Author Archive
Medicare Part D: Who Is the Main Constituency?
Watson Wyatt Worldwide has just released a survey showing — again — that Medicare Part D’s employer subsidies and the availability of the new stand-alone drug plans are bailing out employers who can no longer deliver on their promises to retirees:
Despite widespread use of the Medicare federal subsidy, a vast majority of employers are planning to curtail their retiree medical plans for current and future retirees in the next five years…
Fourteen percent of employers plan to eliminate the benefit entirely for future post-65 retirees and 6 percent plan to eliminate it for their current post-65 retirees…
The lesson from the Pension Benefits Guarantee Corporation and other corporate bailouts could not be more clear: if government lets corporations escape the costs of making promises they can’t keep, we’ll get more corporations making promises they can’t keep.
For Affordable Health Insurance, Cross the Delaware
My brother (whose name, no joke, is Eugene) just moved to New Jersey with his wife (Katryce) and the two cutest nieces you ever saw (Helaina and Deaven).
New Jersey is known as health insurance hell, so I went to eHealthInsurance.com to see how much it would cost Euge to purchase a family policy in New Jersey’s highly regulated individual market. Answer: a lot. In fact, some of his options cost more than my mortgage. Meanwhile, our college buddy in Doylestown (Mike) has over five times as many choices for covering his wife and two daughters in Pennsylvania’s individual market. And the most expensive policy in PA is about the same price as the least expensive plan in NJ. If Euge were just to move his family in with his old roommate, he could save thousands on health insurance.
…or, Congress could just tear down the senseless trade barriers that keep New Jerseyites from purchasing health insurance from Pennsylvania.
Get the full story here.
Health Care Provider Finds No Tragedy in This Commons
An article from the Minneapolis Star-Tribune on competition between physicians and nurse practitioners includes this endearing quote, which encapsulates how some providers see the U.S. health care sector:
The American Medical Association is against giving full autonomy to nurse practitioners, stating as its official policy position that a physician should be supervising nurse practitioners at all times and in all settings…
“There is an element within the physician community that gets a little antsy. … They think it’s going to take away revenue and business from them,” said Dr. Jan Towers, director of health policy for the American Academy of Nurse Practitioners. “Really, there’s more than enough for everybody.”
Cue “We’re in the Money”….
For more, be sure to check out Medicare Meets Mephistopheles, to be released by the Cato Institute in September.
“Crisis of Abundance” Makes Executives’ Reading List
The leadership of the National Chamber Foundation (the educational arm of the U.S. Chamber of Commerce) recently recommended to its board of directors a list of 10 “Books that Drive the Debate.” Among the recommended titles was Crisis of Abundance, a Cato Institute book by adjunct scholar Arnold Kling and the only health policy book to make the list.
The foundation’s board is a bipartisan group of influential figures from the business, political, and policy spheres. The NCF also plans to recommend the 10 titles to all Chamber of Commerce members.
The complete list is pasted below. NCF chairman Bill Little told me today that Crisis of Abundance will be the first book they send out to their board members.
“Books that Drive the Debate”
NCF’s Top 10 Reading Selections
- Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy by Moises Naim
- Three Billion New Capitalists: The Great Shift of Wealth and Power to the East by Clyde Prestowitz
- The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy by Peter Huber and Mark Mills
- In Our Hands: A Plan to Replace the Welfare State by Charles Murray
- Our Brave New World by Charles Gave, Anatole Kaletsky, and Louis-Vincent Gave
- The Sarbanes-Oxley Debacle: What We’ve Learned; How to Fix It by Henry N. Butler
- An Army of Davids: How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths by Glenn Reynolds
- The Innovator’s Solution by Clayton Christensen and Michael Raynor
- Crisis of Abundance: Rethinking How We Pay for Health Care by Arnold Kling
- Education Myths What Special-Interest Groups Want You To Believe About Our Schools – And Why It Isn’t So by Jay P. Greene
(Another Cato connection: in March, the Cato Institute held a book forum for Glenn Reynolds’ An Army of Davids: How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths.)
The leadership of the NCF evidently agreed with Marginal Revolution publisher Tyler Cowen that Crisis of Abundance “is one of the most important books written on health care.”
Well That’s Another Fine Mess You’ve Gotten Us into
AARP and Families USA are screaming about rising prescription drug prices, without and within Medicare Part D. The New York Times is calling for price controls on drugs purchased under Part D.
A 2004 study by the Manhattan Institute estimated that applying the type of price controls found in Medicaid and the Veterans Health Administration to Medicare would reduce pharmaceutical R&D by nearly 40 percent and reduce Americans’ aggregate lifespans by 277 million life-years.
In other words, the logic of “negotiating drug prices” is that everyone under the age of 65 should die one year sooner so 42 million geezers (sorry, Dad) can save a few bucks on Lipitor. But is the logic of opposing price controls that workers should have to pay through the nose to pump these geezers full of drugs?
Part D puts us all in a no-win situation: either pay up and bankrupt the nation or control prices, suppress R&D, and prepare to check out early. It is a trap, set by the Left and sprung by the GOP.
That’s why — if the repeal train has left the station — the only sane option left is a radical overhaul of the entire program. With a little luck, Republicans will come to see the box in which they have put themselves and rediscover their interest in Medicare reform.
“Cursive Is Illegal”
Evergreen State elementary school teachers, take note: Olympia is moving against some of your more affluent failures.
Everyone knows that doctors’ horrible handwriting causes problems for patients and pharmacists. As of this month, it is illegal for doctors in Washington state to write prescriptions in cursive. (Will italics be next??)
The sad thing is that health care markets have become so calcified that this really, really dumb law might actually enhance efficiency. I just hope we won’t have to wait long before some medicine-socializer argues that this proves that government planning is superior to free-market health care. (Any takers?)
Fuzzy Math
This one is a few days old, but last week the Bush administration lowered by 500,000 its rah-rah-Medicare-Part-D estimate of the number of seniors with drug coverage. Seems they double-counted half a million veterans who had enrolled in a private Part D drug plan. Oops.
Two observations.
First, given the administration’s track record, journalists should just start using disclaimers like, “Remember, these Medicare figures were provided by the Bush Administration. Wink, wink.”
Second, I’m not a big fan of either Part D or the Veterans Health Administration. But left-wingers love the latter and hate the former. I wonder how they explain veterans leaving their preferred model for the one entitlement program they detest.
Thud, Part III
Stuart Butler responds here to my critique of his paper/proposal to break the “health care reform stalemate.” As one might expect, the Heritage guy and the Cato guy agree that federalism is good because “state experimentation permits a comparison of approaches to solving social problems.” Those social problems include low-quality, unaffordable health care and other consequences of excessive government.
My skepticism of Stuart’s proposal stems from the fact that he would have the federal government (1) offer financial incentives that induce states to conduct policy experiments and (2) judge the success of those experiments. That actually runs counter to the idea of federalism and sets up a process where advocates of markets are bound to lose.
State officials know that if they don’t maintain or improve quality of life, people and jobs leave. Thus the freedom to choose one’s state of residence both encourages policy experiments and holds states accountable for them. That decentralized accountability mechanism pretty much cannot be fouled up unless a state prohibits its residents to leave or (more likely) finds some way to shift the costs of its experiments to other states.
Having the feds offer states cash to induce policy experiments would favor collectivist over government-limiting experiments. First, it would shift the tax burden of collectivist experiments to other states and therefore make such proposals more attractive to state legislators. (That is the #1 problem with Medicaid.) Proposals to limit government would be on the losing end of that concentrated benefits/diffuse costs problem. By definition, rolling back government involves taking something away from an organized interest group. Were any state to deliver such a proposal to Stuart’s commission, it would have to arrive tied to other proposals that buy off those interest groups. Thus states would present Stuart’s commission with proposals that either increase government intervention or (at best) have no impact on government intervention. On net, that means more government intervention.
Stuart has more confidence than I do that states would propose market-based reforms. As evidence, he cites recent experiments with defined contributions and health savings accounts in Medicaid. But here I think Stuart makes my point for me. As I explain elsewhere, those are not government-limiting reforms. Vouchers and HSAs make Medicaid more like cash assistance, and therefore just trade some of Medicaid’s current problems for problems associated with cash assistance (read: welfare checks). As long as Congress keeps giving states a dollar-for-dollar incentive to expand their Medicaid programs (what I call “pay for dependence”), vouchers and HSAs likely will increase Medicaid spending.
But suppose a state proposed a fantastic health care reform: eliminating the tax exclusion for employer-provided health insurance and lowering marginal tax rates. That and other tax-based reforms would probably fail because even some people who are generally supportive of the concept (like me) would oppose giving the feds the ability to write different tax rules for different states.
It is true that Congress could reject the inevitably collectivism-heavy package of proposals that the commission would submit. I personally have no confidence that any Congress would do something so sensible, much less that this Republican Congress would. But even if we could rely on Congress to act sensibly, why tempt them?
Finally, having the feds judge the results would create a centralized accountability mechanism susceptible to special interest lobbying, which Stuart acknowledges “would probably help those who want to expand government.” It is in the forum of Stuart’s commission, rather than in society at large, where I fear market-based approaches would not survive.
Common Misconflations
A recent Ezra Klein post is a much more interesting read when decoded using this key:
U.S. health care sector ≠ free market
For-profit ≠ free-market
Non-profit ≠ public provision
Non-profit ≠ tax-exempt
Chuck Grassley ≠ free-marketeer
(Okay, so the Chuck Grassley one is not so common.)
Filed under: General; Health Care; Regulatory Studies; Tax and Budget Policy
A Living Monument . . . to So Much
A lovely article about Sen. Robert C. Byrd (D-WV) by Michael Grunwald in Sunday’s Washington Post shows the limits of Democrats’ fealty to pluralism, of Republicans’ devotion to limited government, and of the ability of congressional pork to lift a state out of poverty.
Thud, Part II
In an email, Stuart Butler of the Heritage Foundation took issue with my characterization of his proposal (which has now been introduced as federal legislation) to foster health policy experimentation among the states. So I thought I might elaborate. (Readers can get the particulars of the proposal in Stuart’s paper.)
The system Stuart proposes seems predisposed to increase government health care spending and to produce little or no free-market reform.
Thud
Yesterday, the Heritage Foundation released a paper outlining another big-government health care proposal, which Sens. George Voinovich (R-OH) and Jeff Bingaman (D-NM) have turned into legislation.
Short version: Congress creates a commission, gives more money to the states.
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