economist Victor Fuchs has an article in this week’s New England Journal of Medicine that all who care about freedom and health care reform should read. He discusses the array of forces that could be — and in my view, should be — employed to stop health care reform this year:
First, many organizations and individuals prefer the status quo. This category includes health insurance companies; manufacturers of drugs, medical devices, and medical equipment; companies that employ mostly young, healthy workers and therefore have lower health care costs than they would if required to help subsidize care for the poor and the sick; high-income employees, whose health insurance is heavily subsidized through a tax exemption for the portion of their compensation spent on health insurance; business leaders and others who are ideologically opposed to a larger role of government; highly paid physicians in some surgical and medical specialties; and workers who mistakenly believe that their employment-based insurance is a gift from their employer rather than an offset to their potential take-home pay. These individuals and organizations do not account for a majority of voters, but they probably have disproportionate influence on public policy, especially when their task is simply to block change.
Second, as Niccoló Machiavelli presciently wrote in 1513, “There is nothing more difficult to manage, more dubious to accomplish, nor more doubtful of success . . . than to initiate a new order of things. The reformer has enemies in all those who profit from the old order and only lukewarm defenders in all those who would profit from the new order.” This keenly observed dynamic, known as the “Law of Reform,” suggests that a determined and concentrated minority fighting to preserve the status quo has a considerable advantage over a more diffuse majority who favor reform but have varying degrees of willingness to fight for a promised but uncertain benefit.
Third, our country’s political system renders Machiavelli’s Law of Reform particularly relevant in the United States, where many potential “choke points” offer opportunities to stifle change. The problem starts in the primary elections in so-called safe congressional districts, where special-interest money can exert a great deal of influence because of low voter turnout. The fact that Congress has two houses increases the difficulty of passing complex legislation, especially when several committees may claim jurisdiction over portions of a bill. Also, a supermajority of 60% may be needed to force a vote in the filibuster-prone Senate.
Fourth, reformers have failed to unite behind a single approach. Disagreement among reformers has been a major obstacle to substantial reform since early in the last century. According to historian Daniel Hirshfield, “Some saw health insurance primarily as an educational and public health measure, while others argued that it was an economic device to precipitate a needed reorganization of medical practice. . . . Some saw it as a device to save money for all concerned, while others felt sure that it would increase expenditures significantly.” These differences in objectives persist to this day.
That last item speaks to a divide among left-leaning health care reformers that was discussed by Drew Altman in a column at the Kaiser Family Foundation web site:
Read the rest of this post »
Filed under: Government and Politics; Health, Welfare & Entitlements
Coordinated Care Requires Free Markets
In their zeal to achieve universal health insurance coverage, President-elect Barack Obama and congressional Democrats are likely to exacerbate a real crisis in America’s health-care sector.
Americans generally receive medical care from a fragmented collection of doctors, hospitals, pharmacists, and other health care providers. All too often, those providers don’t communicate and collaborate. The result is too many unnecessary services and too many medical errors. The problem is particularly acute when it comes to complex patients with multiple conditions.
In a paper released today by the Cato Institute titled, “Does the Doctor Need a Boss?“, Arnold Kling and I explain that government prevents coordination of care, and that improving coordination requires reducing government’s role:
Medical care typically lacks coordination, in part because payment systems such as Medicare have not kept pace with technology and patients’ changing needs, and because many doctors are unwilling to cede authority to a boss. Medicare and other payers continue to pay doctors according to the independent-craftsman model. For example, Medicare’s payment system generally does not reward coordination. Instead, Medicare and other fee-for-service payers tend to favor technologically intensive specialist services over those of general practitioners who might be best suited to play the role of project manager…
In the home-building analogy, it is as if the concrete contractor, the drywall contractor, the electrician, and the plumber all refuse to work under a general contractor. Instead, they each try to do their jobs independently, regardless of the impact on the rest of the project.
The culprit is not market forces, but government interventions that protect physicians from competition from better-coordinated providers.
Licensing of medical professionals, state health insurance regulations, corporate-practice-of-medicine laws, and policies that encourage fee-for-service payment (i.e., Medicare, Medicaid, and the federal tax code) hold at bay the market forces that would improve coordination of care…
Improving coordination of care requires two consumer-empowering reforms:
First…consumers should control the money that purchases their health insurance, and should be free to choose their insurer and health care providers.
Second, state licensing regulations make it difficult for corporations to design optimal work flows for health care delivery. Under institutional licensing, regulators would instead evaluate how well a corporation treats its patients, not the credentials of the corporation’s employees. Alternatively, states could recognize clinician licenses issued by other states. That would let corporations operate in multiple states under a single set of rules and put pressure on states to eliminate unnecessarily restrictive regulations.
By centralizing control in Washington, the ruling Democratic left will give new strength to the protectionist forces that have blocked quality improvements in health care.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Obama Proposes Eliminating Medicare Advantage, Ousting 9 Million Seniors from Their Health Plans
On This Week with George Stephanopolous, president-elect Barack Obama proposed eliminating the ENTIRE Medicare Advantage program:
We’ve got to eliminate programs that don’t work, and I’ll give you an example in the health care area. We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients but doesn’t necessarily make people on Medicare healthier.
And if we eliminate that and other programs, we can potentially save $200 billion out of the health care system that we’re currently spending, and take that money and use it in ways that are actually going to make people healthier and improve quality. So what our challenge is going to be is identifying what works and putting more money into that, eliminating things that don’t work, and making things that we have more efficient.
Medicare Advantage allows seniors to choose a private health plan rather than get their health coverage from the traditional Medicare program. The Left has complained Medicare Advantage costs taxpayers more than if those seniors remained in the traditional Medicare program. (I agree, though the reason is not because government is more efficient than private insurance.) The Left has long dreamt of eliminating Medicare Advantage, in part because it poses a threat to their plans for a completely government-run, single-payer health care system. Yet the Left has had to settle for attacking and attempting to eliminate the “overpayments” that Medicare Advantage plans receive. Of course, one can eliminate Medicare Advantage stealthily by reducing payments to private plans until none will participate.
For Obama to suggest eliminating Medicare Advantage outright, however, is extraordinary. First, Obama made a campaign promise that he will let Americans keep their current health insurance. Eliminating Medicare Advantage would force 9 million seniors out of their current health plans and back into traditional Medicare. Second, a man who wants to reform America’s health care sector ought not begin the effort by proposing to take something away from seniors, America’s largest and most politically active voting block. Maybe the Obama folks haven’t learned the lessons of the Clinton health care battle.
Eliminating Medicare Advantage would be bad for non-seniors, too, because it would block innovations that make medicine better, cheaper, and safer. The main reason that the U.S. health care sector fails to coordinate care, fails to provide patients with electronic medical records, and fails to prevent medical errors is that whenever providers try to do those things, the traditional Medicare program’s change-resistant payment system punishes them for doing so. (Universal coverage kills.) Medicare Advantage plans use different financial incentives that actually encourage coordination, EMRs, and error reduction. What a novel thought…
I thought Obama’s remarks were a misprint when I first read them. But then I saw the video.
How Should Developing Nations Regulate Health Care?
The latest issue of the journal Health Affairs publishes a letter I wrote to the editors concerning articles on health care regulation in China and India. The entire letter follows (links added):
Recent articles on China and India (Jul/Aug 08) share the assumptions that markets for medical care and health insurance require extensive government regulation and that each nation should focus on universal coverage.
I am unfamiliar with the history of regulation in those nations. But the track record of clinician and insurance regulation in the United States is not encouraging. Both have been used by incumbents to block competition, leading to higher costs and lower quality. Gerald Bloom and colleagues worry that unless India imposes clinician licensing, “the natural process of competition is expected to force each insurer to come up with its own accreditation policy and reimbursement procedures.” Does that mean that prepayment would compete openly with fee-for-service? And that physicians could not increase costs by blocking health plans from employing mid-levels when appropriate? Dear God—not that.
Ashoke Bhattacharjya and Puneet Sapra write, “It is encouraging to note that notwithstanding the myriad issues and challenges discussed above, both countries are developing a constructive working framework to balance the interests of government, providers, employers, the insurance industry, and patients, en route to the goal of universal coverage and fairness in health care financing.” That’s just the problem: a policy of universal coverage puts too much power in the hands of elites. It inevitably “balances” those interests, when patients’ interests should trump all others. Does not the fact that “these countries lack the fiscal resources required for universal coverage because of their…low average wages” suggest that many residents have more pressing needs than health insurance? For things that might just deliver greater health improvements? In a profession where universal coverage is a religion, such questions are heresy,I know.
China and India are in the process of a slow climb out of poverty. It is entirely possible that the best thing those governments could do to improve these markets and population health would be to enforce contracts, punish torts, contain contagion, and nothing else.
Michael F. Cannon
Cato Institute, Washington, D.C.
Filed under: Health, Welfare & Entitlements; International Economics and Development
Jindal’s Rx: the Most Coordinated System of Care that No One Can Access
Louisiana Gov. Bobby Jindal’s (R) proposed Medicaid reforms are getting a lot of press. Jindal proposes to expand eligibility for Medicaid, enroll Medicaid patients in private managed-care plans, and do other things to improve the quality of care. Writing in The American Spectator, Joseph Lawler says the approach is “market-based” and “could forestall universal health care.”
A friend asked my thoughts about Jindal’s proposal. Here’s what I emailed back:
Why is it that when politicians propose giving taxpayer dollars to private companies, people think that’s “market-based”?
Jindal’s plan is not market-based reform. As a general matter, market-based charity care is just that: private charity. So the only market-based Medicaid reforms are those that remove people from the Medicaid rolls — e.g., federal block grants, eligibility restrictions, etc.
Jindal wants to expand eligibility. For a welfare program. And we call that market-based?
Jindal may be able to improve the quality of care through greater coordination. Which looks good on paper. But if the quality of care in Medicaid improves, more people will enroll. Only 2/3 of those eligible actually sign up for the program. (Many of the 1/3 who don’t enroll actually have private coverage.) So improving Medicaid benefits could cause enrollment to increase 50 percent. And that’s before Jindal expands the eligibility rules.
With all the additional cost pressure, what’s going to happen to Medicaid payments and enrollees’ access to docs? (There are reasons why Medicaid pays so little.)
Louisiana’s Medicaid program could someday achieve the most coordinated system of care that no one can access. Should we pull people out of private health plans for that?
Expanding enrollment in a government-run health plan is supposed to forestall universal coverage? Discerning consumers of market-based ideas should keep shopping.
Filed under: Cato Publications; Health, Welfare & Entitlements
To Stimulate the Economy, Defeat Health Care Reform
The Church of Universal Coverage is telling us that national health insurance will stimulate economic growth.
- Senate Finance Committee chairman Max Baucus (D-MT) says universal health insurance coverage is the key to a healthy economy.
- MIT economist Jonathan Gruber says “health care reform is good for our economy.”
- Business Week columnist Chris Farrell writes, “Universal coverage would stimulate the economy [and] boost the financial security of ordinary Americans.”
That seems to contradict their usual spiel — which happens to be correct — that America’s health care sector is wasteful and inefficient. Americans spend twice the amount that other advanced nations spend on medical care, yet we’re not noticeably healthier. Researchers estimate that one third of U.S. medical spending produces nothing at all — that’s about $700 billion wasted per year. How is pumping more money into such an inefficient economic sector supposed to stimulate growth?
It also doesn’t seem to square with the facts. If anything, the economy appears to grow faster when Congress rejects universal coverage.
- After Congress defeated President Harry Truman’s proposal for national health insurance in 1949, the nation enjoyed four years of robust economic growth.
- The defeat of the Clinton Health Security Act in 1994 was followed by six years of robust economic growth.
- The largest step Congress has taken toward universal coverage was when it launched Medicare and Medicaid in 1966. Real economic growth averaged 5.7 percent in the four years prior to 1966, but only 2.7 percent in the four years that followed.
If history is any guide, politicians who want to stimulate the economy should be trying to defeat universal coverage.
Source: Bureau of Economic Analysis
The right kind of health care reform will reap economic dividends. Letting consumers control their health care dollars and choose their own health plan will make us healthier and wealthier by encouraging innovation, eliminating wasteful spending, and making health care more affordable. Nationalizing health insurance, on the other hand, will suppress innovation and encourage wasteful spending, as evidenced by Medicare, Medicaid, etc.
My favorite New Yorker cartoon shows a bar patron telling his compatriot, “I figure if I don’t have that third Martini, then the terrorists win.“ People will seize on a crisis to justify, well . . . anything.
You’re Gonna Need a Bigger Boat
The Congressional Budget Office released two much-anticipated reports on health care today. I’m just on the first page of the first report and already I found this gem:
By themselves, premium subsidies or mandates to obtain health insurance would not achieve universal coverage.
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