Medicare and the Public Option

Simon and I have our latest weekly column up at the Washington Post. The topic is contradictions: opponents of the public option who bill themselves as defenders of Medicare, opponents of cost savings who support private health insurers, and so on. It’s also about a world without a public option:

Imagine health-care reform without a public option: Insurers have to charge the same price regardless of customers’ medical history; everyone has to buy insurance; and poor people get subsidies to help them afford it. From the insurers’ perspective, they get more than 40 million new customers, they subsidize the old and sick by overcharging the young and healthy (who have to overpay because of the mandate), and the government even pays people to buy their product. There are no new competitors (additional choices for customers), and there is no pressure to reduce costs. What could be better?

As we’ve said before, I think this is still far better than the current situation. Ezra Klein recently made the point much more forcefully. But still, reform without the public option could be a recipe for private insurers to charge whatever they feel like charging. Alex Tabarrok, not the first person you would expect to write a post called “In Defense of the Public Option,” writes:

Since escape via non-purchase will no longer be a potential response to higher prices, mandatory purchase will reduce the elasticity of demand giving firms an incentive to increase prices.  Moreover, in oligopolistic markets, a more homogeneous product can increase the ability of firms to collude.

I believe that health insurance reform will increase the market power of insurance firms and drive up prices.  In this scenario, the public option at least has a raison d’etre, although whether it actually fulfills it’s purpose is an open question.

By James Kwak

107 responses to “Medicare and the Public Option

  1. It’s all good and well to have ivory-tower debates about policy ideas, but I regard two things as almost certain if there does pass a bill which leaves the status quo intact but ropes a conscript herd to serve up to the market slaughterhouse.

    1. No potemkin “reforms” will in practice restrain the rent-seeking practices Tabarrok describes.

    2. The alleged “subsidy” will end up woefully inadequate. Millions would still find themselves under the oppression of a mandate they canot afford.

    All of this is besides the moral and constitutional implications of forcing people, as the price of being allowed to physically exist, to pay this poll tax.

    So for those reasons we should stick with the original, correct position that a strong public option, while not sufficient to constitute real reform, is definitely necessary. (As Klein himself cogently declared before his flip-flop, which came right around when he went to work for the corporate WaPo. Just a coincidence I’m sure.)

  2. I believe that health insurance reform will increase the market power of insurance firms and drive up prices.

    …making it even harder to get rid of them or control costs! muahahaha

  3. further down the road, though, would it not force a utility style regulation on the insurers?

  4. a strong public option, while not sufficient to constitute real reform, is definitely necessary.

    Why aim so low? Why not single-payer?

  5. Make the insurance high-deductible, with reimbursements for low-income families. Force most people to pay for most of their ‘regular’ care, and prices will come down real quick. And yes, we can afford it: we are paying for it now, we just don’t see it.

    Oh, and implement it at the state level so that we don’t further trash the 10th amendment, and allow people who don’t like the relationship that govt. mandated healthcare implies between citizen and govt. have the opportunity to live as they see fit in a (non-costal, no doubt) state.

    Be gentle,
    Carson

  6. I’m sorry – the reform to focus on today is forcing everyone to purchase health insurance through the for-profit insurance companies?

    Seriously – this is the change everyone thinks we need?

    That’s not reform. That’s caving to the special interests, ensuring that they continue to profit mightily by providing a grossly inefficient and costly product to everyone, that health care costs will continue to rise and that the middle class will see a decline in income as a result, instead of just the stagnation they’ve seen in recent decades.

    The dialogue on health care reform has turned into a horrible joke. A horrible horrible horrible joke.

    And I’m no Sarah Palin. I WANT REFORM. But I don’t see it happening in my lifetime, not if Congress and the special interests have their way.

  7. You’re correct to note that a huge issue in passing any kind of reform is that the bulk of consumers have no idea what their health care costs, outside of the $20 copay.

    I have a high deductible HSA plan – it really forces you to question running to the doc at the slightest sniffle. And I get to see just how costly health care really is.

  8. You write:

    [R]eform without the public option could be a recipe for private insurers to charge whatever they feel like charging.

    That assumes that the public option is anything other than window-dressing. The original public option was Medicare-style and projected 130 million enrollees. The public option on offer today is means-tested, firewalled, and projects 9 million enrollees. That’s not enough market clout to “keep the insurance companies honest” (if such a thing were possible).

    So IMNSHO your sentence would be better revised to read:

    HR3200 is a recipe for private insurers to charge whatever they feel like charging.

    In other words, that mandate is a bailout for the insurance companies.

  9. From the LA Times article: UnitedHealth spent the most, $2.5 million in the first half of 2009, and hired some of Washington’s most prominent political players, including Tom Daschle, the former Senate majority leader who served as an informal health policy advisor to Obama.

    Remember Tom Daschle? The mastermind behind getting Obama elected? http://www.rollingstone.com/politics/story/21470304/obamas_brain_trust/print

  10. Carson, you are assuming that a significant portion of costs are due to expenses that do not exceed the the deductible. Additionally, preventive procedures tend to be cheaper than later fixes, so these would tend to fall underneath the deductible as well. From most that I have read, this is not the case. Furthermore, it does not make much sense to encourage people to try to save as much as they can on preventive procedures, but have freedom to be less obligated on greater expenditures.

    I recommend reading http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
    which compares two similar communities, one that has a much lower cost of medical care than another. The main conclusion was that over-prescription was the primary culprit.

    I’d also add that medical expense market is extremely non-transparent. It is not possible to do reasonable cost-benefit comparisons across providers. This could possible change through proper incentives, but it is not a given.

  11. Maine adopted a “public option” several years ago, DirigoChoice. Here’s
    The WSJ reported on the many problems with DirigoChoice last week:

    Among the biggest reasons is a severe adverse selection problem: The sickest, most expensive patients crowded into DirigoChoice, unbalancing its insurance pool and raising costs. That made it unattractive for healthier and lower-risk enrollees. And as a result, few low-income Mainers have been able to afford the premiums, even at subsidized rates.

    What the WSJ leaves out is important, however: it’s very difficult to enroll in Dirigo. I’ve been trying for years. They don’t sell on the individual market (despite the website which says they do), you have to be business to purchase the insurance; the program was never able to enroll enough healthy people to sustain itself.

    A couple of weeks ago, I called an insurance broker for quotes on http://www.dirigohealth.maine.gov/Pages/dirigo_choice.html. The broker also provided quotes for an Anthem product and a Tufts product. Both of the private insurances were, in fact, competing, offering lower premiums for more service; or so it seemed from the broker’s over-the-phone quote. (I must note the the insurance broker failed to follow through with email/mail information on prices/benefits that I’d requested.)

    My biggest criticism is that I had to go through a broker to find out any information useful in comparing plans. In fact, there is almost no information available for an average citizen to compare health-insurance products without a broker.

    Which leads me to the notion that one of the largest problems with reforming health care overall is hidden costs — from insurance to surgery, there’s simply no way for the average consumer to look at the cost related to medical care to use making rational decisions. We’re told it’s bankrupting our nation, but the actual numbers of our own health care are shrouded in mystery.

  12. The whole debate is utter eyeglaze to me and I steer clear of ‘healthcare’ as much of it is bad in practice while looking good in theory with all the tests and gadgets.

    The thing no one will touch is how America gets so many health problems. We are a nation of indulgent and increasingly obese slobs who are blissfully chowing all sorts of toxic stuff foisted by the junk food and soft drink industries.

    I say, treat it like tobacco and tax the daylights out of it all as an offset that follows the ‘make the polluters pay’ model.

    I don’t believe any corporation has a ‘right’ to profit at public expense of this magnitude.

    If a fair and intelligent way is proposed to factor in the hidden costs from gulping sugar water and Cheetos it might quell all the hand wringing about money, the true national religion.

    It also does a zen number on corporate pleading. If the insurance interests see the heat focused on the Dorito lobby, they will ease up on their ad campaigns and Frito Lay/ Pepsi and Coca Cola will look pretty ridiculous trying to defend their internal pollution practices.

    What would be the revenue from a 10 percent levy on all the health crippling slop? I bet it would be substantial.

  13. The major reason people eat “slop” is that it’s all they can afford. It costs far less per calorie than vegetables. McDonalds costs less too.

  14. Team Obama needs to review our history with Cost-Plus regulation of utility companies. All in all, troubling. The metric on which companies get rewarded becomes volume of product sold. The current proposal increasingly resembles this… Except it’s worse, there’s a mandate to pay, and no limit on overall price.

    I am pessimistic primarily because the current proposals focus less on efficiency/improvement, and more on expanding coverage. I cannot see how this will bring prices down. The modest improvements in efficiency (electronic records) cannot compensate for the increase in coverage.

    The hard, cold, brutal facts dictate that medicine is a scarce resource (which will be made more scarce by reducing physician pay without compensating for education costs, debt costs, and lost income during training, let alone long hours). The extreme system of rationing we now have may not be working (overcrowded ER systems are one signal…), but the proposed system has NO RATIONING built in. Rationing can either occur through money or policy, and I have a hard time believing any politician will use policy (better to lay the blame on the feet of evil insurance companies).

    Team Obama maintains that savings will come through better basic health services which will reduce complicated procedures. But where is this built in? This thinking is wishful, and although I find myself utterly disgusted by the pandering and hypocritical Republican response, the CBO is mostly correct in its analysis that this bill will expand coverage without substantially lowering cost of care. Consider:

    Will we have relatively low deductibles on basic services and high deductibles on catastrophic care? (the trend is in the OPPOSITE direction)

    Will the federal subsidies for health care only apply to basic care or care that has high return-on-investment (but not hideously expensive end-of-life care, or expensive diagnostic services or treatments that are not clinically proven to offer benefits)?

    Will we NOT cover cancer treatment for smokers, or diabetes people who are clinically obese (due to primarily non-genetic causes)?

    Will we NOT cover the cost of orthopedic surgery for high-risk athletes like climbers or football players (just like most states force hikers to pay the cost of helicopter evacuations)?

    Will we pass rules that govt. funded or subsidized care plans (including Medicare and Medicaid) will NOT cover expensive procedures when there is a lower cost procedure that is almost as good?

    I fully recognize, and have commented on, the hideous market imperfections in medicine. There is huge room for a government role to improve things (particularly in the area of not subsidizing overtreatment in Medicare, and in public health issues like hospital cleanliness to reduce hospital acquired staph and other infections). Since it’s going to be hard to turn away patients at ER sites (which happens in other countries like India), we’re probably better off giving away basic care (like neonatal care, health checks, venereal disease testing, etc.) for free than letting those cases swamp ER sites.

    But for the most part, this bill has subsidies for the current broken system. It is one thing for people to pay for their overtreatment and their bad habits with their own money; subsidizing overtreatment and other bad habits, however, will fail catastrophically.

    I am growing increasingly concerned that Team Obama’s overly compromising bill – especially without the Public Option – is the Worst of all Worlds.

    In short, it is a massive sellout to concentrated interest groups that permits the middle and upper-middle (but not the upper upper) class to subsidize overtreatment and poor health practices. It is the most expensive of all possible ways to pursue a noble goal: which is to offer coverage to those unfortunate people who (through no fault of their own save bad luck) are being denied cost-effective care.

  15. The idea that the Public Option is some kind of health care reform is a cruel joke.

    The idea that a vast bureaucracy, healthcare or any other kind, will reduce costs is just insane. That has never happened and it never will. Big bureaucracies, by their very nature, carry a tremendous amount of dead weight just in paper pushing and supervision, and that has to be paid for by someone. The eventual cost will far exceed the $2.4 trillion ten year tab the CBO has thrown out. Medicare was supposed to be cheap too, remember?.

    Add the fact that all bureaucracies resist change and innovation and tend to serve their own interests first and foremost. Then throw in the fact that the political motivation for this monstrosity is not to reform healthcare at all, but to lock in a large section of the voting population as health care rent seekers to perpetuate a Democrat majority.

    Health care is largely diagnostic endeavor. The interaction and information gathered between a Doctor and Patient cannot be replicated and standardized to fit some bureaucrat’s pigeonhole. Diagnosis, and as a result treatment will suffer under a public option. And that does not take into account the creativity and choice of care options an informed Doctor could choose, which would be lost in Socialized Care. Bureaucracies make the choice that is best for them not the patient. And never mind that there are many examples of where the healthcare bureaucracies at the VA and public plan in Oregon have already denied seniors care for necessary lifesaving “elective” procedures. The predilection of our Nannystate healthcare bureaucracies for “deathpanels” and denial of care is real and proven.

    There are many, many rational healthcare reform proposals that are supported by politicians on both sides of the aisle, like tort reform, allowing portable coverage, allowing national sales of insurance, healthcare savings accounts, and demanding healthcare facilities inform the patient of the total price before the procedure. These things can be done now without some Stalinist Public Option.

  16. Your use of the Republican buzzwords “bureaucracy”, “nannystate”, “stalinist”, “Socialized Care”, “dead weight”, “monstrosity”, “deathpanels” gets me really excited. Thanks for “energizing the base” Paul!

  17. Tabarrok as quoted is likely wrong. He speculates that removing the right to “vote with their feet” by opting out would give insurance companies the ability to charge whatever premium they like.

    In fact insurance companies currently charge whatever premium they like for individual insurees, and as a consequence, few subscribe to insurance plans individually. Insurance companies know that individual subscribers are more costly than group rate subscribers because they are less likely to pay for insurance if they are healthy.

    It is predictable, therefore, that insurance companies with a public option will use every means at their disposal to shunt these undesirables over to the public option – indeed to do shove undesirable individuals out of the employer group plans whenever possible, as well.

    If you’re going to take action to prevent this, you may as well take it with or without a public option. The public option is weak-kneed at accomplishing anything we hope to accomplish here. Far better to make insurance companies compete, which at the moment the combination of state-by-state regulation and the entrenched employer group system prevents from happening on the whole.

    James has captured Alex’s provocative intro and used it out of context. Read to the end, where he notes three (more exist) lower-risk alternatives which would be better at solving the problem than a publically controlled health insurance program, and recommends one of them.

  18. “they subsidize the old and sick by overcharging the young and healthy…”

    * Main Entry: in·sur·ance
    * Pronunciation: \in-ˈshu̇r-ən(t)s also ˈin-ˌ\
    * Function: noun
    * Date: 1651

    a : the business of insuring persons or property
    b : coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril

  19. McDonalds does not cost less in money. It costs less in cooking skill and preparation time.

    Go forth and solve this problem.

  20. That’s part of why I said “not sufficient”.

    Not being a politician, I can say that I absolutely would hope a strong public option would deal a death blow to the rentier insurance parasite and pave the way for single-payer.

    Actually, as I said in a comment yesterday or the day before, I no longer think a rigorous public option would ever be passed. We’d only get the zombie facade of one.

    So I’ve reverted to my original position from last winter, single payer or nothing, because if it’s ever politically possible to get a real public option, it would be possible to get single-payer, and we should always fight for the highest possible goal, while to settle for less out of a self-imposed sense of political limitation only comes from spiritual weakness and broadcasts that weakness to the enemy, who is then emboldened to tear you down further.

    On the other hand, once you settle, as reformers did last spring (still thinking wrongly that Obama really wanted reform),then you find that even what you were willing to compromise on becomes impossible. That’s why I assume no bill which might be passed by now will actually have regulations which would actually restrain insurance monopoly gouging, nor will it actually have “subsidies” sufficient to pay for these feudal mandate indentures.

    That’s how appeasement always works. We’ve seen that since spring with health care, by the book.

  21. I notice that I seem to be contradicting myself in these two comments. Let me clarify.

    *I don’t think real refrom is any longer possible in this legislative cycle, so it’s better to block anything they try to pass and start over again demanding single-payer.

    *But if you still have hopes for 2009, please at least demand nothing less than a strong public option, as Pelosi still claims some want to pass; and don’t believe that anything less than that which might pass is really going to be anything other than a big gift to corporate interests.

  22. OK – following up on Alex’s recommendations from the article – could someone explain to me what

    “a competitive federalist system for insurance similar to that for corporate charters”

    would be?

  23. Actually there is a “big mac index”
    http://www.economist.com/markets/Bigmac/Index.cfm

    According to the latest index, they cost $3.54 in the U.S. http://www.economist.com/markets/indicators/displaystory.cfm?story_id=13055650

    According to McDonald’s ( http://nutrition.mcdonalds.com/nutritionexchange/nutritionComparison.do ) BigMac’s have 540 calories, roughly 1/2 from fat.

    On the other hand, salad has around 66 calories a pound,
    http://caloriecount.about.com/calories-salad-vegetable-tossed-i21052

    and a pound of salad costs roughly 1/2 as much as a BigMac as of the end of 2008. http://www.freshcut.com/pages/arts.php?ns=1126

    And, as you point out skill and preparation time are reduced.

  24. That would be incorrect. A BigMac has 540 calories and costs $3.54 in the U.S. according to the economist magazine BigMac index, and the McDonald’s website. A pound of vegetable salad has roughly 66 calories and would cost at least $1.39 a pound on average in the U.S. at the end of 2008 according to calorie counting websites and produce sales statistics. Therefore, the cost per calorie of a BigMac is much lower.

  25. Medicare is the most efficient health care system in the country, it’s “bureaucracy” costs are mutiple times less than what private insurance companies pay. Medicare employs roughtly 4,000 people and provides insurance to over 46 Million. By contrast, Aetna has about 35,000 employees and covers about 17 million people, Wellpoint, the countries largest private insurer, employes over 42,000 people and covers about 35 million people. So Medicare covers about 11,500 people for each employee, while private companies cover about 500-800 people for each employee.

    You also seem to be under the impression that private insurance companies don’t ration care. They ration care far in excess of Medicare, Medicaid and the VA. Have you ever raised money, or been asked to raise money for a kid whose cancer treatment isn’t covered, or to buy someone a special wheelchair, or to cover an operation? In all the cases I’ve seen the person in question, or their parents had health insurance, they just won’t cover what they were raising money for. Have you ever been asked to raise money for an old person who had Medicare reject their medical device or operation? I would guess no.

    We can never have a system where everybody gets everything always. It’s just too expensive whether the payor is the governement or a private insurance company. There has to be some kind of rationing, even if that means simply abiding by certain testing guidlines rather than ordering everything in the book. If you think the current system is working then you have a big screw lose. I have seen my health insurance costs go from $300 a month to $1,300 a month over the last ten years and that will continue without reform, that means holding down costs, and that means some combination of efficiency and rationing of care.

    Lastly, you are going to die, I am going to die and everybody else in this world is as well. I know it seems harsh, but radically increasing my insurance costs to give a $100,000 operation to a 90 year old doesn’t make sense in a world where there is a finite amount of money. You live in that world.

    You have a right to be wary of a govenment run enterprise, after all the government can’t run anything well; except Medicare, and the military, and the Army Corps of Engineers, and the park service, and did you know GPS is a government program?

  26. Empirically, you are simply wrong. VA care is substantially equivalent to, perhaps even slightly better than (depending on the metric), comparable private for-profit care.

    For example:

    http://ajm.sagepub.com/cgi/content/abstract/19/1/19

    However, both private for-profit and probably VA care are substantially inferior to private non-profit care.

    Likewise, the VA system had been criticized for being being higher-cost, but empirically we find that this is because VA patients tend to be sicker or needier. Not surprising, since many were injured (physically or mentally) in war. We can expect that cost-per-patient for VA care will climb over the next several decades largely due to the cost of caring for soldiers returned from recent wars.

    http://archinte.ama-assn.org/cgi/content/abstract/160/21/3252

    You note that public plans have denied “elective” lifesaving procedures… As if private plans do not deny these procedures? (And, btw, can you identify the clinical evidence that these procedures are cost-effective? And I do mean evidence other than the personal opinion of a particular doctor who earns money from a procedure.)

    You claim that our “Nannystate” has a predilection for denial of care… Does that mean you think that private insurers do not have this predilection?

    But do you know what I find truly odd about this comment? The notion that a public option will perpetuate a democratic majority. I find this odd because the older vote is largely skewed Republican, in spite of the fact that they are the chief beneficiaries of our current state welfare programs (e.g. Medicare).

    http://www.cnn.com/2008/POLITICS/11/04/exit.polls/

    “Story Highlights: Voters 65 and older only age group to go McCain’s way”

    I particularly enjoy the spectacle of the Republican chant “keep your government hands off of my Medicare”. Indeed, much of the current argument against the public option involves insurance companies that enlist the ranks of the entitled elderly (who voted for McCain by 2 to 1) and soon-to-be-entitled Boomers (who ran this country into debt while lowering their tax burden).

    Amusing, and sad.

  27. “You are technically correct – the best kind of correct!”

    The good news is that one problem we do NOT have in this country is a dearth of calories in our diet.

    Not all calories are equal, of course, nor does “salad” stand in for a healthy meal revolving around fresh produce.

    There is no single major reason why people eat a lot of McDonalds in place of preparing wholesome meals, but affordability does not seem to be a primary factor – far less than time, knowledge, know-how, or culture. There is a correlation between socioeconomic status and reliance on fast food but it is more complex ans sensible than a calculation of cost per calorie.

  28. “Which leads me to the notion that one of the largest problems with reforming health care overall is hidden costs — from insurance to surgery, there’s simply no way for the average consumer to look at the cost related to medical care to use making rational decisions. We’re told it’s bankrupting our nation, but the actual numbers of our own health care are shrouded in mystery.”

    Oh god yes! Bush advocated “consumer-driven health care” but it is impossible for the consumer to make any informed decisions when it comes to health care.

    Which is why mandating that everyone buy insurance through a broken system will put us on a faster track to massive failure.

  29. Aah Conflation.

    I haven’t much of a quarrel with Mackie D’s. A more accurate read of the screed will find it focused on Cheeto’s and Sugar water.

    These make no contribution to health whatever beyond degrading it. The useless snack food and soft drink industry is huge as are many of our citizens from all the big gulps.

    As for McD’s I favor the sausage biscuits for AM and several dollar special double cheeses will work.

  30. Jay wrote that “The good news is that one problem we do NOT have in this country is a dearth of calories in our diet.”

    http://www.hungerinamerica.org/

  31. To SJ and JK:

    I humbly ask that you read this…

    http://www.cnn.com/2009/HEALTH/08/25/harris.primary.care.doctor/index.html

    This nails a major issue from the physician side – one that is somewhat sidelined in the debates we’re having. It is dead on, and entirely non-political. The market is responding to incentives, and the incentives are straightforward:

    Expensive diagnostics and high-tech therapy are rewarded. Conservative treatment is not. Primary care/internists are fleeing, rapidly. Statistically and anecdotally, this is fact. And I do not see much about the proposed plan that changes this. Merely expanding coverage (while undercompensating the most cost-effective components of our health care system) will result in precisely what the CBO is projecting. The Public Option may help, but not if it is orchestrated in the same manner as Medicare (rich payments for MRIs and endoscopies, $55 payments for 15 minute office visits).

    And doctors respond – both to the monetary incentives and to the prestige that the higher incomes entail.

  32. I would question the comparison of Medicare to private insurance as valid; Medicare covers seniors, private insurance from BlueCross or Wellpoint cover younger people who are, as a general rule, not receiving expensive end-of-life care.

  33. StatsGuy – what is private, non-profit care?

    And how can I sign up for some?!

  34. As someone now on Medicare with serious chronic conditions, I’m skeptical of any changes. The reason is I would undoubtedly be assigned a very low QALY score and that may not be good for my future care.
    Meanwhile, the gov’t would want to spend more healthcare money on conditions like obesity. If you have some chronic diseases, you really need to see a doctor regularly and take costly meds; if you are obese you need only, in most cases, eat less.
    That said, Obama has some good ideas on healthcare, and I’m still listening.

  35. Anne, the amounts you pay below your high deductible are likely a small percentage of total health care costs, which are largely attributable to treatments that cost well over your relatively tiny deductible of $2500. Given this, you are *not* seeing the true costs of health care, as you claim.

    Actually, being preventively treated for questionable symptoms (your “sniffles”) could quite likely be more cost effective than waiting to see if it is something more serious condition that requires a costly intervention.

  36. This kind of criticism sounds very intelligent. Please explain how Germany manages to cover every citizen at a fraction of the cost imposed by our super efficient private enterprise health care system.

  37. Examples of studies:

    http://www.consumersunion.org/health/hmosopi899.htm
    http://jama.ama-assn.org/cgi/content/abstract/282/2/159

    I’m sure you can find them in a quick search for non-profit health care or non profit HMO (and your state), for example…
    http://www.nonprofithealthcare.org/members/

    Non-profit does not mean free, however. But usually better. Team Obama’s hope is that Co-ops can effectively expand the role of non-profits, but I simply do not believe the argument. The source of profits today is cherry-picking patients, denying expensive procedures (unless they are compensated richly by Medicare or private insurance), and overdeploying diagnostics/procedures that are overcompensated. In order for Co-ops to survive in the long term they’ll need to deploy the same tactics, unless the compensation structures and incentives are changed.

  38. Health Care Reform? Get ready to pay double for less. Don’t feel like paying? IRS will probably lock you up. This whole debate reminds me of 1986 Tax Reform, which has resulted in major American corporations paying roughly seven percent on taxable income. Meanwhile, minimum wage earners pay fifteen percent and Bill Gates pays an average rate of thirty-three, maybe (unless of course he knows a decent tax lawyer, in which case I would be surprised if he paid fifteen). Does anyone realize that hedge fund operators are taxed at capital gain rates on their share of no risk (to them) operations? Of course not; nobody knows anything about income taxes unless he makes a career of avoiding them. Pays pretty good, too.

  39. I have been trying to understand why some of the television coverage on health care reform has been so dismal. For example, huge air time given to so-called death panels, men carrying guns in public to protest health reform!!! This is a circus that draws attention away from real issues of substance. Then it dawned on me …

    MSM television stations have made and will continue to make billions and billions of dollars on political advertising, as well as, advertising from the for-profit medical industry (eg, pharmaceutical advertising dollars). These media sources cannot alienate their sources of revenue.

    Traditionally, the media is suppose to work for social change, to give voice to those who are vulnerable, oppressed and disenfranchised. The best coverage on health reform is I’ve seen is from Bill Moyer. But this is public broadcasting. Some would regard Moyer a national treasure.

    I find it ironic when the rightwing is critical of the media for being too liberal. The media is considered the Fourth Estate. It is a function of democracy. Without a free press public information becomes propaganda or advertising by powerful lobbies. Without an independent media you don’t have a democracy.

    Just some thoughts.

    It would be interesting to see some objective studies on media independence in covering the health reform story. For example, quality of informed news coverage compared to how much money a MSM television station makes from advertising opposing health reform in the public interest.

  40. Carson Gross

    Frank,

    I guess part of that depends on where you set the deductible. If, say, your deductible were at 10k per year, an awful lot of coverage for most people would fall under it (especially once price competition drove the cost of things like medical imaging, constrained by people actually deciding to do the xray rather than the MRI.)

    Over-prescription should fall when consumers question the doctor prescribing the medicine or procedure based on the cost of it. You could alternatively mandate coverage levels, if you think that supply-fixing works. I tend to think it doesn’t.

    Insurance should cover the big things: emergency medicine and long term care. It should function as insurance against ruinous events. I can see arguments for and against the state providing that sort of coverage, and think people should be able to pick which sort of a society and culture they wish to live in. Some may opt for a voluntary, cultural (e.g. religious) approach to this, some may opt for a European-style state-based approach, some may opt for a libertarian approach. That’s the glory of federalism, in my book.

    The good news for the state-run folks is that you get the coasts, anyway!

    Cheers,
    Carson

  41. NO CO-OP’S! A Little History Lesson

    Young People. America needs your help.

    More than two thirds of the American people want a single payer health care system. And if they cant have a single payer system 77% of all Americans want a strong government-run public option on day one (86% of democrats, 75% of independents, and 72% republicans). Basically everyone.

    Our last great economic catastrophe was called the Great Depression. Then as now it was caused by a reckless, and corrupt Republican administration and republican congress. FDR a Democrat, was then elected to save the nation and the American people from the unbridled GREED and profiteering, of the unregulated predatory self-interest of the banking industry and Wallstreet. Just like now.

    FDR proposed a Government-run health insurance plan to go with Social Security. To assure all Americans high quality, easily accessible, affordable, National Healthcare security. Regardless of where you lived, worked, or your ability to pay. But the AMA riled against it. Using all manor of scare tactics, like Calling it SOCIALIZED MEDICINE!! :-0

    So FDR established thousands of co-op’s around the country in rural America. And all of them failed. The biggest of these co-op organizations would become the grandfather of the predatory monster that all of you know today as the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry. And the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry.

    This former co-op would grow so powerful that it would corrupt every aspect of healthcare delivery in America. Even corrupting the Government of the United States.

    This former co-op’s name is BLUE CROSS/BLUE SHIELD.

    Do you see now why even the suggestion of co-op’s is ridiculous. It makes me so ANGRY! Co-op’s are not a substitute for a government-run public option.

    They are trying to pull the wool over our eye’s again. Senators, if you don’t have the votes now, GET THEM! Or turn them over to us. WE WILL! DEAL WITH THEM. Why do you think we gave your party Control of the House, Control of the Senate, Control of the Whitehouse. The only option on the table that has any chance of fixing our healthcare crisis is a STRONG GOVERNMENT-RUN PUBLIC OPTION.

    An insurance mandate and subsidies without a strong government-run public option choice available on day one, would be worse than the healthcare catastrophe we have now. The insurance, and healthcare industry have been very successful at exploiting the good hearts of the American people. But Congress and the president must not let that happen this time. House Progressives and members of the Tri-caucus must continue to hold firm on their demand for a strong Government-run public option.

    A healthcare reform bill with mandates and subsidies but without a STRONG government-run public option choice on day one, would be much worse than NO healthcare reform at all. So you must be strong and KILL IT! if you have too. And let the chips fall where they may. You can do insurance reform without mandates, subsidies, or taxpayer expense.

    Actually, no tax payer funds should be use to subsidize any private for profit insurance plans. So, NO TAX PAYER SUBSIDIZES TO PRIVATE FOR PROFIT PLANS. Tax payer funds should only be used to subsidize the public plans. Healthcare reform should be 100% for the American people. Not another taxpayer bailout of the private for profit insurance industry, disguised as healthcare reform for the people.

    God Bless You

    Jacksmith — Working Class

    Twitter search #welovetheNHS #NHS Check it out

    (http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/)

    Senator Bernie Sanders on healthcare (http://www.youtube.com/watch?v=RSM8t_cLZgk&feature=player_embedded)

    (http://www.youtube.com/watch?v=IbWw23XwO5o) CYBER WARRIORS!! – TAKE THIS VIRAL

  42. Errol, high nutrient foods are typically low-calorie. So holding calories constant when comparing eating choices nets you some very foolish gustatory economics.

    One of your links seems to announce that some people are hungry and malnourished. I don’t think the OP was pointing the finger at starving people, since he was specifically objecting to paying for the health consequences of obesity.

    Here are some links to dance with yours:

    http://abcnews.go.com/Health/Diet/story?id=5196381&page=1

    http://www.abc15.com/content/living/yourhealth/story/Is-healthy-eating-expensive-Try-these-20-foods-at/VHStVxHXQUuthXtBvDib7A.cspx

  43. Exactly my point, Medicare handles a more expensive population and yet still does it with significantly less overhead. Since they are covering a “cheaper” demographic, the private insurers should be able to do it with less employees and less money per person than Medicare, but they can’t. Private insurers also can, in most states, limit coverages, raise costs based on age and health status, refuse to cover certain people – Medicare has none of these restrictions, it covers everyone regardless of health. If you’re worried about “death panels” for grandma, we should already have them – the government is already running that system.

  44. Jay, I use ABC Television News for all my news too!

  45. Overhead cost is not a measure of efficiency (otherwise Obama would propose the government would replace its expensive computers with nice, cheap abacuses). Cost per unit of coverage is the correct measure but is difficult to measure, especially given the fact that the two systems do not exist in a vacuum and Medicare’s ability to negotiate low rates in part depends on the fact that doctors know they can make it up in private insuruer services.

  46. Caron, first, a deductible of 10k is extremely high if you consider that the median household income in 2007 was $50k.

    Second, when are patients ever in a reasonable position to be able to question a doctor’s prescription? Getting second opinions is expensive in and of itself for many things.

    You’re allude to a system where people can opt in to whatever they want, is that it destroys the concept of insurance working properly. Allowing people to only opt into a health care insurance program when they feel need for it is a guarantee for the system not being able to pay for itself. I do not see a solution that does not require everyone paying into the pot.

  47. Jay, did you read this just in from ABC news?

    http://www.thebostonchannel.com/money/20545299/detail.html

  48. Sorry Yakkis. I just figure one good cursory google search deserves another!

    The USDA found low-income household fat intake similar (as a % of their diet) to the rest of the country, and an average of about 150% of RDA for RDA nutrients. Participants in the food stamp program had slightly better nutrient intake.

    http://www.ers.usda.gov/publications/aib750/aib750p.pdf

    If errol were correct that junk food is preferred by those who must carefully budget their meals, you would expect greater skewing, in the aggregate, toward fat content.

    If cost, rather than taste, availability, knowledge, and time constraints, were the driving factor behind absorption of junk food, then surely more people would plant gardens, use coupons, buy in bulk, dine communally, and so forth.

    On the contrary, there is sometimes a high correlation between low income and obesity, but it is more regional or cultural than income-determined.

    http://www.newsroom.ucla.edu/portal/ucla/obesity-among-california-s-low-72532.aspx

    Perhaps they have been following errol’s advice and purchasing food based on calorie/dollar value. Hence soda is preferable to tap water. Perhaps these individuals also live sedentary lives in front of televisions so as to preserve their activity/calorie value.

  49. Frank, my “relatively tiny deductible” is $4K, not $2500 and if you know anything about deductibles, it’s that insurance does not kick in until the deductible is reached. So for each preventive doctor’s visit, I pay full price – usually more than $100 a visit + whatever tests are ordered.

    For that privilege, I pay a nice premium each month to the insurance company. And all of our drug costs are out-of-pocket, in an attempt to keep premiums down.

    Since my family (knock wood!!) is currently healthy, we’ve not maxed out the deductible yet. We’re money in the bank for our insurance company Frank! And I fear we’ll get dumped or priced out of the market as soon as we develop a serious illness.

    So when you assert that I am *not* seeing the true costs of health care, you’ve made assumptions not born out by the facts.

    However, there is no one in America who fully knows the total cost of health care – not even you, Frank (unless you’re in the health insurance biz) because there is absolutely no transparency in pricing. That’s a major flaw in how the business is conducted, but that is completely out of the hands of consumers.

    As someone with my “relatively tiny deductible,” and relatively large monthly premiums, I do know that I’m far more aware of the cost of health care than the average consumer.

    And I know that if more people had to pay full price for a preventive doctor’s visit, instead of a $20 copay we’d see far fewer visits to the doctor. Money matters, especially in today’s economy. Sounds like you’re good, though, and can afford the best health care money can buy.

    (I know Atul Gawande’s McAllen piece got huge attention, but you might like Gawande’s speech he gave to U of C med school grads last June. You can find it here:

    http://www.newyorker.com/online/blogs/newsdesk/2009/06/atul-gawande-university-of-chicago-medical-school-commencement-address.html – where he talks about the role doctors can play in this reform. Would be interested to know your thoughts on this speech.)

  50. Zic, I found your experience with Dirigo very interesting. I read a report on the Massachusetts system which said that one of the problems with it was that the consumer couldn’t access sufficient information to make a truly informed choice. Indeed, the Connector website won’t give a potential client the actual terms of coverage. Not until the client has purchased the policy will the actual language be available to him or her.

    This is a really huge problem for everyone who isn’t in Medicare. There are just way too many policies out there, even in those set ups which supposedly have minimum standards to which all the competing policies must conform. Even then, as in Massachusetts, there are a range of coverages, ‘tiers’, which have different co-pays and deductibles and co-insurances, in different combinations. In short, wherever for-profit insurance remains the primary source of coverage, there will be cost-shifting and risk-aversive behaviors.

  51. Stats Guy, Maggie Mahar over at Health Beat blog has an excellent post up which consists of a lengthy letter from an oncologist relating his experiences with the way reimubursement schedules have driven chemotherapy decisions, among other things. He also talks at length about how the kind of care everyone who ever gets cancer hopes to receive has a tremendous number of unbillable hours and services. It’s really worth reading.

  52. Bravo. Errol’s advice sucks (no offence errol).

  53. I agree we need to muddle the issues. We can’t just look at the fact that medicare is staffed by many fewer people making less money and consuming fewer resources. We shouldn’t just look at the low costs of running the program. Is this true efficiency? What is efficiency really? Can we be more efficient using an abacus? This is a subject for philosophical debates.

  54. Dirk van Dijk

    OK – following up on Alex’s recommendations from the article – could someone explain to me what

    “a competitive federalist system for insurance similar to that for corporate charters”

    would be?
    oregano

    It is known as a race to the bottom

  55. Be excited! says Ezra. Riiiiight…I’ll be excited when I’m again insured and my Congress isn’t overrun by shameless, whore-mongering buffoons.

  56. One thing for certain, as the HC debate continues, that the second most powerful oligarchy in the country is revealed: the health insurers, second only to the finance community in their control of Congress and the airwaves. In fact, they have far more control over public opinion, since the economic stage has been set by the financial oligarchs.

    The public option, according to the latest stories, is somehow still on the table, but there is mass confusion regarding what it will do. No clear examples have been presented publically, although if one wants to take the time to read the House bills, the truth can be sussed out. One thing for certain, unless the rates and practices of the health insurers are seriously regulated nationally, we will end up in the same place regardless, because they will cherry pick their policyholders, and all of the sick will be forced into the public option. That is still the best of all worlds to the insurers.

    Of course, single payer will ultimately succeed. Look at Ireland. They went to public insurance last year, and about half of their citizens opted to purchase some supplemental private insurance to improve their service delivery experience. The system is working well, but the cost is 44% of their governments total budget (Wow!!!). At least their people are, by and large, far better cared for than the average US citizen.

    I see no option on real reform except to have a public option, and to fiercely regulate the private insurers.

    The most infuriating part of the public debate (and there are many other), for me, is the idea the a public plan will result in rationing. There is always some rationing, but presently the system rations based on the profit/loss decisions of our health insurance oligarchs. Lots of deaths have resulted, and that is really scary.

  57. It’s only scary if you are still alive. Once you are dead, health care tends to matter much less.

  58. How does your tenth amendment feel about people developing a serious, chronic condition in a freedom-loving non-coastal state and then moving to a coastal state to live off the generosity of the socialists? Would you support allowing high-tax states to set immigration requirements?

    Medical expenses for people under 65 tend to be low-frequency, high-severity; a small percentage of the population accounts for the lion’s share of the cost. If you treasure state sovereignty to such an extent as to want each state to administer its own health plan, that’s fine, but then each state needs some mechanism of avoiding out-of-state people who know they are sick from entering and bankrupting the pool.

    Seems a bit more efficient to do this on a national scale, where the INS already has that job, doesn’t it?

  59. Generating a meaningful amount of medical cost control requires the intersection of two things:

    a) more-or-less explicit single payer (could be the Dutch/Swiss versions that are administered privately);

    b) the will to use the purchasing power of the single payer to drive down costs.

    Right now we have neither a nor b. A public option administered by Medicare – paying doctors Medicare rates, requiring doctors who do Medicare business to accept public option payment – would be a slow path to single payer. Whether the current version of “public option”, which covers very few people at high cost, will converge on single payer or failure is unclear. Even if we did have single payer, it still wouldn’t accomplish anything unless and until the payer decided to use its muscle. If you note the government’s refusal to do so with the drug makers, you will not have much confidence for the future.

    However, it should be fairly clear that the most expensive of all possible ways is the status quo. The public option MIGHT work; the status quo very clearly does not.

  60. My concern is that the “reform” will simply allow the private insurance companies to get all four feet in the trough (if you will forgive a blunt midwestern expression). And that the public option, as it now stands (and no, I haven’t read it) is designed to fail. When it has proved to be either impossible to access, or very expensive, or both–then the conservators will point to it as a failure of “government medicine” and use it’s failure to make it impossible to get real reform–either a heavily regulated insurance industry (as in Switzerland) or a single payer system (as in Canada).

    As someone who has hung in there, supporting the (inadequate from the get-go) bill as “better than nothing,” I am now not so certain. It may be time to start working against the health reform bill and hoping we can try again in a couple of years.

    My medicare coverage kicks in in a few months (I am currently unemployed, uninsured and holding my breath) so I will be ok. And I am truly embarrassed by the number of elders who seem to be reflexively opposing anything which would bring costs down.

  61. then the conservators will point to it as a failure of “government medicine”–Oh, dear, I did mean “conservatives” not “conservators!”

  62. Yes! Junk food and smoking increase the cost of health care. Here is how we deal where I live (British Columbia, Canada).

    (1) The sale of junk food is banned in school cafeterias and vending machines.

    (2) Smoking is banned in public places including restaurants and bars.

    (3) High tobacco taxes to discourage smoking.

    (4) Lawsuits against Big Tobacco to recover the cost of smoking related illnesses.

  63. When I hear the word “conservators”, all I can think is “reptilicans.”

  64. Anne, your $4000 deductible is relatively small to the catastrophic costs that take up 50% of the health care expenses in the US (http://www.ahrq.gov/research/ria19/expendria.htm#HowAre). 50% of all expenses are due to 5% of the population, with that 5% exceeding (not averaging) $11k per year. In fact, “those in the top 5 percent spent, on average, more than 17 times as much per person as those in the bottom 50 percent of spenders.”

    So, when I say a $2500 deductible is small (or $4000 in your case, which appears to be for a family, not a single person), I mean not in reference to income, but rather to the cost of what really comprises the majority of health care costs in the US. The money you are paying out below the deductible is rather small considering the study above. In other words, it’s not the small expenses adding up that makes health care expensive for society as a whole, but rather a small proportion of costs have great size. If you are not exceeding your $4k deductible, you are likely not significantly contributing to society’s health care costs, and therefore not realizing the cost levels that significantly consume our aggregate demand.

    The study above also implies that reducing preventive visits the doctor will have a minimal impact on reducing total cost, and rather may increase total costs (ounce of prevention == pound of cure).

    As per the speed you reference, I’ve actually read the articles comparing McAllen and El Paso, and similar to the speech, there is no conclusion that increasing deductibles and having patients bear more cost is the solution. The problem was over-prescription of high-margin work, treating customers as business.

  65. Frank,

    Let us set aside our quarrel over high-deductible. I doubt I can convince you that it will drive down costs and that, indeed, people, when faced with the actual prices of elective procedures and optional analysis, will make reasonable tradeoffs, and I just as much doubt that you can convince me otherwise.

    I’d like to instead focus on this:

    I do not see a solution that does not require everyone paying into the pot.

    I understand your sentiment, and even admire it to a point, but I must point out that you don’t see a solution that you are happy with that does not require everyone it pay into the pot. That’s tyrannical on your part: you have a vision of how healthcare should be paid for by society. I even be convinced that that vision is correct and workable. But there are other people see very different ways to manage healthcare costs. You should leave it open to those people to live as they see fit.

    That’s federalism. The price of getting to live like a Californian, etc. is that you have to let people in Alabama live as Alabamans wish, so long as they live within the bounds of the Constitution.

    Wouldn’t it be nice if it mattered far less who was President? Or who owned the Senate? (Besides the banks, I mean.)

    Cheers,
    Carson

  66. I keep telling you folks Republican Senator Chuck Grassley has already solved this problem. Republican Senator Grassley who has been working in Washington DC for decades has the ingenious idea we have been looking for!!! Thank you Republican Senator Grassley for showing us the light!!!! PLEASE PLEASE PLEASE click on this link to find the answer the nation and world has been looking for!!!!!

  67. My, er, our tenth amendment is indifferent towards that situation, so long as interstate commerce is not involved. The states with state-run healthcare are free to set whatever sort of limits and restrictions on state-provided treatment they see fit.

    Efficiency and liberty are only occasionally allies. That’s what makes preserving liberty so difficult: smart people are nearly all platonists at heart, and they look at the mess and say “Gah, what a mess. I can clean this up.” And down the path to tyranny we skip.

    The mess is a feature, not a bug.

    Cheers,
    Carson

  68. I don’t recall giving any advice. And my links were not posted as a result of a cursory google search as you sneeringly claim.

    I understand your point about people enjoying junk food for it’s taste, convenience, availability, and lack of knowledge and lack of skill, although I think you are adopting an unwarranted supercillious tone in your postings.

    The articles and reports cited are suggestive although they hardly prove anything conclusively. The fat argument you make is a plausible hypothesis but not fully justified by evidence.

    On the other hand, the Drewnowski study cited in the New York Times blog concludes: “The sharp price increase for the low-energy-density foods suggests that economic factors may pose a barrier to the adoption of more healthful diets and so limit the impact of dietary guidance.”

    http://www.adajournal.org/article/PIIS0002822307018007/abstract

    The reasoning shouldn’t be too hard to follow: when eating healthy costs more, people who barely have enough to eat can’t afford it as easily. Certainly, cost per calorie has some bearing when a person needs to have 2,000 calories a day and only has $4 with which to get them.

    Really the only point I was trying to make is that if you subsidized fresh fruit and vegetables so that they were cheaper per calorie than junk food and soda, you could probably get more people to eat more of them and eat less “slop” thereby improving the overall health of Americans. Hardly a controversial proposal.

  69. Problem is, since Shapiro v Thompson (back in 1969), that has not been legal. http://www.law.cornell.edu/supct/html/historics/USSC_CR_0394_0618_ZS.html.

    States’ rights have been a dead letter since the early spring of 1865. It has little to do with liberty and everything to do with the fact that we are citizens of one country, not fifty. I would be happy to reverse this – to have the US dissolve into its various states, free to recombine at will – but it will be hard for the non-coastal states to get used to doing without their welfare checks from the coastal folks.

    In the meantime, let’s find a solution that works for the entire country. The Constitution is not received wisdom; there is no need to venerate it at the expense of getting stuff done.

  70. I mostly agree, but believe the most expensive of all possible ways is enacting the reforms _without_ the public option.

    Moreover (as noted below), “driving down costs” can be accomplished through different mechanisms. If the mechanism is “driving down” compensation rates for the most cost effective procedures (doctor’s visits, GP/Internist basic exams, etc.) to squeeze GPs, while maintaining high compensation for hospital stays and expensive specialist visits and expensive diagnostics and expensive (but unproven) therapies… well, we get _exactly_ what Medicare is now delivering. And _precisely_ the opposite of the components of the UK system that are most cost-effective. That’s the point of the McAllen article, and it’s the point of the CNN article I linked below.

    http://www.cnn.com/2009/HEALTH/08/25/harris.primary.care.doctor/index.html

    And Team Obama’s plan does not fully address this. It mounts attempts to improve “evidence-based” practices, but is unclear on whether there will be “evidence-based” rules dictating compensation structures. Or, like the UK, evidence-based rules that dictate that many diagnostics/procedures do not get covered.

    One of the KEY aspects of the UK system is that expensive (but unproven therapies) are NOT COVERED. These therapies are therefore only available to people with very expensive high cost insurance policies of very high incomes. Moreover, it turns out that even though these things aren’t covered, and their hospitals are somewhat old and decrepit, the overall system still outperforms (largely because so much of the cost we experience is excess diagnostics and overtreatment, and poor basic health).

    In spite of the deceptive rhetoric on the right, I know a number of physicians that are very skeptical precisely because of the points above. The fear – especially among internists – is that the public system will simply attempt to squeeze more out of doctors by lowering compensation and demanding the same (or more) services. GPs/Internists, the backbone of the most cost effective systems in the work, are breaking in the US. No one is going into those fields.

    Moreover, the Medicare system doesn’t fully address differences across states… California (high cost) vs Ohio (low cost).

    Thus, I grow increasingly concerned – the government is incapable of deploying rules that ration care. It may therefore increase costs by increasing coverage, and to the degree it cuts costs many of these costs may come by squeezing doctors.

    In other words, we should be CONSUMING LESS HEALTHCARE, but instead, Team Obama’s Plan increasingly looks like it will CONSUME MORE HEALTH CARE, and possibly try to cut costs by squeezing doctors.

    I will not believe the commitment to cut costs is credible until I see the creation of an INDEPENDENT, doctor-influenced agency (like the FDA) which is charged with determining what the public option will cover/not using evidence-based analysis. And a strong commitment to alter the compensation schemes to encourage more payment for the most cost-effective services and less payment for the least cost-effective services. The plan as written is high on ideals, and low on practical measures.

    Until we get these, Team Obama’s promises lack credibility. Until then – although I favor many of the individual pieces of the health reform plan – I am against the plan overall.

  71. My fear is that the public option will _not_ result in rationing.

  72. Leonard Schoppa

    If Congress can’t accept a public option as a means to add choice and cost-containment to the health care reform plan, here’s an alternative: require that health care providers charge no more to any health insurance provider than they charge to medicare for all health services. That would allow the government, through Medicare’s fee schedule, to begin to bring health costs down.

  73. There are just way too many policies out there, even in those set ups which supposedly have minimum standards to which all the competing policies must conform.

    That’s a regional problem; in some places (rural, low aging population states like Maine), there aren’t enough policies; the only company for people who need to buy as an individual here is Anthem. Period. That, or go without.

  74. Dear errol, I apologize for any crimes of tone. However, keeping it short:

    1. To subsidize salad to the same price per calorie as junk food would be an enormous subsidy, as you can see from some of the links we’ve shared.

    2. And unecessary, because most people in the US aren’t struggling to hit their daily minimum caloric intake.

    3. And off-point, because those who are, are not obese and therefore do not tax our communal health insurance.

    If you’re like the average American, you’d likely find if you took a week and experimented that armed with some budget-conscious fruit and cut-up veggie snacks you can save money and lose weight simply by substituting these foods for your normal snacks – that’s not even including revamping your meal planning or learning to make balanced meals – while improving your nutritional intake.

    Subsidizing good behavior at the consumer level, when consumers have free choice, only works well when there is a powerful money incentive informing behavior to begin with. That’s something you are asserting and I am denying, and I think common sense is sufficient to make the case. For most kids, all produce is actually free, yet they tend to prefer junk food.

    There are periodically segments on NPR or the news concerning this or that NGO which contends with the complex factors informing poor eating choices among low-income and urban families. They reveal a lot about the complexity of the problem.

    The question would be, is the OP’s suggestion, which is not to subsidize health food, but to tax junk food, any more likely to succeed? We should oppose such a tax (and it highlights a danger of public insurance – we all develop an even stronger interest in each others’ formerly private vices) but it has been shown that very high taxes (more than 10%) coupled with public ad campaigns can help stem vices such as smoking. Are we ready to take on the food industry the way we have the tobacco industry?

  75. I don’t think your article pointed out one of the main aspects of its thesis–there are public OPTIONS under Medicare. Part A is mandatory, of course. But Part B is not, although almost all Medicare recipients elect to pay for this option. They do so in no small part because no PRIVATE INSURANCE plan available to provide supplements to Medicare will insure them if they do not.
    Finally, Medicare Part D (passed under George W. Bush with almost all the votes coming from Republicans) is an OPTIONAL plan. Obama and the Democrats have merely been too STUPID to point this inconvenient facts out to their opponents.

  76. I realize it’s inconveninet to compare a program that works, that almost everybody on loves, and that doctors have liked more and more over the years since it actually pays them on a swift and consistent basis and they don’t need a full time employee in their office to fight with the insurance companies all day every day to get reimbursed – with the current system of private insurance that doesn’t work. The reality is however that they are suppose to provide the same services and the govenment run program does a better job. Certainly the private option can happen in a vacuum, there needs to be incentive changes in the system with private insurers also. Why do you think there are so few general practioners now compared to specialists? It’s because private insurance pays more for specialized tests and prodecures and almost nothing for preventative care. Since almost all seniors need more tests and procedures than the average person, it’s not as much of an issue for Medicare receipients. Go to a retirement community, there are GP’s all over the place, being paid almost exclusively by Medicare. Go to a working suburban community with mostly families and people under 60, the waiting list for GPs is a mile long. Only pediatricians make lots of money, and that’s becuase the government has forced insurance companies to cover certain prevenative care for children, like yearly physicals, vaccinations, eye and ear exams, etc. So that profession works. OB’s also make money, because the government has mandated certain preventative care be covered for pregnant women, so many ultrasounds, exams and check ups, perscription vitamins etc. But there is no mandate for prevenative care for the average person between 17-65 whose not carrying a fetus. No incentive, no doctors.

  77. I differ from you on tactical grounds, but I confess I’m no expert on Congressional politics. My belief is that if we have reform without a public option, prices will go up and the subsidies will be insufficient. I think that will create more pressure to get a public option – or some other type of effective cost control – sometime in the next 5-10 years, and I don’t think we will go backwards towards the disaster we have now.

    However, if we get nothing out of this year, I think health care reform will be dead for at least 10 years (it’s been 16 years since Clinton tried).

  78. 5-10 years is an awful long time to continue living with this horror (all of it, not just health care).

    As a Peak Oiler I don’t expect the structure to be prop-uppable that long, not to mention all the other mishaps which can befall such a Tower of Babel.

    So my outlook on something like health care reform is that it’s imperative to get real reform before the real depression sets in, to ameliorate what will be tremendous economic pain regardless.

    When the struggle over diminishing wealth intensifies, it would be best to have as many mechanisms in place as possible to try to see that the people’s wealth actually goes to the people.

    (And, even if things don’t end up being so dire, even if the cornucopians ended up being right for awhile, it would still have been worth doing.)

    So my outlook doesn’t allow as leisurely a time frame.

    But even leaving that aside, I’m not sure how, if it’s not politically possible to get real reform now, how the intensified torment of the people for another ten years can change that in any constructive way.

    If you’re hoping for the bottom-up creation of a new people’s movement which would fight for and compel Change the way the treacherous Democrats refuse to, I hope for that too.

    But at least as likely is the crypto-fascism we’ve been seeing gaining traction. Or just the gradual grinding down of the people into terminal apathy and lassitude. In that case we’d only have permanently compounded the disaster we have now.

  79. how the intensified torment of the people for another ten years can change that in any constructive way.

    There’s always the possibility that pandemic influenza will kill 1/3 of them.

  80. Carson, (the website doesn’t seem to permit replies to deep threads), I agree that in general people should be allowed to formulate groups that have their own systems, but insurance systems are special case that don’t work if people are allowed to fluidly migrate from one group to another without cost. Notice I don’t say that all people in the world have to subscribe to the same insurance program — people do not migrate fluidly between nations, as there are many costs involved.

    If there was a way to ensure that people could not game the system by switching systems to their own benefit but at the detriment of the system, then I would consider a more “federalist” approach.

    I would like to point out that we do not allow people to drive without liability insurance, and no-one really considers this a travesty. People are forced into this insurance program, so that they do not incur costs to society without being obligated to pay into a pot. Allowing people to switch between insurance systems, as I noted above, allows people to not pay into the pot until they need to take from it.

    Lastly, given the complications with people migrating between insurance systems, having per-state systems is not a good idea as then inter-state employment mobility is limited. We don’t to restrict people from migrating freely between states because they haven’t paid into the communal pot for that destination state. Perhaps this can be worked out, but the devil is in the details.

  81. Good to see we are fairly close. I don’t know if reform without the public option is better or worse than no reform at all, because I don’t know what that reform would be. If the only changes were fairly modest and limited to the individual insurance market – no rescission, insurance exchanges, etc – then it would be a correspondingly modest help. If the substantive change – a mandate – came along without a public option, the system would be an unmitigated disaster. I’m with you there.

    On the broader point of whether a public system is an attempt to squeeze more money out of doctors, I would certainly hope so. That does not mean the best doctors to squeeze are the primary care physicians, however; it just means that doctors in the US are far better compensated than doctors in other OECD nations, and some pressure will need to be exerted on doctors as a group. One could as well say that the public option/Medicare should reduce compensation for specialist procedures.

    I disagree with you that we should be consuming less health care. I think we should be getting more health for our care dollar. We spend twice as much as the UK on health care as a percentage of GDP. I would be fine with this if we had significantly better health; my problem is that the system is simply not delivering. So either health is not affected by the medical system, in which case we should probably stop all spending on it, or there is a relationship, in which case we should ask why our system is so glaringly unable to provide what we are paying to receive.

  82. Agoraphobic Kleptomaniac

    I doubt it. First thing to go will be coverage, dropping certain expensive treatments. Then comes the doctor restrictions (even further). Then comes the dropping rates paid to doctors. Also, some versions of the bills are reducing the 80% coverage rate for insurance to pay down to 65%. The system is inherently built to hide cost and shuffle papers.

    It would be 10 years before increased Co-Pays and increasing premiums. I think they could cost shift for 10 years before anyone really noticed who cared enough to do anything.

    Utility type regulation for health-care in this country? I just don’t see it happening.

  83. D. Christopher Leonard

    The central problem with much of the commentary here-in is the category confusion between a social good and the ways in which state choose to pay for them.
    Healthcare is fundamentally, how a society responds to the facts of the human condition: natality, growth, decline, and death – that is all humans transit the life course. In this transit they ineluctably encounter disease, accident, congenital problems, etc. and ultimately, death. While each individual has a unique trajectory, all of them require at some times social support.
    This happens to be a cultural universal not the product of political liberalism (or another political philosophy). How societies manage this social fact is very various over time and space. Pre-modern societies with little or no scientific knowledge did so through religious ritual because there was no alternative.
    A reasonably just society allocates critical social goods in a relatively egalitarian way with consideration for need as an important criterion.
    How you organize the resources to provide these goods is a central role of the state. In the U.S. the state vouchsafes the market for medical services as a commodity like automobiles and hula hoops. There are alternative means.
    In contrast, insurance is a way of buffering risk: another commodity (think Sraffa?). All the alternatives about deductions or other modalities of insurance policies are merely playing with the commodity – like fins on a Cadillac. Because the treatment of illness and the costs of dying are treated as commodities, we already have rationing in the U.S. by the two means always favoured here: class and race (and gender too – given that insurance rarely pays for abortions, pays for male sex drug treatments but not for females).
    Much is made of “over-treatment”, defensive medicine, and medical over-consumption. This is certainly not a problem for the 45-60 million who are un- or under-insured. The homeless are not receiving whole body scans and botox injections. Most health economists estimate that a significant wastage comes from wildly inefficient management as it is fragmented by company, hospital, and practice.
    Insurance companies require a significant rate of return (for Aetna, United between 12-15% if I remember correctly): hence cherry-picking, cutting off insurance for the seriously ill, etc. Pharmaceutical firms are also immensely profitable (think about how much is spent on print and television advertising per anum). Most other national governments negotiate prices with them, here, congress expressly outlawed it for Medicare.
    It would make for greater rationality and efficiency to have a national risk pool than hundreds of fragmented pools distorted by class, race, gender, region, income as we currently do. We do it in other areas (e.g. clean water-sometimes, air, infrastructure, primary education). Note that most of the arguments advanced against a universal, single payer plan (that it involves rationing, would cost too much, would make the country economically uncompetitive) were trotted out against social security in the 30s.
    We also ought to consider both how the U.S. fares compared with other advanced economies on the human capabilities index and on medical outcomes. Taking the latter for example, the U.S. has finally achieved third world status in infant mortality rates (17th – below Cuba), life expectancy for males and females (lower than most of Europe). ((as for human capabilities, we might note that the U.S. has a higher adult illiteracy rate than any other OECD country, we now graduate fewer from high school (especially males). Finally, as everybody knows, we spend much more per-capita per anum on “healthcare” than any other OECD state and get far poorer results – barring the profits of drug and insurance firms.

    What needs to be investigated is the political pressures by various elites and the canaille they can mobilize against a rational plan for healthcare. For everyone genuinely interested in policy and politics, that is where your attention should be focused.

  84. Mr. Leonard…. huh?
    So healthcare is about how we respond to the facts of the human condition. I had a arts professor once tell me that art is a response to the human condition.
    And then as your ramble heads downhill thru the “human capabilities index”, you end up really furthering discussion by an ad hominem attack(very illiberal) on folks opposed to your point of view ….calling them “elites” and “canaille”. That really promotes civil discussion. Maybe the folks you don’t agree with just have a different idea about the “human condition”.
    Or more likely they just like to see and end to discrimination in healthcare insurance due to pre-exisitng conditions… human or not.

  85. This is a disingenuous post. Let’s squeeze the people that are providing the care! Yes! Oh, wait – healthcare providers get 21 cents of every dollar spent on healthcare in this country (Kaiser Family Foundation study, 2009). Simple math quiz – cut every doctor’s pay in half (don’t get me started about the difference between salaries for lawyers and CEOs in this country compared to “OECD nations”) and how much have you reduced healthcare costs? Crickets.

    And then there are no doctors left to practice and an even greater dearth in 10 years.

    I’ve made this point before: who among us has gas or food insurance? Insurance is a risk based strategy that DOESN’T WORK FROM A COST PERSPECTIVE when you use it frequently. As a physician I would think that all the statisticians on this blog would get that. We should be moving AWAY from an insurance model and toward a public health model (ie high deductible tax based public health insurance). Show me where the now morphed Obama plan does anything but the opposite of this.

  86. Yes! I agree. Why is rationing such a dirty word? Ten percent of the Medicare population consumes 67% of the total Medicare dollar. Doesn’t anyone think there’s some opportunity for reform there?

  87. Agoraphobic Kleptomaniac

    I think the “What could be Better?” question was a joke.

    Mandates to buy insurance from a for profit insurance company without a public option is something only a politician would come up with, and frankly, I don’t know anyone who is happy about that idea.

  88. Agoraphobic Kleptomaniac

    Jay:
    “Are we ready to take on the food industry the way we have the tobacco industry?”

    We’d better be. But i’d argue that we don’t need to tax junk food, we just need to stop subsidizing it. Corn Subsidies are the major problem with our food supply today. Without cheap high-fructose corn syrup to go into your hamburger bun, and into your special sauce, and cheap corn feed to give that Cow in the middle, that bigmac becomes a bit more expensive (or less desireable because the sugar content tricking your brain into wanting the bigmac is decreased). Most junkfood uses HFCS instead of sugar because of how much cheaper it is. First thing that needs to go is the subsidies of corn, then we can look to see how much further we need to go from there.

  89. Following up Anne’s thought, a high deductable plan does provide insight to how well intentioned medical community participants help feed the problem. I had a thoughtful Doc write a $500 prescription (when a $200 prescription would have sufficed) in an effort to avoid the mere possibility of my incurring another $20 co-pay.

  90. Where does public sewerage fall on the tyrannical scale?

  91. It’s the government totalitarians forcing the people to accept that their waste be sanitarily disposed, as opposed to giving them a choice of free-market sewage disposal options. Why should I have to pay so that other people don’t get cholera?

  92. a little night musing

    “Sometime in the next 5-10 years”? You do know, I hope, that in HR 3200 the insurance plans do not even begin to become available through the exchanges until 2013, and some parts do not kick in until 2018?

    We won’t even be seeing the start of the effects, or non-effects, until nearly the end of your 5-10 year period (if I start counting now).

    Add a few year for people to realize costs are not coming down, and…

    And meanwhile, we’re told no further action could be contemplated while we wait to see how this one works out. Maybe that’s the point?

  93. No, the point is that comparing administrative costs as a percent of claims paid (which is the metric used by those claiming that Medicare’s is more efficient) artificially and misleadingly favors Medicare, because (1) Medicare’s claims dollars per capita are higher (and administrative costs are NOT anywhere near linearly variable costs), and (2) (to the best of my knowledge) Medicare does not devote administrative resources to cost containment to the same extent (i.e, Medicare is much looser with authorizations of treatments than are private insurers).

    And the second point relates to another important made by a commenter here: administrative costs are not a large portion of total costs. For private insurers, total administrative costs PLUS profit are only 12% of premium revenues.

  94. http://voices.washingtonpost.com/ezra-klein/2009/07/administrative_costs_in_health.html

    A good summary of administrative costs in health care in the U.S.

  95. Of the 260 million Americans with health insurance, 85% are either satisfied or very satisfied with their insurance. Of the 48 million uninsured, maybe 6 million qualify for Medicaid insurance but have not been enrolled; another 6 million are in the country illegally, so they are not covered by any new system. That leaves 36 million or so uninsured… and msot people think it probably isn’t necessary to completely throw-out the existing system to get them covered. Massachusetts has proven that by covering 97% of residents without a public option… but with public subsidies. BTW, Sen. Kennedy supported the Mass plan.

    The purpose of health insurance reform is to achieve universal affordable coverage; coverage that isn’t necessarily tied to employment and coverage that doesn’t exclude people with health problems and coverage that won’t bankrupt the very sick.
    Punishing insurance companies isn’t a purpose of health reform; nor is rationing a purpose of health reform… though both get alot of attention in this posts.
    In 1974, Pres. Nixon proposed a universal healthcare plan… it would have used gov’t subsidies to allow poorer folks to purchase health insurance. However, it didn’t contain a public option and liberals didn’t support it… thus standing on “principles” the left created tens of millions of uninsured.

  96. Horray for Fox News!

  97. There are many interesting points in this blog but to Anne’s point it comes down to the costs the consumer pays, either directly or indirectly to a provider and insurance company or lower pay from their employer. A publioc plan it of itself is not the answerer but what it will do to the infrastructure of the healthcare industry. We need costs reduction from all involved. It is sort of teh 80 20 rule or more like the 87% 13% ruls since about 87 cents of every premium dollar is spent on medical costs, some of which 30% or so are not needed and are wasteful. So lets do some tort reform, comsumer paying transpanency, get the doctors out of the pricing bundling buciness with CPT ownership, revamp research wher dollars by the NIH are directed to collaborative models, create incentives for the use of precsion medicine and disincentives for the use of poorly outcomed procedures, and start with the basic premise of getting people into the system and increase the subsidies to get more primary care docs to helps them with wellness programs and yes those who do not, obese or high risk life styles should pay higher premiums for behavoir they can control or seek help to fix it. It will take structural changes on all our parts but will be worth the effort, a healthly country is a strong country.

  98. I don’t watch Fox News ever. The numbers I used for uninsured, I heard on PBS NewsHour with Jim Lehrer.
    Nixon’s proposal, also called the Nixon-Kennedy Bill at the time, is a matter of history… look it up. If it has passed 30 years ago, universal care would have been as ingrained as public policy as Medicare is now.

    Here’s an interesting quote from today’s LA Times…

    “Reporting from Washington – With a virtual civil war raging over parts of President Obama’s healthcare agenda, the smoke of battle has obscured a surprising fact: Democrats and Republicans actually agree on a bundle of proposals that could make medical insurance better for millions of Americans.

    The consensus proposals include such popular ideas as barring insurance companies from denying coverage to people with preexisting injuries and illnesses, cutting insurance coverage off when a policyholder gets sick and imposing a lifetime cap on benefits.

    The “reforms are quite possibly the least controversial of all the issues in health reform — and among the most important,” said Drew Altman, president of the Henry J. Kaiser Family Foundation, a nonpartisan research group

  99. I think you may have missed some of the discussion then.

    http://www.consumerreports.org/health/insurance/best-health-plans/overview/best-health-plans-ov.htm

    http://baselinescenario.com/2009/08/05/you-do-not-have-health-insurance/

    http://www.washingtonpost.com/wp-dyn/content/article/2009/08/11/AR2009081100048.html

    http://allnurses-central.com/us-politics/cnn-truth-squad-417339.html

    I know all of this, but I personally happen to enjoy disseminating the false information spewed on fox news to help build a society that no one will want to live in. Cheers!

  100. In this health care debate I have not seen much on the issue of the tax-free employer-paid health insurance. First of all, I’m all for single-payer insurance, which, in my thinking, is essentially a single national non-profit insurance company. However, assuming single-payer is not in our immediate future, I think the question of tax-free employer-paid health insurance is a major issue to be considered. My reasoning says that tax-free employer-paid insurance is the primary cause of over-priced insurance resulting in over-priced care. This employer tax deduction has taken employee health care dollars out of the hands of each citizen. The health insurance companies love this arrangement because they then control the market, or in effect there is no market. Health insurance companies, like most American businesses, do not want to compete in a market but instead want to control their market, and they will do this by any means. They will lie, they will cheat, they will steal, and they will use tax deductions. If the employer tax deduction for health insurance were eliminated tomorrow, what would happen? This is not a rhetorical question, I would like answers to this question from this elite group of erudite bloggers. My understanding is that employees would eventually gain control of their health insurance dollars and health insurance costs would be reduced as a result of a true market place for health insurance. Health care costs would also be reduced because there would not be any excess dollars in the system as there are now. It is my belief that excess dollars in the health insurance industry fuel the excess costs in the health care industry. With lower health insurance and health care costs the number of uninsured would be reduced from the present 47 million. Even with the elimination of the tax deduction we would still need the availability of public non-profit health insurance.

  101. In this health care debate I have not seen much on the issue of the tax-free employer-paid health insurance. First of all, I’m all for single-payer insurance, which, in my thinking, is essentially a single national non-profit insurance company. However, assuming single-payer is not in our immediate future, I think the question of tax-free employer-paid health insurance is a major issue to be considered. My reasoning says that tax-free employer-paid insurance is the primary cause of over-priced insurance resulting in over-priced care. This employer tax deduction has taken employee health care dollars out of the hands of each citizen. The health insurance companies love this arrangement because they then control the market, or in effect there is no market. Health insurance companies, like most American businesses, do not want to compete in a market but instead want to control their market, and they will do this by any means. They will lie, they will cheat, they will steal, and they will use tax deductions. If the employer tax deduction for health insurance were eliminated tomorrow, what would happen? This is not a rhetorical question, I would like answers to this question from this elite group of erudite bloggers. My understanding is that employees would eventually gain control of theirwhealth insurance dollars and health insurance costs would be reduced as a result of a true market place for health insurance. Health care costs would also be reduced because there would not be any excess dollars in the system as there are now. It is my belief that excess dollars in the health insurance industry fuel the excess costs in the health care industry. With lower health insurance and health care costs the number of uninsured would be reduced from the present 47 million. Even with the elimination of the tax deduction we would still need the availability of public non-profit health insurance. An added benefit of eliminating this tax deduction would be that health insurance companies would have one less reason to contribute to congressional campaigns.

  102. What about the issue of the employer tax deduction for employee health insurance? This is the single largest cost to the U.S. Treasury.

    In this health care debate I have not seen much on the issue of the tax-free employer-paid health insurance. First of all, I’m all for single-payer insurance, which, in my thinking, is essentially a single national non-profit insurance company. However, assuming single-payer is not in our immediate future, I think the question of tax-free employer-paid health insurance is a major issue to be considered. My reasoning says that tax-free employer-paid insurance is the primary cause of over-priced insurance resulting in over-priced care. This employer tax deduction has taken employee health care dollars out of the hands of each citizen. The health insurance companies love this arrangement because they then control the market, or in effect there is no market. Health insurance companies, like most American businesses, do not want to compete in a market but instead want to control their market, and they will do this by any means. They will lie, they will cheat, they will steal, and they will use tax deductions. If the employer tax deduction for health insurance were eliminated tomorrow, what would happen? This is not a rhetorical question, I would like answers to this question from this elite group of erudite bloggers. My understanding is that employees would eventually gain control of theirwhealth insurance dollars and health insurance costs would be reduced as a result of a true market place for health insurance. Health care costs would also be reduced because there would not be any excess dollars in the system as there are now. It is my belief that excess dollars in the health insurance industry fuel the excess costs in the health care industry. With lower health insurance and health care costs the number of uninsured would be reduced from the present 47 million. Even with the elimination of the tax deduction we would still need the availability of public non-profit health insurance. An added benefit of eliminating this tax deduction would be that health insurance companies would have one less reason to contribute to congressional campaigns.

  103. William. There is nothing worse than an eloquent, yet uninformed individual. First, DHHS reports that over 55% of employers “self fund” their health plans. This is not “insurance” at all. The employer hires a third party administrator to process claims and pays them out of their own coffers. As a plan administrator for a large self-funded company I can assure you that we are not being “ripped off” by insurance companies We control our health care expenses by encouraging health behavior from our employees, which achieves a dual and mutually beneficial objective of lowering the cost of our medical coverage, while improving the health of our employee group. In prior times (pre-self funding of the plans), we did use conventional medical insurance and this was put out to bid each and every year and awarded to the best quality provider with the lowest cost. All of the public option and single payer options completely miss this point. We, as an employer, simply do not want to subsidize people who have no incentive to remain healthy, or employees of other employers who do not see fit to do as we do in this area. The (in your words) “tax free” status of health care simply allows us to provide quality health care to the small segment of the population we do. Taxing of medical benefits would be completely counterproductive and would lead increasing numbers of employers to abandon their plans as non-economic. Another part of this debate omits the fact that the largest “insurance” providers in nearly all 50 states are Blue Cross/ Blue Shield affiliates, all of whom are chartered as non-profit corporations. When you eliminate all of the people enrolled in self-funded employer health plans and in the “Blues” network, the actual number of people that those evil private health insurance companies control is very small and they already have to compete with non-profit Blues providers. These firms have huge risk, low returns and very low administrative costs and high efficiency. I know of no single government program that has any semblance of efficiency and absolutely no expectation that a public option program would fare any better. The public option needs to be called what it is: taxpayer funded insurance for those who cannot or will not pay on their own. I would submit that a better solution would be to offer those tax credits to employers who would provide health care, which would have the double benefit of keeping many of them in business and helping the unemployment situation.