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July 12, 2007

Health Reform and Canada

I actually had a portion on the history of health reform in Canada in the original draft of my article. Here it is:

None can doubt Massachusetts and California’s roles in reinvigorating the debate over national health care. So a second consideration comes into play: Even if state-based plans are unlikely to work in the long-term, they’ll serve to accelerate the transition to a national care system. That, after all, is what happened in Canada. The first universal plan came out of the Saskatchewan province, then the area’s representatives to Parliament became dedicated advocates of the model, and they forced it into the national debate. A likelier analogue in this country would be that one of the governors who passes a universal plan runs for president partially on a platform of expanding the model.

That has its dangers too, though. Mitt Romney, for instance, is running for president. And while his desperation to shore up his conservative bona fides has kept him pretty quiet about the plan, if he made it to the general election, observers expect that it would become central to his national appeal. The problem is it’s not clear that scaling a state plan up is a wise solution. “What states find attractive because they have to work around all these barriers may not be what the feds should find attractive, because they don’t have to face those same barriers,” says [Jacob] Hacker. “So Massachusetts is a pretty elegant reform idea in part because it won’t run afoul of [the Employee Retirement Income Security Act] and in part because it won’t require much new money. But it looks pretty bad on other dimensions, like what’s the coverage that you’re getting and what’s the guarantee that it’ll reach the uninsured.” To construct a national plan that builds in the peculiar limitations of the states while eschewing the unique powers of the federal government would be disastrously bad policy.

That said, one of my main points in the article is that the primary utility of these plans is in providing momentum for the issue on the national level. But you couldn't simple repeat the Canadian formula: What American states can do is very different from what Canadian provinces were capable of pulling off. And what a state could do to regulate the medical industry and fund health care in 1946 are rather different than what one can do in 2007. I assume I don't have to explain why in super great detail. All that said, I do like Sirota's admission that the way he researches this stuff is to "[s]pend 5 minutes on Wikipedia."

At least he's honest.

July 12, 2007 | Permalink

Comments

Heh - nice ad hominem, really. Very skillful. I love it - claiming that because I pointed out Wikipedia, that means that's the way I do research, instead of how that phrase was shorthand for "any idiot can find this out if they bothered to look."

Posted by: David Sirota | Jul 12, 2007 3:49:39 PM

"nice ad hominem, really."

Squeal! Praise from the master!

Posted by: Ezra | Jul 12, 2007 3:54:51 PM

And what a state could do to regulate the medical industry and fund health care in 1946 are rather different than what one can do in 2007.

This would have been the better article.

Posted by: wisewon | Jul 12, 2007 3:55:10 PM

Ezra - come out of the Beltway once in a while. It's nice out here - I promise the savages will be nice to you!

How's that?

Posted by: David Sirota | Jul 12, 2007 3:57:18 PM

that phrase was shorthand for "any idiot can find this out if they bothered to look."

Or perhaps better shorthand for 'a little learning is a dang'rous thing'?

Posted by: pseudonymous in nc | Jul 12, 2007 3:58:23 PM

If only all of this machoismo could be directed to somewhere else, but where? Where could they directed it? I am going blank.

Posted by: akaison | Jul 12, 2007 4:12:34 PM

Squeal! Praise from the master!
Ok, this brought up images in my mind of Deliverance. Shame on you, Ezra.

Posted by: Jason | Jul 12, 2007 4:15:56 PM

You should really look up the definition of the ad hominem fallacy, David. If someone responds to your argument and then calls you an idiot, it's not ad hominem. If someone calls you an idiot as a response to your argument, then it's the fallacy. Ezra obviously did the former.

For more, follow the link.

Posted by: Cain | Jul 12, 2007 4:17:47 PM

OT, Did you know there's a pub called The Squealing Pig in Provincetown?

Posted by: W.B. Reeves | Jul 12, 2007 4:17:51 PM

Squeal! Praise from the master!
Ok, this brought up images in my mind of Deliverance. Shame on you, Ezra.

I imagined more the sound pre-adolescent girls make upon encountering teh cute.

Posted by: idlemind | Jul 12, 2007 4:26:15 PM

You and I are very different people, idlemind.

Posted by: Jason | Jul 12, 2007 4:35:46 PM

I made this point in the other thread, but you should've mentioned that Saskatchewan, the province from which Canadian health care originated, is allowed to run deficits. If the inability of states to run deficits is your argument against state-based systems, your opponents can't cite the Canadian example in response.

I suppose it's possible that momentum in the states could lead to federal reforms before recession hits and the state systems take a beating. But this is consistent with your general point, which approves of state systems for political purposes, but insists that the system we need to end up with is a national one.

Posted by: Neil the Ethical Werewolf | Jul 12, 2007 4:53:31 PM

In fact, it could be said that David's comment here was the ad hominem, as he didn't reply to Ezra's argument at all, except for shouting "Nice ad hominem".

Posted by: Cain | Jul 12, 2007 4:54:26 PM

It might be cynical on my part, but puzzling over Schwarzenegger's support for state-supported health care I can't help but wonder if failure is the intended outcome. And even if it isn't, I'd think that the various interests which oppose universal healthcare would much rather kill it it California, and use that failure to suppress support for it elsewhere, than fight it on a national level. After all, if this sort of "socialist" program doesn't work in the bluest of blue states, people elsewhere will be especially dismissive of it.

Posted by: idlemind | Jul 12, 2007 5:32:06 PM

There are several problems with the state by state approach which Sirota ignores in his finely nuanced piece. First, the impact may be to cause business flight to other jursidictions a la the retreat of businesses to the "right to work" south. Second, there are potential problems in dealing with self-insured plans covered by the broad federal law pre-emption clause in ERISA. (You can google that in 5 minutes). Third, there is the potential for adverse selection, i.e. sick people seeking out the states with universal coverage and thereby disproportionately rasing costs. The latter would not likely effect a place as large as California, but I can imagine a few folks from the "Live Cheaply or Die" State meandering over the Massachusetts line. Lastly, the state schemes are by necessity somewhat jury rigged and can't give the benefits associated with a universal single payer system, particularly its efficiency, simplicity, and economy.

I still think the Medicare for all concept is the strongest and simplest as well as being the best policy. (Of course I live in DC so what do I know.)

Posted by: Klein's tiny left nut | Jul 12, 2007 7:12:26 PM

I still think the Medicare for all concept is the strongest and simplest as well as being the best policy.

Politically, it's a fantasy. Fiscally, it would be a catastrophe. And as a national health care system, it would be hugely wasteful and inefficient.

Posted by: JasonR | Jul 12, 2007 7:16:29 PM

Jason,

You and I have danced this tango, so I'm not going to bore everyone with my ususal arguments, except to say that there are possible savings of a couple of hundred billion in administrative costs, profits, and inflated drug costs through a single payer system.

As for the efficiency argument, check out the costs associated with Social Security versus prviate sector pension plans. Social Security is unbelievably efficient in per participant costs.

Posted by: Klein's tiny left nut | Jul 12, 2007 7:20:13 PM

I understand the reasons some people might think that health care run by the states won't work, but it doesn't seem to me that there's any alternative. The federal government at this point is clearly a dead/lame duck, that probably won't even be around much longer. (I give it 10 to 20 years before it collapses the way the Soviet Union did, at most.) Even if survives in some form, it's certainly no longer capable of planning or executing any national initiatives. If it gets involved it will only make things worse. The odds of anyone receiving health care from it are about the same as the odds of the people of New Orleans receiving any help. It's simply a dead organism at this point, and people should wake up and acknowledge that fact. The future is clearly on the states who I think will emerge as the successors to the old union, and that's where people should invest their energies.

Posted by: mikep | Jul 12, 2007 7:33:30 PM

nut,

The "savings" in administrative costs would actually just be a transfer of those costs to some other part of the system, as Tyler Cowen explains here. A reduction in drugs costs would lead to a reduction in the investment needed to produce new and better drugs in the future. And there's no more reason to think that eliminating the profit motive from our health insurance system would be beneficial than that eliminating the profit motive from any other large sector of our economy would be beneficial.

Posted by: JasonR | Jul 12, 2007 7:36:01 PM

Jason,

Tyler Cowen's piece is bullshit and betrays a total ignorance of how health plans really spend their money. Every private insurer or self-funded health plan is spending money on several, if not all of the following: renting a PPO or other cost continment netowrk, employing a consultant to help with plan design, an administrator to pay claims, a lawyer to write summary plan descriptions and deal with claims issues, an auditor to monitor the books and file forms with the feds, investment managers to handle plan reserves, stop/loss, fiduciary and other insurers, pharmaceutical benefit managers, large case managment and utilization review services, etc. Each of these entities or institutions seeks to profoit by these services. There is enormous duplication and inefficiency in this system. On the care provider side, each doctor's office and hospital employs a battery of staff to deal with claims and eligibility certification, and the different methods required by the various health plans of getting claims paid.

I don't believe that Mr. Cowen exhibits any real knowledge of how the system functions on a micro level. He simply posits that insurers somehow make the system efficient in some magical fashion left undescribed. He notes how much lower Medicares per particpant administrative costs are, but then dismisses this difference out of hand.

In short, I don't think he knows what he is talking about.

Posted by: Klein's tiny left nut | Jul 12, 2007 8:06:32 PM

Ezra didn't make it clear that Canadian health care remains a provincial responsibility. Each province (ranging from Ontario with 13 million people to Prince Edward Island with less than 150,000) operates its own universal, single-payer plan for its citizens. The federal government enforces national standards through the carrot-and-stick of doling out federal tax money. The five basic principles of the federal Canada Health Act are public administration (single payer), comprehensiveness, universality, portability, and accessibility. And, yes, provincial governments may run deficits, though occasionally they run whopping surpluses.
http://www2.news.gov.bc.ca/news_releases_2005-2009/2007FIN0023-000910.htm

Posted by: mijnheer | Jul 12, 2007 11:38:43 PM

nut,

Tyler Cowen's piece is bullshit and betrays a total ignorance of how health plans really spend their money.

Yeah, what does he know? He's just an economics professor with special expertise in health care financing.

He simply posits that insurers somehow make the system efficient in some magical fashion left undescribed.

Right. I must have completely imagined the following:

The monitoring, marketing and overhead costs of private insurance are what allow more expensive medical treatments through the door. It is precisely because competing insurance companies spend money evaluating the appropriateness of claims that they are willing to pay for so many heart bypasses, extra tests, private hospital rooms and CT scans. Medical insurance, whether private or government, is always going to be faced with a fundamental problem: patients and doctors will try to get the most out of any system. When they aren’t paying directly, patients will seek extra care and doctors will be happy to oblige. To deal with that problem, health care systems can offer services indiscriminately and write off the resulting losses, spend money on monitoring, or limit services and prices. An analogous problem is faced by retail stores: they must either put up with theft, hire security to limit theft, or carry lower-value items.

I don't know what part of this you don't understand. Either a health care system spends a lot of money evaluating individual claims and the effectiveness of different drugs, tests, surgeries, etc., or it incurs equivalent costs either from rubber-stamping claims and services that aren't really justified, or denying claims and services that are. Medicare has low administrative costs because it spends much more indiscriminately than a private insurer would. That's one reason why it's headed for bankruptcy within a decade or so.

Posted by: JasonR | Jul 13, 2007 12:02:02 AM

There's also a certain question of scope. Canada has thirteen provinces/territories compared to the US's fifty. The US is also in the range of nine times more populous.

Posted by: Thomas | Jul 13, 2007 4:19:02 AM

Medicare does not spend indiscriminately. That's just wrong. Its finanical issues are related to deomgraphics.

I don't really give a damn about him being an economics professor. My sense of most of them is that they couldn't fine their asses with both hands.

His description of what insurers do to make their money is not something that rings true with someone who has spent a decent amount of the last 22 years working with health plans.

You, of course, didn't address any of the overhead issues I mentioned, because it is contrary to your dreams of the vaunted iefficiency of the private sector. The private sector is efficient at making money, which is not the same thing as being efficient as delivering health care.

Posted by: Klein's tiny left nut | Jul 13, 2007 7:03:22 AM

Either a health care system spends a lot of money evaluating individual claims and the effectiveness of different drugs, tests, surgeries, etc., or it incurs equivalent costs either from rubber-stamping claims and services that aren't really justified, or denying claims and services that are.

Oh, the costs are equivalent. Because you say so, of course. And thus, insurers make the system efficient by doing something that would cost everyone just as much if they didn't do it! Three cheers for efficiency.

Posted by: Steve | Jul 13, 2007 10:56:59 AM

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