My New York Times column is here, it has two parts, a prediction and a proposal. The prediction:
Medicaid has never been especially popular, and when its expanded role becomes more widely understood, it is likely to become less popular still.
I am not expecting that governors will turn away nearly-free federal dollars outright. (Though probably some will, here is an update on how the governors are reacting, which as I see it involves lots of bargaining.) I am predicting that the extreme subsidies for states to hop on to the expansion will at some point weaken or go away.
Change might come soon. If Mitt Romney wins the presidential election, and if Republicans control both houses of Congress, they could turn Medicaid into a block grant program, where states can spend the money as they wish.
Even if President Obama is re-elected, some state governments will work hard to reduce the number of people covered by Medicaid. State officials know that limiting Medicaid will place more individuals in the new, subsidized health care exchanges, and that those bills will be paid by the federal government. The basic dynamic is that state and federal governments have opposite incentives as to how many people should be kept in Medicaid.
The proposal? Here is my best take on how Obamacare might evolve into something more practical:
1. Many of the states slip out of expanded Medicaid obligations and many employers slip out of expanded mandate obligations to cover their employees (waivers, willingness to pay fines, lobby to have the law altered). The system evolves toward a form of means-tested vouchers, sold on the exchanges.
2. The subsidies for the private exchanges become so expensive that the individual mandate is limited in scope. Eventually the mandate applies to catastrophic coverage only.
3. For catastrophic coverage, we move toward a mandate and subsidized exchanges, and for non-catastrophic coverage there is no mandate and health savings accounts, the latter supplemented by public contributions if needed or if you wish.
I am not predicting that, nor is it my first or even preferred second-best solution. It is however the best solution I can see evolving out of ACA in its current form.
You’re a fantastic optimist, Mr. Cowen. Your “not first or second best outcome” Is better than I dare to hope for. Thanks for cheering me up this morning
The far more likely outcome is simple: The have-nots get a type of care that is just “pretty good.”
They get slightly worse outcomes. They only get out of patent drugs. They are a number with no choice of doctor. They get student doctors. They get no choice of treatment options. They get giant scars from heart surgery. They get X-Rays only, never MRIs / CTs. They don’t get Viagra. But they have ready access to mood stabilizers (so they don’t riot).
This is like getting treatment in Cuba – and that is still pretty good.
This is of course more likely because:
1. The haves *the top 66%) will demand first access to the good stuff. Americans don’t queue behind those who have less than they do.
2. It renders the mandate meaningless to free riders. You are free rider. Suddenly the penalty you pay for free riding is not a small dollar amount, it is that you have to get cared for like you live in Cuba.
3. Obamacare will come to mean “pretty good care you don’t want to get, unless it is all you can afford.”
4. Pretty good, will be even be ok for some people who can afford better, but want to drive the KIA and save money.
—–
Lastly, we’re quickly going to see network web tech make leaps and gains on reducing case loads. The machine will know if you took your medicine and aggressively . The machine will know if you are having a heart attack. The machine will make you take pictures and submit them before you are assured treatment.
The one thing that will never happen is the thing that many liberals desperately want – that public employees decide who gets what kind of treatment regardless of who has more cash.
I submit the reason health care expenditure has grown by so much in the past 2 decades is that the ramp up in technology is being insured too quickly. Maybe subsidized medicare and medicaid (and even private insurances) should cover less and keep premiums lower. Expensive new technology should be reserved for the rich paying out of pocket and the cadillac insurance plans (also self-paid) until they become cheap enough for an independent board to recommend coverage.
It may be panned as death panels, but the NHS seems to have a good grasp on measuring benefits of treatment in terms of QALY and the cost of each year.
Morgan’s characterization of a liberal’s wet dream is a world where public employees decide which treatments are covered, no matter the person’s income. I have a dirty little secret for him. This is already the case.
The way it works now is that Medicare leads the other payers in technology adoption. What Medicare covers, the private insurers also cover. You will be hard pressed to find private insurers that cover much of anything that Medicare doesn’t. (Of course, this does not mean there aren’t boutique clinics catering to the very rich who pay out of pocket, but that is a tiny proportion of patients. Anyone you know personally fall into this category?)
Of course, the ACA tried to improve this by empowering CMS to more easily say no to treatments that don’t work and cost too much. If CMS were to take an even more responsible approach to coverage of new technology private, other insurers would follow. Medicare coverage of a product can make or break a company. The bureaucrats have won, now let’s just make Medicare less of a subsidy for biotech companies and more of a healthcare program.
Something Morgan fails to consider: new technology is often cheaper than old technology. when a “new” drug effectively treats a disease which older drugs do not it would be lunatic not to use it. Likewise with no techniques: laproscopic surgery gets people out of the hospital and back to work much faster than older “slice em open like a ripe tomato” techniques. In many ways Morgan’s proposal would be a classic case of “penny-wise dollar-foolish”.
Moreover if new technologies were limited only to the rich who can pay our of pocket its quite likely that choke off medical innovation, which requires a broad base of customers across whom the R&D costs can be amortized.
There are plenty of examples of new innovations that are significantly more expensive than the old, which is why it makes sense to examine the cost-effectiveness of new technologies/drugs to see whether they are actually worth covering.
It is an op ed you authored, Tyler, not a column. A column is a regular section of a newspaper or magazine on a particular subject or by a particular person.
Uhhhh. http://query.nytimes.com/search/sitesearch/#/%22economic+view%22+cowen/
I think the trick here is to define “Catastrophic.” There are many people on the low end of the income range for whom a $500 unexpected medical bill is a genuine catastrophe — could put them in the situation where they have to decide between paying the bill and homelessness. There are many others for whom even a $10,000 medical bill is only a serious inconvenience.
You might try to minimize this by defining catastrophe based on % of income, but even that is unfair to people struggling on the low end.
Catastrophic means actual insurance. As in heart attack (if you’re under a certain age), cancer, etc. Women 15-35 wouldn’t be able to buy cheap pregnancy coverage and people over age XX wouldn’t be able to buy cheap heart attack coverage because the odds of using it would be high. Young people would pay almost nothing for insurance and the bulk of their healthcare money would go into savings. When they were older and insurance coverage started falling, they would buy gap insurance or go without and spend their money. The poor and people with chronic diseases would be picked up by charities or the government.
Or we could just charge the same price for the same product for everyone. Which is how every other good and service is priced in the market (minus very minor and transient discounts– senior citizen special, Ladies nights etc). If Walmart Microsoft, or Exxon tried to charge 70 year olds prices that were a significant multiple of the prices charged to 20 year old we’d close them down. Why not just make insurance like every other good and let the market sort it out? Carving out an exception to rational, uniform pricing screams “Market failure” and suggests that in fact healthcare cannot be priced in a free market.
Insurance is priced based on actuarial risk…
The bigger issue is that hospitals have dramatically different prices depending on who is paying.
I’m going to assume you are just trolling and not actually this stupid, but I will bite anyway.
Insurance products for different ages, sexes and heal levels are different products, because cost of insurance is based on actuarial risk.
Women 15-35 wouldn’t be able to buy cheap pregnancy coverage
Considering the birth rate is dropping in the US (~8% from 2006) do we really want to not cover child birth for women of age? What is a 20 year could not afford ($10K/birth) and looked for alternatives? What are the alternatives? A forced adoption like they did centuries ago?
CR
$500 would be a trivial amount to insure against assuming you weren’t forced to sign up for insurance that covered everything.
And you think the birth rate is falling quickly now?
I think the boat has sailed on catastrophic insurance when it comes to medical care. Most insurance products are for discreat, unrelated events. Your house burns down, that has little or nothing to do with whether or not you’ll get in a car accident tomorrow. Health care, though, is moving away from dealing with unique single issue events in a person’s life and towards one of management and maintaince. You can’t quite break the single event (clutching your chest, ohhh no its a heart attack call 911!) from the more routine care (blood pressure medication, yearly visit with the doc who gives you a lecture on diet and exercise). As we age, we usually end up with multiple chronic conditions (heart problems on top of diabetes and then cancer then dementia and so on). Trying to achieve universal coverage through catastrophic insurance will, IMO, just end up resulting in a lot of gaming of the billing system whereby the health system will try to put as much routine care in as possible as part of a ‘catastrophic’ event and the insurance industry will try to dodge paying for as much as possible
So when do we get to see your first and second best solutions?
I’m not so sure that your statement about the unpopularity of Medicaid holds. It seems that everyone is writing about this in light of the Court decision. We do have at least one good well controlled study of the Medicaid system in Oregon that was published in the New England Journal of Medicine. The article is free at: http://www.nejm.org/doi/full/10.1056/NEJMp1108222 It’s pretty convincing in that they were able to compare cohorts with and without Medicaid. Health care is not free and of course increasing coverage will raise costs, no surprise here. On the other hand, increased coverage leads to improved health outcomes. Of course one can always take the position of many Southern states and keep a lid on Medicaid with the result that there are lots of people who just are not covered.
You would also do well to see what the hospitals’ concerns are here if there is a lack of coverage. They end up on the short end of the straw. It’s also interesting that the insurers are now working on plans for coverage of the Medicaid expansion so there must be a business opportunity there.
Personally, I think the ACA is a kludge and the only thing that could have been passed at the time. There is going to be an evolution to a more complete solution but it’s hard to predict at this moment whether that will be a private sector or governmental approach to universal care. I doubt that it will be HSAs with high deductibles since they really are only worthwhile for individuals who make decent money. Anyone with a family will find that the deductibles will quickly reduce their net income far more than the current system does.
Finally, I disagree with the poster above who takes umbrage to your definition of a “column.” He’s wrong on that count. NYT has rotating columnists in the Sunday business section and not Op-Ed writers. Those are in a different section.
How could a high deductible plan lower their net income? If you have a family and work, your medical insurance may cost the company $10-$15,000 annually. Their net income would go through the roof. The problem would be in forcing them to save the money, when they’d want to use it to buy stuff.
Not sure where you get the idea that high deductible plans lead to massive increases in salary. I worked at a place with typical low deductible plans. Then I got a job at a different place. The health insurance plan was a high deductible plan, but the pay was in the same basic, industry-standard-for-the-area range.
Thanks for the extensive study involving a single data point.
Academic studies show, lower benefits equal higher take-home pay, everything else equal.
I have been thinking for some time that something like his suggestion of an HSA for the basic stuff (eye exams, regular check ups, and so on), but catastrophic coverage for the expensive stuff (cancer and so on) is how the system would evolve for everyone. Which is to say, all of the potential problems with the ACA don’t worry me, because it’s just a matter of time before the entire system goes in this direction.
So, every disabled person and dependent child on government aid gets an HSA funded by taxpayers?
If the HSA isn’t funded by government, than is a really poor person is faced with the choice of paying for food or heat or paying to go to the doctor to get refills on insulin and related drugs, will the cost of their health care actually go down?
Of course, the cheapest food thanks to subsidies for industrial food and the rent seeking for all food by corporations is the worse food for people with health problems. A diet of foods straight from the harvest is more expensive than food that has gone through a refinery and factory. The halving of the income going to food down to 10% of the middle class has come at a cost in food quality, but the aid to the poor is based on the poor quality cheap food.
I read Tyler on food and I’m forced to conclude that people in the Americans two centuries ago had no food to eat for six months out of the year because the food wasn’t trucked in from Florida or flown in from Mexico or California or China, because for six months out of the year, it is impossible to grow food locally year round from Virginia north.
How people on TANF and Medicaid with chronic illness is supposed to pay copays or out of pocket the first $2500 is beyond me. How much do you think welfare pays?
Are you talking about eating canned foods and salted meats 6 months out of the year?
No, man, don’t you remember how Washington grew organic arugula year-round in that geothermal, zero-emission heated greenhouse that Franklin invented for him?
Thanks, Orange 14. Your umbrage is noted. My definition of a column is from the Concise Oxford Dictionary. And yours?
This is a stupid argument and it’s your fault for starting it.
“The subsidies for the private exchanges become so expensive that the individual mandate is limited in scope. Eventually the mandate applies to catastrophic coverage only.”
Since when has expense been a downside for a government program thats already running? It seems quite the opposite, the expensive programs seem to have the most growth potential for the government.
What about a medical procedure futures market? Maybe I should take this over to Hanson’s blog.
Would this be akin to private forces (a la ticket scalpers on a large and professional scale) buying up time slots on a doctor/hospital’s calendar and selling them later?
Sure, but it might start out with me not having to insure myself against a budget-crippling abortion expense.
what, really, is the evidence here? medicare (which you definitely can’t say is “unpopular”) spending growth has always consistently been far, far below private sector spending growth. and now for the first time, partly *in response* to ACA, we are getting widespread efforts to control costs among private insurers and hospitals and doctors in data-driven ways which we already know are working in MA, so why should we buy into this fatalism about the subsidies becoming prohibitively expensive? it’s really just the usual insistence that the world as it was is how it must be, regardless of incentives and innovation, plus the standard fatalism about government improving anything ever. of course the difference here, which is so often the fly that refused to be acknowledged in the libertarian ointment, is that the counterfactual exists and it exists everywhere: people in other countries with longer lifespans and much much much lower spending, primarily *not* through less consumption but through lower prices in order of doctor salaries, medical device prices, and pharmaceutical prices.
“spending growth has always consistently been far, far below private sector spending growth.”
I’d say not true. Do you have a source for that?
Consider here
http://content.healthaffairs.org/content/22/2/230.full
“growth rate of 9.6 percent is lower than the growth rate of 11.1 percent for private health insurers.” I wouldn’t call that “far, far” and from the chart there is no evidence that they are actually actively controlling costs.
Also, I wonder this: why are we talking about this if medicare is not a problem? It is the demographics. So, maybe the recent increase advantage of medicare is due to the slug of baby boomers passing through the private insurance ultimately into medicare. You can’t compare two things that have different populations. Maybe what we are actually discussing is how private insurance survived the demographic hit while medicare is about to find out.
Not to mention some of the “cost control” of government provision is just pushing the costs onto private payers. You simply announce that the government isn’t going to pay and the cost shift to those that will pay, or the doctors stop taking government patients, which is also happening.. That type of “cost control” goes away as you expand government payment. That is touted as one of the benefits (e.g. pricing power) so you can’t double count it.
If a poor person in the South where the higher share of the population have no health coverage fails to buy and use diabetes drugs for lack of money seizes and ends up in a hospital for a couple of days, who pays for the hospital care they get? In Texas, the Federal government is paying hospitals a billion dollars for a portion of that cost, but the cost to the hospitals is probably more like five billion. State and county hospitals once put all that cost on the taxpayers, but the taxpayers put in place cost control, so the costs were shifted to the Federal government and employers, so they have put in place cost controls. But none of that did anything to solve the problem – people with chronic health problems that they can’t afford to pay for so they end up in health crisis and in the hospital for stabilizing care that does nothing to prevent their return in a month or two.
A free market capitalism business solution would be “creative destruction” – euthanize and sell the body parts for salvage.
All the actual evidence shows that people in Texas get way too much medical care
Of course, conservatives and Republicans are totally opposed to any effort to reduce Medicare costs by changing the incentives to quality and efficiency because making Medicare perform like health care in France or Germany or Israel or Canada or Japan would increase the quality of life while drastically cutting gross revenue, and with the rate of profit constant, it slashes the health care industry profits, especially the insurer profits.
Mass is making big changes in the health care system because the costs to employers, individuals, or taxpayers can’t be reduced by trying to deny access to 25% of the population, like Texas does – the voters in Mass aren’t willing to run the risk of being a victim of repeal of Romneycare. So, everyone is forced to change the system in Mass for everyone to satisfy everyone that the quality of care justifies the cost. One might argue that everyone in Mass is equally unhappy, but they are unhappy for the same long time that Europeans are, instead of the 2-3 shorter years that those in the South live on average.
…sustained over many years, math’s a killer. how bout a population growth rate of 1.5% “not far below” an african nation rate of 3%?
You also have to consider the cumulative impact of that difference in the growth rate over time. In the same Health Affairs you cite, they looked at cumulative impact of Medicare and private growth rates between 1970 and 2000: “By 2000 Medicare’s index number for per enrollee costs was 1,544, compared with 2,176 for private insurance. In other words, by 2000 the index for the private market was 44 percent higher than the index for Medicare.”
Also, you say there “is no evidence that they are actively controlling costs.” I think the lower annual spending growth, the much lower cumulative growth, and the specific Medicare cost control measures that the authors discuss in the paper are all evidence that Medicare is actively controlling costs.
You are right that there issues with comparing two different populations. Luckily, Medicare Advantage gives us the opportunity to compare Medicare patients that get their care through private insurance (subsidized higher payments and sometimes by additional beneficiary contributions) to patients that receive care through traditional Medicare. On nearly every measure Medicare Advantage performs no better than traditional Medicare, yet it costs significantly more.
(http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=1)
As such, I wouldn’t expect MA to perform _better_. It’s just giving rich, old, white people more of other people’s money, something that is incredibly popular.
Yes, privatizing this public program doesn’t perform any better and costs more. It is a subsidy to insurance companies, as well as rich old white people.
Correct, demographics are the problem.
If we hadn’t of legalized abortion and oral contraception, we wouldn’t be having this conversation.
Does this mean that abortion and oral contraception have a large externality? Would Mankiw say they should be taxed?
The converse, killing old people, makes more sense to me.
Nature does that for you, at low cost.
If Medicaid were unpopular states would have opted out long ago. Instead, every state in the country has joined this optional program. None have dropped out. Medicaid improves health and, while it costs money, is just about the cheapest program and most efficient program for delivering care. Covering people using private insurance through subsidies for low-income people will be less efficient.
It is hardly efficient, just more efficient than the alternatives the conservatives in control are willing to consider.
Canada, Israel, Germany, Japan, France are all vastly more efficient – higher quality of outcomes for substantially less cost.
Every analysis I have seen of states reactions to Medicaid ignores the fact that states also have budgets, and in recent years have had to slash those budgets to the bone. It is nice to think that in 3 years the Feds will still be picking up 90% of the tab, until you consider that even 10% of the tab is something that many states cannot afford. These decisions aren’t made in a vacuum. Where 10% of the tab still forces you into bankruptcy like in California or Illinois, or forces you to close your state parks, like in Kentucky. 10% is a great deal, but it is being offered to people who are already struggling to balance budgets.
You are assuming the people who will be added to Medicaid and that the States will have an added 10% cost for are somehow zero cost today.
Texas hospitals get one billion dollars from the Feds for uncompensated care, but that is certainly not covering it all – Texas taxpayers are paying for the hospital costs of the uncovered poor somehow.
Until you support euthanizing and selling the body parts of the poor to recover costs, you merely push the costs from place to place without eliminating the costs. Once you accept the costs, you now have a choice of a better system like dozens of other nations have which delivers high quality outcomes for lower costs, or simply paying the higher costs.
Oh, so now you reveal that is the total for all uncompensated care and not just for people who cannot afford their diabetes medicine due to evil capitalism? How are Texas taxpayers paying for it “one way or another”. It’s quite possible total costs would go way up if all the people getting uncompensated care had medical insurance, as usage rates went up. Usage rates are already way, way too high in many parts of Texas.
Below is what I’ve said in a previous Medicaid thread, and it refutes your assertion. It includes facts and a citation.
It is estimated the expansion would cost Mississippi about $581 million 2014 through 2019, or $116 million per year on average. According to this local newspaper (http://djournal.com/view/full_story/19204142/article-Medicaid%E2%80%99s-impact-may-drive-debate-on-expansion?instance=home_news_right), the federal Disproportionate Share Hospital payments (“free care”) the state will lose after ACA is fully implemented is about $210 million per year. It would seem to me it is a no brainer to expand Medicaid at a price of about $116 million per year so that local and MS state government are not on the hook for the $210 million of care that the hospitals provide to the uninsured, currently paid for by the feds. The individual mandate will still apply to those who can afford insurance.
There are other arguments to be made about the impact of Medicaid injecting money into the state economy generally, but I don’t think of healthcare as a jobs program or a subsidy to for-profit companies. States need to weigh the costs and benefits of investment in Medicaid expansion against other costs.
this is not true: State officials know that limiting Medicaid will place more individuals in the new, subsidized health care exchanges, and that those bills will be paid by the federal government.
those below the poverty line are ineligible for the exchanges
rjs,
Those below the poverty line are eligible for traditional Medicaid. Those above the poverty line, but below the 133% line will be eligible for the exchanges, surely, if the states don’t accept the Medicaid expansions. This will surely be a fix even Democrats will support, if it isn’t already in the PPACA.
The only way that a state could push more people into the subsidized exchanges is if it currently has a Medicaid eligibility threshold above 138% of FPL (which many states do) and they now decide to decrease their coverage to some lower threshold. I don’t believe any of these high threshold states are considering decreasing coverage, though it is a possible scenario.
Health insurance premium subsidies are going to be available for those making 138%-400% of FPL. I think HHS will try to figure out how to expand these subsidies to people below 138% FPL in states that choose not to adopt the Medicaid expansion, however it is not totally clear from the law that this will be possible.
Funny thing.
People seem opposed to allocating costs to the categories that produced them.
Today, medicare and private insured subidize the care of the uninsured poor: privately insured pay $1000 for the uninsured through their premia; medicare overpays hospitals to compensate them for uncompensated care.
You would think that when when we explicity accounted for these subsidies–by removing them, and shifting the costs to those who are uninsured, but could be, or take the payment that pays for uncompensated care out of medicare, that people would be cheering.
The costs of the uninsured would be exposed, so it could be managed.
Instead, people seem to prefer having the insured pay, or having medicare pick up the costs. Maybe the states like private insured picking up the tab, or they like the fed picking up the tab through medicare. I can understand that, but is it efficient doing it that way. Sometimes allocating costs to the proper categories lets you manage the costs of those populations–including their externalities.
Interesting.
The theory is the uninsured are the healthiest part of the population because they have no third party to pay for their choice to need medical treatment.
Dick Cheney chose his lifestyle of smoking and excess because he had health insurance from an employer or the government, and if he hadn’t had insurance, he would have lived like Mitt Romney who has obviously never had any health insurance from anyone for his entire life.
The large majority of uninsured are uninsured by choice. Many of the are healthy young people, for whom insurance is the worst deal (due of course to government regulation regarding minimum coverage, etc.)
Cliff, Do you have any statistics on what percentage of the uninsured are healthy young people? Do you have any statistic on what percentage of the healthy young people want to buy insurance but cannot afford it because they have low income?
What factual support do you have for your assertions?
Uncompensated care is a bogeyman thrown up by Democrats. It is a tiny factor in health care costs. There is no guarantee costs would go down if all those people getting uncompensated care were covered by insurance.
Tiny? It was $62.1 billion in 2009. Did you know that you could cover every single state budget shortfall in 2013 with what uncompensated care costs?
“Over the six-year period of proposed health reform legislation, 2014–2019, the costs of uncompensated care without health reform would be between $560 and $700 billion. With reform, the cost would be $330 billion under the Senate bill and provide substantive savings to each level of government.”
http://www.urban.org/publications/412045.html and http://www.cbpp.org/cms/index.cfm?fa=view&id=711
Conservatives are objecting Medicaid covering half the uninsured and the elimination of Federal subsidies of free health care, but the original proposals to expand health insurance into the Medicaid pool was objected to by conservatives as costing too much and putting too great a burden on the mainstream health care system.
This is like the problem with flying. Providing a robust train or bus system for the people who aren’t wealthy enough to pay for airfares gets smacked down by saying it would be cheaper to subsidize plane tickets. Airlines subsidize the poor, soldiers, students, by filling empty seats. But why not sell the seats, so airlines implemented lots of schemes to fill seats and get the maximum cash. Now cheap seats do show up, so now subsidizing bus and train is now even less acceptable. But now there are the subsidies to the smaller cities. Meanwhile, a passenger traveling on business in his suit paying $200 is seated next to an obviously poor person and baby paying $80 who could have been bumped if only another businessman had stepped up and paid $300. Airlines tried to go the railroad route with first class, coach, cattle class, but businesses objected to paying twice or three times cattle for the underlings, so pretty much everyone flies cattle class, with the price paid varying widely for cattle class. Expanding exchanges to the poor means the businessman will be paying $10,000 a year to see the same doctor the guy sitting next to him is paying $1000 to see, it is obvious he’s paying that little from his dress. Separating the classes when trains and buses were the backbone of moving people was a lot easier – the well off were not forced to sit next to the poor.
Medicaid can force people into a train cattle class system of clinics for the poor, hospitals for the poor, while the well off get coach or business class air service doctors and hospitals.
I think the problem for a lot of conservatives is the conflict between privatizing Medicaid by turning it over to insurers who simply use their existing network contracts to provide care, or expanding a government run system that makes health care policy a State political issue. Wellpoint has taken the step of expanding into Medicaid managed care which will obviously use its existing insurance provider network serving employees and individuals.
Maybe the idea is that with block grants, the States can simply tell Wellpoint, “you have $4000 a patient, deliver as much as you can after you take off your profits, and we will blame you for corruption and waste when patient deaths and suffering hit the news, but that’s why you get the big bonuses.”
But this just reflects the lack of any ideas on health care from the conservatives and Republicans now that all the Republican ideas have been made law in ACA.
States do have the option under the law of a purely State based health care system top to bottom beginning in 2016, which could be moved to 2014 with a one page law that would pass with strong Democratic support because Vermont wants that freedom, along with a couple of other small rural States.
The constant “tort reform” argument is just so tired – this is a “tenth amendment” issue – the States define the tort law, but ACA does fund grants to pay for study and drafting of tort reform in each State, as if another round of State tort reform will make a difference – malpractice costs are no longer a problem – in NH the government takeover of malpractice insurance lowered rates and then ran up huge surpluses which the legislature wanted to use to pay bills, but the medical community sued to have returned in rebates.
The claim that paying out of pocket will make people make better choices and shop around for cheaper care argues the poor will be the healthiest people and when they become ill or injured, they have the cheapest medical costs to themselves and society. So the pay out of pocket argument is tired and failed. And the shift of employers to high deductible plus HSAs has not slowed the cost of insurance to employers, who have the choice of 1) offering nothing, 2) offering something that isn’t tax exempt, or 3) conforming to broad universal coverage requirements for tax exempt benefits.
The claim that using the market for insurance is the solution is suddenly no longer acceptable now that this is what Obama forced liberals to compromise on just to get closer to universal coverage.
Every alternative conservatives have offered in the past 30 years is in ACA. And when conservatives talk about “replace” they start listing provisions in ACA. Obama compromised and included the mandate which conservatives argue is required in order to get the insurers on board. The insurers agree with conservatives that a free market solution works only with a mandate.
The Medicare cost control of the 90s was driven by conservatives, but every time the cost control they demanded is set to go into effect, they are the first to call for kicking it down the road with another “doc fix.”
We can look at dozens of nations that deal with health care delivery and costs far better than we do, but conservatives just protests the very thought that anyone else is better than the US, or that government is the solution. So, things have just gotten worse and worse. In 1980, the US led in such metrics as life expectancy and had costs that were only 1-2% of GDP higher. Today, the US metrics have the US lagging, with costs 4-6% of GDP higher. To listen to the attack on Obamacare, you have to believe Switzerland is a socialist jack boot state with no individual liberty, for they barely passed the same reform in 1995 by referendum, a reform that has overwhelming support today.
As Orange14 and Jan observe above, Tyler’s claim that Medicaid has never been especially popular is unsupported and likely untrue. Checking into whether it has ever “never” been popular is more of a task than I’m inclined to undertake at the moment, but some recent polls are at hand.
In May, 70% of respondents in a national poll said the Supreme Court should uphold the Medicaid expansion. In April, 66% of respondents had a very or somewhat favorable view of the ACA’s Medicaid expansion.
http://webapps.ropercenter.uconn.edu/cfide/psearch_test/webroot/multquestion_view.cfm?QSTN_ID2=1811890&QSTN_ID2=1809211&qid=+1811890+1809211&pid=4&ccid=0&x=75&y=11
In May 2011, majorities opposed both block grants and any cuts to Medicaid: http://www.kff.org/kaiserpolls/posr052511nr.cfm
Joe, And, many of those who have an opinion probably have grandparents who may go destitute and rely upon medicaid to help them pay for nursing home care?
Ignorance is bliss, for some.
I also just re-read David Goldhill, “How American health care killed my father,” The Atlantic (sep 2009). Both good papers forget ‘path dependence,’ the great difficulty to change away from earlier features of insurance arrangements. Goldhill acknowledges that his changes even if feasible will take at least a generation (30 years?). For all that may be wrong with excessive insurance financing and Medicaid, perhaps most importantly, it IS, it exists and has now existed for nearly half a century. Employment-based insurance? Even older.
Most likely events? More of the same with a few tweaks here and there. Depressing, no?
I am always amazed at the popular media these days. So many lightweights. So many people so busy to have their names and columns in front of the people. Their intellects are light emperors without clothes.
Let me offer a scenario that may encompass just a slight, minuscule modicum of original thinking. We have about 250 million people, despite the best and brightest efforts of the most sinister and subjective critics and propagandists…want universal health care.
The only way we will get there is the opposite thinking of the current Congress. Therefore, we will change Congress. It happened in 2004 and in 2006, and 2010. It will switch to the Democrats. Why? Because some people do not look at polls. They look at electoral possibilities and probabilities. And they understand people…what they will tolerate…and when they will break with their traditions.
So what will happen is nothing like what has been described. Romney hasn’t a prayer of being elected. The money that can be put into a campaign can only be put into areas that will make a difference. Most of the states are already decided, thanks to the Republicans and their obstruction. Already decided.
So, the exchanges, when they come about, will immediately reduce health insurance costs. That is why the health insurance industry is fighting this with every extra penny they have. It will eventually ruin them. People follow their own best interests. I may hate WalMart but buy my tires there. I may hate Home Depot but buy my lumber there. I may hate things made in China but will not go out of my way to either find or pay for American-made products. It is called human nature and if you can’t see it by this time, then you are in big trouble.
When that happens, Medicaid will cease to exist as a separate entity. Costs for state governments will go down. Affordable Car Act will make a ton of people very happy and governors who are more concerned about ALEC members and big contributions will see governors in Red States start to get knocked off…some of them big time…big losses. (Because you don’t lie to the people and get votes. No one likes being lied to.) It is a mortal sin with voters and you find your mortality at the ballot box.
No one is going to make this problem go away. Market forces–surprise, surprise conservatives–will sweep it away. It may be soon or it may take a while. WalMart wasn’t built in a day.
Do you also hate your wife, but still sleep with her?
How to control health costs in a market-based system by communicating costs to consumers before they visit the doctor, using a single number per provider, and similarly reward providers for keeping costs down (for those consumers who care about how much they spend):
lɯʇɥ˙pǝʇıun-uı-sʇsoɔ-ǝɹɐɔ-ɥʇlɐǝɥ-ƃuılloɹʇuoɔ/ϛ0/ᄅƖ0ᄅ/ɯoɔ˙ʇodsƃolq˙uɐlduoıʇɐǝɹɔqoɾ//:dʇʇɥ
URL flipped due to spam filter.
Misaki,
I think this represents a disconnect with what really drives health care costs. You going to the doctor because you have a small cut and need stiches or because your kid has a cough and needs a note to stay home from school does NOT drive health care costs…even if those visits are paid for by insurance leaving you with a small co-pay. In this case consumer choice would work quite well. If you were going to an urgent care center, for example, you might see one charges $100 and the other $85.
Health care costs are driven by chronic conditions and complicated cases. For example the elderly man who has a slight bit of dementia coming on, kidney failure and high blood pressure. His health care costs will not be well controlled by treating health care as a menu where you can keep the tab low by just ordering an appetizer, skipping the main course and not getting any mixed drinks. The easiest ways for him to ‘skim’ his costs down would be to take out goods and services that feel like they have a high out of pocket costs (say blood pressure medication @ $150 a month) but in fact effectively avoid more serious costs down the line (going into the ER clutching your chest).
‘Consumer choice’ here is not going to do much good as the only real choice the consumer will make is to live by whatever the doctors say has the best shot of working for now. Here the bargaining will get ‘outsourced’ to insurance companies who can negotiate the entire relationship with the doctor as well as apply some dispassionate analysis on what really works. The latter most patients are totally unable to do effectively given the amount of knowledge required and the emotional burden of illness, the former even very savy patients can benefit from the insurance company’s market power and ability to negotiate with providers. The downside, though, is you’re simply not going to get what market orientated health care reformers seem to want, which is something like a Home Depot of health care where everyone walks in and buys goods and services off the shelves with clearly labelled prices.
>Health care costs are driven by chronic conditions and complicated cases.
The data says otherwise.
http://mydoctorsf.com/study-shows-shocking-disparities-in-hospital-bills-for-appendicitis-treatment-costsofcare.html
The post I linked earlier has more links to comparisons of health care costs, like the high prices of MRIs in the US and even the wide variation of prices within the US. Much more serious than a cut on the knee yet just as subject to market pressures if that information is properly communicated at the right time.
One issue I came across is that some people will use prescription drugs because the out-of-pocket amount they pay is less than for generics. http://costsofcare.blogspot.com/ probably has more examples, I only looked at the first few posts when I was researching the topic…
But at the same time, as was pointed out in the post I linked, higher health care costs lead to higher employment. There is no real reason to reduce government health care spending unless we create jobs outside of the health care sector… as the site I linked in the previous comment describes how to do.
>as well as apply some dispassionate analysis on what really works.
This was analyzed in the post linked in the previous comment. The solution is to reward the institution by displaying the costs of care and allowing people to avoid providers that tend to charge high prices for what the patient and physician agree to be reasonable treatment.
See also http://en.wikipedia.org/wiki/Medical_tourism
http://en.wikipedia.org/wiki/Dental_tourism
I’m not clear your link supports your case very well. All it says is that routine appendicitis cases had a wide disperity in costs and based on what it says it seems a good portion of that is driven by the fact that routine appendicitis cases cases are not consistent requiring different things for different people….therefore you’re not going to get very far by asking how much does hospital A charge for appendicitis, hospital B, C and so on like you’re a travel site looking at airfares.
Also I think you’re confusing prices with costs, they aren’t the same thing. Most accounting software requires the user to input prices to attach to items so an itemized bill will print with prices that tie out to the bottom line, but its the bottom line that counts. My cable bill, for example, says I’m being charged $10 for ‘boost internet’ at a higher speed than regular internet. There is no way, though, I could lower my bill $10 by dropping the boost item nor if I didn’t have it could I raise my bill by just $10 by adding it. Since everything is bundled together the moment I change one thing the price of everything I’m not changing changes.
I don’t object to ‘medical tourism’ and price competition is great to encourage as much as possible. However there’s probably more awareness of prices now than there was ten, twenty, thirty years ago. Yet health spending continues to climb. Why? IMO it’s clearly the continued rise of complicated, chronic conditions that are not independent and whose treatment is not a self-contained event (like a broken leg, an MRI, etc.) Price competition works best in a direct ‘fee for service’ environment where each billable action is a self-contained event. Unfortunately the health care that we more and more often need is more efficiently done as a ‘fee for ongoing relationship’ and there price competition becomes much more tricky.
>therefore you’re not going to get very far by asking how much does hospital A charge for appendicitis, hospital B, C and so on like you’re a travel site looking at airfares.
Mostly just because almost no one asks about prices. As that study said, it examined costs for that particular operation because it is usually very simple, and they also avoided looking at cases that required hospital stays longer than what is routine.
The post I linked earlier has this example from the cost of care blog for a procedure that CAN be easily compared: http://costsofcare.blogspot.com/2012/04/savvy-patient-finds-hidden-discounts.html
The author writes, I was often transferred from one department to another, usually ending up in billing or finance, and more than once, was told, “I’ve never been asked that before.” … you can see the chart for yourself of costs ranging from $5459 to $1616, with some hospitals willing to give over a 50% discount to customers who simply ask.
As I pointed out, and as physicians themselves say, it isn’t reasonable for someone to call up hospitals during an emergency to compare prices, especially when hospitals are not used to having the information readily available; this is why the suggestion is made to have a single number publicly associated with a provider that indicates their average cost of care.
This works just as well for ‘care as ongoing relationship’ because even if the customer is not aware whether certain health care services or fees were needed, these costs are reflected in the assessment of the institution’s prices using the existing concept of diagnosis-related groups, which is a way of bundling the services provided and paying based on the type of medical problem… already used by Medicare somewhat.
While this wouldn’t be the only metric used to evaluate a provider, and some people would even want the more expensive providers because they assume they’re higher quality (for the same reason people assume the same about luxury goods) it would help with costs. Even if it was only used for things like X-rays and MRIs.
This is what a recent NYTimes article had to say about health care:
Hospital care tends to be the most confounding, and experts say the charges you see on your bill are usually completely unrelated to the cost of providing the services (at hospitals, these list prices are called the “charge master file”). “The charges have no rhyme or reason at all,” Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins Bloomberg School of Public Health. “Why is 30 minutes in the operating room $2,000 and not $1,500? There is absolutely no basis for setting that charge. It is not based upon the cost, and it’s not based upon the market forces, other than the whim of the C.F.O. of the hospital.”
A nice report from the International Federation of Health Plans, showing the wide disparity of fees in the US: http://www.ifhp.com/documents/2011iFHPPriceReportGraphs_version3.pdf
Taking one easily compared procedure, “CT Scan: Abdomen”:
France $141
India $148
Germany $354
Switzerland $425
US: 25th percentile $219, average $584, commercial 95th percentile $1,657
The cost per hospital day though is probably the biggest difference between the US and other countries… Germany $632, France $655, Switzerland $690… but the US is $1449 at the 25th percentile, $3949 average, $11,496 at 95th percentile.
Only because the rich can afford it, of course, and don’t notice those costs while people with insurance have already paid them.
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