Obamacare

Just Because You Can Force An Issue Doesn't Mean You Can Solve It

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Once in a while, an ObamaCare supporter will admit that the law might not succeed in controlling costs very well. But, the line usually goes, at least it will force the issue. That may be right. But just because you've forced the issue doesn't mean you've genuinely resolved it.

Witness what's happened in Massachusetts, where RomneyCare has certainly forced the issue of rising costs. Yet aside from desperate, foolish attempts to put arbitrary (and actuarily unjustifiable) price controls on health insurance premiums, raising the issue has yet to lead to any significant action, much less a working solution. In 2009, for example, a commission set up to look at health care costs urged a series of payment reforms, including getting rid of fee-for-service payments to providers. But a little over a year later, efforts to implement the plan are stalled:

A state commission recommended a year ago that Massachusetts adopt a new cost-conscious payment system and do so quickly, but a large number of issues remain unresolved. Consumer groups and some lawmakers, for example, want the legislation to guarantee patients freedom to choose doctors and hospitals, while other lawmakers and state officials believe that some limits are necessary for the plan to really save money and improve care.

Senate leaders and the Patrick administration disagree about how much authority a board that would oversee the new system should have over the actual fees paid to providers. And hospitals have been all over the map; some want the state to provide additional money, perhaps through higher Medicaid payments, for the technology that would allow them to help better coordinate patient care. But the state budget is already extremely tight.

As Arnold Kling and Michael Cannon have argued at some length, fee-for-service payment systems create significant problems. Yet payment-system reform of any kind still faces tremendous hurdles—the main reason being that while just about everyone pays lip service to the idea that we need to cut medical spending, no one wants their services or payments to be cut. Doctors, naturally, want to keep getting paid every time they do something, and patients, who typically don't shell out directly for the bulk of their medical costs, want doctors to have the fee-for-service system's incentive to do more rather than less. At the same time, politicians don't want to be seen as shorting doctors, or as passing payment plans that might reduce consumer choice.

That leaves insurers stuck in the middle. The increased costs of care and the increased costs of regulation lead insurers to increase premiums. But steadily increasing premiums, as well as a reputation for stinginess with reimbursements, tends to increase public antipathy toward the entire health insurance industry. That makes insurers political targets, which leads to moves like Gov. Deval Patrick's arbitrary rate caps. Along the way, the whole system begins to break down—and all the while, costs are still going up, and no one has figured out a way to hold them down. When it comes to rising costs, RomneyCare has certainly forced the issue—but only by making it worse. Expect the federal overhaul to do the same.

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  1. As Arnold Kling and Michael Cannon have argued at some length, fee-for-service payment systems create significant problems.

    If they want to argue that fee for service payment causes problems when the patient has no financial obligation I won’t argue. Those problems are, of course, rising costs.

    Of course, capitated payment systems also cause problems when the patient has no financial obligation. Those problems are different, consisting of declining access to care.

    If there were only some common thread in these broken payment systems that we could identify . . . .

    1. But …But…RC!!! Free healthcare for all! Disease will be eradicated and all the little children will be free from recission! Gammy can get that new hip and CABG and Pappy can get that Dendreon! Everyone will be healthy and happy! Doctors will be put in their rightful place, the greedy bastards! It will be panacea, peace, love and humptiness when we eliminate the profit motive from healthcare!

      1. I love posts like this, because they give me hope that I will get my unicorn that will shoot gold bullion out of its arse very soon!

      2. But can you doctors sing like the slaves of yore could? I could really go for a good physician spiritual, like Uncle Remus in a lab coat-type thing.

        1. ? “There’s a little valve op’nin in my heart…

          There’s a little valve a closin’ in my heart…

          In my heart…

          In my heart…

          There’s little valves a workin’ in my heart…” ?

    2. Putting significant financial obligation on the patient can cause problems of its own. Lack of preventative care, etc.

      Unless we’re societally willing to treat people who come down with life-threatening illnesses like we treat cars with blown engines, making patients pay directly is not the silver bullet you seem to think it is.

      Of course, I don’t think socialized medicine or the current system is a good idea either. It’s a mess all around and every possible solution has some serious problems with it.

      1. Lack of preventative care

        Which is incumbent upon the patient Tulpa. If one’s new iPhone is more important than setting aside money for a yearly or bi-yearly physical or getting a shiny new Mercedes than investing in a health policy while the patient is healthy, I hold little sympathy.

        Unless we’re societally willing to treat people who come down with life-threatening illnesses like we treat cars with blown engines, making patients pay directly is not the silver bullet you seem to think it is.

        You have heard of the Shriner’s, no?

        every possible solution has some serious problems with it.

        Very true. Perhaps we should ask the dentists and look at the dental model of care. Now that is true insurance, unless you believe that everyone has a right to dentures and cosmetic dentistry.

        1. You have heard of the Shriner’s, no?

          So the sum total of your argument for how to deal with critically/terminally ill individuals whose care will vastly outstrip their means is…charity?

          You have been living in a political vacuum if you thing that perspective has a chance in hell of getting even significant minority support.

          Tulpa’s point is that the general populace is a long long way from being willing to marginalize those who have high costs due to medical conditions.

          1. So the sum total of your argument for how to deal with critically/terminally ill individuals whose care will vastly outstrip their means is…charity?

            Makes Dr. Berwick’s and Mitt Romney’s equally ludicrous then, as they support “encouraged charity”, AKA coercion. In short, yes. People will then realize how expensive medical care really is.

            Tulpa’s point is that the general populace is a long long way from being willing to marginalize those who have high costs due to medical conditions.

            I am well aware of Tulpa’s point. However, when the populance writ large is on the hook for other’s care, that attitude will change rather quickly. It is the biggest crack in the Tea Party’s and TEAM RED’S armor: they will not recognize that CMS is part of the problem, and government will starve CMS in favor of Obamacare.

          2. Tulpa’s point is that the general populace is a long long way from being willing to marginalize those who have high costs due to medical conditions.

            I think it’s useful, however, to have someone in the arena of ideas actually proposal a solution that won’t either bankrupt the nation or put on the road to it. It’s all well and good to say that the thing that really works isn’t politically popular, but if we truly want to solve the problem we can’t ignore even unpopular solutions.

            1. Moreover, we’re all missing the point that if an individual insures themselves when they are young and reasonably healthy in order to insure against the possibility of an expensive and lengthy medical issue, the catastrophic cost argument loses its force because the insurer will be obligated to finally pony up for that care.

          3. If the patient has no money and still is treated, then the only two choices to recover the money are charity (willful contribution by society’s members) or coercion (forced contribution by society’s members, aka theft). I’ll take charity any day.

            Americans have historically been very generous to charity, and that continues to this day even though our paychecks are thoroughly abused by those who think they know better how to spend our money. Charity is given; taxes are taken at gun point. Which do you think is more moral?

            Of course, that’s why it’ll never be allowed by our betters…

  2. In a perverse way, I’m looking forward to the liberal reaction when they realize that someone else will be tasked with saying “no” after the insurance companies are run off.
    But then, I also like rubbing salt in Bills’ fans’ wounds.

    1. But that’s just what the regressives are waiting for. They’ll finally be the ones who get to say “No.” Then the social engineering door will be busted wide open.

      1. And I’ll stand outside that office in a wearing a black robe and carrying scythe and chant the palinesque:

        “Death Panels”

    2. They will blame it on “those Republicans” anyway.

    3. I hate you.

    4. That is the wrong battle line to draw. The sense of medical entitlement among the American populace needs to be beaten down. In both a Free Market and a Single Payer system, NO will always be a driving force. It’s who controls the NO that’s the real fight, government bureaucrats or private technocrats.

      Getting Americans away from this absurd fantasy of unlimited care is a worthwhile goal.

      1. “It’s who controls the NO that’s the real fight, government bureaucrats or private technocrats.”

        This is a really well-phrased point. I think the government-sector of health care has been trying to make it seem as though government bureaucrats are less stingy and less privately invasive (“more compassionate”) than private technocrats. They’ve done this by running up massive bills in medicare, medicaid, and the rest without doing any of the belt-tightening expected of a responsible system. If people ever see what medicare is like when the bureaucrats are in full-on penny-pinching mode (granny should give that hip a full year before we’ll pay for replacement, etc.), they’ll begin to see that the private technocrats are not so bad by comparison.

  3. What do you mean, forcing the issue doesn’t solve it? After all, “Starve The Beast” worked so well..

  4. Since Medicare covers my Viagra, I don’t have to force the issue!

  5. This actually reminds me a lot of the Kyoto protocol. Back when I was a meteorology grad student, I argued with my colleagues about whether one should support a “solution” that clearly won’t actually solve the problem (as everybody knew was the case with Kyoto). Pretty much everybody who supported Kyoto justified it by saying, “Well, it’s better than doing nothing!”

    1. That’s the same thing I hear from people who support cap & trade.

    2. The assumption that doing something is better than doing nothing is at the root of an awful lot of problems.

      1. Well, the idea that government is the best (or only, for some people) means for doing something contributes a bunch to the problem.

      2. What? You’re not making any sense.

        1. Well, I’m a veteran…

    3. For some reason you don’t get this same mentality from liberals when it comes to school vouchers.

  6. Healthcare costs will never come down as long as insurance is treated as a third party payment system instead of, you know, insurance.

  7. Putting significant financial obligation on the patient can cause problems of its own. Lack of preventative care, etc.

    If an individual experiences problems because of their individual decisions (such as not seeking preventive care), that’s, well, the way it is supposed to work.

    However, problems created by broken state-mandated systems are another kettle of fish.

    Unless we’re societally willing to treat people who come down with life-threatening illnesses like we treat cars with blown engines, making patients pay directly is not the silver bullet you seem to think it is.

    My thought that people should bear some financial responsibility in no way implies that they should bear all financial responsibility, or that no financial assistance or insurance should be available.

    1. However, problems created by broken state-mandated systems are another kettle of fish.

      THIS! This, folks, is gold. I firmly believe the root of a great many problems with health care delivery rests firmly in state legislation.

      My thought that people should bear some financial responsibility in no way implies that they should bear all financial responsibility, or that no financial assistance or insurance should be available.

      Agreed. For catastrophic care, I do think there should be some sort of relief; that comes in the form of insurance. Folks, there IS charity care out there and there are ways to help defray cost of care. It takes work, but it can be done. Non-profits and payment specialists at hospitals are willing to help people who are in dire straights.

  8. There exists, far off, a race of Nordic Supermen whose every policy is a whitely shining example for us to follow. But Americans, sullied, unperfected, resist the angelic call.

    Imposing a worse-than-socialist system on them, an inescapable RomneyCare for everyone, will weaken their resistance to SuperWhitey’s divine guidance.

    And the “issue” will be “forced.”

    BORK BORK BORK

    1. Expanding a system 30+ fold may not always yield the same results. Scaling effects and diseconomies of scale and all those other fun issues.

      1. He was kidding. Seriously, though, the gap in life expectancy between Swedes and Americans has not budged since universal healthcare was enacted in Sweden.

        1. I thought he was referring to 1930s and 40s Germany…

  9. As a Mass resident who pays out of pocket for private insurance (BCBS), who talks to those affected, and who reads the local news, RomneyCare has been a total bust. Insurance regulation, driven as Peter says by political expedience rather than market reality, is a wonderful thing for Gov. Patrick’s re-election hopes, but it’s destroying private insurance in this state. Each year I get a letter from BCBS telling me my PPO no longer meets state standards and changes are coming. Yet my PPO is FAR superior to the state’s own insurance program. Slowly but surely the state is squeezing private insurance companies out of the game… it’s the only way it can attract enough customers to remain, even if costs to the taxpayer (direct and indirect) continue to rise.

  10. The sense of medical entitlement among the American populace needs to be beaten down.

    Exactly.

    In the not-so-distant past, people expected to pay out of pocket for doctor’s office visits. The third-party payer system has led people to believe they should never, ever, have to spend a penny of their own money on health care.

    1. At least not more than $25.

    2. I know. Why is it that people who have hundreds of dollars to pay their mechanic when their car breaks down never have a penny to pay their doctor when they get sick?

      1. Oh, I see where you’re going with this, R C. “My car depends on me as much as I do on it.” “It’s a part of the family.” “I have a right to a dependable car.” “This is the wealthiest nation on Earth and we don’t even protect our cars.” “Etc.”

  11. Massachusetts is working hard to prove Friedrich Hayek right.

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