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January 15, 2007
The "All Or Nothing" Myth
As follow-up to the post below, I want to play around with the idea that the medical industrial-complex will attack any serious health reform with total ferocity, and so would-be reformers should simply try and legislate them out of existence, knowing that that's the path of maximal efficiency. Look at the Clinton push, these folks say. They tried to compromise and were torn apart for it. Single-payer style solutions, by contrast, are simpler, and will be easier to sell.
It doesn't necessarily follow that since liberals have lost when they've sought compromise, they'll win with the opposite stance. It could be that a proposal closer to single-payer would've been even more disastrous. Indeed, what always strikes me about this argument is that the attitudes of the American people towards massive government regulation are largely ignored. Single-payer isn't simply blocked by industry despite overwhelming public support. It doesn't garner much support. As Chris reminds us in comments:
On the idea that single-payer will sell because it's simple to explain, Oregon had a single-payer health care bill, Measure 23, on the public ballot in 2002. It failed by 21.5% to 78.5%. California had a single-payer bill, Proposition 186, on the public ballot in 1994. It failed by 27% to 73%. If this is such a great idea that everyone supports and is so easy to sell, how come it's failed among the public by 50 points in two Blue states?
And here's a November 2006 poll on the question:
"Which of the following approaches for providing health care in the United States would you prefer: replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?" Options rotated. N=478, MoE ± 5 (Form B).
Replace Maintain Unsure
11/9-12/06 39 51 10
11/7-10/05 41 49 10
11/7-10/04 32 63 5
11/3-5/03 38 57 5
11/8-11/01 33 61 6
Those aren't slam dunk numbers. Quite the opposite, in fact. In every poll, a plurality favors the retention of the private system. In four of the five, majorities do. And think back to the Clinton battles. A common element in the case against The New Republic is Betsy McCaughey's No Exit, a massively influential article published during Andrew Sullivan's watch that charged -- inaccurately -- that the Clinton plan would bar individuals from seeking private insurance if they were unhappy with the government's coverage. There would, in other words, be "no exit" from the system. This was roundly denounced as a smear job. "Roundly," because it was a hugely influential and effective attack, and so it enraged lots of people. The idea that Americans would be trapped in an untested, possibly awful government system was a powerful argument against the reforms. "Smear job" because it was untrue -- the legislation would have done no such thing.
But if liberals are going to sign the insurance industry out of existence, it will be true. It won't be a smear. And while we think the end of insurers will be a good thing, history suggests that Americans may disagree, at least initially, at least while our option is unproven (and any new program -- even if it's an expansion of an old program -- covering a previously uncovered demographic is unproven). Our anger at Betsy McCaughey's article, and at The New Republic for publishing it, suggests that we, on some level, know that.
Now, many will argue that it's a framing argument, that we need to call Government Care Medicare and Americans will sign up in droves. Maybe so. But even given the familiarity of Medicare, will expanding the program be more popular if we tie it to the end of all current insurance options, opening ourselves to the argument that, if this goes bad, Americans will have no recourse? Again, I'm open to evidence in the affirmative. But demanding the end of private health insurance and believing it will be not only popular, but more popular than alternative proposals, strikes me as something we should be examining, not assuming. I see little evidence for it in the history of health reform, or current polling. But I would, of course, like to be proven wrong.
January 15, 2007 in Health Care | Permalink
Comments
Basic negotiating theory states that if you want 100, your opening offer should be for 125. If you open at 50 year are most likely to get 25, and quite possibly you will get zero as you opponent will smell weakness.
Testing this theory in practice, for the last 6 years at least (and I would argue 12 years) the Radical Republicans have opened every negotiation demanding 200, if not 20,000. They have ended up closer to 100 in astonishingly high percentage of the "negotiations".
So regardless of what we suspect will happen, both in theory and practice I think it is a bad idea to open at 30 or 40 when we are seeking 95.
Cranky
Posted by: Cranky Observer | Jan 15, 2007 10:49:19 AM
Focusing on what progressive reforms can be accomplished now is not the same as "compromise." When we compromise, we negotiate with the other side and offer them concessions. That means our ultimate goal is what's really on the table, and it is the caricature of this ultimate goal - universal healthcare coverage - that is presented by our opponents to the public.
If we go to the insurance industry, ask them what reforms they would be willing to live with, and write a bill that does exactly that and no more, the insurance industry will send their shills out to the TV shows and op-eds crying about 'socialism' and 'faceless bureaucrats in DC making your healthcare choices.' In this regard, then, compromise is not possible.
However, offering a plan to insure all the nation's children, or to offer an adequately-funded Medicare/Congressional Health Plan to anyone who wants to buy in - with subsidies for the poor - is not compromise. It's just a program, a bill, a proposal. It can be debated on its merits. When the right attacks it, the response is to question why they don't want to help poor people and why they want to restrict people's choices. After all, if Congress' health plan is good enough for Congress, isn't it good enough for all of us?
It's much easier to defend, it would accomplish needed reforms and would put us a giant step closer to instituting the full range of reforms that the American healthcare system so desperately needs. And it does all this without having to 'compromise' with the other side.
Posted by: Stephen | Jan 15, 2007 11:25:20 AM
"But demanding the end of private health insurance and believing it will be not only popular, but more popular than alternative proposals, strikes me as something we should be examining, not assuming. I see little evidence for it in the history of health reform, or current polling. But I would, of course, like to be proven wrong."
How 'bout we create a Medicare insurance plan which is in competition with private insurance.
Then there's no need to abolish private insurance - you just let it wither on the vine.
Posted by: Petey | Jan 15, 2007 11:29:22 AM
Take a look at the wording of the poll question.
"replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?"
I'd bet most people interpret that first option to mean government not only pays the insurance costs but runs the actual provision of care. No wonder so many didn't select that option in the poll. Who wants to have the people who brought us FEMA running your doctor's office?
If the poll had been worded something like "replacing private health insurance with government provided insurance available to every American regardless of income or pre-existing health conditions while keeping health care providers in the private sector," the response would have been much more positive.
That poll is an example of how the insurance industry and the right wing will try to frame the debate to maintain the status quo rather than proof the public won't support change.
Posted by: Ron | Jan 15, 2007 11:32:05 AM
Actually, Ron has it almost right- I would change the wording to "would you prefer the private healthcare insurance that you have now or would you be willing to change programs to a extremely low monthly cost program like medicaid?" if the democrats wanted to win- and that's a big if to me- they would begin a push poll campaign asking this kind of question and more. use the tactics of the right (because they are really marketing tactics) for the purpose of winning positions on the left (because we have the solutions that Americans really want if we explained it to them in a way that is emotionally appealing). the problem with all of this, as I said else where is that we don't take into account perception or leadership gaps. single payer in CA failed because of what reason? don't just tell me it failed- tell me what was the campaign that preceeded it because that maters A LOT. maybe the program with this was that it was called single payer rather than the California Medcaid for All program. if you market this a certain way, you will get one answer, and if you market it another way, you will get another. the lesson of madison avenue is that marketing is as important to selling an ideal as the benefits that the ideal with bestow. that's why a bad product can beat a good one-- perception over substance.
Posted by: akaison | Jan 15, 2007 11:55:40 AM
Why not make it even simpler - Medicare for All. People know Medicare and they trust it for the most part. It'll be a lot harder for the insurance industry to demonize the extension of a program that already exists and works well. Framing is a big part of the solution here. And, as noted above, it's bad negotiating tactics to ask for half a loaf from the outset.
Posted by: Josh G. | Jan 15, 2007 1:17:24 PM
How 'bout we create a Medicare insurance plan which is in competition with private insurance.
I agree with this approach. The implication is that Medicare could, presumably, undersell private insurers because (1) Medicare doesn't have to (or expect to) make a profit and (2) its administrative costs are claimed to be lower.
If insurers are, in the opinion of single payer advocates, just parasites that add no value, Medicare should be able to put them out of business with lower prices. I think the insurance industry might be willing to take on this competition if: (1) Medicare is not allowed to deliberately underprice its product and make up the shortfall with general taxpayer revenue, (2) it must price to breakeven at least, and (3) it must raise its rates as necessary to make sure it continues to break even.
By the way, the insurance that Congress and other federal employees have is private insurance, not Medicare or Medicaid. It is paid for by the employer, which, in this case, also happens to be the taxpayer. Personally, I think taxpayer funding with a premium support payment or voucher sufficient to buy a basic plan provided by private insurers (for the non-Medicare eligible population) and the opportunity to buy a more robust plan for a higher out of pocket premium payment would be far preferable to a single payer government monopoly, even if it means that administrative costs will be slightly higher. Premium support is the approach that Wisconsin is taking, which requires a 14% payroll tax (12% employer and 2% employee paid) to finance.
Posted by: BC | Jan 15, 2007 1:26:52 PM
by the way-as an analogy, to let you know just how powerful perception is- I am attorney. I see this sort of thing all the time. Someone will hire BigLaw Firm X over smaller or medium sized law firm Z. Why do they do this? because of perception. They pay a higher costs, and get less benefits because they despite being supposedly rational actors, indeed, are not always rational. The amount of waste in corp america where hundreds of billions are not always spent in the best way is a result of the fact that even the most rational actors in the world can still act based on perception versus reality. If these relatively sophisticated consumers can be hoodwinked and bamboozled, then why do we think that a slick marketing ploy by the the right over 30 years can have the same effect on discussions of healthcare? people can know what they want- as the polls show, and still based on the conditioning they have had be willing to come to the trough to drink the water. That's why this is a perceptional and leadership gap to me. The issues I mention can be overcome, but it requires a lot of leg work and hustle. The same that you would expect to find trying to convince an institutional client to go with you rather than the largest firm on the block.
Posted by: akaison | Jan 15, 2007 1:31:43 PM
bc- I have never known any one to be okay with increased competition or someone cutting into their profit- what business is this that is okay with the idea? i am not disputing the ideas that you mentioned- just the idea that insurance companies will be agreeable to it. i think its flawed to think they have any interest in competition. competition is a public interest. profits are the corporate interest. I think people need to stop confusing the two.
Posted by: akaison | Jan 15, 2007 1:35:02 PM
Starting with a position that most people will see as unreasonable or a nonstarter isn't such a great strategy either.
Medicare for all isn't a bad thing and might not have that problem, but it, or anything like it, would make the "no exit" attack actually true (more or less), as Ezra was saying above. That would probably be a problem.
I think the insurance industry might be willing to take on this competition if: (1) Medicare is not allowed to deliberately underprice its product and make up the shortfall with general taxpayer revenue, (2) it must price to breakeven at least, and (3) it must raise its rates as necessary to make sure it continues to break even.
I don't think insurers would consider this very long before breaking out Harry and Louise, because there'e no provision for a profit margin, or taxes, and once in place, the laws could too easily be changed to fund Medicare at a loss. They would legitimately argue that competition with a governmental agency isn't really competition.
Posted by: Sanpete | Jan 15, 2007 1:38:30 PM
Posted by: Ron | Jan 15, 2007 8:32:05 AM
"replacing the current health care system with a new government run health care system, or maintaining the current system based mostly on private health insurance?"I'd bet most people interpret that first option to mean government not only pays the insurance costs but runs the actual provision of care.
And if they don't interpret single-payer as government-provided health care after the single-payer proponents have present the plan to them, they certainly will after the insurance lobby is done with it ... because they certainly have people in their employ who can read that same poll.
Posted by: BruceMcF | Jan 15, 2007 1:38:57 PM
"Medicare for all" is essentially what they have in Canada. In fact, I think their system is even called Medicare. It is not difficult to come up with reasons why this would be an incredibly hard sell politically. It would put the entire U.S. private health insurance industry out of business, or at least massively reduce their role. Health care providers would likely face significant cuts in income and profits. It would be a massive, unprecedented increase in the federal budget, many hundreds of billions of dollars a year at least, with the obvious risk of massively increasing the deficit. And it would create plausible fears of rationing, waiting lists and loss of choice among consumers. Do you really think such a plan this has a snowball's chance in hell of being passed into law?
Posted by: Incant | Jan 15, 2007 1:50:40 PM
Health care providers would likely face significant cuts in income and profits.
IMO, this one is the killer--and the worst-needed change.
The insurance issue is marginal. The malpractice issue is marginal. (In total, they account for maybe 20% of the cost of medical provision.) The big issue is that costs go up, quickly and relentlessly--and incomes don't. To be able to get medical care significantly more cheaply will mean that providers make less--and providers will fight that change quite fiercely.
Posted by: SamChevre | Jan 15, 2007 1:58:54 PM
thats bullshit- malpractice accounts for less than 5 percent of costs. if we did everything that tort deform people wanted to do today, it wouldn't change the spiraling out of control cost of healthcare. if ezra, you want to understand how to respond to bs its not fact for fact- its calling bullshit to the bullshiters.
Posted by: akaison | Jan 15, 2007 2:02:50 PM
Ezra,
I'm not against incrementalism, Medicare for kids, Medicare for the unemployed, Medicare for clowns, etc. That's all fine and honestly universal health care doesn't all have to be done with a big bang. It just has to be done and the roadblock to be dynamited with either the funky Wyden plans or the single-payer plans is the insurance industry.
So what's your political strategy? How do you sell universal health care that is complicated to explain with a rabid industry attacking you?
Here's my strategy. A simple narrative on our side is 'insurance companies = bad'. They can and will say 'government = bad', which is fine. That's the debate. That debate is harder to have if your plan already works through the private insurance market to deliver universal care.
To pull something out of my ass about the public, my sense is that Americans don't like big government regulating stuff but they don't like big companies run by wealthy executives regulating it either. In other words we need polling on the credibility of the insurance industry.
I bet you'll find remarkably low approval ratings, especially because everyone knows someone who was denied care or fucked over or killed by them. And as for what the 'American public' thinks as a general rule, I think we have to not only consider where people are right now but how they will respond as the arguments play out, and understand that health care is really complicated and small changes in wording of polls can change response rates quite dramatically.
Americans responded to Reagan, but they also responded to Huey Long.
Posted by: Matt Stoller | Jan 15, 2007 2:03:51 PM
Akaison, I wish you would be more careful before accusing people of being dishonest or full of crap. Sam is talking about the costs of insurance and malpractice taken together, and his point is in part the same as yours that they aren't the chief causes of increased costs.
Matt, how do you respond to the "no exit" charge?
Posted by: Sanpete | Jan 15, 2007 2:17:57 PM
Sanpete,
The business model I had in mind for Medicare as a competitor to private insurance carriers is the Postal Service. Since 1971, I believe, Congress has required the Postal Service to operate on a breakeven basis. This model has been in place for 35 years now with rates increasing every two or three years to generate the revenue needed to assure breakeven operations. At the same time Federal Express, United Parcel Service and others have thrived. Even the Postal Service has developed new products along the way (like Express Mail and Priority Mail).
Akaison,
My presumption is that private insurers think they can beat Medicare with better tools to control utilization, manage disease, process claims, identify the most cost-effective providers and steer patients to them, etc. Medicare has the advantage of not having to pay taxes or make a profit, but that is hardly insurmountable. Lots of functions have been outsourced over the years from state and local government to the private sector. Private companies made money, and taxpayers saved money. State Medicaid systems are currently experimenting successfully with outsourcing care management to private insurers, and taxpayer dollars are being saved. In the most recently completed fiscal year, Medicaid spending (state and federal combined) actually declined slightly from the prior year for the first time ever! Part of that was due to Medicare taking over the cost of prescription drugs for dual eligibles, but some of these state experiments are starting to bear fruit.
Posted by: BC | Jan 15, 2007 2:21:47 PM
"Americans responded to Reagan, but they also responded to Huey Long."
Glad to hear you're finally on the Edwards bandwagon, Matt.
Posted by: Petey | Jan 15, 2007 2:23:45 PM
>> Health care providers would likely face
>> significant cuts in income and profits.
> IMO, this one is the killer--and the
> worst-needed change.
Which is larger: the number of primary care providers, or the number of specialists? Given the structure of the industry, I think you would find that primary care providers (internists, family practictioners, pediatricians, primary care nurses, PAs) would see their income go up somewhat and their professional lives get quite a bit more pleasant. Perhaps concentrate on selling them and then let numbers do their work.
Cranky
Posted by: Cranky Observer | Jan 15, 2007 2:39:04 PM
BC, the Postal Service would be very hard to create today if UPS, FedEx and private mail carriers for letters that don't even exist now were already here. Medicare, with its competitive leg up from its governmental status, would take away much of the insurance industry, and insurers know that. I don't think they would accept it. They will accept subsidized mandates for universal insurance, though, and trade it for mandated community rating.
Posted by: Sanpete | Jan 15, 2007 2:40:56 PM
if they are unwilling to look up the numbers and make outrageous claims about malepractice being the cause of healthcare industry problems then they are being dishonest- that's my polite way of saying they are lying. if you dont like that, tough. but i am not willing to play your cordially game why peo just make shit up.
Posted by: akaison | Jan 15, 2007 2:50:21 PM
Cranky,
Getting primary-care providers on-board would certainly help.
I'm not certain, though, that it will be possible; I think that many of the most sensible cost-containment moves (requiring states to allow any medical practitioner to practice in their state if they're certified for the services they provide in any state--so, e.g., midwives could practice in NY with a California license) will not be in the interests of a significant number of current PCPs.
Posted by: SamChevre | Jan 15, 2007 2:51:28 PM
I have to take the position that if we don't go for single payer from the start we won't achieve anything. Single payer is unpopular in large part because the American public doesn't even know what it means. I consider myself well informed but the first I heard the term was on the blogosphere. Democrats and liberals arn't out there making endless cases for change, there is no drumbeat for reform. Clintoncare didn't go down institutionally, after all; the Republicans gunned for it heavily and specifically. A Democratic congress with a Democratic president might just be able to do it, or something like it.
Posted by: Sandals | Jan 15, 2007 2:54:40 PM
bc- my central thesis wasn't against or for this policy or that- it questions the ideal that the insurance companies want competition. i think that is the part of yoru comments which is just false on its face. if they want competition, prove that to me because the point being made by matt, and one which i agree with, is that the insurance companies have zero interest in competition no matter what you think. its not in their interest because the bottom line is to make money, not to have competition. i dont know any business that wants competition. competition is a government thing. its a thing of the public interest through concepts like antitrust law, fair trade, etc as an analogy. it's not what businesses want. whether or not they think they can compete better is irrelevant to the question of do they want to compete at all. right now they know they dont have to compete at all- whats the incentive to create competition for them in terms of their bottomline? i dont see it, and you so far haven't shown it. i doubt frankly you will be able to do so- you can show how the government (with its other interests) can never theless benefit from private sector tactics, but you can not show that the private insurance companies will benefit by having fewer premiums paid to them, and at a reduced rate at that.
Posted by: akaison | Jan 15, 2007 2:58:08 PM
akaison,
Let me repeat myself, in language that is hopefully not too complicated for you to understand.
The costs of insurance (administrative costs) might be 5%, or 14%, or 22%; which of those numbers is right IS NOT THAT important. The costs of the medical malpractice system might be 2%, or 20%; again, which of those numbers is right IS NOT THAT important. Costs are increasing 15% a year; even if the highest number is correct in each case, and the proposed reform fixes that problem entirely (so the cost is 0), the best we can get is that we pay the same amount for health-care in 2010 that we'd otherwise have paid in 2008. That's a little bit of a help--but it's not enough to make everything better. To really make things better, we need to actually push costs down in ways that ARE going to affect providers.
Posted by: SamChevre | Jan 15, 2007 2:58:23 PM
Being more cordial wouldn't harm you any, Akaison. But the point was that you totally misread what Sam said. You're the one making shit up in this case (but not lying, which is something different) and in the last case too (in the other thread), and you do it a lot more than you realize. You've got a hair trigger; respond too fast and miss what people really say.
I have to take the position that if we don't go for single payer from the start we won't achieve anything.
Universal coverage with community rating is something, Sandals.
Posted by: Sanpete | Jan 15, 2007 3:05:40 PM
Given the structure of the industry, I think you would find that primary care providers (internists, family practictioners, pediatricians, primary care nurses, PAs) would see their income go up somewhat and their professional lives get quite a bit more pleasant.
Perhaps, but it doesn't seem likely. According to Ezra (in his "Health of Nations" piece), physicians' fees are "way higher" in the U.S. than Canada, and physicians in the U.S. make three times what they do in France (often cited as having the world's best health care system). Wikipedia reports that: "Some of the extra money spent in the United States goes to doctors, nurses, and other medical professionals, all of whom receive much higher compensation than their counterparts north of the border." And according to this source, the average annual income of U.S. physicians is on the order of double or triple that of physicians in other industrialized democracies.
Posted by: Jason | Jan 15, 2007 3:11:24 PM
And if they don't interpret single-payer as government-provided health care after the single-payer proponents have present the plan to them, they certainly will after the insurance lobby is done with it ... because they certainly have people in their employ who can read that same poll.
So? The longer people think about this issue, the more they'll come to see the benefits of single-payer.
Posted by: hf | Jan 15, 2007 4:00:39 PM
Sam,
It seems that you're talking about a couple of different things. In terms of providers, you seem to be suggesting that providers' overhead is increasing at 15% a year.
The other side of this equation is the increased costs born by consumers - those who pay premiums, including corporate costs and those who receive healthcare services. Are you saying that these are also increasing 15% a year?
The problem I see here is that you aren't looking at ways to reduce the growth in costs other than to reduce payments to providers. What about the fact that private insurers spend more on admin costs than Medicare or the VA? What about the issue of profit - let's face it, the premiums we pay aren't just there to provide money for the treatment we get, they're also there to earn a profit for the company and to make up for any losses they suffer if other investments go sour.
Any expansion of Medicare or similar plan would need to have strong funding support. Even just a few years of providers seeing increased or even steady payouts from Medicare while seeing their private insurance payouts decline would do a lot to switch providers' opinions. Also, any number of people that can be switched from private insurance hell to a non-profit system like Medicare would help to reduce the amount of dollars that Americans spend on "healthcare" for which they receive no healthcare.
Posted by: Stephen | Jan 15, 2007 4:15:48 PM
Stephen,
I'm saying:
1) Consumer costs of the health-care system in total is increasing about 15% a year, and has been since the 80's IIRC.
2) Even if you have 30% administrative costs/insurance company profits/malpractice expenses (costs of the health-care system that don't end up being kept by providers), those costs aren't what's driving the increase; the 15% per year increase is a 15% per year increase in money going to providers of medical care.
Given (1) and (2), even if you can reform the health-care system so ALL the money goes to providers, it will be as unaffordable in a year or two as it is now; to make everything work long-time means cutting costs of medical care, and that will WILL end up hurting (at least some) providers.
Posted by: SamChevre | Jan 15, 2007 4:26:33 PM
Radical change inspires fear, incremental change, hope.
The success of radical Republicanism is that they have focus grouped their ideas in order to couch them in the least threatening language. If that doesn't work, they merely lie by using the word "reform" as in Clean Air Act Reform which in reality destroys the Clean Air Act.
The best way to sell health care reform is to expand the Medicare that everyone is comfortable with, first by including children to age 18 which no one should be able to defame convincingly.
Next, lower the eligible age from 65 to 64...63...62.... Again no great outcry will result when it shows that otherwise uninsurables are getting coverage at minimal costs to the taxpayer.
Easy, incremental reform will sound good, sell well, keep the initial cost low and leave the current system in place for those wanting it. One could leave in place the PCP system if it reassures people that costs are being contained.
The second main objection people have is that this pays for some that the ruling elite don't want their tax dollars to include: blacks, hispanics, the poor, etc. These people are bigots. Screw 'em.
Posted by: Mike | Jan 15, 2007 4:36:07 PM
Mike, how long will it take your plan to reach universal coverage?
Posted by: Sanpete | Jan 15, 2007 4:46:01 PM
Matt hits the nail on the head here. It's fine and important and useful to be tinkering around the margins (Medicare for Kids, etc.) but somewhere people have to start making the case for a very reduced role for insurance companies. Will it happen overnight? Or even in my lifetime? Possibly not, but there's so little evidence that the current system of insurance is a net positive that it's incumbent on us all to start the ball rolling to a better future.
And I'll add that if we look at Ezra's backyard, economics, we only have to look at Larry Kudlow and the Laffer curve to show that long term, any idea, with the constant pushing of a movement, can acheive prominence.
Also, part of building that movement is putting up plans for the Republicans to vote against. Then when someone's life is bitten by insurance overruns they'll think twice about voting Republican.
Posted by: Meh | Jan 15, 2007 5:25:45 PM
The evidence I have seen is that the rise in per capita spending on health care in the U.S. over the last decade or so has not been much different from the OECD average. So whatever is driving the increase, it does not seem likely to be the unique or distinctive features of the U.S. system (tort law, private insurance, fragmentation, etc.). One rather obvious factor driving rising health costs in all developed nations is the relentless public demand for expensive new and improved health care products and services--new drugs, new tests, better surgical procedures, etc. That demand isn't going to go away under single-payer or any other kind of structural reform.
Posted by: Jason | Jan 15, 2007 5:37:22 PM
Sam,
For your numbers to be accurate, there would need to have been no increases in insurance companies' costs or profits. Obviously, that isn't the case.
If the money spent on healthcare in this country is increasing at 15% a year, then all aspects of the system are part of the increase. However, if healthcare providers alone are seeing a 15% increase per year in their gross receipts, then it's high time they felt the pinch.
Since it's painfully clear that providers have not seen an annual 15% increase in gross receipts for the last 25 years, I would imagine that there actually is quite a bit of room for us to work within the system to save costs without having to cut doctors' salaries to Canadian or French levels.
Posted by: Stephen | Jan 15, 2007 5:47:32 PM
the point is that much of the discussion about malpractice insurance and other like issues are put out their by corporate america to avoid the really big conversation of health care in general. so feel free to repeat yourselves on irrelevancies because the truth is even if every tort deform or other tickering that industry wanted occured today, years from now, not in the distant future we would be in same mess we are now because these things aren't the problem.
Posted by: akaison | Jan 15, 2007 5:53:23 PM
Posted by: Jason | Jan 15, 2007 2:37:22 PM
The evidence I have seen is that the rise in per capita spending on health care in the U.S. over the last decade or so has not been much different from the OECD average.
Then, since health care price inflation is running at a more rapid pace in the US than in the OECD as a whole, it would seem to follow that the US is getting the short end of the stick in terms of increase in health care services.
Posted by: BruceMcF | Jan 15, 2007 6:09:45 PM
Stephen,
According to this article, which uses OECD data as its source, the average annual increase in total health care spending per capita in the U.S. between 1990 and 2003 was 3.6%. This seems to be about average for OECD nations. The increase in total spending will be somewhat higher than this due to population growth, but it's nowhere near 15% a year. Given these numbers, the idea that it will be possible to achieve large and sustainable reductions in the growth of spending through administrative improvements or profit reduction doesn't seem very plausible.
Posted by: Jason | Jan 15, 2007 6:27:59 PM
Akaison – I think most insurers would argue that their marketplace is already highly competitive. If I were an insurance company CEO contemplating the prospect of competing with Medicare, my thinking might go something like this:
There are a lot of single payer or Medicare For All advocates who believe that the government can provide health insurance (not healthcare) cheaper than we (XYZ Insurance Co.) can. I think we can compete quite effectively even though we need to make a profit and pay taxes. If I can have a chance to go head to head with Medicare (assuming Medicare is required to charge rates high enough to break even) and win, I will bury the issue with real world experience. If I'm wrong, my business will shrink (or maybe even disappear). I'm confident we can win a fair competition, so let Medicare compete with us and the rest of the industry.
Now, if you ask me would I rather have a monopoly (and the pricing power and profits that go with it) or have lots of competitors, I'll tell you I would rather have a monopoly. However, nobody is offering me that option.
Posted by: BC | Jan 15, 2007 7:55:04 PM
BC, have you heard rumblings in the insurance industry that they would really accept this idea? It seems a long shot to me.
Posted by: Sanpete | Jan 15, 2007 8:41:51 PM
Sanpete,
No, I haven't. I have heard Karen Ignagni, CEO of America's Health Insurance Plans, make a similar argument regarding prescription drugs. Also, under current law, Medicare is scheduled to begin a premium support experiment (on a pilot basis) in 2010. If they set the premium support voucher at the average per capita Medicare spending level in each county, that would establish the potential for a fair test (for Medicare beneficiaries) along the lines I described.
Posted by: BC | Jan 15, 2007 9:05:13 PM
Posted by: Stephen | Jan 15, 2007 2:47:32 PM
According to this article, which uses OECD data as its source, the average annual increase in total health care spending per capita in the U.S. between 1990 and 2003 was 3.6%. This seems to be about average for OECD nations.
Since the US is starting from a much larger base as a share of GDP than the OECD average, a 3.6% growth rate is a much larger increment of GDP than than the OECD average.
Posted by: BruceMcF | Jan 15, 2007 9:29:39 PM
IIRC there was a poll back when the Clinton plan was being put out. When the pollsters just explained the plan details, about 2 in 3 people favored the plan. When the pollsters called it the Clinton plan (after the Harry and Louise commercials) support fell to 1 in 3.
Posted by: BillCross | Jan 15, 2007 9:38:23 PM
On the same damn page that Ezra found his poll results:
"Which would you prefer: the current health insurance system in the United States, in which most people get their health insurance from private employers, but some people have no insurance, OR, a universal health insurance program, in which everyone is covered under a program like Medicare that's run by the government and financed by taxpayers?"Current System: 33%
Universal Program: 62%
Unsure: 6%
(from Oct. 2003)
Posted by: pseudonymous | Jan 15, 2007 9:48:19 PM
Since the US is starting from a much larger base as a share of GDP than the OECD average, a 3.6% growth rate is a much larger increment of GDP than than the OECD average.
So what? The growth rate that is relevant to the issue I am addressing is the growth rate of health care spending, not the growth rate of health care spending as a fraction of GDP. The fact that the growth rate of health care spending over the past decade or so in the U.S. is close to the OECD average suggests that it is unlikely to be significantly affected by structural reform.
Posted by: Jason | Jan 15, 2007 9:54:53 PM
On the same damn page that Ezra found his poll results
Interesting, but see also the post from Bill right before yours. These polls about options don't mean so much before there's an actual proposal being savaged by its opponents, bringing out people's fears more and exploiting weaknesses. It's like the current presidential race polls.
Posted by: Sanpete | Jan 15, 2007 10:07:29 PM
pseudonymous,
Yes, but as Ruy Teixiera points out, that same poll found that support for a universal health care system run by the government drops to 35% if it would limit choice of doctors and to 38% if it would mean longer waits for nonemergency treatment. Both of those problems exist in the government-run, universal coverage systems of Britain and Canada. Even if you could persuade a solid and enduring majority of the public to support such a system, you'd still be up against the health insurance and health provider industries, both of which would stand to lose huge amounts of money from a move to single-payer. It just seems inconceivable to me that, for example, doctors and nurses would go along with a reform from which they would stand to lose half or two-thirds of their income.
Posted by: Jason | Jan 15, 2007 10:13:48 PM
Given these numbers, the idea that it will be possible to achieve large and sustainable reductions in the growth of spending through administrative improvements or profit reduction doesn't seem very plausible.
Your conclusion isn't supported by the numbers. Let's say you give me $100. I spend $60 on food and shelter and flush $40 down the toilet. The next day you give me $103.60. I spend $61 on food and shelter, and flush $42.60 down the toilet. You get tired of giving me $100 when 40% isn't being used for the purpose you had in mind and tell me so. My response is to tell you that I suppose I could cut costs by $2.00, but that means I'll only have $59 for food and shelter, which is less than what I was originally getting.
We need to stop flushing profits and money for multiple bureaucracies down the toilet. That's how we save money, and yes, it is there.
BC,
No CEO wants to compete with anybody, despite what their public statements might say. Any proposal that would provide people with health insurance that bypasses existing health insurance companies is going to scare the crap out of every CEO in the business.
The insurance industry is extra competitive because everyone is fighting over the exact same group of people. And, as the list of pathologies that can be applied to us grows, that group of people will shrink even further.
As long as whatever proposals get passed don't try to compete for these same people, they can be competitive. And in terms of "real world experience," the Federal and every state government are already quite experienced managing health plans, and they tend to do it with less overhead costs than private insurers.
Bruce, I didn't write that. Just so you know.
Posted by: Stephen | Jan 15, 2007 11:27:53 PM
Ezra, I know of Doctors who wish there was some way to control costs and some form of universal health care.
Many Doctors would like to be able to lower their rates and be able to help more. Because of their malpractice insurance they cannot do alot of what they would like to do to help people. They feel hemmed in and constrained by the insurance companies and the coorporate controls of the health care system.
Posted by: vwcat | Jan 15, 2007 11:33:42 PM
I don't understand how this competition between private insurance companies and "Medicare for All" would work. The government program presumably would have the huge disadvantage of having to accept anyone who wanted to join and never drop them. Are people suggesting that insurance companies could be forced to operate under those conditions? If not, it seems it would be like "competition" between private and public schools, where the private schools are able to cherrypick students, while the public schools are stuck with the more expensive, hard-to-handle students.
Posted by: KCinDC | Jan 15, 2007 11:35:58 PM
Stephen,
I'm having a hard time figuring out what your hypothetical has to do with what I wrote about growth in health care spending. Perhaps you could make your argument more explicit.
Posted by: Jason | Jan 16, 2007 12:05:04 AM
actually what the stats show is that 35 percent support federal, but another large chunk support state based - there is when taken those numbers together rather than restricting it to federal as some of you are doing support for government based healthcare.
Posted by: akaison | Jan 16, 2007 12:09:41 AM
the competition would work on price like it is supposed to work. if you think most americans want to continue to pay more for their health insurance, then I don't know what to tell you. The numbers don't back that up. I think this is the fundamental issue- some of you seem to think that most americans are happy with where things are. the numbers don't back that up. So the ideal that private insurance companies will cherrypick the best without reducing their price seems to me to miss that they will lose the customer pricely because the best will not want to pay the higher rate involved in a private plan.
and in terms of quality of service- which is also a false argument- ezra has put numbers on here that show that to be flatly false, and is mostly the product of belief rather than reality.
Posted by: akaison | Jan 16, 2007 12:18:02 AM
the way best doesn't equal most wealthy, it equals most healthy
Posted by: akaison | Jan 16, 2007 12:19:47 AM
Jason,
That expenses are growing slowly doesn't necessarily mean that there are no areas to save costs. For your conclusion to work, we need to assume an incredibly efficient system that is completely geared toward collecting and spending money only on providing healthcare. We do not have such a system. Rather, we have a patchwork of systems, the majority of which are dominated by private, for-profit corporations for whom the bottom line is far more important than providing services.
KCinDC,
You raise a good point. Any proposal is going to have to have in it incentives for people to be part of the plan. Also, while insurance companies would fight it tooth-and-nail, instituting community rating across the board is entirely possible given the right political makeup in DC. This would, in fact, require insurance companies to either accept everyone who wanted to sign up with them or find other ways to reject them, and would limit their ability to price certain people out of the market.
Posted by: Stephen | Jan 16, 2007 12:40:36 AM
Posted by: Jason | Jan 15, 2007 6:54:53 PM
The fact that the growth rate of health care spending over the past decade or so in the U.S. is close to the OECD average suggests that it is unlikely to be significantly affected by structural reform.
But why? The grabbing of an increasinly large share of GDP is the source of the sustained percentage growth rate of health care spending.
If the US stops having more price inflation for health care than is normal among wealthy nations, then for a while it will have lower expansion of health care expenditure than the OECD mean, as the share of GDP it devotes to health care spending becomes more similar to most other wealthy nations of the world.
Posted by: BruceMcF | Jan 16, 2007 2:03:25 AM
Posted by: Stephen | Jan 15, 2007 8:27:53 PM
Bruce, I didn't write that. Just so you know.
Sorry about that, I got a new autoformatting toy so I don't have to type out <blockquote></blockquote> all the time, but I handn't got up to speed yet on getting the quote and the postline in the same go. That actually should have been "Posted by: Jason | January 15, 2007 at 03:27 PM"
Posted by: BruceMcF | Jan 16, 2007 2:13:30 AM
The ability of healthcare reform, whether it's single payer or premium support, to drastically reduce administrative costs in the healthcare system is grossly overestimated, in my opinion.
Under our current system, large employers who self-insure, spend about 5%-6% of their total dollars on administration, and almost all of that is for claims processing (which is required under any system) and network access. Where administrative costs are high within the insurance sector is in the individual and small group (ISG) marketplace. The high costs are largely accounted for by commissions paid to insurance brokers and the cost of medical underwriting. Even then, young healthy people, who are the key beneficiaries of underwriting (as opposed to community rating) are able to buy health insurance much more cheaply than they could under community rating.
No, suppose we had a single payer system. How much in administrative costs could we take out of the healthcare system? Since most doctors in the country practice either alone or as part of a very small group, it would be difficult for them to eliminate office staff. Even if they could, they would probably try to capture the savings for themselves rather than pass them through as lower charges for services. If a large academic medical center earning, say, $1 billion per year in revenue, could take 100 people out of its business office at an average compensation of $60K each, it would save $6 million per year or 0.6% of revenue / costs. That won't go very far in reducing hospital charges.
While I have said repeatedly that I support community rating and universal coverage, and I think taxpayer financing with a premium support approach would be better and more sustainable than the current employer based system, the big goldmine of administrative cost savings just does not appear to be there.
I say again that our costs are higher than elsewhere because our doctors and other providers earn much higher incomes, we provide more heroic services at the end of life, and our litigation system drives more defensive medicine. Taxpayer financing will not address any of those.
Posted by: BC | Jan 16, 2007 5:18:47 AM
bc your numbers don't jive with the numbers i have seen- i dont have time to look it up, but for example there is an estimated layer of some 3 million people in the insurance end (not as you claim in the employer) that is nothing but an extra layer of unnecessary administration who has as their sole function to limit coverage and claims. i think i saw this with paul kraugman or someone else, but i cant remember well.
and you say again all you want that costs are higher eslewhere such as pretending its with litigation. but the numbers do not back that up. there are strong public policy reasons why we have the tort structure we do, and there are mulitple layers to prevent abuse. not the least of which is the fact lawyers make no money if there is not a claim that has underlying proof of the elements of the tort, and your version of reality would change the law even though it would not change a thing regarding the structtural issues leading to the healthcare critis in this country. what is the public policy reasoning behind the numerous reasons insurance companies find to deny claims and/or keep people off their rolls?
Posted by: akaison | Jan 16, 2007 8:33:29 AM
bc your numbers don't jive with the numbers i have seen- i don't have time to look it up, but for example there is an estimated layer of some 3 million people in the insurance end (not as you claim in the employer) that is nothing but an extra layer of unnecessary administration who has as their sole function to limit coverage and claims. i think i saw this with paul kraugman or someone else, but i cant remember well.
akaison – You either misread the data you cited or Krugman is smoking something. The four largest insurers are: United Healthgroup, Wellpoint, Aetna, and Cigna in that order. Together, they either provide administrative services or full risk insurance products for approximately 90 million Americans or 35% of the population with insurance. The number of employees that work for each of these companies is as follows: United, 55,000; Wellpoint, 42,000; Aetna, 28,200, and Cigna, 28,000. Total: 153,200. If you gross that up for the entire health insurance industry, it implies that total industrywide employment is approximately 438,000, a far cry from 3 million. Total net after tax profit for the four companies combined (2006 estimate) is $10 billion. The net profit for the entire health insurance industry, taking into account the fact that many of the Blues are still non-profit is probably in the $20 billion range or less than 1/6th of 1% of GDP, not a big deal in the context of a healthcare sector that consumes 16% of GDP.
As for my comment that defensive medicine contributes to our high healthcare costs, I deliberately mentioned it last implying it was the least important of the three factors that I cited. Much higher incomes earned by doctors and other providers is, by far, the most important factor.
Posted by: BC | Jan 16, 2007 9:24:07 AM
Posted by: BC | Jan 16, 2007 2:18:47 AM
I say again that our costs are higher than elsewhere because our doctors and other providers earn much higher incomes, we provide more heroic services at the end of life, and our litigation system drives more defensive medicine. Taxpayer financing will not address any of those.
Taxpayer funding of prescription drugs does not intrinisically cut the cost of prescription drugs, but on the other hand the PBS in Oz includes a step where the medical benefit for the cost of the outlay on the drug has to be demonstrated, and US pharmaceuticals fought hard to get try to undermine that system during the US/Oz free trade agreement negotiations.
"Taxpayer funding" ... or, in reality, purchases financed by the monopoly issuer of fiat currency ... that's not the controversial part. Growing fat at the public trough is never controversial for one of the pigs with a place at the trough.
A countervailing force to the marketing and promotion of disease to tap into very low elasticity demand relationships on very large cash flows ... that's the controversial part.
Posted by: BruceMcF | Jan 16, 2007 9:53:21 AM
So the ideal that private insurance companies will cherrypick the best without reducing their price seems to me to miss that they will lose the customer pricely because the best will not want to pay the higher rate involved in a private plan.
I think you were replying to me, akaison, because I brought up cherrypicking, but I have no idea why you think I believe Americans are happy with the existing system. My point is that if the private insurance companies are able to cherrypick customers then they will have lower prices (for people they're willing to accept) than the government system (assuming it has to pay for itself), which will have all the old, sick people who can't get private insurance.
Posted by: KCinDC | Jan 16, 2007 10:08:59 AM
the key word is "if" and as I point out the problem with your "if" to me is that it is exactly the reverse of what would probably happen. think of how health insurance works. its a volumn game.
Posted by: akaison | Jan 16, 2007 10:38:27 AM
I don't understand, akaison. Isn't the idea to have a "volume" of healthy people, who don't cost you much? Having a bunch of old, sick people doesn't help you unless you're charging them huge premiums, which they won't be able to afford. The private companies have every incentive to drop (or avoid accepting in the first place) people who will cost them more -- something the government program presumably won't be able to do. What it is that you believe reverses that?
Posted by: KCinDC | Jan 16, 2007 10:49:03 AM
the part you keep missing is price which the government will almost certainly beat the private insurer at. the other factor is that the private insurer really is going to have a hard time selling "we will give you cheap healthcare so long as you remain healthy" to enough people to produce a volume that matters. your version of reality (which some might call fantasy) is where no one gets sick unless they are old or poor. the reality is that health is ah uman thing- not a class or age thing.
Posted by: akaison | Jan 16, 2007 2:36:49 PM
"The number of employees that work for each of these companies is as follows: United, 55,000; Wellpoint, 42,000; Aetna, 28,200, and Cigna, 28,000. Total: 153,200. If you gross that up for the entire health insurance industry, it implies that total industrywide employment is approximately 438,000, a far cry from 3 million."
You also need to include the increased staff at the healthcare provider level that private multi-payer insurance enforces upon them. Most estimates suggest that such staff levels at healthcare providers are several times larger than would be needed within single payer (or a more streamlined multi-payer system). While I don't know if 3 million is the right number, it doesn't seem at all implausible.
The profitability levels of private insurers isn't that relevant either. It's only a small part of the cost savings, which is in:
a. removing the expenses of the insurers in sales, extra paperwork and so on.
b. moving backoffice staff from private insurers to government employment (which removes high executive salaries, additional real estate expenses for corporate HQs, private corporation legal/financial/accounting expenses and so on).
c. reducing provider level paperwork expenses.
"If a large academic medical center earning, say, $1 billion per year in revenue, could take 100 people out of its business office at an average compensation of $60K each, it would save $6 million per year or 0.6% of revenue / costs."
You're underestimating the number, salary/benefit cost AND additional expenses of the insurance paperwork staff. These staff would be at least 500+ strong, and be paid ~100-150k each (including benefits, which you have to include) AND cost substantial amounts in terms of office space rent, computer equipment, support and so on. All told, this would be at least around 97.5 million of the hospital's 1 billion budget, or at least nearly 10% (and it's often much higher). Of course, we can't probably reduce this expense to $0, but it's a very substantial part of any hospital's overhead.
Posted by: burritoboy | Jan 16, 2007 2:44:21 PM
BC, universal coverage and community rating might increase the pressure to deal with the cost issues you mention, since taxpayers and the Congress will have more at stake in the system as a whole, as more of the money will go through their budgets.
Posted by: Sanpete | Jan 16, 2007 2:45:00 PM
burritoboy,
Do you also favor government takeover of the home, auto, life, and disability insurance industries? Think of the savings from eliminating all that "wasteful" duplication of staff and equipment, advertising, profit, etc. And why limit it to insurance? Why not also nationalize the airline industry, the computer industry, the auto industry, etc., etc.?
Your argument just isn't credible. Why should we think that health insurance is uniquely suited to being run by the government rather than the market?
Posted by: Jason | Jan 16, 2007 3:34:11 PM
"Do you also favor government takeover of the home, auto, life, and disability insurance industries?"
The disability insurance industry has, in fact, partially been taken over by the government anyway.
The others, no, for pretty simple reasons:
a. they don't seem to be a major part in creating major economic imbalances (I don't think Americans are notably massively overspending for these other insurances, while we clearly are overspending as a nation for healthcare provision).
b. these other insurances are simply not as critical as healthcare insurance: technically, one doesn't need home or car insurance by the simple method of not owning a home or car. But everyone owns their own body AND healthcare expenses can be potentially limitless (unlike the comparatively modest limited price of replacing a car or even a home). Even if one loses one's home or car, as bad as that is, it's not like losing one's life.
"Why not also nationalize the airline industry, the computer industry, the auto industry, etc., etc.?"
Because, simply, I have no a priori theory about it. Nationalization of various industries may be useful at one moment in time, and not in another. And the reasons I would advocate nationalization of healthcare provision is simple:
a. the USA spends far too much on it, for worse healthcare results.
b. our overspending on healthcare does not provide us with additional goods or services to trade.
c. the vast majority of other countries are able to provide demonstrably better healthcare with significantly lower cost by various methods of nationalization.
Posted by: burritoboy | Jan 16, 2007 3:49:24 PM
what's not credible jason is slippery slope the "commies are comming" arguments which is about where I place what you wrote. what makes healthcare uniquely suited for government are some basic economic concepts, and some that are not: a) that health insurance relies on scale (volumn matters) b) that it's not clear that healthcare actors as consumers act rationally c) that there isn't a savings from being in the private sector because our system costs more than other systems d) that the private sector has produced a worse result when compared to other countries of similar development; e) that if nothing is done, there will be market failure (everyone in their gut except crazies like you realize that 15 percent inflationary increases in the insurance market for consumers isn't sustaintable and prices people out of the market for services which are considered as basic as utilities f) that even if one takes into account all the faux reasons (such as litigation) ther eality is that there still would be a healthcare crisis because we do healthcare inefficiently. markets depend on rational actors- when they dont exist in rare occasions, there must be some other mechanism to deal with them. Pretending those rare occasions dont exist may make you nutcases feel better but it does shit for my bottom line each month when I am forking over now a 15 percent increase per year.
Posted by: akaison | Jan 16, 2007 3:53:42 PM
akaison,
Your claims (a) and (b) apply to other kinds of insurance, and indeed to the provision of most kinds of product and service. I would strongly dispute (c) through (f). You need to demonstrate these claims with evidence. How have you determined, for example, that "the private sector has produced a worse result when compared to other countries of similar development?"
Posted by: Jason | Jan 16, 2007 4:23:23 PM
burritoboy,
a. they don't seem to be a major part in creating major economic imbalances
Sure they do. The lack or insufficiency of such insurance can easily cost people tens or hundreds of thousands of dollars, and is probably a frequent contributor to personal bankruptcies. And even if health insurance is a larger cause of economic imbalances, why does that mean it should be run primarily or entirely by the government?
b. these other insurances are simply not as critical as healthcare insurance:
Well, shelter, food and clothing are also critical, but we don't fund or provide those through the government for the vast majority of people. So again, I don't see why this is a valid reason for nationalizing the health insurance industry.
Posted by: Jason | Jan 16, 2007 4:37:42 PM
burritoboy,
a. the USA spends far too much on it, for worse healthcare results.
b. our overspending on healthcare does not provide us with additional goods or services to trade.
c. the vast majority of other countries are able to provide demonstrably better healthcare with significantly lower cost by various methods of nationalization.
As far as I can tell, these three points are essentially the same claim, but you're not clearly distinguishing the issues of funding vs. provision or the degree of government involvement. The position I am arguing against here is single-payer, goverment funding of all or most health care services. I'm not saying that government has no legitimate role at all in either funding or providing health care services. I'm arguing that the primary mechanisms of funding and delivery should be in the private sector, just as they are for almost every other kind of product and service.
I would like to see your evidence that "the vast majority of other countries are able to provide demonstrably better healthcare with significantly lower cost by various methods of nationalization." I'm particularly interested in your evidence for this claim with respect to single-payer national health care systems such as the ones in Canada and Britain.
Posted by: Jason | Jan 16, 2007 5:17:41 PM
my advice jason if you are truly interested is to do what i did when realized how much I am paying for insurance - I looked the information- read articles etc. I am kind of done with people saying 'well i dont believe you' so prove it to me. even when i bother to go through the efforts here, and this isn't about you, i find that it doesn't affect what is often pure idealogical bent masquerading as open interest.
Posted by: akaison | Jan 16, 2007 6:31:00 PM
my advice jason if you are truly interested is to do what i did when realized how much I am paying for insurance - I looked the information- read articles etc. I am kind of done with people saying 'well i dont believe you' so prove it to me. even when i bother to go through the efforts here, and this isn't about you, i find that it doesn't affect what is often pure idealogical bent masquerading as open interest.
Posted by: akaison | Jan 16, 2007 6:31:19 PM
akaison,
I have looked into it and I don't see any basis for your claims. The "evidence" typically offered is a handful of health-related statistics that are essentially meaningless as measures of the quality or performance of a nation's health care system. The argument goes something like, "Country X has higher life expectancy, lower infant mortality, and more hospital beds than the U.S., therefore it has a better health care system." It's absurd. If you think you have something more substantive, I'd love to see it.
Posted by: Jason | Jan 16, 2007 6:45:17 PM
There are several states trying to develop plans to achieve universal health coverage, most prominently, California. Each is taking a somewhat different approach which is good thing, in my opinion. The most interesting experiment, I think, is in Wisconsin. They assert that employers, on average, have been paying approximately 15% of payroll to provide health insurance to their employees and their families. Under their universal coverage approach, this system of financing would be replaced with a 12% tax on employer payrolls above $500,000 (all employees combined) with rates as low as 3% for tiny businesses with payrolls below $50K. Employees would pay a 2% payroll tax up to the maximum Social Security taxable wage base ($97,200 for 2007). The health plan would have a deductible of $1,200 per adult, $500 for children, and an out of pocket maximum (after co-pays) of $2,000 for singles and $3,000 for families. Each policy would come with a $500 per year deposit into a Health Savings Account. It is a premium support model with the stipend sufficient to buy a basic plan from a private insurance company. Plans with richer coverage would also be available for people who want them and are willing to pay the additional premium themselves.
The plan would be community rated, insurers would have to take all comers, and payments to individual insurance companies would be adjusted both up and down depending on how risky their total insurance pool compares to a benchmark level. With people organized into large, community rated pools, administrative costs are estimated at 8% of total costs as compared to roughly 6% for large, self-insured employer plans. The state intends to sell it to employers on the basis that they will pay no more, and in many cases less, than they are now to cover their employees.
There is lots of value added that private insurers bring to the table as compared to a government run single payer system including: (1) better ability to steer consumers to cheaper generic drugs when one is available, (2) better ability to identify the most cost-effective hospitals and doctors, (3) better ability to control fraud and other improper payments, (4) ability to challenge providers who over utilize tests without achieving better outcomes. By contrast, a government single payer is more likely to be just a big dumb payer that blithely writes checks for every claim that comes in and then brags about its low administrative costs.
Finally, with private insurers, if I am not satisfied with my insurance company, I will be able to take my business elsewhere when the annual renewal period arrives. With a single payer, I am stuck with them no matter how inefficient and unresponsive they are. In other words: NO EXIT. Even if a system run by private insurers cost slightly more, it is well worth it to have options if we're not satisfied with the insurer's service.
Posted by: BC | Jan 16, 2007 7:32:45 PM
No, your attempt at a rebuttal is precisely why I won't bother. Nothing is ever going to be "substantive" evidence unless you personally agree that the point is important. Not whether these are measures that people in general use, but only that you are the determinative of their validity. Your argument structure is a trap which I don't want to enter. It has no point to it beyond "I." Put another way, your approach can deny the earth is round because you have decided the evidence given has no validity. You haven't disproven it. You simply ignore it. Those aren't the same things. The first is an argument. The later is denial.
Posted by: akaison | Jan 16, 2007 8:09:39 PM
Raise your hands by the way if any one here 'really' and I dont mean simply for the purpose of winning the argument has a plan remotely looking like the version being offered up by BC? I mean its all well and good to talk theory- but is that what we have?
Posted by: akaison | Jan 16, 2007 8:12:27 PM
akaison,
Life expectancy, infant mortality, and similar statistics are worthless with respect to the question in dispute because they have very little to do with the quality or performance of a nation's health care system, at least among the wealthy industrialized nations. The primary determinants of a nation's aggregate mortality and morbidity statistics are broader cultural, social and environmental factors such as prevailing patterns of diet and exercise, rates of smoking, alcohol consumption and drug use, sexual activity, crime, education, public health measures, community and social support, patterns of work and leisure, that sort of thing. These influences swamp the effects of medical care interventions by a nation's health care system. That's why so much of the left's criticism of the "results" of the U.S. health care system is specious.
Posted by: Jason | Jan 16, 2007 8:41:32 PM
That Wisconsin plan looks a lot more generous than California's.
Posted by: Sanpete | Jan 16, 2007 9:42:22 PM
jason- if life were only divisible like you say but then if raindrops were honey. good luck.
Posted by: akaison | Jan 16, 2007 9:48:25 PM
akaison,
I'm not saying that, I'm saying the opposite. I'm saying that there is a constellation of cultural, social, political and environmental influences on the health status and longevity of a national population, and that it therefore makes no sense to try and compare the quality or performance or "results" of different nations' health care systems by comparing a handful of aggregate health statistics. For example, if heart disease is twice as common amoung Americans as amoung Japanese because of differences between the two countries in diet and exercise patterns, you can't conclude that the Japanese health care system is "better" at diagnosing and treating heart disease simply because fewer Japanese than Americans suffer or die from the disease.
Posted by: Jason | Jan 16, 2007 10:08:41 PM
then there is no way to ever compare anything jason because you know- there are differences. it's still an avoidance. the point is how they approach healthcare is one of those BIG factors for why they are living better than Americans. the division part is where you pretend that because there are other factors, lifestyle etc, that means you get to ignore the data about their healthcare system. how you can separate out that from the discussion of things life style choices, etc is beyond me, but you seem to think you can do it. oh, and dont think I didn't notice you cherrypicking the countries that fit your idealogical paradigm. the more honest eval would have included england, jap, europe in general, and multiple other countreis, each with very different life styles, some as bad as the ameircan life style some better, some with a diverse population some not. and when looking at all of those countries with all those factors in consinderation, they still fair better than us. selectivity of analysis may make you right, but the overall pic of all countries in the first world does not.
Posted by: akaison | Jan 16, 2007 11:53:32 PM
akaison,
No, it's not impossible to make meaningful quality and performance comparisons between different health care systems. It's just much, much more complicated than simply comparing aggregate health statistics like average life expectancy and infant mortality rate. Any meaningful comparison must be based on indicators that actually measure health care system quality and performance, not just the health status of the population. The OECD is in the process of developing a set of indicators for just this purpose (see here for some more details), but it will probably be years before they have enough data to allow for a serious evaluation.
Posted by: Jason | Jan 17, 2007 1:02:41 AM
actually jason- as my analysis points out- its not. because all those societies have differences from even each other in terms of all the variables you mention as well as the US and yet they have outcomes that are far superior to the US. there is no way that you can reasonably attribute those outcomes to discussions of how these society's differ unless you want to ignore the obvious answer because it doesn't fit into your idealogical bent. the way to test a variable in science is variation. here we have it. I dont think anyone in their right mind can conclude that England has a better numbers because of better life style choices. the problem your argument faces is that we are outperformed across the board.
Posted by: akaison | Jan 17, 2007 8:47:52 AM
akaison,
I dont think anyone in their right mind can conclude that England has a better numbers because of better life style choices.
Well, you're wrong about this too (although I didn't say "life style choices," I said "broader cultural, social and environmental factors," which includes much more than just behaviors representing "life style choices."). A study was published in JAMA just last year that compared the health status of American men with British men in the same age range. The study found that American men were much less healthy than their British counterparts, but the authors were clear that these differences in health could not be attributed to differences between Britain's and America's health care systems. One of the authors suggested that the most likely cause of the health differences was differences between the two countries in patterns of work, job security and the nature of communities. You can read a New York Times report on the study here.
Posted by: Jason | Jan 17, 2007 12:48:52 PM
The article you cite doesn't make much sense. For example, the reasearcher says, "I'm arguing that it's due to the differences in the circumstances in which people live," he said Tuesday in a telephone interview. "Work, job insecurity, the nature of communities, residential communities, et cetera — I think that's the place we should try to look." If economics are the factors (work, job insecurity (why is it that we need to work longer or have job insecurity?) then how does he conclude that quality of the healthcare system even under unversal access aren't a factor? And what is unversal access when one has insecurity about their job in a society where access is linked to having a job? Also, where are the resources going for the American versus british patient. For example, preventative or catostraphic care. He talks a link about the number of beds in the UK, but here's the kicker despite less beds, they still have better health. Why is that the case? Could it be because they are treating throughout rather than waiting until problems are exascerbated? The point is I don't understand how, when talking about healthcare, or for that matter life style, how one does as this researcher did without answering these kinds of questions. How does one decide that of the economic factors that decide healthcare outcomes that quality of healthcare doesn't matter? How does one decide what constitutes quality of healthcare? I think you need to dig deeper.
Posted by: akaison | Jan 17, 2007 2:15:57 PM
"The lack or insufficiency of such insurance can easily cost people tens or hundreds of thousands of dollars, and is probably a frequent contributor to personal bankruptcies. And even if health insurance is a larger cause of economic imbalances, why does that mean it should be run primarily or entirely by the government?"
One reason I already mentioned (and which you ignored): it's very simple not to need auto or home insurance (you don't have to own a home or a car) at all. Now, your life might be worse due to lack of home or automotive insurance, but it's not going to kill you. I prefer to deal with the life-threatening problems before the country tackles the high costs of auto insurance. Preserving lives is simply more important than lower-cost auto insurance. If you disagree, that's your choice, but I don't think too many people will pick being dead over not having cheaper auto insurance.
And, of course, health bills tend to be a more important cause of personal bankruptcies than car repair or home repair bills (as bad as those bills can be). Also, those bills are simply more predictable - it's very easy to price a replacement car or even price a replacement home. Pricing medical care is completely different.
Posted by: burritoboy | Jan 17, 2007 2:52:03 PM
"but the authors were clear that these differences in health could not be attributed to differences between Britain's and America's health care systems"
Not quite. The authors couldn't attribute these differences to gross and immediately obvious differences between the two nations' health care systems: on a very surface level, the vast majority of high SES (socio-economic status) people in the US have nominal access to the healthcare system, just as effectively all of similar high SES people in the UK do.
But that tells us very little of what "access" means in the two nations. High SES citizens of both nations have "access", but that doesn't mean "access" means the same thing.
Only one difference is that even high SES people in the US have widely varying access at different points in their lives (depending on employer, employment/educational status, parental support and so on), whereas UK citizens have effectively the same system at every point in their lives.
Posted by: burritoboy | Jan 17, 2007 4:52:17 PM
burritoboy,
it's very simple not to need auto or home insurance (you don't have to own a home or a car) at all. Now, your life might be worse due to lack of home or automotive insurance, but it's not going to kill you.
The lack of health insurance isn't going to kill you, either, so this is yet another claim of a difference that doesn't exist. And you're moving the goalposts anyway, since your previous rationalization for treating health insurance differently was that it is a cause of "major economic imbalances." In fact, most Americans are far more likely to suffer major economic disruption from losing their job (possibly as a result of illness) or as a result of divorce than they are from medical debt. Instead of reasoning forward from basic principles about the proper role of the state vs. the market, you are simply drawing arbitrary lines to try and justify your predetermined committment to the position that health insurance should be run by the government.
Posted by: Jason | Jan 17, 2007 7:53:50 PM
burritoboy,
Only one difference is that even high SES people in the US have widely varying access at different points in their lives (depending on employer, employment/educational status, parental support and so on), whereas UK citizens have effectively the same system at every point in their lives.
If that difference had had a significant effect the results wouldn't have shown that health correlates positively with socioeconomic status in both countries. The clear and obvious implication of the finding that even wealthy Americans with good insurance are significantly sicker than their British socioeconomic counterparts is that the differences in health status have little or nothing to do with differences between the two nations' health care systems, just as the study's authors concluded. The view that a person's health status is determined mainly by factors other than the type of health care system under which he lives is not controversial, and I don't know why you continue to resist it. It has been substantiated by numerous studies on everything from the health effects of diet, exercise, smoking, etc., to the fact that married people tend to be healthier than single people.
Posted by: Jason | Jan 17, 2007 8:09:46 PM
uhm- yes a lack of health insurance is going to kill you. if you can't even agree with that common sense point then there really isn't any way we can ever agree. it will kill you because of things like a) if you need a colonscopy that would cost you 2k to screen periodically for the polyps that cause colon cancer you wouldn't be able to do so because you don't have health insurance or b) if you have asthma you might not go to the doctor for treatment related to the disease, and therefore shorten your life cycle by several years or c) you might not have someone check for that lump under your breast because you dont do periodice screenings, or have a doctor to tell you to do so, or any number of other things that if caught early would save your life. There are multiple other examples where having insurace matters. It matters in areas like obesity, and that critical checking and taking care of hypertenson and other treatable chronic conditions. it matters when you have diabettes. It matters when you have some kind of long term degenerative neurological condition. It matters if you are disabled. the list goes on and on.
Posted by: akaison | Jan 17, 2007 8:11:33 PM
akaison,
Your arguments are getting increasingly silly. Obviously, there's no guarantee that you will get a colonoscopy, or get asthma treatment, or have a breast exam, whether you have insurance or not. Not only do health insurers impose strict limits on the type and number of tests and procedures they will cover, but few insured people take full advantage of the health care services they are covered for, anyway. In the aggregate, the insured are probably more likely to be diagnosed and treated for illness than the uninsured, but the difference is quantitative, not qualitative.
Posted by: Jason | Jan 17, 2007 8:42:41 PM
It looks like a consensus on healthcare reform is emerging. Read it here. Single payer, it's not.
Posted by: BC | Jan 18, 2007 8:47:29 AM
thats an article about what politicians think
Posted by: akaison | Jan 18, 2007 9:21:16 AM
the president of the Business Roundtable, representing the country's largest corporations; the president of the Service Employees International Union, the country's most vibrant union and one of its fastest-growing; and the president of AARP, the formidable seniors lobby.
Not only politicians. There's cost containment stuff in there for you, Akaison.
universal coverage, accomplished either through a mandate on everyone to purchase basic health insurance
Yay!
or a mandate on all employers to offer it
Doesn't sound universal with that "or," but I suppose he means that you either have to get it through your employer or buy it.
"pay or play" -- either providing employer-paid health insurance or paying a tax to the state subsidy pool
I don't like this connection, but it can serve as a transitional arrangement.
Health insurers would have to accept the obligation to sell insurance to everyone, with only modest variation in rates for age and health status.
Well, that's close.
a "basic" insurance package that provides full coverage for preventive care and catastrophic illness but requires patient cost-sharing for routine care
Not sure how preventive care and routine care are divided, but maybe that will work.
subsidies for families with incomes up to 300 percent of the poverty level to help defray the cost of that insurance and the deductibles and co-payments that go with it
Yay!
changes in tax law so that individuals who purchase health insurance enjoy the same tax benefits as those who get it as a fringe benefit at work
Good.
a pooling arrangement in every state to allow individuals and small businesses to buy health insurance at the same price as large corporations.
Good.
a deadline for physicians and hospitals to switch to computerized health records, along with a program to provide no-interest loans to buy the necessary hardware and software
Good.
Doctors would have to agree to have their compensation from insurers tied, in part, to how well they conform to treatment protocols established by the various medical specialties.
I wonder if the AMA is on board here.
Hospitals and insurers would have to agree that 85 percent of their revenue would go to providing direct care, capping profit and administrative expenses at 15 percent.
Sounds good, maybe.
union members and high-income workers would have to accept a cap on the amount of health benefits they receive tax-free
Fair enough. The union guy was there, so maybe that can happen, though he doesn't represent many people with those high benefits.
To avoid government "negotiated" prices, drug companies would have to submit new drugs to a rigorous cost-benefit test by an independent agency, such as the Institute of Medicine, as a condition for being included on the Medicare and Medicaid formularies.
Wow. Would that work?
It remains unclear whether Democrats would prefer to make progress now or have an issue to run on in the 2008 presidential election.
That's very smelly thinking.
Posted by: Sanpete | Jan 18, 2007 3:30:40 PM
I'm sorry I got to this thread so late. A few observations:
To say that the average yearly increase in real medical costs was about 3.6% from 1990 to 2003 is misleading. The reason is that the period from 1994 to 1998 saw a very unusual dip in the medical cost trend due to managed care. Those years aside, the trend was around 10% per year on average, maybe higher. The rate of increase was considerably higher from the 50s-80s than it was in the 90s.
Right now we are experiencing a slight dip in the trend to about 7%, very roughly twice the general rate of inflation.
The higher trend before the explosion of managed care in the 90s blows a number of arguments out of the water, by the way. First, the health insurance industry was dominated by the non-profit blues, not for-profit companies. Second, most people had "major medical," which was what we would now call a high-deductible plan. We have already tried high cost-sharing, and it has failed dismally as a means to control costs. The increase in quality and price information may help "consumerism" this time, but buying cancer treatment is psychologically very different from buying a car, and free markets do not and will not control costs in a fee for service system as a result.
Posted by: jd | Jan 18, 2007 11:36:11 PM
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