Why Health Insurance Isn't Like Auto Insurance

I feel a bit silly actually writing a post explaining that things with "insurance" in the name aren't all the same, but such is life. So long as non-compliance with auto insurance mandates is going to be tossed up as an argument against health insurance mandates, though, it's probably worth explaining why the two are not alike.

1) You Can Drive Without Swiping Your Auto Insurance: This is the most obvious, and most important, difference. If your car required proof of insurance to start, more people would be insured. But it doesn't. Cops don't even ask for insurance when they pull you over. The only time insurance is relevant is when you're in an accident.

Health insurance mandates, by contrast, make proof of insurance a prerequisite to using the system. To see a doctor, you do have to swipe your insurance card. To enter a hospital, you do need to show proof of insurance. In the Edwards plan, you'll need to enter your policy number on your tax form. If you can't, you'll be enrolled in the basic plan. This alone will reduce noncompliance dramatically, because compliance will be necessary to use the health system. Auto insurance, by contrast, is not necessary to use a car.

2) Car accidents are less likely than flus: Everybody reading this has been to the doctor. Most reading this have never been in a car accident. People are not unaware of the relative rarity of those events. It's easy to skip car insurance under the theory that you will not need it. It will be harder to skip health insurance under the theory that you will not need it. (This is Obama's argument. The danger is that people will skip it until they do need it, as explained here.)

3) We do not subsidize auto insurance: At least so far as I know. By contrast, all of the major Democrats, including Obama, subsidize health insurance to 300 percent or 400 percent of the poverty line. If lower income folks were given help on auto insurance, more would purchase it. As it is, they will be given help on health insurance,and so more will purchase it. This isn't rocket science. It's also one of the useful things about a mandate: The very fact of its universality means a hue and a cry will go up if the government doesn't ensure affordability. Thus, the government has to ensure affordability, or publicly dismantle its mandate. My hunch is it will do the former.

There are, of course, many more, but those should suffice for now.

Ask The Expert

MIT's Jonathan Gruber is among the leading health economists in the country. He's worked extensively with candidates of all stripes, was a prime architect of the Massachusetts plan, and has conducted an unsettling amount of the most used, most respected, current research in the field. He's asked me to post this response to Kit Seelye's atrocious article on the various Democratic health plans, in which he dives into the misuse of the research on auto insurance, explains what's actually going on in Massachusetts, and gives what is the consensus view on mandates and coverage. I'm happy to do so. His full letter is below the fold.

I was surprised and somewhat offended by the lack of balance in the article by Katharine Q. Seelye in today’s Times (“Clinton Attack on Obama Overlooks Some Realities”). The health plans of Hilary Clinton and Barack Obama differ in a number of respects, but most important is the fact that Clinton includes a requirement that individuals purchase insurance. Virtually every health expert in the nation would agree that such a requirement is necessary for universal insurance coverage within our private insurance-based system. As a result, Clinton correctly pointed out that Obama’s plan would leave the nation far short of universal coverage. The 15 million estimate that she used was validated by myself and other experts, as detailed in Jonathan Cohn’s recent post on the New Republic’s web site. In recent days advisors to the Obama campaign have made a series of incorrect attacks on the claim that Clinton’s and John Edwards’ plans would cover more Americans than theirs. Ms. Seelye’s article simply parrots these incorrect attacks.

She first points to the figure from the Insurance Research Council that states that 15% of drivers are uninsured. As detailed in research by J. Daniel Khazzom (paper available at here), this figure clearly overstates the rate of uninsured drivers by computing this rate as the share of accidents in which the driver did not have insurance. But since uninsured drivers are typically from groups that are more accident-prone, the share of accidents involving the uninsured will clearly overstate the share of drivers that are uninsured. Moreover, state reforms to improve compliance with auto insurance requirements have been very successful, with the rate of uninsured drivers (measured appropriately) in Georgia recently falling to 2%.

She then cites the experience of Massachusetts, where I serve on the Connector Board that is implementing our ambitious health reform passed in 2006. She correctly points out that, as part of a compromise last year, we exempted almost 20% of uninsured adults from mandated coverage. But half of these are low income individuals offered employer insurance who can be covered as part of the law, but for whom we have not yet had time to design an appropriate subsidy program. The other half are individuals above three times the poverty line who are excluded from subsidies through a compromise between then Governor Romney and our legislature. If subsidies were extended further, exemptions would have been unnecessary. Candidates Clinton and Edwards have said that under their plans all individuals would be subsidized so that no one has to pay an unaffordable amount for insurance. She has laid out no specific plans for mandate exemptions, and there is no reason why she should be tarred by what we have done under the constraints of our Massachusetts law.

As Ms. Seelye highlights, the 15 million figure is not a precise estimate. But the general point should not be lost in the debate over the numbers: a plan with an individual mandate will cover millions more individuals than a plan without an individual mandate. There can be legitimate debates over whether a mandate is necessary or not. I personally feel that it is necessary to prevent free riding in our health care system, to ensure fluid functioning of insurance markets, and to ensure that all citizens are protected against health risk. At the same time, I can also respect, while disagreeing with, Candidate Obama’s decision to exclude a mandate. But there can be no debate over the fact that a mandate is required to bring us to universal health insurance coverage in the United States, and that a plan without a mandate will leave us far shorter of that goal than any plan with a mandate, proper subsidies, market reforms, and sensible enforcement rules.

I Need To Go On Fewer Man Dates

Sigh. Yes, the reason the progressive health policy community supports mandates is because we desperately want to screw over poor people. Is primary season over yet?

I could go into the reasons for a mandate in really great detail, but since I've been over every inch and aspect of individual mandates at excruciating length lately, let me just offer the simple and easy one: It's critical for reforming the insurance industry.

You have to do something to end the selection problems bedeviling the insurance system. On the insurer side, you impose community rating, which means they have to offer insurance to everyone, at the same price. But let's say you impose that without a mandate. What happens? Well, a whole lot of people reason that they don't need to buy insurance. After all, the second they do need insurance, they can purchase it, no penalty. The smart move in such a world is to avoid the system when well, only pay in when sick. This will, of course, destroy the system.

So you impose a mandate so everyone has to buy coverage. The insurers can't risk select applicants, the applicants can't game the system. Without the mandate, you can't reform the insurance system. And if you're not going to reform the insurance system and not going to achieve universal coverage, then why not focus on something else?

Maggie Mahar has much more. So does health care expert Len Nichols. It's worth noting that the need for universality -- either through an employer mandate, a government mandate, or an individual one -- wasn't a controversial point among liberals until Obama brought out a plan without a mandate of any sort. Indeed, his plan is, in some ways, the worst of both worlds: It eschews single payer and its close relatives for the more moderate, less expansive, less disruptive structural design that mandates were created to complete, but also doesn't have a mandate. So the mechanism for building on and reforming the system is broken, but he doesn't construct something new to replace it.

Programs For The Poor Are Poor Programs

Kevin MD asks how single-payer advocates account for the failure of the Indian Health Service. I don't know enough about the IHS to say whether it's a failure, but for the sake of discussion, the answer is easy: As the saying goes, programs for the poor are poor programs. Native Americans are among the poorest, most marginalized, most disenfranchised constituencies in American life. That a charity program for them would be underfunded and rarely improved is among the least surprising facts you could possibly tell me. It's like asking why, in the private system, the poor seem to have it so bad. The answer is because they're poor. The virtue of single payer, and all integrated national systems, is that it puts the poor and downtrodden in the same system as the rich and politically powerful. If the rich want a decent system, then the poor get one too. In other countries, there's a word for this: Solidarity. In our country, we call it universalism.

Update: Or, as El Cid says in comments, "I am shocked, just shocked at any suggestion that a U.S. government program based on solemn promises to our native American communities is operated with anything less than perfect dedication."

The Republicans and Cancer

If anyone from The LA Times would like to come by Ezra Klein World Headquarters, I have a giant gold star for them:

When Rudolph W. Giuliani was diagnosed with prostate cancer in the spring of 2000, one thing he did not have to worry about was a lack of medical insurance.

Today, the former New York mayor joins two other cancer survivors in seeking the Republican presidential nomination: Arizona Sen. John McCain has been treated for melanoma, the most serious type of skin malignancy, and former Tennessee Sen. Fred Thompson had lymphoma, a cancer of the immune system.

All three have offered proposals with the stated aim of helping the 47 million people in the U.S. who have no health insurance, including those with preexisting medical conditions.

But under the plans all three have put forward, cancer survivors such as themselves could not be sure of getting coverage -- especially if they were not already covered by a government or job-related plan and had to seek insurance as individuals.

As you folks already know, the Republican plans do very little to reform the health care system, and absolutely nothing to reform the insurance system. If you're blocked from accessing health insurance now, these plans do nothing to help you. They would, for instance, do nothing to help Susan Brown:

Susan Brown, 53, discovered her melanoma early -- a sore spot on her left shoulder smaller than a pencil eraser. She was successfully treated in 2000. But Brown, who lives in a small town in East Texas, had to give up her job as a medical office manager -- and the healthcare benefits it came with.

Since then, she said, she has been unable to find private coverage that she can afford. One company turned her down. Another wanted a letter from her cancer specialist stating that the disease would not return. Others demanded premiums that would have drained her bank account in return for policies that still would not have covered a recurrence of cancer.

The candidates "can't sit there and say they understand what people are going through, because they've got healthcare," Brown said. "We went through the same illness, however [they] don't understand what it's like not to have health insurance."

Brown remains cancer-free but uninsured. She depends on charity care for her follow-up cancer screenings, she said.

If you have cancer and can't get health insurance, the Republican solution is a tax cut. The Democratic solution is health insurance. So far as health care goes, that's the election's bottom line. What's all the more amazing is that the Republicans offering these inconsequential, insufficient plans are, themselves, cancer survivors, who routinely laud the wonderful health care they were able to access because they had health insurance. Indeed, Giuliani's post-cancer realization was that everybody should have health insurance, and that his legacy would be expanding coverage.

That was before he decided to run for president, of course. Before cruelty became more politically expedient than compassion.

Industry Warms to Health Reform

Good piece in the WSJ detailing a recent PriceWaterhouseCoopers report showing that universal health care may have significant, positive implications for...the health care industry. Which has long been obvious. If an expansion of access is done through private insurance, that's 45 million more individuals purchasing coverage, and many millions more who'll be able to afford prescription drugs, regular treatment, and all the rest. We are, in effect, subsidizing the poor to become health care customers.

Industry has some concerns, however. Mainly, the public insurer being proposed by Democrats. They don't like that idea, and for all the obvious reasons. For all the scary stories about the dystopian hell that awaits us if we nationalize the health care system, the private insurers seem surprisingly loathe to compete against an insurer uninterested in turning a profit. It's almost as if they don't really think that Americans will hate public insurance! What're the odds!?

My hunch, sadly, is that they'll get their way on this. Barring a remarkable Democratic year, or the Democrats showing enough stones to ram this through the Budget Reconciliation process (where it only needs 50 votes), the public insurer may well get bargained away in return for a couple key Republican supporters. It'll be a shame if that happens, as the public insurer will be good for cost control and a damn useful experiment, but the Republicans -- and their corporate backers -- really are worried that if Americans have a choice, they'll choose government. And that's the sort of ideologically transformative occurrence they can't allow to happen.

Disillusionment

A sad close to a sad story of a woman with a terrible genetic illness who found that just because she had health coverage didn't mean anyone would cover her health problems:

In recent weeks, Mrs. Calder has been lobbying Mr. Calder and her children to move to Belgium, where she once lived with her ex-husband, arguing that they could get good care there cheaply through the country's universal health-care system. One of the leading researchers of EDS is a Belgian geneticist who works at the University of Ghent.

Mr. Calder, whose father was a doctor and mother was a nurse, grew up believing the U.S. health-care system was the best in the world. But he says his wife's struggle has eroded that faith. "I've actually turned around to where I'm thinking, 'Yeah, Europe may not be a bad thing.' "

It's worth noting that this story is a frontpager in today's Wall Street Journal. If business does prove more constructive in the upcoming health reform fight, it will be, in part, because the Journal's news staff has spent the last decade providing constant, substantive, and humane coverage of America's health care crisis. Indeed, the story is accompanied by an online poll asking "how would you grade your health insurance?" These polls aren't scientific, and the response rate for this one isn't particularly high, but it's a potentially interesting snapshot of a very privileged group's tepid feelings towards their own insurance:

And the comments below are interesting. A couple selections:

C, because I'm ticked right now at all the convolutions just to see a doctor.

I've got gold plated benefits about which I do not complain, just complaints against the specific health insurance company (though it is the best of three options) and getting it to work for me, not the other way around.
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B.

It is Medicare. Doctors and Hospitals know the rules. There is no prior permission from the 'insurance' company for treatment. Costs are well established. Don't get any bill from any provider, either. There are no gimmicks. If a provider does not get paid enough from Medicare, that is just too bad; patient is fully protected from gouging. And there is literally no limit for treatment.
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I have Medicare and blue Cross supplemental insurance. I have had major surgeries and not paid a cent,including a 9 and a half hour open heart surgery this year.
The phony spin out there is that while you may be OK with your coverage, there are tons of folks that are dying in there bedrooms because they can't get medical care. Most of the uninsured are between jobs for a few months, are twenty five and never get sick and so would rather spend their bucks on beer, nice cars, fancy cloths , and bar bills looking for babes.
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I grade my current coverage, a plan that's available through my employer and which covers about 20,000 other employees, an A.

The coverage I had while I worked for myself, I give an F. Not only was it inadequate to start with, but since it was essentially individual coverage, the first answer to every claim submitted was "no." If you didn't have the time, talent and energy to wrangle with the insurer's 1-800-whocares claims office, they didn't pay. That's scurrilous, and it drove away from self-employment.

I'm treated well now that I'm backed by an employer who's an 800-pound gorilla of a customer. Amazing how that works!

I love my current job, and I'm glad I'm here. But no one living in a first-world country should have their employment choices governed by the need for health insurance.

Remember: This is all in The Wall Street Journal.

More on Universal Health Care and Innovation

I'd endorse Kevin's suggestion for using Medicare as a model for what universal health care will and will not do, but it's worth being a bit careful here. We often say that Medicare's current performance is not, in fact, a good guide to how a reformed system would perform. Medicare is a creature of the system that's currently in operation, and has not been charged, and has shown no interest in using its weight and market share to push towards reform. A Medicare single-payer plan with price controls could operate very differently. And since one of our big arguments for reform is the need for cost control, we can't assume Medicare will operate as it currently does -- spending almost whatever is asked on whatever treatment is recommended.

But nor are price controls being contemplated. A lot of the current thinking has to do with funneling research dollars towards studies that will demonstrate the cost-effectiveness of various therapies and the comparative effectiveness of similar treatments. Additionally, changing how we treat chronic diseases -- which is to say, moving from an acute care model to coordinated, maintenance oriented model -- offers an enormous amount of hope, as 70 percent of our spending is on chronic conditions. Add in electronic records, a reduction in incentives for physicians to overprescribe treatments, administrative savings, and all the rest, and you have some real hope for cost savings that have nothing to do with price controls, or indeed any policies that would impede useful innovations. There will, presumably, be fewer incentives for the development of me-too drugs, and the prescription of unproven therapies, but those are good things.

Which gets to the final point: With the possible savings, you could plow more money into the National Institute of Health, put more funds behind the FDA (thus speeding up the drug review process), establish prize funds for pharmaceutical development, and do much more that would actually accelerate innovation. We can construct a universal health care program in any way we want and if we'd like to retain something near current levels of spending in order to increase the likelihood of medical breakthroughs, we can do that too.

The Wyden Bill

So I'm not going to pretend that I understand exactly how senators decide to vote for legislation. But Ron Wyden's health care bill, which is solid, impressively comprehensive, reform legislation, now has 11 Senate cosponsors, including six Republicans. And these are powerful, conservative, Republicans -- Grassley, Judd, Gregg, Alexander, Coleman, Crapo, and Bennett (not to mention Lieberman). Grassley, for one, is actually the ranking Republican on the Finance Committee, which is the relevant committee. Crapo's on the committee as well.

So, assuming three more Republicans could be persuaded to eschew a filibuster -- say. Warner, McCain, and Graham -- couldn't this bill be passed, like, tomorrow? Bush would veto it, of course. But in theory -- and that "in theory" is where this all breaks down -- a Democratic president could come into office, send this to the floor, and sign it a week later. The world doesn't work like that, but it's very hard for me to imagine why Grassley and Crapo and Bennett are jumping onto this bill if it's only to jump off when its passage approaches reality. This is the sort of congressional coalition building around concrete legislation that didn't precede the Clinton reforms, and which many feel were the missing ingredient for their success. That it's happening organically, among the relevant players, without executive leadership, seems quite meaningful.

In (Partial) Defense of Employer-Based Health Insurance

To say a bit more on the subject of the employer link in health care, it's true, as Ramesh says, that an employer-based system is bad. It does not follow, however, that anything that weakens that link is good. The fact that A is bad does not mean not-A is good. So you have to think seriously about why the employer link is a problem, and, somewhat more counter-intuitively, what its benefits are.

The problems with the employer link are, in short, portability, job lock, and insulation. You can't move your insurance around, you're locked into jobs you don't necessarily want to keep, and you can't see the stresses on the health care system because your employer is paying the premiums. These are bad things.

But there are good ones, too: Your employer gives you a risk pool to buy into, so you're no longer ejected for preexisting conditions or poor health. Your employer contracts out with insurers, offering you more choices, at a lower price, and with an administrative buffer -- an HR person to turn to if the going gets rough. Your employer offers an easy, centralized access point to the system. In other words: They organize the system, and give individuals a way to pool their purchasing power for better prices and treatment.

The Republican plans get half of this: They realize the employer-based system is bad, that it distorts employment decisions and insulates from risks. But they don't understand the importance of risk pooling, of administrative buffers, of protections from the whims of your insurers, of easy ways to navigate the system. They want to trade in a poorly organized, heavily fractured, ad hoc social insurance system for a vulnerable, exposed, system in which every individual is on their own. As Ramesh says, it's definitely a more radical plan. But it's a bad one. The problems with the system are that it's heavily fractured and ad hoc. The benefits are that it resembles, for those lucky enough to be with large employers, a social insurance system. The Republicans are trying to magnify the failings and minimize the protections.

What It's Like To Be Poor

This post recounting the author's first time visiting the doctor with health insurance is heartbreaking and beautiful:

lawdy lawdy, it was like i was in heaven or something. the doctor even told me, well, instead of getting you all drugged up with pain medications, let's see what we can do to make sure that this doesn't happen again. it was like angels came from the heavens and shared with me a piece of what the lord must promise to those who have clean souls.

i was on pins and needles the whole time, however--asking every five minutes--are you sure my insurance covers this? are you sure my insurance covers that? i want to make sure my insurance covers that!! please don't schedule me for anything until i've checked to make sure my insurance covers that!!!

i am waiting for the reply of four different emails to the same person begging them to make sure that everything is covered.

if you have ever wondered, what's so wrong with being poor--this is it: if somebody is gentle with you, if somebody takes time to talk to you, if somebody wants to help you heal instead of drugging you until the pain goes away, if somebody believes you when you say it hurts--there must be a mistake. there must be something wrong, somebody must be tricking you or must've filed the wrong paper work or fucked something up some where.

it's not right, it's not normal or natural, for a poor person to walk into the doctor's office and not expect an all out fight with the office bill collectors, roughness and shortness in conversation from the doctors, raised eyebrows in disbelief from all concerned and a final dismal of "well, you're insurance doesn't cover it anyway, so take lots of aspirin and you'll feel better eventually."

Was RAND Health Insurance Study Wrong?

News that there were serious methodological flaws in the RAND health insurance study is actually very, very important. The RAND health insurance study remains the source for almost all speculation about how individuals react to different types of health insurance. When we say that higher co-pays make people cut care indiscriminately, we're going off of their evidence. When some say that health outcomes weren't much better with no co-pays, they're going off of RAND's evidence. When HSA supporters say that higher co-pays didn't degrade health status at all, and thus we should cut insurance spending across the board, they're going off of RAND's evidence. The problem is, RAND's evidence may not have been very good:

Of the various responses to cost sharing that were observed in the participants of the RAND HIE, by far the strongest and most dramatic was in the relative number of RAND participants who voluntarily dropped out of the study over the course of the experiment. Of the 1,294 adult participants who were randomly assigned to the free plan, 5 participants (0.4 percent) left the experiment voluntarily during the observation period, while of the 2,664 who were assigned to any of the cost-sharing plans, 179 participants (6.7 percent) voluntarily left the experiment. This represented a greater than sixteenfold increase in the percentage of dropouts, a difference that was highly significant and a magnitude of response that was nowhere else duplicated in the experiment.

“What explains this? The explanation that makes the most sense is that the dropouts were participants who had just been diagnosed with an illness that would require a costly hospital procedure. … If they dropped out, their coverage would automatically revert to their original insurance policies, which were likely to cover major medical expenses (such as hospitalizations) with no copayments … As a result of dropping out, these participants’ inpatient stays (and associated health care spending) did not register in the experiment, and it appeared as if participants in the cost-sharing group had a lower rate of inpatient use. … the cost-sharing participants who remained exhibited a lower rate of inpatient use than free FFS participants, not because they were responding to the higher coinsurance rate by forgoing frivolous hospital care but instead because they did not need as much hospital care, since many of those who became ill and needed hospital care had already dropped out of the experiment before their hospitalization occurred. …

So when we say that higher co-pays didn't degrade health outcomes, it turns out that many of those facing a health crisis and assigned to the high co-pay set dropped out of the study. So we have no idea what their outcomes would've been. Sick individuals in the low co-pay bracket, by contrast, did not drop out of the study, and so the comparison between the two brackets is deeply flawed.

For most folks, this probably seem really wonky and in-the-weeds. But it's almost impossible to overstate how much pull the RAND study has in health policy circles. Jason Furman's whole paper on cost sharing? Largely based on the RAND study. Robin Hanson's theories about slashing medical care in half? Largely based on the RAND study. And now it turns out that the RAND study has some compromised data. I don't know which co-pay subgroups saw the most folks dropping out, and I don't know how the data would change if they had stayed in. It's possible that the RAND study's actual conclusions are right (if, at this point, somewhat outdated). But it's no longer clear that we can simply assume that that's true.

Bridging the Gaps

I'm off to the Bridging the Gaps conference, where I'm speaking on a panel about state and federal solutions to the health care crisis. For those interested, here are my opening remarks:

I’m here, I think, to be the Grinch. We’ve got all these great universal bills passing at the state level, and I’m here to tell you that, well, they are pretty great, but they’re not going to work. It didn’t work in Washington State, when they tried it, and the insurers first jacked up the premiums, and then moved out of the state in order to kill the model. It didn’t work in Hawaii, which saw an economic downturn move more people onto their subsidies exactly as the state’s revenues dropped. It didn’t work in Tennessee, where the Democratic governor, Phil Bredesen, upon killing off Tenncare and leaving 300,000 people uninsured, told his state that, "I say to you with a clear heart that I've tried everything. There is no big lump of federal money that will make the problem go away." Similar plans failed in Oregon, in Massachusetts, and many other states.

The plans fall for a few small reasons, and one big one. The big one is that states don’t have the fiscal stability to run universal health care. 49 of 50 states cant deficit spend. That means that when the state goes into recession and more people need subsidies and the revenues to give them don’t exist the state can’t borrow the money. So they dismantle the program. It’s happened time and time again -- in some states, like Oregon, more than once.

Moreover, you don’t really want this being a state-run solution. As a stopgap, increasing coverage through state plans is worthwhile, but health care reform is more than access – it’s actual reform to bring down costs, which are, at the end of the day, the biggest problem in the system. And the states don’t have the regulatory authority, the money, or, save in a few cases, the size to do that. I simply don’t trust them to fundamentally reform the system.

Now, folks make a good point: Health care reform has failed at the federal level time and again. The filibuster knocks it out. You’ll never pass it. States are the only hope. To that I’d say two things: One, if you think these red states will never embrace health reform, then they’re not going to do it on the state level, either, and I’m not comfortable with a solution that means Texas and Arkansas and North Carolina are left out. So that’s point one. Point two is that I think you can have federal reform. More than that, you will. It’s true that federal efforts have failed before. But look closer.

Truman failed in the 40’s with a heavily Republican Congress. Nixon failed in the 70s – but he failed because congressional Democrats didn’t want to hand him a victory, and rejected his, by our standards, very liberal, very comprehensive proposal in favor of something much closer to single payer. In retrospect, that was a huge mistake, but reform could have passed. And as for 1994, well, I don’t need to tell folks in this room how poorly that process was run. Maybe nothing could have passed, even with a saner, smarter, process. But change a few variables here and there – leave Lloyd Bentsen on the Finance Committee, tackle health care before NAFTA, take an earlier compromise -- and maybe it all turns out different.

More to the point, with every passing year, the pressure for reform grows stronger, not weaker. We have more uninsured, more struggling small businesses, more flagging mega-businesses, more determined unions, more coming cost crunches, more public unrest, more anxiety, more necessity. You can look at the cost projections for Medicare – which are really projections for American health care, as the private system’s spending growth looks as bad or worse – and you can tell right there that we’ll need reform, if only to save the country’s finances.

Moreover, much has changed politically. The Democratic Party is no longer dominated by Dixiecrats in Congress. It’s more parliamentary, more ideological. We have progressive coalitions with a breadth and strength that we never imagined in 1994 – during the S-CHIP fight, a coalition formed that included – deep breath here -- the AFL-CIO, AFSCME, SEIU, MoveOn.org, Americans United for Change, USAction, and TrueMajority. That didn’t exist in 1994. Nor did the blogs, or Media Matters, or the Center for American Progress. So yeah, we’ll need to be better this time, with a smarter, more aggressive political strategy, one that’s willing to bring enormous pressure to bear on any and every congress member who balks. But I think it can be done. And once it’s done, I think it’ll work, which I can’t say for the state reforms.

You know, whenever you talk about the state reforms, you always hear the old Brandeis quote about the “laboratories of democracy.” But there’s another Brandeis saying that I think is more applicable: “If we would guide by the light of reason,” he said, “we must let our minds be bold.” And that’s what I’m asking: Be bold. Because nothing else will, in the long term, work.

Thanks.

Health Care And Economic Security

Jon Cohn preaches the gospel:

Lack of health insurance leads to worse health. The precise impact isn't clear--largely because it's difficult to separate causality and correlation. But most experts I know would agree it has some impact, likely a substantial one, by making access to medical care more difficult. Still, the health effects of uninsurance--and underinsurance--are secondary to the financial ones. In other words, universal health insurance is primarily an economic security issue. Individually, Americans face severe financial hardship if they end up with medical bills they can't pay. Collectively, we all bear the price of a system that distorts our labor markets and, more generally, costs more than it should given what we get from it. So if you're doing a cost-benefit analysis of universal health coverage, a big benefit--indeed, I would argue, the biggest benefit--is vastly improving economic security for low- and middle-income (and even a few upper-income) Americans.

Economic insecurity, as Jon notes, exist both on the micro and macro levels. On the micro level, a health crisis can leave you bankrupt if you lack insurance, have too little insurance, have too high a deductible, or your insurance decides not to cover the costs of your treatment. On the macro level, the spiraling cost of health care is a massive threat to our economy. Looking into the future, if we don't restrain the growth in health spending, effective GDP-per-person (i.e, what's left after health costs) will actually begin to go down (here's a graph!), and we'll all become poorer. And my hunch is that the only way to restrain health costs in a humane and politically palatable way will be through integrating the system, bargaining down prices, and rearranging consumer incentives so soft rationing -- i.e, ineffective drugs receive less reimbursement, and so aren't as often used -- becomes possible. The Right's strategy, vastly increase people's personal financial exposure so they can buy less health care or suffer worse consequences, both won't fly politically, and shouldn't fly morally.

How To Pass Health Reform

John Boehner is promising that the Republicans will soon produce a health care plan "that will provide access to all Americans to high quality health insurance." Atrios replies, "Given the quality of media coverage of policy debates they're probably making the right move. There are different plans, and, hey, who can tell which will work. It's all so confusing and boring. Hillary cackled!"

That's exactly right. These plans exist to toss static into the discussion and make it seem as if there are two viable, existent options, one of which costs a lot of money and is really scary, and one of which involves no money, changes, or actual improvements, but will still solve everything, forever.

That said, the reason the Republicans are jumping into this debate is that they're scared. The Democrats need to viscerally recognize that this issue is moving in their direction, get the Republicans on the record supporting reform, and then brutally attack them until they actually vote for reform. We know which plans will work and which won't. We know which plans are proportionate to the problem and which aren't. The question won't be how good our policies are, but how good our political strategy is. And what the Right is showing here isn't that they want to have a serious conversation about the issue, but that they sense their own weakness on the issue. Democrats have to be prepared to capitalize, and if the Republican plan is nothing more than a pathetic tax exemption, Democrats have to be willing to say so, and use that puny, cruel, cynical policy offering to force Republicans to the table.

Health care reform will pass when obstruction ceases to be politically safe. It's up to the Democrats to make that the case.

SocializzzzZZZZzzzz

Ezekiel Emmanuel deserves props for assuming the thankless task of slowly and patiently explaining that nothing the major Democrats are proposing even nears the dread "socialized medicine." But it's basically irrelevant. Republicans aren't using "socialist" as a descriptor. They're using it as a smear. And they'll continue to do so until the world loses its power, or the press pushes back -- in accordance with what it already knows.

Emmanuel, remember, is writing this in The Washington Post. So everyone at the paper now knows that the Republican presidential candidates are lying when they utter this attack. The question then becomes one of courage: Will The Post take this newfound knowledge to heart, and every time Rudy Giuliani uses the term "socialized medicine," run a ponderous article about Giuliani's willingness to lie to the electorate in order to gain political advantage? That's certainly as important, and newsworthy, a piece as "For Fred Thompson, It's TIme To Turn On The Gas." And it's indisputably true, which should qualify it as "objective."

As for Democrats, it's time they stopped explaining that their plans are being misrepresented. There's no reason that the party with the comprehensive, popular proposals and the public lead on the issue should be the one constantly defending against attacks. That Democrats repeatedly explain that their plans don't count as socialism, while Republicans aren't feeling forced to explain how they can possibly countenance leaving tens of millions of Americans, including millions of children, without health insurance, is ludicrous. The Left needs to learn to attack, not simply assume their policy superiority will carry them through.

Update: El Cid notes:

Still, I think it was a strategic error for Democrats to name their health program The Heroic Strength of the Proletariat Preservation of Health and Medical Defeat of Capitalism Act. I know names aren't important, but this might have not been the best spin.

Fair enough.

Reforming Health Care...With No Sudden Movements

I agree that an individual mandate plan is imperfect, and it would be better to enroll everyone through taxes. But there's a reason politicians are so reluctant to advocate such serious changes in financing and organization. Surveys routinely show that 80-some percent of the America people are satisfied with their health care coverage. They want to change the system because they fear for their future in it, but they like what they have right now. And when you like what you have, and what you have is medical care, there's a lot of status quo bias -- it's not something you feel comfortable experimenting with.

It's exactly this attachment to the status quo that was so brutally exploited in 1994, when the various industries shredded the Clinton plan on the grounds that it would take away what people already had. That was, essentially, the attack. And it worked. Because it was true. In order to make health coverage an automatic feature of taxes, you had to construct a whole new structure. But this proposed transformation caused a lot of anxiety; folks feared what they'd end up with in the new system. So the new generation of plans ensures that everyone can keep exactly what they have. That means letting employers continue to offer their current coverage, and keeping large swaths of the current financing structure. In order to let people keep what they already have, you have to retain much of what already exists. From a policy standpoint, that's less than optimal. But from a political standpoint, it appears necessary.

The individual mandate, imperfect though it may be, is an attempt to paste universality atop a system not easily given to it. It's about the best you can do. That's why it's so important that these plans set up, and quietly advantage, federally regulated menus of public and private insurance options which both businesses and individuals can buy into. The hope is that these markets will be cheaper and more efficient, will attract the bulk of customers, and you can eventually move towards something closer to public health care. In reformer-speak, this is called "sequentialism," and all the major plans have it. But what you're seeing in these plans is the candidates attempting to create as good a health care system as an anxious public will allow. That means trading in some good policy -- like funding through taxes -- in order to retain a high level of security.

Time To Attack

Hillary Clinton's healthcare plan may be a worthy piece of legislation that preserves a primary role for the private market and takes the preservation and expansion of choice as its main imperative, but that doesn't mean it won't be smeared on exactly those grounds. Here, for instance, is Fred Thompson, doing some lying:

Charming! It worries me a bit that Democrats spend so little time attacking the Right on healthcare. Given that we're the ones with the plans and the polling advantage, there can be a tendency to be constructive without being aggressive. But Romney, Giuliani, and Thompson have all gone for the throat on her plan -- and that will, over time, impact public perceptions of Democratic efforts, even as it does nothing for Republican ratings on the issue. But they don't need to build, only destroy.

Better by far would be for Democrats to affirmatively strike at the Right's incoherence on the issue. Thompson can attack Clinton on choice all he wants, but Hillary can point out that she's letting Americans choose any type of full coverage they want, while Thompson is offering the uninsured mother with breast cancer her choice of tax deduction. If Thompson wants to argue that Democrats are allergic to choice, there's no reason Democrats can't wonder why Republicans have such trouble with compassion -- and why they think every American shouldn't have health insurance.

Hazardous Morals

Moral hazard is a pretty simple idea: The less you bear the consequences of your actions, the more reckless you'll be. And it's often applied to health care: The less it costs, the more you'll consume. That's why conservatives tend to want you to pay for everything out of pocket, and see universal coverage plans as surefire ways to send costs skyrocketing. If you're paying more for care, you'll be able to afford less of it. But it's a bit bizarre of a theory.

Currently, if I want a bar of precious, precious gold, I have to pay a lot of money for it. If someone let me into Fort Knox and said the gold was on them, however, I'd take as much as I could possibly carry. I like gold! The more the better. That's not really the case with colonoscopies, or triple-bypasses. Now, you could make it so I can't afford colonoscopies, in which case I can't get them, but making it so I can have an unlimited number won't compel me to make them a weekly event.

Indeed, the reason people get medical care -- in particular expensive medical care -- is because their doctors tell them to. I have never in my life sat up in bed and thought, "huh, I should really get some laparoscopic surgery." If I get a surgery, it's because my doctor told me to. And if I can't afford it, I have to ignore his diagnosis.

For that reason, if you want to safely cut back on care patients buy, you need to get doctors to stop recommending so much wasted care. You can do that in a few ways: Put them on salary rather than on fee-for-service deals, so they don't make more money when they recommend treatment. Create new research institutions that test the cost effectiveness of care so they have a better idea of which treatments are worth recommending. Offer bonuses for using proven therapies. Etc, etc. But this idea that the way to better run medical care is to rejigger the financial incentives so patients have to ignore their doctor's advice is really quite bizarre.

ClintonCare

Paul Starr was in the balcony, sitting with Hillary Clinton, when Bill Clinton addressed Congress on his new health care bill. So when he says the story of that campaign has been distorted and mis-reported, listen to him. But in some ways, the most interesting part of his remembrances come not in his exoneration of Hillary Clinton -- who didn't, according to Paul, have much input into the basic shape of the reforms -- but in his retelling of Bill Clinton's approach:

During the 1992 campaign, Clinton had not given health-care reform top billing -- his primary issue was the economy, and he probably talked more about welfare reform than about health care. But higher deficit forecasts that fall led him to change his priorities soon after the election. Abandoning his promise of a middle-class tax cut and retrenching on other measures, Clinton opted for deficit reduction in the hope that it would lead to lower interest rates and higher economic growth. The deficit forecasts also highlighted how critical it was to control the cost of health care. If health costs kept gobbling up revenue, they would make long-term deficit reduction impossible and sharply circumscribe what the new administration could accomplish in other areas. Comprehensive health-care reform therefore held more than one attraction. If reform contained health costs, it would contribute to the success of Clinton's economic program.

Clinton's interest in health care was secondary to, and in many ways subsumed beneath, his economic agenda That explains why deficit reduction and NAFTA both went first. It explains, in part, why the plan he settled on made little political sense but a lot of economic sense. It explains why health care happened so late, and wasn't pushed first when Clinton had maximal media attention and political capital.

Indeed, that, I think, is one of the prime lesson's of 1994: Health care has to be the first priority for an incoming president. It has to be an extension of a presidential campaign that the candidate uses to build momentum for health reform, not an isolated initiative that comes two years in, and shortly before the midterms.

Business and Health Care Forum

There was a great line at this morning's Business and Health Care forum, attributed to Newt Gingrich, which went something like, "one man's $200 billion in waste is another man's $200 billion profit stream." That's about the most essential fact in health care politics there is.

Some other thought-provoking comments:

• "In this country, our biggest source of health costs are preventable, chronic diseases. 25 years ago, they were acute conditions." In other words, the bulk of our spending isn't in cardiac arrest, but in managing cardiac disease. That suggests a prevention and wellness directed approach to cost control, not to mention significantly more research into how to cost effectively manage chronic conditions.

• "We need plan designs that incentivize the right patient behaviors and disincentivize wrong behaviors. At Pitney-Bowes, we eliminated the costs of 'tier one' drugs for chronic conditions. The result was reductions in the rate of cost increase for diabetes, cardiovascular health, etc -- all because we made those drugs free!" This goes to my progressive cost-sharing argument, but there are quite a few treatments we know to be effective and cheap if followed. If we made it effective and cheap to follow them, it would lower costs and improve health.

• "Commodities that are very bad for you are heavily subsidized. Poor people thinking very rationally about how to maximize their food purchasing are purchasing foods that contribute to chronic conditions." Our subsidies go into corn, not organic fruit. So those most likely to take advantage of subsidized foods load up on corn. And then they get sick. And then we pay. On the bright side, this is very good for a very small number of very politically powerful corn farmers.

• "In the past, folks have asked if we really should have wellness plans, because well be spending money on employees who leave for other companies. The hope, now, is that enough other companies will do this that we'll benefit from their programs and they'll benefit from ours." This is what you'd call a collective action problem: If every company will invest in wellness, they'll all save money. But on your own, it doesn't make sense to pump money ensuring a healthy middle age for young workers who will leave your firm.

Waiting For The System To Catch Up

The Wall Street Journal has a searing report on a particularly bizarre loophole in Medicaid law: States can, if they so choose, cover only conditions diagnosed at federal cancer-detection centers. That means if the cancer is diagnosed elsewhere, it's not eligible for treatment under Medicaid, even if the individual is. Shirley Loewe, for instance, we diagnosed with a large, deadly tumor in her breast, but diagnosed at the wrong facility. So the coverage she would have qualified for was denied. Instead, she had to fight for charity coverage, which means cutting back her working hours till her income fell below $8,000 -- which meant, in turn, moving from her apartment to a small trailer. The cancer eventually metastasized to her brain, and Loewe moved back in with her daughter who, while trying to seek care from her mother, was told by a social worker, "People die every day waiting for the system to catch up. Why is your mother any different?"

She wasn't, as it turned out. Loewe died earlier this year. She was just another person without insurance, waiting for the system to catch up.

A Better Medicare

Jon Cohn writes:

Ramesh also invokes an argument that I've always found a bit unfair: the suggestion that those of us who champion Medicare as a model of successful government-run health insurance ignore its huge cost. Nothing could be further from the truth. We're well aware of the huge costs Medicare imposes on our society. It's just that we're also aware of the even huger cost private insurance imposes.

And let me go a step further and mention the huge cost private insurance imposes on Medicare. Medicare is a Very Expensive Program for the same reasons that American health care is Very Expensive. So long as it operates within a fragmented, patchwork system that largely exists to amp up insurance industry profits, Medicare will largely act as a private insurers whose costs are borne by taxpayers. It will suffer from most all the inefficiencies endemic to the system, save the few where Medicare can act in a self-contained manner (i.e, administrative costs, where they pay 3% compared to the 14% of your average private insurer).

The idea of expanding into Medicare for All is laced with arguments about the cost savings a move towards a nationalized, integrated health system will bring. Lower administration, of course, but also better chronic disease management, and savings from lower prices extracted through government bargaining, and comparative pharmaceutical trials that direct treatment regimens more cost-effectively. Medicare is currently expensive, but less so than private insurance. In a Medicare-for-All structure, in which our health system more closely mimics that of other countries (who pay much less, as Ramesh admits), the savings could well be substantial. The fact of Medicare's cost is an argument for reform, not against, because what's so costly is our health care system, and that's what's being targeted.

Health Care Mandates

More from Ponnuru's piece:

The tax code, as noted above, has shaped the private health-care market. Restrictions on who can perform medical services also keep their prices higher than they otherwise would be. And states have imposed an ever-larger number of mandates on insurers. Arkansas is one of thirteen states, for example, that require health insurance to cover in vitro fertilization. Add up such mandates, and the effect can be to price a lot of people out of the market. Duke University professor Christopher Conover estimates that the number of uninsured Americans would drop by a quarter if these mandates disappeared.

This idea that states force insurers to offer overly-comprehensive coverage is a common one. Sebastian Mallaby put it slightly differently when he snarked that Minnesota covers wigs and massage therapy, and what sort of health care system was that? So let's take a look at what these mandates are.

The Council for Affordable Health Insurance -- an industry front group -- puts out a yearly report on the mandates, and repeats this figure that one-quarter of the uninsured are uninsured because the mandates are so onerous. I picked a state at random -- Arizona, who's not too red nor blue, and who has an average number of mandates -- and collected all the conditions and treatments the state is forcing them to cover. Tell me which ones you'd want insurers to drop: Alcoholism, ambulatory surgery, breast reconstruction, colorectal cancer screening, contraceptives, diabetes care and supplies, emergency services, home health care, mammograms, maternity stays, maternity health parity, off-label drug use, infant formula, chiropodists, chiropractors, nurse anesthetists, nurse practitioners, nurse midwives, optometrists, occupational therapists, podiatrists, psychologists, and speech and hearing specialists. Additionally, they mandate that insurers offer coverage for adopted children, dependents, handicapped dependents, and newborns.

Certainly, you can pick a couple things to carve off. Maybe you'll take off chiropractors, though that may actually cost you money as patients opt for covered (and ineffective) lumbar surgeries over manual readjustments. You could take out midwives, but they're saving you money, too. And this stuff just doesn't cost that much: The benefit mandates (your wigs and in-viutro fertilizations and diabetes care), according to Conover, cost only $13 billion. The money comes in access mandates ($81.4 billion), which force insurers to cover the disabled, pregnant women, and let you go to psychologists, chiropractors, etc. And the calculated benefits of those mandates come to a bit over $70 billion. So here's my question for Ponnuru and others: Which of these services shouldn't be protected? And how will its absence improve the cost-effectivieness -- to be distinguished from the mere cost -- of medical care?

Ponnuru on Health Care

It's sort of a shame that Ramesh Ponnuru's article on health care is behind The National Review's* subscription wall, as it's a very serious exploration of the issue that's fairly notable in its stubborn refusal to engage in the usual demagoguery (When's the last time you heard a conservative say, "Even the single-payer proposal is less radical than it may sound. It would make explicit the current system’s prepayment and socialization of costs, while reducing its administrative costs and its penalization of people with pre-existing conditions."). I'll probably do a few posts on it, but for now, this is an important graf:

The very fact that the tax code encourages employers’ provision of insurance introduces another distortion. If workers were buying a policy themselves, with no tax break to affect their decision, they might prefer a cheap policy that covers only catastrophic medical expenses while leaving them to pay for routine care out of pocket. But the playing field isn’t level: Your incentive is to have as many of your health expenses as possible qualify for the tax break, which means you want your employer-provided insurance to cover even routine expenses. Health “insurance” is no longer primarily a matter of insuring against remote but predictable risks, but of prepaying for health expenses. Instead of hedging risks, it socializes costs.

For the moment, I'll leave out the likely policy outcomes of the first few sentences, which would see a deterioration in coverage among the young and healthy, leading to rocketing prices among the old and sick, leading to a huge class of individuals being priced out of health insurance.

But in that last line, Ponnuru gets to the heart of the debate: Liberals really do craft health care policy with the intent of broadly sharing costs. The idea is that everyone should be able to afford care and coverage. Conservatives are trying to move towards a system where we pay basically what we owe, with insurance acting -- for those who can afford it -- as a check against ruin. Both systems create winners: In the conservative vision, it's those who are healthy and/or young and/or lucky and/or conscientious. In the liberal vision, it's rather the opposite. A liberal will tell you that, eventually, we're all going to be part of that opposite group, and that's the moment when policy should protect us. A conservative would say that sets up incentives to ignore your health and overuse care. But that, on a policy level, is the debate.

*Incidentally, I subscribed to The National Review a few weeks ago under the rationale that I need to follow conservative commentary, rather than just liberal commentary about conservative commentary. I haven't regretted it.

Which Proposal Is Which?

Proposals like Stuart Baker's thoughtful-but-inadequate answer to our health care woes strike me as a bit less dangerous than some progressives assume. What Butler has is the sort of non-progressive policy that makes sense as an incremental measure to progressives. Given our biases, it's plausible that a political system oriented towards the status quo will falter in pursuit of real change and adopt this milder alternative. But the problem with something like the Butler plan -- at least unless industry adopts it -- is that it lacks an affirmative constituency. It's 30 percent of a progressive proposal rather than 65% of a conservative proposal. And it's complicated, not easy to explain, and not a particularly good policy with which to bludgeon liberals. It would have to be a policy compromise, rather than a political gambit.

So it's hard to see where it's support will come from. I tend to be more worried about the thoughtless proposals from Giuliani types which are created to a) attract industry money, b) facilitate attacks on Democratic proposals, and c) make it sound like the politician has an answer even if they've got nothing at all. A world where Butler's proposal could get enacted is a world where a better proposal will get enacted. A world where Giuliani's BS gets a respectful hearing is much more worrisome.

The Smartest Thing I've Read Today. By Far.

Megan (Not McArdle...calm down) writes:

My policy professor taught me that policy beliefs originate from a model of the individual. The rational economic actor is one model of the individual. The policies that you trust are aggregations of your model of the individual:

For health care, my model of the individual:

People live in denial, do not do good risk analysis (as evidenced by my erratic use of bike helmets.) They do not conscientiously save against medical emergencies, even though they could. They do not have the capacity to compare fancy-dancy medical treatments (I should figure out what chemo regimen is best for me? I DO NOT WANT TO, because that is outside my expertise and BORING. I want to trust an expert, if it comes to that.), especially if the pain has already started. They do not have any interest in comparing not-fancy treatments. (When I broke my arm, I realized I had no information whatsoever on which of the four local emergency rooms had good reputations. None. I had never cared until it was too late.) I derive zero utility from comparison shopping for health care; I want someone else to handle it.

I figure people are roughly like me, non-savers, bad risk assessment, more than willing to delegate their health care. (I am not willing to delegate my fitness or nutrition, but that is different from disease or injury.) You know what makes good sense for that model of the individual? Government based health care that does a decent job by me. You know what doesn't make sense? For profit insurance agencies who do not have my best interests at heart.

For what it's worth, this is exactly my model of how individuals relate to health care too. When I bring this up with conservatives, they often protest that individuals simply haven't been properly trained to be mega-rational health care consumers. This sometimes makes me think they've never met any individuals. When i ask what will happen to all those individuals who falter between now and when we've trained people to be perfectly rational, they sort of shrug and say that people have to take responsibility for their own actions.

I'll Take Medicare, Thanks

Libertarian health wonk Michael Cannon writes that "it should come as no surprise that health insurance premiums have risen 87% since 2000. Doctors and insurance companies can get away with charging high prices because their customers don't bear the costs directly...This isn't some inevitable result of market forces, but of government programs and tax preferences for employer-controlled insurance."

But then you'd assumedly expect the individual insurance market -- where employers have no role, government programs aren't involved, and thus both distortions are minimized -- to exhibit much healthier characteristics. Instead, it's far more perverse.

Between 8 and 18 percent of applicants are denied health coverage outright due to preexisting conditions. Additionally, the pool of individuals seeking coverage is quite healthy -- the opposite of what you'd expect, given that the sick are disproportionately likely to be unemployed, and are more acutely in need of care. They're simply being priced out. Meanwhile, individual coverage is becoming less and less popular -- and that's across-the-board, the rich and the poor, the old and the young, the sick and the healthy. Why? Well, it turns out their premiums are going up too -- even without the distortions of employers or governments.

My guess is Cannon will say that this proves consumers still don't have enough power, and they should just be paying for their care directly. But the world of individual insurance is still much closer to his perfect world than, say, Medicare, is, and yet it's a comparative dystopia, in which substantial fractions of the population simply can't get insurance, costs continue going up, and more and more individuals are giving up on coverage altogether.

The Straw Reformers

"I would like to hear from a large number of single-payer advocates," writes McMegan, "who will say that if the American system could be proven to provide higher quality care per dollar on average than other industrialised system, then they would be content to leave 40 million people uninsured." And I would like to hear from a large number of auto enthusiasts who will say that if the car I'm selling them can be proven to go really fast, then they won't care that it's missing two seats, a mufflers, half a door, and three cylinders.

The 45 million are not some puppies-and-rainbows issue we're talking about because they make us feel sad and draw frownie faces in the margins of our notebooks. It's not efficient to have 45 million people going without preventive care. I could name about 45 million reasons why this is so -- ranging from enhanced productivity to the cost-effectiveness of statin drugs to the young uninsured who should be in the risk pool -- but that's the fact of it. The reason policy reformers are so intent on pulling them into the system isn't because policy reformers are Really Great People, it's because their absence is mucking everything up, and causing gross inefficiencies for hospitals, clinics, Medicare, Medicaid, taxpayers, and themselves.

On the other hand, if Megan could decisively prove that a non-single payer system would be more effective than a single payer system -- which would mean it offered full coverage, not sacrificed it to prove its own seriousness -- then most reformers would happily support it. Indeed, most reformers already believe that, which is why so few of us support single-payer systems in the first place, and tend to instead promote hybrid systems like France. But at least this straw reform movement which believes dogmatically in single payer for incomprehensible reasons and laughs at efficiency claims isn't around to menace us any longer. We can thank Megan for that.

Dangerous, Rather Than Annoying, Arguments

Folks konw I think McMegan is an interesting writer. Some of you even hold it against me. But just this once, you can't stop e-mailing to tell me she wrote a really, really long post on health care. I know! I read it! It's very bad!

It relies on unproven and incorrect premises ("Most advocates of single payer, I think, care most about this justice claim. They may also think that they can make the system more efficient, but if one could somehow prove scientifically that a private system would be cheaper and better, they would still favor a public system as long as a substantial population remained uninsured); brackets the argument about efficiency then pretends it doesn't figure into reformer's claims; radically overstates individual culpability for illnesses; elides the fact that living a healthier life just means you die from something expensive later; mistakes an intergenerational compact (wherein each generation pays for the next, rather than making a one-time transfer) for charity; and appears to miss the fact that Medicare already exists, and so single-payer would not mean more resources would be transferred to the old, thus obviating the central point. And that's just a partial list!

But this is the type of bad I can get behind. McMegan's post is one I disagree with, but do not fear. Indeed, if some eager speechwriter plugged it into Mitt Romney's next address ("My fellow Americans, I think it's time we abolished Medicare, because the old don't deserve our help. And we should also stop caring for the sick, because that colon cancer is your own damn fault Mr. I-Don't-Eat-My-Fiber.") I think we'd have found the straightest line between here and national health care.

Lately, though, I've been trying to think more systematically about which health care arguments are dangerous to reform, rather than just annoying to reformers. Here's what I've got so far:

• The government can't do it. It'll be like the DMV. It's "socialized medicine." Do you love waiting times? etc.
• It'll be too expensive.
• Incrementalism-as-obstruction. i.e, "We should have a more "American" system based on tax credits and deductions!" These proposals don't have the downsides of real reform, but they don't fix anything, either. However, they do make it seem like the politician "has a plan." See Giuliani, Rudy.
• National reform will fail, as it always has, and the cause will be dealt an enormous blow, just like in 1994. Better to be incremental and just cover kids or something.
• It'll reduce pharmaceutical innovation.

Any more?

The Cancer Question

By Ezra

Andrew Sullivan is quite pleased that the US is #1 in cancer survival rates. So am I! Problem is, we don't know what that means. The US has the most aggressive tumor screening in the world. That means we find some tumors earlier, but we also find many tumors that would have been non-lethal, or proven so slow-growing that something else would have killed the individual before the cancer did. In those cases, our treatments are, at best, an enormous waste of money, and at worst, more damaging than the disease. The question is how many otherwise lethal cancers we're curing, not merely how many cancers we're curing (or slowing).

Moreover, simply having the highest survival rates isn't a particularly useful metric of whether we're getting good value for our money. Our 5-year cancer survival rate, according to the study Andrew links, is 62.9%. Italy's is 59%. Italy spends about $2,532 per person. America spends about $6,100. And these numbers, incidentally, are adjusted for purchasing power parity. Then there's the question of who our treatment is best for. Not the poor. Studies show significantly lower mortality rates for the low-income cancer patients in Canada than in the US. Is this all a good deal? Maybe. But Sullivan should explain why we should believe that.

At the end of the day, the question is never American health care: Good or bad. It's whether it can be better. It's whether we get good value for our dollar. It would be absurd if a system that spends twice what anyone else does didn't demonstrate superiority in some areas. The question is why so few, and why by such minor margins (a percent or two, in this case). It baffles me -- genuinely baffles me -- that conservatives seem so intent on defending an obviously bad deal. I don't know if it's a reflexive, for-what-the-left-is-against kind of thing, or whether they're worried about the specter of a single-payer system very few people support, but it leaves them clinging to scraps of evidence, and ignoring vast swaths of the story.

For more on the cancer question, see Jon Cohn's excellent column on the subject.

COBRA's Are a M*&@#!%*$@ing Pain

By Deborah Newell Tornello a.k.a. litbrit

Crackpotpress contributor Dave, a freelance writer and Type 1 diabetic whose health care has been covered by COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) for the past year, just learned that the carrier has cancelled his policy:

Here's the deal, I've been working freelance for the last year and been paying Cobra.

Well, the jackasses at the COBRA SERVE NATION (sic) (from Florida) upped my policy by $15 and changed my due date UP two weeks. I received no notification of this.

When they got the regular payment I had been electronically transferring every month, they said "Whoa! You're late! You're short! You're CANCELLED! Effective immediately." I’m not quoting but that was the feel.

Here's the rub, as many of you know, I am a type-one diabetic. This means I am uninsurable across the board. I have about a month’s worth of insulin left. I am truly lucky to have the cash today to pay uninsured premiums. Today.

   According to the Department of Labor website:

The initial premium payment must be made within 45 days  after the date of the COBRA election by the qualified beneficiary.  Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event.  Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments.  Payment is considered to be made on the date it is sent to the plan.

If premiums are not paid by the first day of the period of coverage, the plan has the option to cancel coverage until payment is received and then reinstate coverage retroactively to the beginning of the period of coverage.       If the amount of the payment made to the plan is made in error but is not significantly less than the amount due, the plan is required to notify you of the deficiency and grant a reasonable period (for this purpose, 30 days is considered reasonable) to pay the difference.  The plan is not obligated to send monthly premium notices.   

Dave paid his premiums regularly, and on time, using an electronic payment system accepted--and presumably set up--by the carrier.  And while the company may not be obligated to send monthly premium notices, surely they are obligated to notify a person, in writing, when and if they have raised said premiums and moved up the due date, particularly when that person is on record as using an automated, pre-scheduled payment system?

Feel free to offer your thoughts on this, along with any helpful suggestions you might have for Dave, in comments.  (And of course you may also contact him directly: Dave at Crackpotpress dot com.)

(Via Blue Gal)

More vs Better

So in the continuing argument over whether high health spending actually does you any good, there's yet a bit more evidence that it does. This mixes in with some evidence that it doesn't. It's all quite confusing.

Well, superficially so. These are not arguments over whether taking statin drugs to reduce cholesterol is a medically effective therapy. It is. If your doctor tells you to do that, listen to her. The question is whether being treated in an area with high health expenditures -- i.e, where they do more to you -- is better than being treated in an area with low health expenditures.

The reason this is even an issue is that health treatments have a negative impact, too. Surgeries are dangerous, and mistakes, combined with post-operation infections, can kill you. Hospitals transmit diseases and pharmaceuticals can be rough on the system. So the actual argument here is over net effect: Whether the good outweighs the bad. Whether getting everything and the kitchen sink creates improvements at the margins, or whether most of these additional therapies offer little benefit and occasional harm.

Which makes these studies comparing high and low spending areas a bit useless. Not useless in that they don't tell you anything, but useless in that they just point to what every health wonk and medical researcher already knows: We need more data. We need to find, and then focus on, cost-effective treatments.

A system in which the incentives for the doctor and hospital are always to do more -- and where patients simplistically think more is better -- is not a system that's going to offer cost-effective health care. And in that system, more will not necessarily be better, because the incentives are on the more, not the better. We could set up a system -- like they've done in France, begun doing in England, or done in the VA -- where better takes precedence, and more coverage is offered to cost-effective treatments and less to unproven therapies, but that would mean a lot of people currently making a lot of money would start doing somewhat worse, and they ad the politicians they fund don't want that.

Medicare Analogies

It's incumbent on us to say, rather honestly, that Medicare Part D is working better than expected. More than 90 percent of seniors now have drug coverage, and the poor seniors, who get their drugs through Medicaid, have signed up in record numbers. Yet Medicare Part D is still a bad program.

I've long struggled to explain this, because if something's a bad program, we assume that people won't like it. But satisfaction with Part D is quite high -- and costs are even coming in a bit below estimates. So what gives?

Imagine the government starts up a subsidized cars program. Millions of individuals who don't currently have a car are going to get one, and will only pay 15 percent of the cost. But when the program is actually implemented, it turns out that though everyone is getting an economy car, the government is letting the dealers dictate the prices. So all these $15,000 Civics are costing $35,000.

Now, millions of people just got a brand new car. And they paid only a small amount out-of-pocket for it. And insofar as your aim was to increase mobility, you've succeeded. But the program wasn't a good deal. The government is overpaying for every car by around $20,000. And the program's recipients are getting much less car than they should be for their money. So though the aims are being fulfilled and the folks with subsidized autos are satisfied, everyone involved -- taxpayers, government, and the poor -- are being ripped off while the car dealerships make out like bandits. It's just that it's harder to see the rip-off, and easier to see the new cars.

A Free, Preventive Lunch

David Leonhardt has a smart column on health care spending today, in which he takes on the idea that preventive care will actually save us money:

The actual savings are also not as large as might at first seem. Even if you don’t develop diabetes, your lifetime medical costs won’t drop to zero. You might live longer and better and yet still ultimately run up almost as big a lifetime medical bill, because you’ll eventually have other problems. That would be an undeniably better outcome, but it wouldn’t produce a financial windfall for society.[...]

Intermountain Healthcare, a network of hospitals in Utah and Idaho that has saved money in recent years by reducing hospital infections and drug errors. Intermountain hospitals have also largely stopped inducing child labor for the sake of doctors’ or parents’ convenience. The hospital induces birth only for medical reasons — and the number of babies that spend time in the neonatal intensive care unit has fallen.

It’s this last example that holds the real key to cutting medical costs. I realize many people will react to the notion that preventive care usually costs money by saying, “So what? We should do it anyway.” And we should.

But by describing it as an easy win-win solution, the presidential candidates are gliding over an important part of the issue. Preventive care saves real money only when it replaces existing care that is expensive and doesn’t do much, if any, good. There are plenty of examples of such care — from induced labor to many lumbar surgeries and cardiac stent procedures.

The problem is that the people getting this care typically don’t consider it wasteful. We all like to believe that other people are the ones getting the unnecessary care. We, on the other hand, are probably not getting enough treatment.

This is all true. To be sure, in a perfect world, I could probably dream up a set of policy initiatives that, if broadly implemented and competently carried out, could reduce health spending off the bat. But the world continually disappoints with its stubborn lack of perfection. Instead, the more achievable goal is to move towards a universal system that's more cost-effective, which is, in fact, very much the same thing as saving money, and towards an integrated system that readies the ground for tougher cost control mechanisms down the road.

Single-Payer

Over at TAP, Roger Bybee interviews Dr. Steffie Woolhandler, one of the founders of Physicians for a National Health Program, on the desirability and achievability of single-payer health care. I don't find the interview terribly convincing on either count, but Woolhandler's diagnoses of why HMO's failed, what will happen to the Massachusetts' reforms, and what's wrong with Health Savings Accounts are all compelling. This, too, is interesting, on the oft-heard administrative savings argument:

You performed a study showing that about 31 percent of health spending in America goes to administrative overhead and profit. If 20 percent is accounted for by the insurance companies, what explains the rest? Is it, as critics like Paul Krugman say, the strategy of "denial management" followed by insurance companies, where they've bloated their staffs so that they can challenge more claims by both providers and patients?

The remainder of the overhead comes from doctors and hospitals. Part of it is in response to "denial management," but the big portion is just needing a high baseline level of paperwork and administrative support to deal with all the different insurers. In my little practice, you have to deal with all the different insurance companies, different co-payments, different deductibles, and different formularies [listings of approved prescriptions].

Right. There's just an extraordinary amount of paperwork involved in dealing that many payers who're all negotiating different rates, denying different services, offering different insurance packages, and forcing different lines of communication. It's staggeringly inefficient.

As for why we'll all support single-payer when the time for reform comes, Woolhandler says, "There will be a lot of debate, but when people fully understand the economics of healthcare, there will be more support for single-payer." Any political strategy that relies on people "fully understan[ing] the economics of health care" is in trouble.

Insurance Matters

One of the common objections to universal coverage is that insurance coverage doesn't actually improve health outcomes all that much. This objection, unsurprisingly, is generally made by people with health coverage. It's also not very true.

More evidence for the importance of health coverage comes from a study in The New England Journal of Medicine this month, which tracks what happens when the previously uninsured become eligible for Medicare. It turns out that they -- surprise! -- need a whole lot more care than their demographically similar, but previously insured, brethren!

They have conditions that need to be treated and managed, exhibit higher rates of hospitalization and doctor's visits, and generally cost a whole bunch more money than those who've been availing themselves of the health care system for years. As the NEJM dryly concludes, "The costs of expanding health insurance coverage for uninsured adults before they reach the age of 65 years may be partially offset by subsequent reductions in health care use and spending for these adults after the age of 65." Add in what they cost the system in catastrophic health incidents before they become eligible for Medicare, and it begins to look like keeping the uninsured population uninsured is a much better deal for the insurers than it is for taxpayers, hospitals, or just about anyone else.

Long Form Health Wonkery

We've talked a fair amount about universal health reform going through the states. Massachusetts is currently implementing a plan, California is floating one, and a variety of others, from Pennsylvania to Illinois to Connecticut, are hinting that they'll follow suit. Politically, I'm all for these initiatives. As a policy matter, however, they're doomed, for reasons I explain in the latest Washington Monthly. The trick is going to be converting the energy of the states into momentum for a national solution. Hand it over to the laboratories of democracy, however, and their solutions will collapse, and the push for reform will, I fear, be set back.

The idea of giving universal health care a little more time in the laboratories of democracy may sound tempting to certain cautious, bipartisanship-loving Beltway observers. But letting states continue to take the lead would be disastrous, for one very simple reason: providing health care for all citizens is one of those tasks, like national defense, that the states are simply unequipped to manage on their own. The history of state health reform initiatives (and there’s quite a history) is a tale of false hopes and great disappointments. The deck is stacked from the start, and the house—in this case the insurers, the providers, and other agents of the status quo—always wins. The new raft of reforms may prove different, but they probably won’t. Universal care advocates must be realistic about that, and think hard about how to convert the energy in the states into a national solution before the current crop of novel experiments fail—because fail they almost certainly will.

The current appetite for universal health care in state capitals may seem thrilling and unprecedented to some, but to those who follow the issue it carries an unsettling charge of déjà vu. Over the years, states have tried programs of many different ideological and economic persuasions. All of them failed, and not because the programs were insufficiently inventive, but because states are structurally incapable of sustaining them.

Read the whole thing.

Thompson on Health Care

It's important to note that Fred Thompson isn't going to be just any Republican. He's going to be a hack Republican. This is not a guy like Romney or Giuliani who's had a period of substantial executive experience, and so, whatever their panders, actually possess some independent idea of how policy works. Thompson is a movement conservative with no particular policy specialties and a deep involvement in the oh-so-substantial world of conservative talk radio. It'll be like electing Limbaugh. If the court would be so kind, I'd like to turn their attention to exhibit A, Thompson's radio review of Sicko:

It used to be a lot easier to make the case for nationalizing health care before we actually started looking at the countries that have it. A lot of people don't seem to have noticed but, in recent years, the grand experiments in bureaucratic medicine are coming apart at the seams.

What a tantalizing start to an argument. As Thompson surely knows, we spend more than twice as much as any other developed nation on health care. We have 45 million uninsured, while they have full coverage. Our health outcomes are comparatively poor. These must be some seams to overwhelm all those other concerns. I only wish I'd noticed them sooner.

Nearest home, it was the Canadian Health Care system that lost its luster. Despite paying nearly half their incomes in taxes, and as much as 40 percent of each tax dollar on health care, many Canadian experts have recognized that their health care system’s in a state of crisis.

Who are these Canadian health care experts? Who knows! Good thing no one ever uses the word "crisis" in conjunction with our health care system (and certainly not 16,900,000 times). Meanwhile, why does Fred Thompson think it better to spend $6,102 per person on health care through private spending rather than $3,165 through public funds? Again, it's never explained.

Many Canadians have started coming to the US for treatments that they just can't get at home.

No.

Now, top officials of the British National Health Service, often held out as an example of the kind of socialized medicine America should adopt, have acknowledged that they have similar problems. One in eight National Health Service hospital patients has to wait more than a year for treatment. Thirty percent wait more than 30 weeks.

Think about it. This is what we're supposed to copy? The poorest Americans are getting far better service than that.

The Brits pay 41 percent what we do per person. If you want to purchase a $35,000 car, and I want to purchase a $14,350 car, who's going to get the better vehicle? And the Brits, again, don't have 45 million uninsured. Everyone there gets coverage. And despite what Thompson implies, you're far better off being covered there than uncovered here. Hell, you're better off there period. A recent study found that the English are far healthier than we are. Indeed, "in the categories of diabetes, blood pressure and cancer, England's poorest citizens -- those in the lowest one-third of income levels -- did better than the richest one-third of Americans." Some dystopia.

Look: Giuliani is wrong on health care. Thompson just doesn't know what he's talking about. He's spitting scare stories and conservative platitudes. There are no signs of sentience here at all. Put him in office and you'll get whatever the industry lobbyist's want.

All of which is to say, he's totally getting the nomination.

Perfect vs. the Good

Look people, just because a nationalized health care system in America is unlikely to be as cheap as similar systems in Canada, France, the UK, Japan, Germany, Australia, and so forth, doesn't mean it won't be significantly cheaper than what we have now. This isn't even an objection. It's a diversion. As we've already seen, the incentives and practices within government care systems really can sharply cut spending growth. Between 1999 and 2003, enrollment in the VA grew by 70 percent. Funding increased by 40 percent -- as quality improved. Even now, with a population that's sicker, older, more likely to smoke, have diabetes, and abuse drugs, the VA spends more than $500 less per capita than the rest of the system. That's not to say they spend half as much, as Canada does, but they're doing a helluva lot better at cutting costs than the private system in this country. If national health care got everybody covered, improved quality of care, cut costs by only 2 percent, and merely slowed spending growth, well, you're telling me that's not worth doing?

The secondary point is that savings from an integrated system aren't all up-front. An overhaul that's spending neutral but brings the health system into some sort of coherent structure paves the way for all sorts of cost savings down the line. Within a single structure, you could impose anything from global budgets to first-dollar cost sharing to massive preventive health measures to huge improvements in chronic care treatment. Within the current system, where care is split between Aetna, and Medicaid, and Medicare, and UnitedHealth Group, and your employer, and the VA, and Blue Cross, and the state high risk pool, and FEHBP, and a thousand more besides, there's no way to impose cost-cutting measures. Were the system under one roof, there would be.

Every Man A Doctor, Purchaser, and HMO

It's pretty funny to watch Michael Cannon explain how, if you didn't hurt yourself too badly, and you happen to be a professional health care expert deeply steeped in theories of consumer cost control, you can use an HSA to bring down costs on your torn ACL. So we get lines like "I heard a tear, not a crack — which suggested soft tissue damage, but no broken bones. The only reason I used that information to rule out an X–ray was because I had a financial incentive to avoid unnecessary spending." That's all for the good, when it's all for the good. On the other hand, that's just a hop, skip, and a jump away from "She had shortness of breath, but no radiating arm pain, so she decided to wait through the weekend because she couldn't afford the ambulance ride. She died."

That's not my collectivist impulses spinning some implausibly hellish scenario, by the way. A recent study looked into what happens if you increase cost sharing on pharmaceuticals in Medicare. In other words, what happens when the patients have what Cannon calls a "financial incentive to avoid unnecessary spending." The answer? "[S]ubjects whose benefits were capped had higher rates of nonelective hospitalizations, visits to the emergency department, and death. In addition, subjects whose benefits were capped had lower pharmacy costs but higher hospital and emergency department costs, with no significant difference in total medical costs between the two groups."

They did try and bargain down care, and even skip some pharmaceuticals. But their choices led to neither better outcomes nor lower spending. Instead, they died more often, and we paid for their ambulance rides more frequently. Everyone's a loser!

Luckily, you can bring down health spending on the supply side, not only the demand side. Rather than asking each patient to serve as their own doctor, purchaser, and HMO, we can get the government to bargain with all providers to bring down prices for everyone. If Michael Cannon still wants to barter for lower MRI prices, he should. But for those who don't know how to direct their own care, and aren't sure whether they heard a tear or a crack, they'll still be getting lower prices, too. Just like they do in every other country.

Health Wonkery in Everything

Matthew Holt writes:

Apple CEO Steve Jobs and filmmaker Michael Moore essentially are on the same mission. They both want to convince the American public to take another look at what they've been using so far hoping that the re-evaluation will be so dramatic that the scales will fall from their eyes and Americans will suddenly realize they can do much much better than what they've had to put up with so far.

The simple fact of the matter is that, like cell phones in the EU, health care works better over there. Why? Better use and management of the technology at hand. It's not entirely a coincidence that in most major European countries the use electronic medical records by physicians is much more common than it is the US. And we're not talking a minor distinction here. In countries like Denmark, Norway, the Netherlands, the UK and New Zealand the use of electronic medical records in the exam room by primary care physicians is almost universal. In the US despite years of hype, somewhere under 20% of doctors are using them.

To this day, I've never read a compelling explanation of why the nation's doctors and hospitals haven't broadly adopted electronic medical records. It's not as if they're allergic to technology. At this point, cardiovascular care employs every strategy but astral projection to keep our in rhythm. It's not as if it wouldn't be cheaper and easier for them. The man hours and costs from keeping track of files, printing out labels, finding lost manila folders, and getting sued because the nurse misread the doctor's handwriting are enormous. Theoretically, insurers should be pushing on this, but they seem behind the curve, too. And it's not as if there aren't tested programs in use -- not only does Europe do electronic records well, but the VA does them beautifully, and they've released their primary program, ViSTA, as open source, for free use by anybody.

That all these factors haven't spurred our private providers to incorporate such broadly appreciated technology should be one of our first signs that American medicine is not responding to the incentives we'd expect. But wait, no, can't say that, because Michael Moore sometimes stretches the truth...

Counterintuitive Health Chart of the Day

The other night, I had a long argument with some health care types* that hinged, partly, on whether individuals have seen sharp shifts towards out-of-pocket spending in the past few years.  Whether, in other words, the Great Risk Shift was heaping out-of-pocket costs onto individuals in some new way.  My recollection of the data was that it wasn't, that out-of-pocket spending was actually going down, and that ever more money was going into insulation and premiums.  This was not a popular viewpoint.  So I was glad to come across this CBO graph detailing the story I was trying, and failing, to tell:

That's a sharp drop, particularly considering how much health costs have risen over the same period.  What you're seeing, to be sure, isn't less total spending on the part of consumers, but more going into premiums, and being taken out of wages.  And this has some negative effects.  As the CBO says, "Consumers facing lower out-of pocket costs tend to demand more health care services than consumers facing higher out-of pocket costs. At the same time, rising healthcare costs (as a share of income) have probably led individuals to seek more extensive insurance in order to keep the variability of their out-of-pocket expenses from increasing." 

So it's a bit of a perverse cycle.  Costs go up, unsettling consumers, who buy more protection, which encourages somewhat more use of health care, which then brings costs up...rinse and repeat.  This critique is often used by libertarians to argue that we shouldn't have any insulation at all.  That's foolish.  But I could see a world in which first-dollar cost sharing is increased in a targeted way to both bring down costs and increase quality.  Indeed, I've even written about such a world...

*Yes, I'm exciting.

Can Public/Private Competition Work?

One of my favorite features of the Edwards' health care plan is its promise to "drive down costs by making private insurers compete with a public plan." That's good stuff, and a slice of rhetoric you hear often from health care collectivists like myself. But I'm a bit worried about such a plan when it doesn't break employer control over health care. Were we in a perfect world where all the different plans would compete on grounds of cost and quality, it would be fine. But in that world, we could also ride our unicorns to the rainbow ro