President Obama’s opening comments at yesterday’s Blair House summit were concise, coherent, and thoughtful. Yes, he spoke about the people who suffer under the current system. But he also spoke of rising costs – for small businesses that have faced sharp premium hikes, for families who have seen health costs double over the last decade, and – yes – for government. He explained:
Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our federal deficit. And if we don’t get control over that we can’t get control over our federal budget.
It’s a point that the White House has made time and again over this past year. Health reform must bend the curve of future health costs.
To that end, the White House has pushed sweeping measures: a Medicare-style plan to compete with private insurance; new bureaucratic committees to define and oversee private coverage; expansions of public programs; and a government body tasked with bettering healthcare by guiding the decisions of doctors. White House budget director Peter Orszag crowed that the latest Obamacare bill “contains more cost containment and delivery-system reforms . . . than any bill that has ever been considered on the Senate floor, period.”
This week, the White House promoted a new idea to add to the list: a federal government committee to review and reject health insurance premiums.
But, Mr. President, government control isn’t cost control.
As I argue in my most recent essay, countries that have employed government solutions to health reform have done no better at taming health inflation.
The full essay can be found here.
DavidWelker // Feb 26, 2010 at 8:29 pm
I think your article in the National Review is interesting, although maybe a too moderate for that particular publication.
A couple of thoughts. You have mentioned other countries that have socialized medicine. We in the United States have socialized medicine with Medicare, Medicaid, and the Veterans Administration among others. The question is not whether we shall have socialized medicine or not. The question is whether or not the medicine we have will be effective. I think your writing would be more credible if you avoided propaganda points about socialized medicine; on the other hand, if you want to be like everyone else at the National Review (not the most thoughtful publication) then have at it.
Another thing I quibble with is your mentioning of rationing in these countries that have socialized medicine. But, the truth is all countries have rationing. When someone does not go to the doctor to get preventative care, and the cancer is not detected until it is too late as a result, that is a form of rationing. And in fact, a form of rationing that has very severe consequences. Republicans sometimes admit that we will have rationing no matter what, but then say it is matter of “who decides” the government (as if the government were not controlled by the People) or individuals. But this isn’t correct. In the free market, people will generally take the advice of their doctor regarding care if they can afford it. So, the people who will “decide” to not get care will be those who cannot afford it. This isn’t a free decision, and it isn’t a decision driven by the fundamentals of the actual medical problem.
Think about the following. A person could have said to have “decided” to not buy a million dollar home if they had the income or credit to buy such a home, but decided not to. But, if they don’t have the income or credit in the first place and never had an opportunity to make a large income, this isn’t really a “decision” that they made to not buy the home. It was never an option in the first place.
FURTHER, there is a big difference between a million dollar home and health care. One is rightly considered a necessity and the other is rightly considered a luxury. We should not allocate necessities in the same manner that we allocate luxuries.
I think your prescription concerning why health care costs are increasing is partially right. You write that the causes include:
It must be conceded that worsening diet and fitness habits are a serious problem, and are not adequately addressed in the Democratic plan. I have seen no Republican proposals that adequately address this issue either.
As far as higher expectations, I don’t think this is true. People have always wanted to live as long and as healthily as possible. Before, that was not as possible because either the technology or the money was not available to ensure it. But, it has never been the case that anyone without a serious mental problem would have in the past refused medical care that could both help them and which they could afford. That people want to live as healthily and as long as possible is more of a constant, not a variable.
Your point about medical innovation is right on. Again, I don’t think the Democratic plan does anything to address this. I think a solution to address this would involve something like a reward system, where medical innovations are given approximately the same reward that they would in the free market, but in exchange lose IP protections which result in massive deadweights costs to society, s people are denied treatment where they would be willing to pay the marginal cost of the treatment, but cannot afford the higher price. Not, no Republican alternative address the problem of medical innovation. Furthermore, we should not lose sight of the fact that, overall, this is actually a good problem to have. When Republicans say we have the best health care system in the world, they mean for the highest tech treatments. But, of course, health care needs to be measured across other dimensions as well, which are not as favorable to the United States.
As far as shielding people from the economic consequences of their decisions, this is so much libertarian propaganda. When it comes to life and death treatment, people are always going to demand as much as they can get. Not only that, we SHOULD provide people as much as they can get. No one should be denied the best available cancer treatment or a heart bypass because they don’t have enough money.
The problem of medical inflation is emphatically not driven by too many poor people getting too much preventative care at clinics. It is the high tech care that is and should be politically impossible to do anything about. The only sort of care that Republicans have successful been able to ration is preventative care for the middle lower class. But they would not dare say that these same people be denied care in emergency rooms. To do so would be political suicide. So, you have a strange situation where Republican incentives are to target that which does not matter (use of preventative care by the lower middle class) but not the really hard decisions.
Ultimately, the really hard decisions don’t need to be made in a harsh way, in reality, once you realize that the way we pay for medical innovation is flawed. We pay high prices for each drug or machine or whatever, when the marginal cost of manufacture is actually much lower. This creates large deadweight costs where many people who value the treatment much more than the marginal costs are either denied care or have their care subsidized to a much larger degree than is necessary by others. Unfortunately, neither the Democratic plan nor the Republican alternative make any attempt to address this issue.
Overall, we have the following situation. The Democratic plan is flawed, but it does take real and serious steps to partially control medical inflation. Republican alternatives, aside from the political suicide bill put forward by Rep. Ryan, do practically nothing to control medical inflation.
Lets talk about YOUR propose solutions for a moment. You write:
(1)
Affordable wellness incentives are a great idea. Along the same lines, we should get rid of soda machines in public schools and increase the amount of physical education. There should also be physical education requirements (with reasonable exceptions) to graduate from any college that accepts federal funding too.
(2)
As far as cutting regulation, I think this is a rather mindless proposal. We should cut some regulation and increase other regulation. What we need is intelligent regulation. If we were to talk about the concept of “aggregate regulation” (whatever that means) intelligent regulation might be more or it might be less. Of course, the quantity of regulation itself is a variable here, but it is a massively overstated variable. As Alexander Hamilton wrote in Federalist 78, to some extent a large quantity of laws is both predictable and necessary:
Any criticism of the quantity of regulation must start from an understanding of the causes. You cannot merely assume that less regulation is better. Simply talking points like you are falling to here is part of the problem, not part of the solution.
(3)
Market-based solutions are fine. But they are also incomplete. We will never get rid of socialized medicine. No one is willing to deny people emergency care, for example, based on “market principles” that those who cannot afford treatment for a heart attack, for example, are just left to die. So, lets get real. It is true that we need to take insights from economics and elsewhere and apply them intelligently to health care reform. What isn’t true is that what is needed is to simply unleash the market because lower middle class people are going to the doctor for check-ups too much. Again, your suggestion that there is a simplistic solution does more harm to the debate more than it advances it.
You have too many talking points, and not enough substance. Is the problem that National Review will not actually give you the space to elaborate? If so, maybe you should concentrate your efforts elsewhere. Your opening statements make me think your a reasonable non-partisan person. But your solutions (besides the mention of wellness incentives) are just so many empty Republican talking points. That is too bad.
sinz54 // Feb 27, 2010 at 9:30 am
DavidWelker:
There have been careful studies on just what are the biggest cost drivers in pushing up the cost of health care in the U.S.
The two biggest cost drivers are:
1. The increasing use of ever more expensive state-of-the-art medical technology; and
2. The cost of caring for a patient in his final year of life. Battling to extend a patient’s life as long as is scientifically possible is VERY expensive.
The British NHS has tackled problem #2 squarely–by instituting Sarah Palin’s “death panels.” The NHS simply refuses to pay for any treatment that costs more than about $40,000 and that extends a patient’s life by less than six months. You get sent to a hospice instead. But I very much doubt that would be accepted in America’s Medicare.
Here in the U.S., these problems can be partially alleviated by requiring all insurers (including government insurers like Medicare) to remind all patients of their option to appoint a health care proxy, and to sign a Do Not Resuscitate form. That could be done by requiring it to be part of the process to apply for health insurance.
These are strictly voluntary. But by signing a Do Not Resuscitate form, you are voluntarily surrendering your right to end up like Terri Schaivo–a mental vegetable kept alive indefinitely by artificial means at huge cost. If you can no longer make decisions about yourself, a health care proxy can make them for you.
If Schaivo had taken such options when she was healthy and her mind clear, that whole sad controversy could have been avoided–and the cost of caring for her in her condition could have been avoided.
GOProud // Feb 28, 2010 at 12:16 am
Sinz54 says: “The British NHS has tackled problem #2 squarely–by instituting Sarah Palin’s “death panels.””
Let me finx that for you.
The British NHS has tackled problem #2 squarely–by instituting Obama’s and the Democrat’s death panels.
Anyone remember the first rumblings of the death panels? The Obama VA wanting staff to be more pro-active in discussing with dying vets whether prolonging their life is worth the allocation of scarce VA resources… eg, why don’t you go die so someone with a better prognosis can have the bed?
And the abortionists inside the Democrat Party use to contend the moral slippery slope of killing off fetuses wouldn’t lead to forced euthanasia of the least defended in society? Yeah, they got that one wrong, too.
balconesfault // Feb 28, 2010 at 3:08 am
The Obama VA wanting staff to be more pro-active in discussing with dying vets whether prolonging their life is worth the allocation of scarce VA resources… eg, why don’t you go die so someone with a better prognosis can have the bed?
By that framing, a purely free market healthcare system inherently makes essentially the same dictate … except that the charge is really “why don’t you go die so someone with more money can have the bed?”
Out of curiosity, do you consider the VA encouraging someone to consider hospice care is the same as “forced euthanasia”?
How about this then – is denying coverage to anyone who will die as a result of the denied coverage “forced euthanasia”?
It actually seems to me that the latter is much closer to forced euthanasia than the former … although even I wouldn’t go so far as to give a pure free market healthcare system that obscene label.
SFTor1 // Feb 28, 2010 at 4:46 am
Thank you to Mr. Welker for his thoughtful comments.
As far as I can tell the Republicans need to answer a few questions about health care:
1. Do they consider the U.S. health care system to be broken?
2. If yes, when did they gain this awareness? There was no sign of it during the Bush years.
3. Do Republicans agree that drastic cost increases, poor statistical health outcomes, and a lack of coverage for 40 to 50 million Americans are the main problems?
4. If so, why haven’t 40 years of private insurance addressed these issues?
5. If private insurance has been unable to keep costs down and provides unequal access to care, why do they want to keep this system?
6. If the Republicans want to keep the private insurance system, do they believe it is OK to provide care based on ability to pay? Let’s take two examples: 1) a member of a wealthy family who has never worked a day in his or her life. 2) a woman working two part-time jobs, neither of which provide health care. She lives in Alabama, makes $16,000 per year and is therefore not eligible for Medicaid coverage there. She has a three year-old with a heart problem.
7. Can Republicans demonstrate that allowing insurance sales across state borders and a cap on medical malpractice awards will be sufficient to address the problem of costs rising out of control?
8. If Republicans truly believe that a free market is the best approach to solving our health care issues, how can they endorse Medicare, Medicaid, and other public-sector systems?
9. How do people “shop for the care that is best for them” when they have no idea whether, when, or how they may get sick or injured? One person may come down with several ailments that are not life-threatening, but that all require treatment to maintain quality of life and restore fitness for work, let’s say arthritis, Epstein-Barr, and depression. Another may have a major accident and require long-term rehabilitation. Another may develop a curable cancer that requires costly treatment, for example Hodgkin’s disease. Another may come down with a manageable chronic disease like diabetes, where serious complications are a near-certainty if no treatment is provided. Another may need an organ transplant. Others may remain healthy, but need long-term treatment for their children.
How does this jive with the idea of “shopping” for health care? Isn’t it obvious that the “customers” have no idea what to shop for, and even if they did would be unable to predict which treatment would promise the best outcome for them, not to mention keep up on new treatments? If the “customers” have no market power, can you call it a “free market?”
10. What does “the best health care system in the world” mean? For a millionaire with a platinum policy? An unemployed coal miner with black lung and no insurance? A part-time worker with three kids and no access to care? A member of Congress with federal employee coverage through Medicare? A homeless family in Florida?
balconesfault // Feb 28, 2010 at 8:22 am
SFTor1
Now THAT would make a good post here, and not just a comment. One worthy of response.
There are certainly questions that I’m sure a Republican would find the framing of objectionable (for example number 7, given the requirement of a “demonstration”). But in the aggregate reasoned start.
But I look forward to more “elevator liberals” posts…
SFTor1 // Feb 28, 2010 at 5:57 pm
Hello Balconesfault:
When I say “demonstrate” I mean a financial projection. The necessary numbers are available to do the analysis.