America's Incoherent Approach to Health Care

From a Kaiser Health News interview with former Congressional Budget Office director and current American Action Forum president Douglas Holtz-Eakin:

Fundamentally, what we have in all our health programs is the following: We say to beneficiaries, you can have all the highest quality medical science that we can provide. And we say to [medical] providers, 'God, that's expensive! Stop it!' And we cut back their payments or tell them not to do stuff. Then the beneficiary says, 'But you said,' and we go back and give it to them. It's incoherent.

Comments

[Pro Libertate]

Even within the current system, which is maybe a third or more socialized, why shouldn't we try to remove the barriers to competition, particularly in health insurance? If the Democrats weren't so obsessed with a European-style socialized system, I think they wouldn't fear that sort of deregulation, which would, of course, help to reduce premiums. Perhaps dramatically so after the market got going.

There are other reforms necessary, but that would be a huge start. Naturally, I'd prefer a whole lot less government intervention, which I believe has driven up the costs more than any other single factor, but some serious deregulation would improve the situation for most people even with Medicare, etc.

[West Texas]

I think you answered your own question. "Fixing the system" isn't the goal; the goal is enlarging their own power, expanding dependency on the government and establishing a permanent constituency.

That so many freeloaders are enamored with the idea is a bonus for them.

[sarcasmic]

They don't want competition because that leaves companies free to make their own decisions, free to set their own prices, and leaves consumers free to choose that which they like best.
That kind of freedom is bad.

Instead what politicians want to do is free businesses from making their own decisions, free them from setting prices, and free consumers from choosing what policy best fits them.
That kind of freedom is good.

Only when all your choices are made for you and all responsibility is taken away from you will you be truly free.

[Mainer]

Oh how I wish that was a parody of progressive thought.

[sarcasmic]

progressives think?

I thought all they did was emote.

[Mainer]

point taken

[Tony]

So if government is the problem, why have Medicare's costs risen at a slower pace than private insurance?

[Mainer]

Don't...please...just don't

[West Texas]

They haven't. The government just refuses to pay for certain treatments or pays way below the market rate for those procedures and as result they're less widely available.

The "cost" of the illness remains, it's just borne by a decreased quality of life (or outright death) of the sick person, who has to wait longer to get treatment (because there are fewer doctors) and often doesn't get fully cured because the cure "costs" too much.

Money spent is not always the same thing as costs.

[Mainer]

Fuck. Let the boredom begin.

[West Texas]

Sorry dude, was already typing it when you responded.

[fresno dan]

Not only that, but when you get to set the goalposts whereever you like, its easy to score.
Kinda like how the gubermint says there is no inflation. (I love paroding the "The Village" because it captures so well how the gubermint ignores what it can't fix)
Except that inflation of which we do not measure. We measure that inflation that is the inflation, and the inflation that we do not measure is not inflation, or is not inflation that is important inflation to measure, and that is why we speak not of the not measured inflation. And that is why there is no inflation...

[West Texas]

"Core inflation" is an enormous scam perpetrated solely for political reasons.

[KPres]

"Money spent is not always the same thing as costs."

I've never met one who understands opportunity cost.

[sarcasmic]

Because when private insurance doesn't pay hospitals it is a crime, but when the government doesn't pay hospitals it's business as usual.

Hey Mainer, is LePage paying Maine Med that $300,000,000 in back bills yet?

[Mainer]

Having helped elect LePage, I've moved to New Hampshire recently, so I really don't know. OTOH, I get to vote in the NH primaries, so I got that goin' for me.

[sarcasmic]

OMG how will you survive without sales tax or income tax?

The horror!

[Mainer]

Yup, EXACTLY why I moved.

[Old Mexican]

Re: Tony,

So if government is the problem, why have Medicare's costs risen at a slower pace than private insurance?

Ha ha ha ha!!! That's funny, because you conflate "cost" with "whatever the government feels like reimbursing doctors."

You are such a cad, Tony!

[Tony]

Because insurance companies let customers go absolutely wild with the procedures they're willing pay for...

[Old Mexican]

Re: Tony,

Because insurance companies let customers go absolutely wild with the procedures they're willing pay for[...]

God forbid we have customers pay for what they're willing to pay for!

The humanity!

Now, getting back at this "Medicare is better because its costs grow less" stupidity...

[sarcasmic]

Government can pay for anything because it has a money tree.

[West Texas]

That's where Obama gets his stash, after all.

[KPres]

Because insurance companies let customers go absolutely wild with the procedures they're willing pay for..."

This is such a dumb argument. Insurance companies profit at around 3%. They only way to cover more procedures is to raise rates.

Anticipating Tony's canned liberal respose:

"They can cut the executive bonuses!"

Executive pay is even less significant than profits as a percentage of total revenues.

[sevo]

Tony|3.18.11 @ 11:06AM|#
"Truly ignorant question, based on circular argument"

Thanks, Tony, good start.

[KPres]

So if government is the problem, why have Medicare's costs risen at a slower pace than private insurance?

You can't be serious.

Hospitals lose money on Medicare procedures, and make up the difference by overcharging for procedures paid by by private insurers. So of course Medicare grows more slowly than private insurance. Private insurance is paying for it!

Nothing new though. The best thing Socialism has going for it is that it's incredibly easy for the state to manipulate statistics to make it look like Socialism works. The Soviet Union avoided public backlash for 50 years doing just that.

[The Enforcer]

Because providers price discriminate to cost shift disproportionately to the private payers...you dolt.

[crossofcrimson]

"So if government is the problem, why have Medicare's costs risen at a slower pace than private insurance?"

Tony,

As someone who works in the medical billing industry I can safely say that "West Texas" is fairly correct. But I'll push his point even further. Even given the medicare and medicaid denials (which are plentiful, just like the private sector), the difference between what these programs pay and the actual cost of the procedures are born by either the providers, the patients, and/or subscribers in general. Of course if you, as government, essentially force a provider to accept a payment that covers roughly half the price of the procedure, you can say that the program's cost is lower. It doesn't mean that the cost of care has been effectively lowered. It's like walking into a store and paying 25 cents for a bottle of water at the point of a gun. You could say you paid less for the water. You can't say you lowered the cost of the water - you just pushed it onto someone else.

This is part of what's infuriating about many of the proponents of the ACA who claim that programs like medicare push down costs. Simply put, this is just the result of a poor understanding of economics. No, it doesn't push down costs. It comes at the cost of providers and their employees, or at the cost of subscribers when hospitals and insurance companies have to negotiate terrible schedule fees for their networks. And the tragic irony of the latter is that it pushes up the premiums of the insured within the private market, making health care even less affordable for those who can only afford it at the margin. Insurance companies and providers already share a somewhat antagonistic relationship - this doesn't help.

I think what blinds people to some of these simple truths is the fact that roughly half of the health care market has been essentially subsumed by public programs. When government thinks it's "lowering the price of gas" by setting gas prices, for instance, producers and distributors have no refuge. The result is essentially shortages...rationing. To the extent that service providers have been able to counter those offsets cutting employees or raising fees, and to the extent that the insurance companies in turn have been able to counter these increased fees by raising premiums, it's all ultimately resulting in less total healthcare, of less general quality, being administered at a higher price. That's the explicit result of the half-private/half-public system that we have in place now. In some sense, economically, it's the worst of both worlds.

As libertarian as I am, government would make a much better case for what they do if they simply had a means-tested subsidization of individuals (and I mean directly to those individuals) whom cannot afford insurance, or subsidized non-profit public clinics (of which means-testing would preclude service) than what they're doing currently by simply shorting providers forcibly and making believe that they're doing anything to address the cost of care.

But that's just my two cents.

[Chris]

"As libertarian as I am, government would make a much better case for what they do if they simply had a means-tested subsidization of individuals (and I mean directly to those individuals) whom cannot afford insurance,"

Agree with the sentiment and:
1) How low/high do we go in defining "can't afford"?
2) To what level should we indirectly subsidize someone's poor self care via paying for their appropriately raised premiums?
3) How do we manage the "uninsurables" (i.e. the 48 year old smoker with Type 2 diabetes and his first heart attack)?

[crossofcrimson]

"Agree with the sentiment and....."

Let me first say that there are lots of things I'd support over what laid out there as an alternative. But my point was that I would have preferred something like what I mentioned over what's actually being done. I just don't want anyone to be confused on that point.

That being said:

1) I'm not an expert regarding means-testing or even that familiar with critical variables that would be most suited for means-testing when it comes to medical insurance subsidization. So I would defer opinion on those matters to economists and experts in various aspects of social work before I'd give my own.

2) In many ways this would be the most difficult part but I think it would fall back on appropriate means testing. We can make any number of compromises to make it palatable, all the way and up to including outright denial for people based on such criteria. Or we could have a score system that would limit the compensation for based on a number of factors. Of course, there would be controversy here - particularly regarding obesity. But, again, I still find something along these lines preferable.

3) This is obviously a very pertinent question as this is a large focus of the current manifestation of the ACA - and for the purpose of this hypothetical, let's assume that the person's un-insurability, as it were, is not his own fault per se. This would obviously, I think, again tie into whatever system of means testing we arrived at. I think that, arguably, a person who has been, for instance, just laid off, loses his insurance, and now cannot find affordable plans because of some condition is the exact person the ACA was designed to help - so if that's what we're concerned about, they should get the most support I suppose. The first and most obvious thing we could do, outside of direct subsidization, is to try to effectively sever the tie between insurance and employment. I think this would not only fix the problems of the people we are primarily concerned with, but also give us the political and social will/capital necessary to come up with a fairly useful means-tested system (and not one that simply cuts checks left and right).

I know these really aren't substantial answers in themselves (as what I'd propose is different than this alternative), but I think there are professionals out there who could sort through a good deal of this better than I can while following along similar lines. Of course, I don't think this will happen in any case. It's still worth exploring.

[Peter Suderman]

Instead, PPACA institutes mandatory minimum loss ratio requirements that are expected to push carriers out of the market and result, overall, in increased consolidation.

[Spencer]

Of course. It's the only sensible option for those who are smart enough to REALLY understand what's going on. Perhaps if they explained it to us again we would get it. Maybe if we asked them to use small words so our little minds can comprehend why this really is such a good idea. Just have faith in them, they'v never steered us wrong(ly?) before.

[wylie]

Sen-si......whoa, slow down there, Smart Guy.

[DNS]

PPACA

Couch duty sucks, doesn't it?

[?]

He's very free with pronouns. Maybe our not clearly defining who's "I," "you," "they" and "we" when we make all these plans for us is the coherency problem here.

[Daffy Duck]

Pronoun trouble: it's not "He doesnt have to shoot YOU now", its "He doesnt have to shoot ME now". Well I say he does have to shoot me now so....SHOOT ME NOW!

[Michael Pack]

we also expect a third party to pay for it,the government or employer.And hey,it's not income,it's a benifit ,so,no income tax and a deduction for the boos.Now if youpay your own well...not to mention that we expect it to cover ALL expences.

[Old Mexican]

"Fundamentally, what we have in all our health programs is the following: We say to beneficiaries, you can have all the highest quality medical science that we can provide. And we say to [medical] providers, 'God, that's expensive! Stop it!' And we cut back their payments or tell them not to do stuff. Then the beneficiary says, 'But you said,' and we go back and give it to them. It's incoherent."

But ALL of that will go AWAY once we have universal single-payer coverage!!

All.

Of.

It.

Right?

[wylie]

Well, yeah, because the providers will lose their sweet gov't positions if they don't follow orders. *dusts off hands* Problem solved.

[George Carlin]

Something you'll never hear a man say: "Stop sucking my dick now or I'll call the police."

[P Brooks]

It's incoherent.

That's not the term I use.

Not even in "polite" company.

[GSL]

Fundamentally, what we have in all our health programs is the following: We say to beneficiaries, you can have all the highest quality medical science that we can provide. And we say to [medical] providers, 'God, that's expensive! Stop it!' And we cut back their payments or tell them not to do stuff. Then the beneficiary says, 'But you said,' and we go back and give it to them. It's incoherent.

Wow, is this the first time someone's pointed out a serious problem with third-party payment for health care?
(/sarcasm)

[fresno dan]

A little data just for the heck of it:
http://www.workingmomsagainstg.....-1950.html

best line:
"But really, how different is giving birth to a baby in 2008 versus 1950?"

You know, the Mom's p*ssy is doing all the work - everybody else is just a big leach.

[Ken Shultz]

"We say to beneficiaries, you can have all the highest quality medical science that we can provide. And we say to [medical] providers, 'God, that's expensive! Stop it!' And we cut back their payments or tell them not to do stuff. Then the beneficiary says, 'But you said,'..."

There's this ingenious innovation that humanity discovered thousands of years ago that mediates this very situation, where unlimited wants are reconciled with limited resources...

No really.

...and that ingenious innovation is not a government program.

Barack Obama has been working on reinventing the wheel for more than two years now--and people still think his square wheel is an improvement?!