Thursday, June 25, 2009

Cautionary Tales

I’ve been known to characterize single payer (national health insurance) as an arrangement for freezing the existing health care system in place and then slowly starving it to death.

The freezing part was illustrated by President Obama during his recent press conference when he assured those who were satisfied with their current health insurance plans and physicians that they could keep what they have and need not be affected by his proposal for a government-run plan. What he was saying, in effect, was that you could keep your doctor, however incompetent or wasteful he/she might be, and your health insurance would have to pay him/her.

The starving part was shown in the June 24 issue of The Boston Globe, which headlined the decision of the Massachusetts legislature to cut some $115 million from the budget of the celebrated Massachusetts health reform plan as a budget balancing measure. Further back in the same issue, State Treasurer Cahill, who has expressed an interest in running for governor, was quoted as referring to the Massachusetts health plan as “a luxury taxpayers can no longer afford.”

These ought to be taken as cautionary tales by advocates of single payer.

Saturday, June 20, 2009

Cost Versus Coverage in Health Care Reform

Health care reform has come down to a contest between two issues, cost and coverage.

Cost is an issue because nearly 17% of our economy is now devoted to health care and that number continues to rise because expenditures for health care are rising faster than the growth of the economy as a whole. Students of the issue foresee the day when the government will no longer be able to pay its health care bill from its own funds or borrow the money to do so.

Coverage is an issue because some 47 million Americans are without health insurance. In the modern era, the lack of health insurance can force a patient to choose between foregoing needed health care and facing financial disaster.

Measures that address the coverage issue provide a benefit for people in need and are therefore politically attractive.

Measures that address the cost issue place restraints on established practices and are therefore politically hazardous.

The contest arises because measures directed at the coverage issue involve new expenditures of prodigious amounts of money, thus exacerbating the cost issue.

Added to that is growing concern over ballooning budget deficits at the federal level.

I have said over the years that the cost of health care continues to rise because the pain of paying is less than the pain of doing something about it.

That may be changing.

Saturday, June 13, 2009

Process vs. Content In Health Care Reform

Politics is a competitive activity with contests, winners, and losers. One consequence is that it tends to be more concerned with process than with content.

Nowhere is that more clear than in the current effort at the federal level to enact health care reform. The print pundits and the cable talking heads are giving little attention to the legislative provisions being considered and a great deal to questions like the effect of Senator Kennedy’s illness, how much of the detail should be left to the congress, and whether Senator Baucus will be able to persuade Senator Grassley to support a bill.

Although that approach works most of the time, I predict it will cause trouble in this case as it did with the Clinton effort in 1993. The health care issue is a lot more complicated than most people, including politicians, want to admit. In the Clinton case, the failure to recognize that resulted in a thousand-plus page report that proved too much for the Congress to digest. What form it will take in the current situation remains to be seen, but the unacknowledged complexity could well drag the process down again.

One indication is the amount of attention President Obama is trying to focus on the need to contain the cost of care while most of the proposals deal with health insurance, and do so in a way that would cost a ton of money. It doesn’t seem to have occurred to people that you don’t restrain cost by spending more money.

Another sign is the statement by Administration and Congressional leaders that health care reform must be “budget neutral” and not add to the deficit. They are a lot less specific about where the money would come from.

It looks to me as though the process of health care reform is once again going to be swamped by the content. We’ll see if I am right.

Monday, June 08, 2009

Being Distracted by Appearances

A widely noted feature of the health care reform plan being developed by the Democrats is a health insurance agency to be operated by the federal government in competition with private health insurance companies, including Blue Cross Blue Shield.

The proposal speaks to the general perception that health care can be reformed by reforming health care insurance. The source of that perception is not so hard to identify. For most people, the cost of health care is the cost of health insurance, which keeps rising year by year. Attempts to rein in the use of health care services take the form of the health insurance company refusing to pay, which infuriates both patients and providers.

Health insurance companies also get a bad name by trying to hold down their cost by not insuring sick people and by cancelling policies on people who get sick.

It is also true that private health insurance pays providers more than do Medicare and Medicaid. But I have not heard critics suggest that private health insurance should pay providers less.

Unless that is the argument, there is no basis to conclude that health insurance companies are the cause of health care costs being out of control. The health insurance market is highly competitive and any company that can devise a more attractive package of benefits or find ways to operate more efficiently would be quick to do so.

No doubt there are better ways to regulate the health insurance industry so as to mitigate some of its objectionable practices, but people should not deceive themselves by believing that doing so would have any significant effect on the cost of care.

It is the cost of providing the care itself that is driving up the numbers, not the cost incurred by the health insurance companies.

Aside from its merits or lack thereof, the proposal for a federal health insurance company reveals how easily we can be distracted by appearances.

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