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July 19, 2005

Against Health-Care Determinism

That's a neat trick. Arnold Relman, the Harvard Medical School expert who wrote TNR's cover story on universal health care a few months back, somehow got David Francis to rewrite his whole article for the Christian Science Monitor, complete with lots of quotations from, yes, Arnold Relman. Well played!

Relman's basic argument is that the next 5-10 years will see the ascension of consumer-driven health solutions: HSA's, MSA's, and all the other acronyms that mean you, not your employer, are now responsible for the majority of your health care expenditures. Relman thinks this revolution will fail, and when it does, single-payer will be the last option left standing and we'll adopt it.

I wish. We've been down this road before, most recently with less ruthless forms of cost-sharing and the managed care revolution. And how'd that turn out?

In most countries, health spending increased more rapidly than GDP. U.S. health spending as a percentage of GDP increased by 1.6 percentage points from 1992 to 2003 (from 13.0 percent to 14.6 percent)—twice the OECD median increase of 0.8 percentage points. This was during a period when managed care and greater cost sharing were credited for holding down U.S. health spending.

So instead of abandoning course, we've simply gone to more "cost-sharing". At a point, this just becomes cost-shunting. But at that point, single-payer loses an ally.

When you talk about business favoring single-payer, you're talking about a certain subset of business: older firms that were around in Labor's heyday and are now groaning under the weight of comprehensive health benefits for their retirees. It's not Wal-Mart hoping for universal health care, it's Ford, GM, and so forth. But if they're able to worm out of Labor agreements, if HSA's become so accepted that they're able to move employees onto them, then their need for government relief on health care costs evaporates, and their desire to avoid a large tax increase gains primacy.

Relman's vision is comforting, but we don't quite have time to wait. We need to change this system, not allow health care to devolve to another good for those who can afford it. Because there's an alternate future then the one Relman predicts. Say Clinton wins election, complete with her once-bitten-twice-shy incrementalism on health care. The country begins moving towards "consumer-driven" plans and more and more find themselves unable to afford decent care. In response, Clinton jacks up the Medicaid income limit, making Medicaid a de facto insurance company for the lower middle class. Now you have a nightmare program: it's all adverse selection. The healthy poor don't sign up, the sick do, and neither group has any money anyway.

We're about to watch adverse selection in action with Bush's Medicare drug benefit (super complicated, opt-in, only a good deal for the poor or sick, the healthy will stay out, the impoverished and ill will opt-in, and the whole thing will be a fiscal train wreck), we don't want that in a general program. These programs, unable to draw on a normal cross-section of healthy and unhealthy and underfunded anyway, make government-run health care look financially doomed. It's decidedly not. But if the programs don't have cash and they only care for high-risk groups, they will, by definition, be unsustainable. So Relman's vision, while comforting, is neither sure nor safe, and we shouldn't let him tell us otherwise. The 90's showed we can't sit back and wait for health care to happen. Let's not make the same mistake twice.

July 19, 2005 in Health Care | Permalink

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Posted by: peter.w | Sep 17, 2007 2:50:02 AM

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