Friday, July 24, 2009

Sometimes you jump, sometimes you're pushed

[This is the health care post I mentioned in my substitute offering. It didn’t turn out to be about what I thought it was going to be about but after I’d written it and left it to sit in the corner of my desktop to think about its disobedience, I ran across an serendipitous series of posts:

Ace of Spades (via Little Miss Attila) saying - among other interesting points:

... providing access to the uninsured doesn't poll well, as taxpayers correctly deduce that this means no benefit for themselves, but rather higher costs and rationing to service the uninsured.

Cardinalpark at TigerHawk writing “In Defense of Our Much Maligned Healthcare System”. You just have to read it. When I attempted to excerpt the good parts I ended up with practically the whole post.

And Grim writing on “Kindness to Others”. Again you should read the whole thing but I can’t resist quoting the line which is most appropriate here:

no one has the right to decide for us that we shall give up everything and live in mud huts, so that the poor may be given whatever we might have.

Realizing that my abandoned post had pieces of all three of those posts in it, I decided the wayward part of me that authored it was attempting some type of synthesis. So I took it out of the corner, dusted it off, and present it here. Abrupt ending and all.]

Recently Althouse quoted a paragraph from a Thomas Szasz opinion piece in the Wall Street Journal:

If we persevere in our quixotic quest for a fetishized medical equality we will sacrifice personal freedom as its price. We will become the voluntary slaves of a "compassionate" government that will provide the same low quality health care to everyone.

I believe that for some who support universal health care that is precisely the point. What is driving their support for universal health care is not the desire to insure that everyone has some health care but rather their determination to insure that everyone has the same health care. This would explain why the House health care bill (HR3200) is apparently so sweeping.

Even if we ignore the likelihood that including a “public option” will eventually - and probably not so far down the road - do away with private insurance altogether there are elements in the bill that appear designed to drive private insurance toward homogeneity. I’ve skimmed the beginning of the bill - I only got up to Section 204 - and what I seem to be seeing are rules about how much a subscriber’s out-of-pocket can be; Section 122’s specification of what must be in the “essential benefits package”; and requirements for offering standardized plans (Basic, Enhanced, Premium, and Premium-Plus). Then there’s this in Section 203 which I think may have the effect - because of cost not direct regulation - of doing away with individual States’ decisions about what insurers must offer:

(d) Treatment of State Benefit Mandates- Insofar as a State requires a health insurance issuer offering health insurance coverage to include benefits beyond the essential benefits package, such requirement shall continue to apply to an Exchange-participating health benefits plan, if the State has entered into an arrangement satisfactory to the Commissioner to reimburse the Commissioner for the amount of any net increase in affordability premium credits under subtitle C as a result of an increase in premium in basic plans as a result of application of such requirement.

Some of these may be good ideas, some may not. But I don’t see how any of them are necessary if the goal is simply to be sure everyone has some kind of health insurance. If that’s all that was wanted there are much simpler ways to achieve that. My plan to let anyone who wants enroll in FEHP with subsidies for those who need them. Alternatively, let everyone who wants to enroll in Medicaid but charge a premium to those who can afford it. Simplest of all, the idea I read somewhere that we give those below a certain income level debit cards and let them pick their own insurance. Even doing what Peter Singer suggests is simpler than HR3200:

This would mean extending Medicare to the entire population, irrespective of age, but without Medicare’s current policy that allows doctors wide latitude in prescribing treatments for eligible patients. Instead, Medicare for All, as we might call it, should refuse to pay where the cost per QALY is extremely high. (On the other hand, Medicare for All would not require more than a token copayment for drugs that are cost-effective.) The extension of Medicare could be financed by a small income-tax levy, for those who pay income tax — in Australia the levy is 1.5 percent of taxable income. (There’s an extra 1 percent surcharge for those with high incomes and no private insurance. Those who earn too little to pay income tax would be carried at no cost to themselves.) Those who want to be sure of receiving every treatment that their own privately chosen physicians recommend, regardless of cost, would be free to opt out of Medicare for All as long as they can demonstrate that they have sufficient private health insurance to avoid becoming a burden on the community if they fall ill. Alternatively, they might remain in Medicare for All but take out supplementary insurance for health care that Medicare for All does not cover.

Everyone would have some coverage but those who wanted and could afford it could have better coverage - or simply different coverage. So long as the government did not use Medicare for All payment rates to drive doctors out of business - and limiting which procedures it would pay for should ease the pressure to do that - private insurance would continue to be available. Yes, there are a lot of problems with Singer’s article but the plan he’s suggesting is simple and doesn’t make the government the only game in town. A great improvement over what HR3200 appears to be.

But the House Democrats have not opted for any simple plan that would simply give everyone some health insurance. Instead they’ve opted for a Rube Goldberg machine that seems bent on giving everyone the same insurance. That leads me to believe that everyone having the same thing is far more important than everyone having something.

At first glance, this doesn’t appear to be an indefensible position. I’ve always believed that the two strongest selling points for universal health care are:

1) Americans are willing to pay for health insurance but they want to know they won't lose it because they lose their jobs or because they get sick. (How can it be "insurance" if when you finally need it, the insurer can cancel it?) This includes worrying about premiums going so high they can't afford them.

2) Americans feel bad that some people don't have health insurance and think those people should be able to get it, too. As a nation we're just not comfortable with the idea that people may die of a treatable illness simply because they're poor.

It’s easy to extend the second point - no one should die because they don’t have health insurance because they’re poor - to also mean no one should live because they do have great health insurance because they’re not poor. All should have the same. If, as I suspect, that’s the driving force behind bills like HR3200, I wish the proponents would just say so. Because once you think about it for a minute, it’s nonsense and I think a national conversation about why it’s nonsense would be very useful.

The first nonsensical element is the idea that humans will ever construct a system in which everyone has the same health care. (The same anything, really, but I’m trying to stay focused here.) Those who are rich will always get better health care. Period. Even if the United States forces everyone to have the same health insurance, even if the United States drives really good doctors out of business, the rich will get great health care. They will jet off to Switzerland or Australia or Brazil or India or wherever really good doctors find a welcoming environment and get whatever health care they need.

What this means, of course, is that the rich will continue to get superb healthcare, the poor will get somewhat better healthcare, and those in between will get not only worse healthcare than the rich but worse healthcare than they’re currently getting.

The second nonsensical element is the idea that people will value the health of a stranger over that of themselves or their loved ones. If a bill like HR3200 ultimately means the government health plan is the only game in town, that will be the bargain. The vast majority of people who are neither rich nor poor - let’s call them middle-class - will get worse health care for themselves and their families in order to provide better health care to strangers. Here I think Singer’s thought experiment can be very useful. Paraphrased briefly, it goes like this:

Let’s say someone in my health insurance plan has advanced kidney cancer. The disease will kill him but if he takes a drug called Sutent his death can be postponed for six months. Every penny spent to prolong his life will raise my health insurance premiums. Sutent costs $54,000 for that six-month reprieve. I say it’s well worth it even for a stranger. Would I say the same if the six months cost $1 million, $10 million, any amount, no matter how high?

I believe that even those people who insist any amount of money, no matter how great, is worth it so a stranger can have those extra six months would object if that stranger were to show up on their doorstep and ask them and their families to agree to forego some health care in the future so the stranger can have those extra six months. Similarly, I believe the middle-class is willing to chip in some money so those less fortunate can have adequate health care. However if they believe they are going to have to accept worse health care so total strangers can get better health care, they won’t do it. At least not knowingly.

In addition to the nonsensical nature of the “everyone should have the same” idea there is also a very dangerous side-effect: the chilling effect on innovation. Once everyone (except the rich) has the same health care, how will health care in general ever get any better? Procedures might: all those good doctors in Zurich or Sydney or Rio or Bombay will almost certainly improve their techniques so surgical procedures, for example, will probably get better. But why would a pharmaceutical company develop a new drug? The government has already decided what it will buy for the masses; the pool of people who can afford to buy a new drug will be limited to the rich and how many rich people are there likely to be with a need for a specific drug?

The company could develop it, of course, and hope that it proves successful enough so the government will decide to put it on the list and be willing to pay enough to produce a profit. But that’s a pretty speculative basis for a huge investment. So either the drugs won’t get developed or they will get developed but only because a pharmaceutical company thinks it has enough pull with the government to get the drug put on the list. Not exactly a formula for ending up with the best - or even the most - possible new drugs.

And this issue leads into a larger form of the “everyone should have the same” theme: why should the United States carry the burden of paying for drug development? Right now - and I’m grossly oversimplifying here - patients in the United States pay full price for new drugs while countries with universal health care bargain to be sure their citizens pay less. We are the engine that drives improvements in health care.* Once upon a time, I think most people in this country would have been proud of the fact that in giving ourselves better health care we are also giving people all over the world better health care. Now I wonder how many of us would object because “that’s not fair”?

Perhaps that’s the ultimate problem with the idea that “all should have the same”: a fixation on whether anyone’s piece of the pie is larger than mine is pretty much guaranteed to kill generosity.


* From Wikipedia:

The United States still dominates the biopharmaceutical field, accounting for the three quarters of the world’s biotechnology revenues and R&D spending.

In 2007 North America accounted for 45.9% of world pharmaceutical sales against 31.1% for Europe. According to IMS Health data, 65% of sales of new medicines launched during the period 2002-2007 were generated on the US market, compared with 24% on the European market.


cokaygne said...

Well-written post that plainly states arguments against national health care.

Many of those pushing national health care do so out of some sense of compassion. Like many liberals, they are bothered by misery in such a rich country and want to feel good by directing tax money (in today's government it is borrowed money) towards alleviating that misery.

Not discussed, however, is the fact that money spent on health care by someone, the government for example, is someone's income. Until Massachusetts's program, advocates for national health care included health care providers who wanted more paying patients. These folks have also been active on a state-by-state basis in mandating bigger benefit packages for health insurance. Insurance companies, trying to keep premiums down in order to attract customers and fulfil their fiduciary duty to stockholders, were portrayed as evil.

In a politically brilliant stroke, Massachusetts mandated that all persons have health insurance. Now the insurance companies have a captive market and the risk pool is broadened with people who think that the cost of health insurance is too high for their degree of risk. The insurance companies are now on board as advocates of national health care.

As usual, liberals are ignorant of the consequences of their policy preferences. Case in point is their diehard insistence on a "public option". Over time, the public option is going to look like Medicaid. The liberals think that the public option will drive private insurers out of business and increase the number of people covered by public funds, and they are not wrong.

Like Medicaid, however, the public option will enroll those who cannot obtain private coverage. That is another way of saying that it is a high risk, relative to income, pool. Costs in the public option could exceed private costs. The public option should because computing is a fixed cost and high transaction wolume translates into much lower cost per transaction, and will, save tremendous amounts on administration; but with a high risk pool the public option will need to provide more services. At that point, the only thing left for the public option would be some combination of reducing enrollment and underpayment of providers. Since the goal is to reduce to nothing the number of people without health insurance, the only way out is underpayment. Welcome to Medicaid where huge chunks of the population have coverage but cannot find competent providers willing to see them.

It has already been pointed out that much of the expanded coverage of the uninsured in these bills is to be achieved by expanding Medicaid, which implies some cost-sharing by states. Where will the states get the money?

Elise said...

Welcome to Medicaid where huge chunks of the population have coverage but cannot find competent providers willing to see them.

Yup. I made this point in the comments at the TIgerHawk post I link to in here and someone pointed out that this is already happening. Doctors are getting squeezed.

I hadn't though about your question with regard to where the states are going to get the money for the Medicaid expansion but I bet that's what some of the governors were talking about when they expressed concerns over more unfunded mandates.