Today’s Washington Post contains an article titled, “FDA Considers Revoking Approval of Avastin for Advanced Breast Cancer.”  An excerpt:

The debate over Avastin, prescribed to about 17,500 women with breast cancer a year, has become entangled in the politically explosive struggle over medical spending and effectiveness that flared during the battle over health-care reform: How should the government balance protecting patients and controlling costs without restricting access to cutting-edge, and often costly, treatments?

A better question is: why should the government be the one to strike that balance?  Why shouldn’t some women be able to sign up for a health plan that covers Avastin, while others are free to make a different choice?

Why Should Politicians and Bureaucrats Decide Whether Breast-Cancer Patients Can Take Avastin? is a post from Cato @ Liberty - Cato Institute Blog

Christopher Weaver of Kaiser Health News has an excellent article in today’s Washington Post on the various government agencies that will now be deciding what health insurance coverage you must purchase, and how many of those decisions will ultimately fall to lobbyists and politicians:

For years, an obscure federal task force sifted through medical literature on colonoscopies, prostate-cancer screening and fluoride treatments, ferreting out the best evidence for doctors to use in caring for their patients. But now its recommendations have financial implications, raising the stakes for patients, doctors and others in the health-care industry.

Under the new health-care overhaul law, health insurers will be required to pay fully for services that get an A or B recommendation from the U.S. Preventive Services Task Force…[which] puts the group in the cross hairs of lobbyists and disease advocates eager to see their top priorities — routine screening for Alzheimer’s disease, diabetes or HIV, for example — become covered services.

And it’s not just the USPSTF that will be deciding what coverage you must purchase:

[P]lans must also cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices, as well as screening practices for children that have been developed by the Health Resources and Services Administration in conjunction the American Academy of Pediatrics. Health plans will also be required to cover additional preventative care for women recommended under new guidelines that the Department of Health and Human Services is expected to issue by August 2011.

The chairman of the USPSTF says the task force will try “to stay true to the methods and the evidence… the science needs to come first.”  A noble sentiment, but as my colleague Peter Van Doren likes to say, “When politics and science conflict, politics wins.”  Witness how industry lobbyists have killed or neutered every single government agency that has ever dared to produce useful comparative-effectiveness research.  (You’re next, Patient-Centered Outcomes Research Institute!)

When government agencies are making non-scientific value judgments–e.g., are these studies reliable enough to merit an A or B recommendation? what should be the thresholds for an A or B recommendation? will the benefits of mandating this coverage outweigh the costs?–politics does even better.  Witness Sen. Barbara Mikulski (D-Md) overruling a USPSTF recommendation when she “inserted an amendment in the [new] health-care law to explicitly cover regular mammograms for women between 40 and 50. ”

Speaking of value judgments, the one flaw in Weaver’s article is that it inadvertently conveys a value judgment as if it were fact.  He writes that the mandate to purchase coverage for preventive services is “good news for patients” and that 88 million Americans “will benefit.”  Whether the mandate is good news for patients depends on whether patients value the added coverage more than the additional premiums they must pay.  (The administration estimates that premiums for affected consumers will rise an average of 1.5 percent.  One insurer puts the average cost at 3-4 percent of premiums.  Naturally, some consumers will face above-average costs.)  Whether the benefits outweigh the costs is ultimately a subjective determination. (The best way to find out, as it happens, is to let consumers make the decision themselves.)

Your Health Insurance, Designed by Lobbyists is a post from Cato @ Liberty - Cato Institute Blog

Today, the Obama administration issued new health insurance regulations as part of its effort to implement ObamaCare.  According to The New York Times:

the rules appear to fall short of the sweeping commitments President Obama made while trying to reassure the public in the fight over health legislation.

One of those commitments was that people who are satisfied with their health insurance will be able to keep their existing health plans. Of course, there is a tension between that goal and ObamaCare’s goal of requiring every American to purchase a minimum amount of health insurance coverage.

The new regulations explain how the government will interpret ObamaCare’s “grandfather” clause, which allows some health plans to continue as they exist today. If an insurer makes too many changes to its health plan, or if an employer or individual purchaser selects a different health plan, then the consumer loses the protection of ObamaCare’s grandfather clause. The consumer must then purchase the full array of coverage that ObamaCare requires, which can increase premiums significantly.

How many Americans will lose this protection?  Again, The Times:

About half of employer-sponsored health plans will see such changes by the end of 2013, the administration says in an economic analysis of the rules.

What are some of the ways that consumers can lose this protection?

If, for example, an employer is paying 60 percent of the cost of family coverage, it would run afoul of the rules if it cut its share to 50 percent.

An employer would also lose its exempt status if it increased co-payments for doctor’s visits to $45, from $30 — a 50 percent increase — while medical inflation was 8 percent…

An insurer loses its special protection…if, for example, it requires patients to pay 25 percent of the bill for surgery, rather than the 20 percent charged in the past…

If [insurers] want to retain their grandfathered status, they cannot reduce any annual dollar limit that was in place on March 23.

The upshot of these regulations is this:  Health premiums, which were going to keep rising anyway, will rise even higher as a result of ObamaCare.  If employers or consumers try to cope with those rising premiums by paring back the amount of coverage they purchase, they lose their “grandfather” protections, and ObamaCare forces them to purchase even more coverage.  Damned if you do, damned if you don’t.

The requirement that employers sustain their “contribution” to the cost of health benefits, meanwhile, will hide ObamaCare’s effect on health insurance premiums.  Health economists agree, almost universally, that the “employer contribution” is a fiction; employers merely deduct from the employee’s overall compensation package whatever they pay toward health benefits.  In other words, the employee pays for her health benefits, not the employer.  Forcing employers to maintain their current “contribution” essentially requires them to hide much of ObamaCare’s cost in the form of lower wages, which workers are less likely to associate with the law than rising premiums.

ObamaCare Regs Will Increase Premiums, Reduce Wages, Force Americans to Change Coverage is a post from Cato @ Liberty - Cato Institute Blog

A correspondent for The Economist, whose initials are M.S., posts this on the Democracy in America blog:

[T]he new health-care-reform law passed in March is an entirely private-insurer, free-market-based reform. If someone were to refer to it as a “government takeover of the health-care sector”, that person would hold a factually incorrect ideological belief.

I wonder what convinced M.S. that the new health care law is an entirely free-market-based reform.  Was it the expansion of the government’s Medicaid program to another 16 million Americans?  Was it the 19-million-plus other Americans who will receive government subsidies to purchase private health insurance? Was it the new price controls that the law imposes on health insurance?  Or the price and exchange controls that it will extend to even more of the market?  Was it the dynamics those regulations set in motion, which will reduce variety and innovation in health insurance?  Was it the mandates that require private actors to spend their resources according to the wishes of the state?  Or the new federal regulations that will shape every health insurance plan in the United States, whether purchased through the employer-based market, the individual market, or the new health insurance “exchanges”?  Was it the half-trillion dollars of (explicit) tax increases over the next 10 years?  

I wonder what it is about this law that M.S. thinks is consonant with the principles of a free market.  Perhaps we have a different idea of what “free” means.

M.S. lists other “factually incorrect beliefs,” including:

that the Clinton plan would deny patients their choice of doctor, and that the health-care-reform bills in Congress at the time involved government “death panels” that could decide to withhold care from elderly patients on a cost-benefit basis.

I won’t dredge up the Clinton health plan.  But I have previously demonstrated that, when Sarah Palin claimed that President Obama wanted to give a government panel the power to deny medical care to the elderly and disabled based on cost-effectiveness criteria, the president had in fact proposed a panel with the power to do exactly that.

I agree with M.S. about this much: “once people are exposed to false information, it’s extremely difficult to convince them it’s false.”

What Do The Economist‘s Bloggers Think a Free Market Is, Anyway? is a post from Cato @ Liberty - Cato Institute Blog

George Avery is an assistant professor of public health at Purdue University.  In today’s Daily Caller, Avery rebuts claims that the Obama health plan would improve public health:

The idea that health care contributes significantly to population health is both intuitively appealing and untrue….

In fact, federal “reform” often hurts the public health system. Both public health and health care experts have criticized Medicare and Medicaid, enacted by Congress in 1965, for changing the focus of health care practitioners from prevention to treatment….

Requiring all Americans purchase health insurance, which the current bills hope to do, would not address the underlying socio-economic issues at the root of most public health problems….

Indeed, access to health care can help individual patients, but can also aggravate some public health problems…. High rates of surgical intervention increase the risk and spread of drug resistant infections like MRSA.

Avery is the author of the Cato Institute briefing paper, “Scientific Misconduct: The Manipulation of Evidence for Political Advocacy in Health Care and Climate Policy.”

Would ObamaCare Improve Public Health? Probably Not. is a post from Cato @ Liberty - Cato Institute Blog

I’ve already posted two series of such queries.  But every day brings new questions to mind.  So here are a few more:

• What does it say that pharmaceutical-industry lobbyists are meeting with House Democrats to write this legislation behind closed doors?  Or that the pharmaceutical industry is preparing to spend millions of dollars on advertisements in support of the legislation?
• Does it trouble you that a former federal judge writes, “Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another“?
• Does it trouble you that Speaker Pelosi says of the proposed “deeming” strategy, “I like it because people don’t have to vote on the Senate bill“? (Emphasis added.)
• What does it say that left-of-center The Washington Post editorializes that the Democrats’ endgame seems “dodgy” and “threatens to turn into something unseemly and, more important, contrary to Democrats’ promises of transparency and time for deliberation”?
• What does it say about the feasibility of the Obama health plan that Speaker Pelosi is drawn to the “deeming” strategy, which she once opposed in a court of law?

Questions for Thoughtful ObamaCare Supporters, Part III is a post from Cato @ Liberty - Cato Institute Blog

Massachusetts state treasurer and recent Democrat Timothy Cahill has harsh words for the health plan foisted on his state and the identical plan that President Obama is trying to foist on the nation.  From The Boston Globe:

“If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years,” Cahill said in a press conference in his office.

Echoing criticism leveled by congressional Republicans in recent weeks, Cahill said, “It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country.”

[T]he state’s health insurance law…Cahill said, “has nearly bankrupted the state.”

Cahill said the law is being sustained only with the help of federal aid, which he suggested that the Obama administration is funneling to Massachusetts to help the president make the case for a similar plan in Congress.

“The real problem is the sucking sound of money that has been going in to pay for this health care reform,” Cahill said. “And I would argue that we’re being propped up so that the federal government and the Obama administration can drive it through” Congress.

Commonwealth Connector, the independent state agency established to help residents find the health insurance, has “totally failed,” to create competition and connect people with affordable insurance, Cahill said, pointing out that 68 percent of the residents it serves receive subsidized care.

“We haven’t done anything about driving down costs,” Cahill said. “We haven’t helped small business. We haven’t changed the way we pay for health care and the way we deliver it.”…

Asked for solutions today, Cahill said he would seek to “level the playing field” between hospitals that charge different rates for similar procedures, seek to increase competition by allowing health insurance companies plans to sell plans across state lines, and would slash benefits mandated under state law.

For more on the Massachusetts health plan, see “The Massachusetts Health Plan: Much Pain, Little Gain.”

Massachusetts Treasurer Blasts RomneyCare and, Equivalently, ObamaCare is a post from Cato @ Liberty - Cato Institute Blog

Ezra Klein quotes the Congressional Budget Office’s latest cost estimate of the Senate health care bill when he writes:

“CBO expects that the legislation would generate a reduction in the federal budgetary commitment to health care during the decade following 2019,” which is to say that this bill will cover 30 million people but the cost controls will, within a decade or so, leave us spending less on health care than if we’d done nothing.  That’s a pretty good deal. But it’s not a very well-understood deal.

Indeed, because that’s not what the CBO said.

First, the CBO said the “federal budgetary commitment to health care” would rise by $210 billion between 2010 and 2019 under the Senate bill.  Then, after 2019, it would fall from that higher level.  And it could fall quite a bit before returning to its current level.

Second, the “federal budgetary commitment to health care” is a concept that includes federal spending on health care and the tax revenue that the federal government forgoes due to health-care-related tax breaks, the largest being the exclusion for employer-sponsored insurance premiums.  If Congress creates a new $1 trillion health care entitlement and finances it with deficit spending or an income-tax hike, the “federal budgetary commitment to health care” rises by $1 trillion.  But if Congress funds it by eliminating $1 trillion of health-care-related tax breaks, the “federal budgetary commitment to health care” would be unchanged, even though Congress just increased government spending by $1 trillion.  That’s what the Senate bill’s tax on high-cost health plans does: by revoking part of the tax break for employer-sponsored insurance, it makes the projected growth in the “federal budgetary commitment to health care” appear smaller than the actual growth of government.

Third, the usual caveats about the Senate bill’s Medicare cuts, which the CBO says are questionable and Medicare’s chief actuary calls “doubtful” and “unrealistic,” apply.  If those spending cuts don’t materialize, the “federal budgetary commitment to health care” will be higher than the CBO projects.

Fourth, Medicare’s chief actuary also contradicts Klein’s claim that the Senate bill would “leave us spending less on health care than if we’d done nothing.”  The actuary estimated that national health expenditures would rise by $234 billion under the Senate bill.

And really, Klein’s claim is a little silly.  Even President Obama admits, “You can’t structure a bill where suddenly 30 million people have coverage and it costs nothing.”

The Senate Bill Would Increase Health Spending is a post from Cato @ Liberty - Cato Institute Blog

Noting that premium increases, such as Anthem’s proposed 39-percent hike in California, have caused individuals and employers to purchase less coverage, Kaiser Family Foundation president Drew Altman writes:

Rising health care costs and insurance company practices are leading not just to more expensive premiums, but to skimpier, less comprehensive coverage as well; slowly redefining what we have known as health insurance. To be sure, some economists argue that this is precisely what should happen…But this is not likely how regular people see it. Appropriate cost sharing is one thing, but we may be reaching the point in the individual market where the policies many people have simply cannot be considered meaningful coverage.

Of course, this is the whole idea behind President Obama’s proposed tax on high-cost health plans: higher prices will cause people to purchase less coverage, which will temper health care spending.

But whether Altman is correct depends on what the meaning of “meaningful” is.  When individuals pare back the amount of insurance they purchase, they are revealing what they consider to be meaningful coverage.  (The same is true when employers opt for less-comprehensive coverage, though employers’ revealed preferences are obviously a poor proxy for what their workers value.)

If Altman thinks the coverage that individuals are choosing “cannot be considered meaningful coverage” (note the passive voice), he is implicitly stating that individuals are not the best judges of their own welfare.  And the only way to devise an alternative definition of meaningful coverage is through the political process.

It is difficult to argue that the political process does a better job of selecting meaningful coverage.  That process forces many consumers to purchase coverage that they don’t find meaningful (e.g., chiropractic, acupuncture, circumcision), that they find offensive (e.g., abortion, contraception, in-vitro fertilization), or for treatments that are downright harmful (e.g., high-dose chemotherapy combined with autologous bone-marrow transplant for late-stage breast cancer).

Letting consumers reveal their preferences is possibly the worst way to define “meaningful coverage.”  Except for all the others.

What Is ‘Meaningful’ Health Insurance? Who Decides?’ is a post from Cato @ Liberty - Cato Institute Blog

What does it say that the American polity has consistently rejected a wholesale government takeover of health care for 100 years?

What does it say that public opinion has been consistently against the Democrats’ health care takeover since July 2009?

What does it say that Democrats are having this much difficulty enacting their health care legislation despite unified Democratic rule?  Despite large supermajorities in both chambers of Congress, including a once-filibuster-proof Senate majority (see more below)?  Despite an opportunistic change in Massachusetts law that provided that crucial 60th vote at a crucial moment?  Despite a popular and charismatic president?

What does it say that 38 House Democrats voted against the president’s health plan?

What does it say that Massachusetts voters elected, to fill the term of Ted Kennedy, a Republican who ran against the health care legislation that Kennedy helped to shape?

What does it say that the only thing bipartisan about that legislation is the opposition to it?

What does it say that 39 senators voted to declare that legislation’s centerpiece unconstitutional?

What does it say that health care researchers — a fairly left-wing lot — think the Senate bill is unconstitutional?

What does it say that the demands of pro-life and pro-choice House Democrats, each of which hold enough votes to determine the fate of this legislation, are irreconcilable?

What does it say that House Democrats are actually contemplating a legislative strategy that would deem the Senate bill to have passed the House — without the House ever actually voting on it?

Given that ours is a system of government where ambition is made to counteract ambition, what does it mean that the only way to pass this legislation is for the House to trust that the Senate will keep the House’s interests at heart?

Questions for Thoughtful ObamaCare Supporters is a post from Cato @ Liberty - Cato Institute Blog

President Obama evidently thinks that if he promises not to kill health savings accounts (HSAs), opponents will swoon for his government takeover of health care.  If that doesn’t do the trick, he should make clear that his health plan would not eliminate other things too, like the Defense Department and puppies.

Of course, that hollow gesture didn’t win the president any Republican support.  But it may have cost him some Democratic support — or at least frayed the nerves of a few House Democrats.  According to CongressDaily:

Liberals, meanwhile, are fuming over an addition Obama made to his proposal to make the effort appear bipartisan and possibly switch the votes of moderate Democrats who opposed the House bill last year.

The Congressional Progressive Caucus co-chairman, Rep. Raul Grijalva, D-Ariz., said Wednesday he is disturbed and bitter about an addition he said goes against Democratic principles.

“I’ve been leaning ‘no’ for a long time. That hasn’t changed,” Grijalva said about voting for the healthcare overhaul the Senate passed in December and a package of changes that would move through a separate bill through reconciliation.

Obama indicated he might be open to a provision that would encourage the use of health savings accounts, a tax-exempt savings account that typically is used in conjunction with a high-deductible plan. The provision would allow the exchanges to offer high-deductible plans.

“For some of us, the bitterness about HSAs in and the public option completely out, I don’t know how long that’s going to linger,” Grijalva said.

Which tends to confirm what HSA supporters have long feared: killing HSAs is the Left’s game plan.

Obama’s HSA Gambit a Net Minus? is a post from Cato @ Liberty - Cato Institute Blog

Hoping to revive his increasingly unpopular health care overhaul, President Obama has invited Republicans to a bipartisan summit this Thursday and plans to introduce a new reform blueprint in advance of the summit.  On Sunday, the White House announced that a key feature of that blueprint will be premium caps, a form of government price control that helped kill the Clinton health plan when even New Democrats rejected it.

The New York Times reports on President Obama’s blueprint:

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators.

It bears repeating what Obama’s top economic advisor Larry Summers thinks about price controls:

Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time.

For example, as I have written elsewhere, artificially limiting premium growth allows the government to curtail spending while leaving the dirty work of withholding medical care to private insurers: “Premium caps, which Massachusetts governor Deval Patrick is currently threatening to impose, force private insurers to manage care more tightly — i.e., to deny coverage for more services.”  No doubt the Obama administration would lay the blame for coverage denials on private insurers and claim that such denials demonstrate the need for a so-called “public option.”

As the Progressive Policy Institute’s David Kendall explained in a 1994 paper, the Clinton health plan contained similar price controls.  Kendall explains why they would be a disaster:

In spite of the late hour in the health care debate, Congress has not yet decided how to restrain runaway health care costs. The essential choices are a top- down strategy of government limits on health care spending enforced by price controls or a bottom-up strategy of consumer choice and market competition. History clarifies that choice: Previous government efforts to regulate prices in peacetime have invariably failed. Moreover, government attempts to control prices in the health care sector would undermine concurrent efforts to restructure the marketplace…

The idea of controlling costs by government fiat is seductively simple. But it rests on a conceit as persistent as it is damaging: that government bureaucracies can allocate resources more wisely and efficiently than millions of consumers and providers pursuing their interests in the marketplace. The alternative — one rooted in America’s progressive tradition of individual responsibility and free enterprise — is to improve the market’s ground rules in order to decentralize decision-making, spur innovation, reward efficiency, and respect personal choice.

As centrally planned economies crumble around the world, many in the United States seem bent on erecting a command and control economy in health care. This policy briefing examines the reasons why government price regulation would fail to constrain health care costs and create many adverse side effects…

Ultimately, government price regulation will always fail because it does not change the underlying economic forces driving up prices. If we are serious about slowing the growth of health care costs, we have to change the ways we consume and provide medical care. Price controls evade the hard but essential work of structural reform in health care markets: They are a quintessentially political response to an economic problem. The alternative is to allow well-functioning markets to set prices and allocate resources, while ensuring that all Americans have access to affordable health care coverage. The market-oriented approach leaves decisions to cost-conscious consumers and health care providers rather than bureaucrats.

Any of that sound familiar?  It’s worth reading the whole thing.

This is not hope.  This is not change.  (Much less a game-changer.)  It is, to pinch a phrase, a return to “the failed theories that helped lead us into this crisis.”

Obama’s ‘Best’ Idea? Rationing Care via Clinton-esque Price Controls is a post from Cato @ Liberty - Cato Institute Blog

Yesterday, Cato released a new study, “The Massachusetts Health Plan: Much Pain, Little Gain,” which showed that official estimates overstate the gains in health insurance coverage resulting from a 2006 Massachusetts law by at least 45 percent.  The study also finds: supporters understate the law’s cost by nearly 60 percent; government programs are crowding out private insurance; self-reported health improved for some but fell for others; and young adults are responding to the law by avoiding Massachusetts.

Given that the Massachusetts health plan bears a “remarkable resemblance” to the Obama plan, the study should serve as a warning sign to members of Congress, says Michael Cannon, director of health policy studies.

The study has received coverage in Investor’s Business Daily, The Wall Street Journal, The Washington Post, Detroit News, The Washington Times, the Reason Foundation and the Pioneer Institute.

Trouble in Massachusetts is a post from Cato @ Liberty - Cato Institute Blog

Even if Democrat Martha Coakley wins 50 percent of the vote in the race to fill the late Sen. Ted Kennedy’s (ahem) term, there are other numbers emanating from Massachusetts that present a problem for President Obama’s health plan.

On Wednesday, the Cato Institute will release “The Massachusetts Health Plan: Much Pain, Little Gain,” authored by Cato adjunct scholar Aaron Yelowitz and yours truly. Our study evaluates Massachusetts’ 2006 health law, which bears a “remarkable resemblance” to the president’s plan. We use the same methodology as previous work by the Urban Institute, but ours is the first study to evaluate the effects of the Massachusetts law using Current Population Survey data for 2008 (i.e., from the 2009 March supplement).  Since I’m sure that supporters of the Massachusetts law and the Obama plan will dismiss anything from Cato as ideologically motivated hackery: Yelowitz’s empirical work is frequently cited by the Congressional Budget Office, and includes one article co-authored with MIT health economist (and Obama administration consultant) Jonathan Gruber, under whom Yelowitz studied.

Among our findings:

• Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent.
• The actual coverage gains may be lower still, because uninsured Massachusetts residents appear to be concealing their lack of insurance rather than admit to breaking the law.
• Public programs crowded out private insurance among low-income children and adults.
• Self-reported health improved for some, but fell for others.
• Young adults appear to be avoiding Massachusetts as a result of the law.
• Leading estimates understate the cost of the Massachusetts law by at least one third.

When Obama campaigns for Martha Coakley, he is really campaigning for his health plan, which means he is really campaigning for the Massachusetts health plan.

He and Coakley should explain why they’re pursuing a health plan that’s not only increasingly unpopular, but also appears to have a rather high cost-benefit ratio.

(Cross-posted at Politico‘s Health Care Arena.)

Obama’s Other Massachusetts Problem is a post from Cato @ Liberty - Cato Institute Blog

So yes, enacting the Obama health plan would be an historic achievement.  But its supporters don’t know if it would be a good historic achievement or one of those bad historic achievements — like slavery, unequal suffrage, Jim Crow, etc.

Oh, and they don’t care.

Baucus: No Senator Understands This Health Care Bill is a post from Cato @ Liberty - Cato Institute Blog

• Report: New threats to free speech.

• The politics behind the health care overhaul.

• Mass corruption in Afghanistan. Malou Innocent: “Washington has already surged into Afghanistan once this year. The United States should not spend more American blood and more of its ever-diminishing financial resources to prop up Karzai’s ineffectual regime.”

• A government takeover of health care is not pro-choice — for anyone: “Whatever your views on abortion, the fight over abortion in the Obama health plan illustrates perfectly why government should stay out of health care. When the government subsidizes health care, anything you do with that money becomes the voters’ business. And rather than allow for choice between different ways of doing things, the government typically imposes the preferences of the majority — or sometimes, a vocal minority — on everybody.”

• Podcast: “A Proposed Beat Down for Banks“

Monday Links is a post from Cato @ Liberty - Cato Institute Blog

At his White House forum on health reform back in March, President Barack Obama offered:

If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.

In a new Cato study titled, “Yes, Mr. President, a Free Market Can Fix Health Care,” I take up the president’s challenge and explain that markets are indeed the only way to achieve those goals.  I also explain how Congress can remove the impediments that currently prevent markets from doing so:

1. Give Medicare enrollees a voucher (adjusted for their means and health risk) and let them purchase any health plan on the market,
2. Reform the tax treatment of health care with “large” health savings accounts, which would give workers a $9.7 trillion tax cut (without increasing the deficit) and free them to purchase secure coverage that meets their needs,
3. Free consumers and employers to purchase health insurance across state lines (i.e., licensed by other states), which could cover up to one third of the uninsured,
4. Make state-issued clinician licenses portable, which would increase access to care and competition among health plans, and
5. Block-grant Medicaid and the State Children’s Health Insurance Program, just as Congress did with welfare.

Unlike the president’s health care proposals (which, as Victor Fuchs explains, would merely shift costs), these reforms would reduce costs, expand coverage, and improve health care quality – without new taxes, government subsidies, or deficit spending.

Would a free market be nirvana?  Of course not.  But fewer Americans would fall through the cracks than under the status quo or the government takeover advancing through Congress.

There is a better way.

(Cross-posted at Politico‘s Health Care Arena.)

Yes, Mr. President, a Free Market Can Fix Health Care is a post from Cato @ Liberty - Cato Institute Blog

Just days after the health-insurance lobby released a report criticizing the Senate Finance Committee’s health care overhaul (for not expanding government enough!), Democrats and President Barack Obama lashed out at health insurers, threatening to revoke what the Government Accountability Office calls the insurers’ “very limited exemption from the federal antitrust laws.”

Democrats say they’re motivated by the need to increase competition in health insurance markets.  Right.

According to Business Week:

David Hyman, a professor of law and medicine at the University of Illinois College of Law and adjunct scholar at the Cato Institute…considers it unlikely that repeal would fundamentally change the nature of the market. While it might increase competition in some markets, he says, it could actually decrease it in others, such as those where small insurers survive because they have access to larger providers’ data. Changes to the act could therefore hurt smaller companies more than larger ones, he says.

Because the act doesn’t outlaw the existence of a dominant provider but simply prohibits collusion, says Hyman, a repeal would fall short of breaking up existing market monopolies that are blamed for artificially inflating prices. The current move against [the] McCarran-Ferguson [Act], he says, “has more to do with the politics of pushing back against the insurance industry’s opposition to health reform than it does with increasing competition in health-insurance markets.”

Combined with what The New York Times described as the Obama administration’s “ham-handed” attempt to censor insurers who communicated with seniors about the effects of the president’s health plan — the Times editorialized: “the government’s Centers for Medicare and Medicaid Services had to stretch facts to the breaking point to make a weak case that the insurers were doing anything improper” — it’s hard to argue that this is anything but Democrats threatening to use the power of the state to punish dissidents.

When Republicans were in power, dissent was the highest form of patriotism.  Now that Democrats are in power, obedience is the highest form of patriotism.

Nice Insurance Company. Shame If Anything Were to Happen to It. is a post from Cato @ Liberty - Cato Institute Blog

Yes, you read that right.  And I had to do the same sort of double-take when I read David Broder’s op-ed in The Washington Post this morning.

Broder writes, “Obama has steered the enterprise to the point that odds now favor a bill-signing ceremony.  But the hardest choices still lie ahead….”  Whaa??  How can the odds be better than 50-50 if the biggest fights haven’t even happened yet?

Broder’s optimism continues, “Two things will be needed to reach [a majority in the House and 60 votes in the Senate]: first, a plausible plan for making affordable and comprehensive health insurance available to millions…. And second, a way of financing the coverage….”  But that’s been the whole challenge all along.  Is Broder actually acknowledging that Democrats aren’t any closer to a signing ceremony than they were six months ago?

Broder says Democrats can meet the second challenge by taxing high-cost health plans — “a step that would require Obama to face down his labor union allies.”  You mean Obama should lean on Democrats to tax a crucial part of their own base?  One that’s already activating to block that tax?

Broder also thinks Obama should lean on his fellow Democrats to roll the doctors and hospitals in their states/districts by including more (some? any?) “delivery system reforms” in the legislation.

Sure.  No problem.  What could go wrong?  This is practically a done deal.

(Cross-posted, sarcasm and all, at Politico‘s Health Care Arena.)

Broder: Health Overhaul Likely, Because Hardest Part Lies Ahead is a post from Cato @ Liberty - Cato Institute Blog

In my recent Cato paper, “All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover,” I explain that if Congress compels Americans to purchase health insurance, it would “inevitably and unnecessarily open a new front in the abortion debate, one where either side—and possibly both sides—could lose.”

Slate‘s William Saletan explains how the pro-choice side could lose:

This week, the Senate finance committee is considering amendments that would bar coverage of abortions under federally subsidized health insurance. Pro-choice groups are up in arms. After all, says NARAL Pro-Choice America, “In the current insurance marketplace, private plans can choose whether to cover abortion care—and most do.” If Congress enacts subsidies that exclude abortion, “women could lose coverage for abortion care, even if their private health-insurance plan already covers it!“…

The argument these groups make is perfectly logical: If you standardize health insurance through federal subsidies and coverage requirements, people might lose benefits they used to enjoy in the private sector. But that’s more than an argument against excluding abortion. It’s an argument against health care reform altogether.

Saletan also explains why pro-life and pro-choice positions on Obama’s health plan are irreconcilable:

To get what they consider neutrality, pro-choicers have to make pro-lifers pay indirectly for abortions. And to keep what they consider clean hands, pro-lifers have to make abortion coverage federally unsupportable and therefore, in a subsidy-dependent system, commercially nonviable.

Rather than an argument against all health care reform, I’d say this is an argument against reforms that expand government subsidies or otherwise give government the power to choose what kind of insurance you purchase.  Fortunately, there are better ways to reform health care.

“Keep Your Subsidies off My Ovaries” is a post from Cato @ Liberty - Cato Institute Blog