How to reform Obamacare

by on October 20, 2013 at 4:27 am in Economics, Medicine | Permalink

Obviously we remain in a gridlocked political period, but if a new deal on health care reform could be cut, what would it look like?  What should it look like?  In my latest New York Times column I attempt to peer into that future.  Here is one excerpt:

One way forward would look like this: Federalize Medicaid, remove its obligations from state budgets altogether and gradually shift people from Medicaid into the health care exchanges and the network of federal insurance subsidies. One benefit would be that private insurance coverage brings better care access than Medicaid, which many doctors are reluctant to accept.

To help pay for such a major shift, the federal government would cut back on revenue sharing with the states and repeal the deductibility of state income taxes. The states should be able to afford these changes because a big financial obligation would be removed from their budgets.

By moving people from Medicaid to Obamacare, the Democrats could claim a major coverage expansion, an improvement in the quality of care and access for the poor, and a stabilization of President Obama’s legacy — even if the result isn’t exactly the Affordable Care Act as it was enacted. The Republicans could claim that they did away with Medicaid, expanded the private insurance market, and moved the nation closer to a flat-tax system by eliminating some deductions, namely those for state income taxes paid.

At the same time, I’d recommend narrowing the scope of required insurance to focus on catastrophic expenses. If insurance picks up too many small expenses, it encourages abuse and overuse of scarce resources.

The full column is here.  Please allow me to add a few remarks which did not fit into the column proper (which is strictly limited at 900 words):

1. My argument does presuppose that the exchanges can at the technical level, in some manner, end up working for enough states to carry this option forward.  I still think this is likely, but today it appears less likely than even a week ago when I drafted the column.  The biggest danger is that we enter an “adverse selection death spiral,” even if the technical problems eventually get fixed.  It has to be seen as easy for young, healthy people to buy health insurance on the exchanges, otherwise they probably will not work.

2. I view this reform as more likely to come through a Republican President than a Democrat.  A Republican has to do something which counts as “getting rid of Obamacare,” yet simply returning to the status quo ex ante would not be so popular with mainstream voters.  This is the most likely direction for such reforms.

3. I did not have enough space to talk about more immigration for physicians and nurses, liability reform, and other supply-side reforms.  They are very important.

4. I have been reading for years that ACA is just like the health care reform proposal from The Heritage Foundation from the early 1990s.  Well, sort of.  I view the proposal in my column as closer to the ideas many conservatives were pushing in the 1990s.  But if they are indeed “the same thing,” then fine, there should be no problem supporting one rather than the other!

5. I view my proposal as a third- or fourth-best exercise, it is neither first nor second best.  It may be the best we can do from where we stand, subject to the caveats in #1 however.

Here are some related remarks from Ross Douthat.  He argues that conservatives should be hoping that the exchanges succeed, because the relevant alternatives are worse and because the exchanges themselves can serve as a foundation for future reforms.

1 Sam Clarke October 20, 2013 at 5:23 am

By moving someone financially eligible for Medicaid into the individual policy market, I assume that you’re assuming the Fed covers 100% of premium, deductible and copay costs charged by the insurer. Currently, these charges (prices) remain unregulated in most states.

I look at what has happened to college costs since the ‘federalization’ of the student loan market. Nearly unlimited federally guaranteed credit brings steady price increases. Won’t there be a similar outcome if millions of people enter into the individual health insurance market wholly on the government’s (taxpayer) dime? What incentive or need will there be for insurers to compete on price? Will those who have to purchase and pay for individual policies with no or partial subsidies be able to afford it?

Doctors refuse Medicaid patients because reimbursements are low and slow. What you’re suggesting brings payments to providers for this patient group to the same level as everyone else. Isn’t that itself a huge increase in healthcare spending from where we are now, even before considering the likely increase in policy coverage costs?

2 buddyglass October 20, 2013 at 9:43 am

With the removal of low payments from Medicaid patients, would insurers theoretically be in a better position to bargain down the rates they negotiate with doctors? One of the reason doctors have to charge non-Medicaid patients X instead of “X – epsilon” is that they have to charge Medicaid patients “X – delta”, with delta >> epsilon.

3 visigoth October 20, 2013 at 10:24 am

It is just like buying a car. You may get the monthly down but the down goes up. You might get extended maintenance but you will pay extra for the floormats. It is a baloon, squeeze it here it bulges there. None of these maneuvers changes the main dynamic that medicine is ‘free’. Block grants to the states? Why not just leave the money in the states where it came from to begin with? Cancel these programs and do not collect the taxes that support them. If the states are more competent to make these decisions (and I think they are) there is no benefit from funneling the money up the chain for redistro DOWN. Or is there? The one thing we KNOW will happen is that circulating gusher will not come back as powerfully as it went out….. UNLESS some new money is either printed, borrowed or extracted from some less wary citizens. That way is our path and it is the path of madness. Let’s at least stop marching down it.

4 Lee A. Arnold October 20, 2013 at 3:54 pm

Or else get the private insurers out of it altogether, and save the 15-20% they get for no value-added.

5 EMichael October 20, 2013 at 4:59 pm


Then we could get Big Pharma and their patent schemes out of it and save another 10%!.

Then we could stop letting the AMA set their own fees, and maybe save another bundle! ((personally It amazes me the AMA can set the fees based on the time it takes to do a procedure, and it results in some doctors supposedly working 24 hours a day!

But nah, best we just let tens of thousands Americans die every year.

6 mulp October 20, 2013 at 10:44 pm

In other words, the US should move to single payer like in France or Canada or maybe the UK NHS before 2000 because higher ed costs were under control when the government provided the subsidies directly to the colleges and universities and set tuition rates for public schools, and the private sector was forced to keep costs to students low to compete with the government run higher ed.

7 prior_approval October 20, 2013 at 5:34 am

‘I did not have enough space to talk about more immigration for physicians and nurses’

A lucky fact, considering how there is little to nothing you could add that Dean Baker hasn’t covered for more than a decade.

‘If insurance picks up too many small expenses, it encourages abuse and overuse of scarce resources.’

And to think that in other countries with universal health care, there is this idea of ‘preventative care’ – in other words, it is better to handle small expenses than major ones which can be avoided. And this done in the interest of preventing the abuse and overuse of scarce resources. Admittedly, in a health care system where profit reigns supreme, such an idea must seem virtually impossible to grasp.

Especially where the idea of just going to a doctor, being examined/treated, is nothing unusual at all. Hand over a card, wait maybe 15 minutes (at least my experience in this town in Germany over more than 15 years). And the other people in the office also? None of them are abusing the system by going to a doctor – that is why the system exists, after all. Which just might explain why the American system of health care is so hard for non-Americans to grasp – non-Americans in other industrial countries are accustomed to going to a doctor when they feel unwell, and the results in terms of cost and ‘overuse of scarce resources’ speaks for themselves – everywhere that does not practicce the American model has less costly health care.

8 Chip October 20, 2013 at 7:13 am

I don’t know which universal system you’re referring to but in Canada it’s not so much preventative care as preventing care. When health spending is seen solely as a cost rather than revenue there is enormous pressure to ration treatments.

Canada’s health costs are rising just as quickly as Americas – now taking up half of provincial budgets – and year long waits for knee replacements, specialist appointments and even PET scans are common.

Incidentally Canada had 29 PET machines as of last year while the US had over 2000.

9 john personna October 20, 2013 at 10:42 am

Are PET machines per capita so out of line with genuine need?

10 derek October 20, 2013 at 1:54 pm

That is always the argument up here. Genuine need ends up being defined as not killing you and not subjecting the province to court challenges where the denial of timely service is considered a Charter issue.

11 Jonfraz October 20, 2013 at 11:51 am

Canada also has fewer people than the US, and most of them are geographically concentrated in a narrow band in the south of the country.

12 drycreekboy October 21, 2013 at 10:03 pm

“Canada also has fewer people than the US”

Yes, but almost 70X fewer?

Works out to about one PET machine per 1.2 M people in Canada vs. 1 per 158K in the states.

U.S. population is arguably somewhat clustered too: basically along the coasts and borders, with the interior of the country a lot less crowded.

13 K. October 20, 2013 at 12:48 pm

Actually there has been a steady decrease in wait times in Ontario, as part of a government initiative responding to problems in past years.

As for prevention and reducing costs, there has been a huge drive towards integrated health care teams which involve a close network of nurses, dieticians, paediatricians, and GPs. The idea is that the GP that seems you for you checkup can easily refer you to quick follow ups with preventative types (i.e. dieticians, chiropodists, etc) or lower cost providers (nurses) for the lower cost stuff. Old GPs still operate on the old isolated model, but many of the new clinics use the integrated model.

14 derek October 20, 2013 at 1:57 pm

Something to mention about Ontario is that they have an enormous fiscal deficit. Free health care is always a possibility as long as someone will lend the government money.

15 Lee A. Arnold October 20, 2013 at 4:00 pm

Chip: “I don’t know which universal system you’re referring to”

Prior-approval is clearly referring to Germany. There are a dozen others which would probably qualify for good examples, as well.

16 Michael October 20, 2013 at 4:16 pm

There are a dozen others which would probably qualify for good examples, as well”

Most notably Sweden, France, and Finnland, for instance. Switzerland is also pretty good.

17 whatever October 20, 2013 at 5:17 pm

Yeah, but for me who knows the French system well, I am always surprised that people could suggest it is self-evidently less costly than the American one.

It may be less costly, controlled for quality of care, maybe, I don’t know. But it is not a trivial question. About 8% of salaries are automatically taken to fund the “Securité Sociale” and virtually all people have a “complémentaire”, i.e. a supplemental insurance that can cost another 10%.

In other words, when you spend 20% of your salary on something that isn’t clearly better, I don’t think you can call it cheap (and certainly not free).

18 mulp October 21, 2013 at 12:08 am

If you are single working for $10/hour without any employer health benefit and you have an injured knee from a sports injury, how long will you wait to see a knee surgeon in the US? Will the surgeon see you faster in the US for free than the surgeon in Canada paid by their Medicare system?

$20K a year in income is too high for a single adult to qualify for Medicaid without Obamacare for anyone who can work.

When you compare a government worker or F500 employee with health insurance that costs the employer the same amount as the entire per capital health care cost in Canada, with everyone paying taxes to pay for government health care for the elderly, poor, and disabled that is equal to the per capita cost in Canada, and still 25% of US residents have not insurance and no money to pay for health care while Canada covers everyone, you are comparing apples to gravel.

Let’s compare the worst case in the US, the working poor with no employer health benefits to Canada’s unemployed – Canada wins. And if you want US access for the wealthy and you live in Canada, drive to the US and buy it – paying taxes in Canada and then driving to the US to pay for the stuff you want faster is cheaper than paying taxes in the US to pay for health care and still paying for health insurance to get faster access.

19 Edward Burke October 20, 2013 at 9:35 am

Arguably, America is home to more hypochondriacs than have been diagnosed with hypochondria. (Does the Affordable Care Tax Act make provisions for the diagnosis and treatment of hypochondria?)

20 visigoth October 20, 2013 at 10:35 am

Yes, actually. Mental health parity has come to nearly all houses though not through Obamacare. It’s been a long project at the state level. Now, bulimia, dipsomania, body-gender dysmorphia…. are all on an equal footing to leukemia and broken spines; making the same claims and subject to the same limits. Only now there are no coverage limits, neither annual nor lifetime so when you send Uncle Merle to rehab the insurance NEVER runs out. I look forward to a long, luxurious vacation on my insurance policy, if ever I get one. I could pretend to quit drinking for six months. Maybe a year!

21 visigoth October 20, 2013 at 10:32 am

Preventive care may indeed be a moral good but it does not help the finances, at least not as practiced here. There is already an incentive to over-test, over-diagnose and over-prescribe; that is the near plague of medical liability awards that are gratuitous in some way. We could blame that on the lawyers and they do drive much of it, but without plaintiffs there would be no lawyers. Yes, many of these suits are valid but the awards still climb out of all proportion, often reaching much higher than what the civil judgement on a malice murder would amount to! Think on that. Add to that that the health insurers lay off their liabilities to big re-insurers that are the same entities covering the physicians’ malpractice insurance. Now, patients as well as doctors are legally bound to be insured…. and by the same parties! Yeah, that’s…. That’s a good idea.

22 Tom T. October 20, 2013 at 11:19 am

Indeed, my recollection is that studies have consistently shown that expanding preventative care raises overall costs. The cost of extending relatively cheap preventative care to a large population that doesn’t need it exceeds the cost of paying for expensive acute care for those who do (particularly when you factor in that preventative care at best only reduces, rather than eliminates, the need for acute care later).

23 Jonfraz October 20, 2013 at 11:55 am

The average healthy person will have maybe one doctor’s visit a year. Even at middle age and with asthma I go only twice a year (mainly because I have to get Rx refills and this must be done via appointment). That sort of spending is chump change and it’s not what is driving our high healthcare tab. Most of the money is being spent on a minority of people with expensive health conditions. The goal should be to find a way to throttle back on the expenses there without of course seriously compromising care. There’s just not a lot of savings to be had in limiting the occasional office visit.

24 EMichael October 20, 2013 at 5:02 pm

Any chance there is a link to back up your recollection?

25 mulp October 21, 2013 at 12:33 am

Define “preventative care”?

I assume you don’t believe immunization, treating diabetes, treating hypertension, etc are preventative because treating smallpox, polio, heart attacks, strokes, and amputating limbs is cheaper.

26 Doug October 20, 2013 at 3:17 pm

“Especially where the idea of just going to a doctor, being examined/treated, is nothing unusual at all. Hand over a card, wait maybe 15 minutes (at least my experience in this town in Germany over more than 15 years)”

There’s very little that you’ll learn from a 15 minute to a GP that you won’t learn in a 5 minute search on Google for your symptoms. Want to reduce costs? Stop encouraging people to think of doctors as high priests that need to adjudicate literally every health decision no matter how microscopic.

27 EMichael October 20, 2013 at 5:03 pm

Can you do your own blood tests on line? Urine tests?

28 Jay October 20, 2013 at 9:53 pm

Does a doctor need to? A badly trained nurse is more than capable of handling urine vials and sending them to a lab.

29 Y544 October 21, 2013 at 11:48 am

As a matter of fact you can get blood tests and urinalysis done online. Just last week I had a Complete Wellness Profile of 50-some blood tests done, along with a complete urinalysis for $113. Here’s the link:

The only person I had to see was the phlebotomist at LabCorp.

30 Dan Weber October 20, 2013 at 3:46 pm

“Preventive care” is the left’s version of “waste, fraud, and abuse.” If we just provide more care, we can save money and make everyone healthier!

In reality, almost everything known to reduce costs and increase health is already being done, and a whole lot of things that people imagine as preventive medicine but aren’t really are also thrown on the same heap.

31 Lee A. Arnold October 20, 2013 at 3:57 pm

“In reality, almost everything known to reduce costs and increase health is already being done”

In reality, that is simply untrue.

32 Dan Weber October 20, 2013 at 4:16 pm

Please specify.

33 EMichael October 20, 2013 at 5:04 pm

Specify what?

We rank in the upper twenties in results and are number 1 in costs by a huge margin and you think we have done everything that can be done?

So the rest of the world is just that much better and smarter than us?

34 Dan Weber October 20, 2013 at 5:13 pm

Specify the preventive care that reduces costs and increases health that isn’t being done right now.

To be fair, I thought we were discussing actual things, instead of polemics about how awesome/sucky the American health care system is. If that’s what’s going on it explains my confusion.

35 EMichael October 20, 2013 at 5:27 pm

I responded to your reply to Mr. Arnold

“In reality, almost everything known to reduce costs and increase health is already being done”

In reality, that is simply untrue.


Dan Weber October 20, 2013 at 4:16 pm

Please specify.

My reply is directed towards that.

36 Dan Weber October 20, 2013 at 5:33 pm

That’s odd. I figured you didn’t have the context, because reading it in context makes your question sound completely bonkers.

I’ll try being very explicit: What procedures are there that reduce costs and increase lifespan that are not already covered?

37 Lee A. Arnold October 20, 2013 at 7:35 pm

Dan Weber: “Please specify.”

You first! You wrote, “In reality, almost everything known to reduce costs and increase health is already being done” Prove that.

While you’re at it, please prove that existing preventive medicine was already available to the people who did not have health insurance.

38 mulp October 21, 2013 at 1:40 am

“I’ll try being very explicit: What procedures are there that reduce costs and increase lifespan that are not already covered?”

You are working poor and single, thus no Medicaid and no employer health care, so you get:

no treatment for essential hypertension – even the subsidized clinics for the poor can’t deliver an annual visit for $100 and the generic drugs for less than $10 a month for a pretty standard case of which there are millions of undiagnosed and untreated cases in the US. Statistically these cases will lead to heart attack and stroke that in the case of the working poor will lead to uncompensated hospitalization, loss of jobs, and commonly long term unemployment and welfare leading in a lot of cases to disability. After a few years, SS plus Medicare plus Medicaid will finally deliver the care to get such people rehabilitated.

no treatment for diabetes other than at the ER (without being able to pay the bills) when ill or sporadic treatment when money is available – long term this leads to blindness, limb amputation, etc

birth control – it would help to make birth control pills over the counter, but an exam regularly is still needed to catch cancers etc.

Without insurance, its almost certain no one you see will have your medical history, other than what you provide on the spot.

Of course, a single women who can’t afford to see a doc to get birth control will probably qualify for Medicaid, but jumping through all the hoops to do so take time so prenatal care will be delayed or not done at all, so making sure there is no anemia etc to prevent birth defects and premature delivery won’t happen, not to mention counseling the women to not drink and smoke and eat a decent diet. The US has the worst record in birth related problems – oddly the high rate of premature deliveries is touted as proof of the greatness of the US health care system by conservatives, because the US does a great job delivering the babies of 13-14 year old girls.

39 Dan Weber October 21, 2013 at 10:46 am

mulp, how do you know those procedures are cost-reducing and health-increasing? is a nice overview for people who have never looked into the research before. “This $800,000 procedure could have been stopped with a $100 prevention” doesn’t cut it, because it doesn’t tell us the NNT for that $100 prevention or its side effects on everyone else.

Diabetes care, incidentally, is probably the one open area. Calling up patients at home to bug them to take their meds has shown good real-world effects. But there is no medicare billing code for that.

40 EMichael October 20, 2013 at 6:04 pm

MY context is fine, it was in reply to Lee Arnold’s comment on a specific paragraph in Doug’s post.

The fact that other countries are less expensive and get better results combined with the fact they do things differently than we do clearly means we have not done everything to decrease costs and increase results.

Clearly, what all of those countries do is cover everyone with a minimum. We have not tried that. So there is one for you.

In terms of your preventive care, I have not seen any study that says saves money. I have seen many that says it saves lives, and improves the lives of many people. But none that says it saves money.

Course, I am confused why many insurance companies have started to give a lot of preventive care for free(including my own employer provided insurance), so their actions in this area lead to believe the insurance companies know something we do not.

But that is supposition, not a study I would pay much attention to.

41 Jay October 20, 2013 at 9:58 pm

Can you please provide your study that shows better results for cheaper? That line is frequently parroted by the left as gospel without providing evidence. My understanding was that controlling for proper statistics and the way they are gathered (infant mortality comes to mind which is collected differently, as well as controlling for car accidents, murders, and suicides in age of death statistics for example) the US usually comes out far better than the countries touted by you (looking at cancer survival rates for instance).

42 W.E. Heasley October 20, 2013 at 6:27 am

One might say the aggregate want/need is: For a low price health-care delivery system resulting in good health-care outcomes.

A system where low frequency/high severity risk is the focus of the insurance deployed, which is the most effective point in the risk management matrix. Where health-care “price” is clearly available and functions as a signal. A system of robust health-care supply.

On the other hand, the current system is the deployment of insurance away from low frequency/high severity risk as the focus which drives price up. Where the price of health-care is basically unknown and hence does not function as a signal. A system of non-robust health-care supply.

Why? The common thread when one examines each of the problem areas is: Politicos through the mechanism of government. That much of the problem is the notion that political solutions are indeed the answers to economic problems, which once again has been found to be a major error, this time in the form of the current health-care delivery system.

If markets supposedly fail, then governments fail too. “Government is the only enterprise on earth, that when it fails, it merely does the same thing over again, just bigger.” – Don Luskin, TrendMacro

43 8 October 20, 2013 at 6:51 am

Obamacare has opened the major wedge separating employment from healthcare. Tax all benefits as wages while cutting income tax rates to make it revenue neutral.
The next step is to make all health insurance a national market by eliminating state regulations on insurance.

Real healthcare reform would hurt the healthcare sector by allowing people not to spend so much on healthcare. Real reform would be noticeable by the rapid decline in healthcare as a percentage of GDP.

44 Bill October 20, 2013 at 7:08 am

8, If you eliminate state regulation of insurance, you will need to replace it with national regulation of insurance. If you have national regulation of insurance, you can easily have interstate sales of insurance.

The proposal to have national insurance regulation was first proposed in the Nixon/Ford administration. The Antitrust Division of the Department of Justice wrote a 300 page monograph on state regulation, a federal regulatory system (solvency, deception, done nationally: complaint handing possibly by the states). In fact, what they proposed was a dual system: state regulation as is for those carriers who wished to stay there, and a national system and regulation for those who wished to sell interstate. The idea is that the national carriers would be more competitive, causing the state regulated to opt into a federal system. In a federal system, by the way, the insurance antitrust exemption would be eliminated or suplanted with a narrower exemption (currently carriers are exempt if they are regulated by state law)..

45 Andrew' October 20, 2013 at 10:06 am


Interstate is now legal.


Everyone will adjust. Liberals can even still require any dumb ideas they want.

46 visigoth October 20, 2013 at 10:40 am

There is no great reason for interstate barriers on insurance sales but the idea that there are huge financial benefits there just isn’t true. Actuaries are actuaries. The rates reflect conditions within states controlled by the insurance commission. The only way you generate more cheddar is if you find a group willing to overpay for their risks or one to underclaim. Probably it would be a mix of both but the spread is not much and that is probably due to brand loyalty that certainly will not survive the sudden eradication of one’s plan, whatever the reason.

47 Bill October 20, 2013 at 11:24 am

visi, regarding interstate barriers: if you do interstate sales, say an insurance carrier from Texas regulated by the Texas insurance commissioner, sells you a policy in Vermont, good luck having the Texas insurance commissioner intervene on your behalf. One of the reasons you have state regulation is that the insurance company will be responsive to the state regulator. Sort of like the Texas (Houston) building inspector supervising a house built in NYC.

48 Bill October 20, 2013 at 11:20 am

Andrew, Interstate health insurance is now legal?

In what country?

49 Jonfraz October 20, 2013 at 12:03 pm

You can certainly buy a policy from a company headquartered out of state. It’s not like there are 50+ health insurers, several local to each state. However all policies sold in a state must conform to its regulations. (This is true of auto and other insurance as well; I had auto policies from companies in Ohio and New York when I lived in Michigan; but they had to be Michigan no-fault policies).
And this is of course plain old fashioned federalism which is supposed to be something conservatives and libertarians favor.

50 Bill October 20, 2013 at 1:19 pm

Jon, This is a bit disengenous: “all policies sold in a state must conform to its regulations.” Well, da, what do you think it means that you can only sell in the state if your policies comply with the state law. Its not like Aetna is confined to Connecticutt….of course, by your definition, there is “interstate” sales of policies whenever an insurance company headquartered in another state sells a policy in a state which complies with that states regulations…but, guess what, every state is different.

By the way, tell Andrew that by your definition there are already interstate sales.

51 EMichael October 20, 2013 at 6:07 pm

Good lord.

Selling across state lines in this area means selling across state lines without complying with the insured’s state regulations.

Not where the insurance company is.


52 Jason (the commenter) October 20, 2013 at 6:58 am

Repealing the deductibility of state income taxes would damage the viability of liberal states with high taxes. So I don’t see that ever happening, even if you tell them it will fund Obamacare. Liberalism is all about spending other people’s money after all.

53 Bill October 20, 2013 at 7:14 am

Yeah, but look at it this way: if you are Texas, and don’t want to participate in Obamacare, your citizens get to send their taxes currently to New York, to fund their medicaid expansion.

Tyler’s proposal is a face saving retreat for those state which currently do not participate in Obamacare, and will have to in the future when they see their private insurance plans increase rates because of uncompensated indigent care.

I’d say sit tight and watch the conservative state opposition shift in a few years, unless this hot potato is taken from the hand of these states with Tyler’s proposal.

54 Morgan Warstler October 20, 2013 at 8:09 am

See below. Texas has a preferred solution already.

55 Morgan Warstler October 20, 2013 at 7:11 am

This is a horrible idea.

Truly awful. And conservatives ought to run in terror from it.

To move forward the modern GOP, mist stop being the party of No, and become the party of No Strings. Block grants to states on Obamacare and everything else, with no “essential health benefits” requirements:

In practice this means the GOP says, “We’ll support whatever Federal Program the Dems want, BUT the states have to gave total control and authority of the program, except that the entire thing must be built online with open source software.” Block grants would come with instructions like “These funds are to be used to provide healthcare for all citizens of the state.”

Texas gets the block grant on Medicare, Medicaid, Obamacare, Welfare, UI, all of it, and decides what to give, what not to give, and other states, since they are running the same OSS, are easily joined into and out of Texas via compact. Compacts are formed and reformed with ease.

Tyler surely will cheer a GOP that turns DC into Detroit, as there are no more earmarks, none, zero, zip, bc the money always comes with No Strings.

The RNC ought to function very much like Grover Norquist, requiring all Congressmen to sign a pledge that they will NEVER Federalize a program, NEVER vote in favor of legislation with a single earmark, and NEVER apply Strings to money.

Letting Texas (and the states like her) lead the GOP, and become the true capital of the US, is the best possible play for the modern GOP.

56 Rahul October 20, 2013 at 8:00 am

It is interesting that there’s so much advocacy of people asked to change preferences for the good of a party rather than parties changing strategies for the overall good of their constituents.

57 Morgan Warstler October 20, 2013 at 8:08 am

No one ought to change their preferences. But, they should only achieve them within their own state. There’s no better way to help your constituents than to send the money back to the states.

If you have “preferences” about how the rest of states ought to live, yuck.

58 visigoth October 20, 2013 at 10:42 am

Preferences are subservient to reality.

59 Jan October 20, 2013 at 9:28 am

Secession might work better. Places like Texas are the reason most lawmakers don’t trust states to have full autonomy over their federally mandated programs for the poor.

60 Jay October 21, 2013 at 11:37 am

Other than to bash Texas, care to expand what you mean? Are the poor in TX being cruelly treated somehow?

61 anne October 20, 2013 at 9:32 am

Nailed it!!! To suggest the GOP should get behind an idea that gives more control to DC and less to the states is lunacy. The last, best hope for this country is federalism. That is the ONLY issue.

62 visigoth October 20, 2013 at 10:47 am

Block grants are getting closer but still have the fatal flaw that they route through a trough of swine with neither the knowledge nor the competency to make the redistribution proportionate. Rather this will be determined the New Fashioned Way, by lobbyists, committees, PR concerns and pay-offs reaching the right desk with appropriate speed. The term “grant” is revealing. It’s like a land grant or a title? It comes from the hand of the sovereign? Yeah, maybe but before that it came from the pockets of the citizenry at large which includes your own. What benefit accrues from seizing loot here, transporting it there and then dispensing a portion back home? The benefit accrues but not to those who pay into the system nor those who draw out. The benefit is in allowing the class of fixers/breakers and quick talking pickpockets to wet their beaks. Oh, they only want a taste, true, but another tickbird sees them and demands the same. And another. And another. Best the states or even municipalities deal with their own truly indigent as it is the only way to keep that number of truly indigent to a manageable level.

63 Rahul October 20, 2013 at 7:47 am

I think it’s a rather sad part of the American heathcare debates that supply-side reforms (more physicians and nurses, liability reform, cheaper drugs, outsourcing healthcare etc.) almost always get relegated to a footnote.

Juggling costs and expenses around or finessing entitlements, premiums or coverage are only stop gap measures. The only real progress will be through supply-side reforms.

Unfortunately supply-side reforms don’t have any strong lobby behind them and sadly aren’t fashionable because those are ideology-agnostic therefore not particularly enticing to neither liberals nor conservatives.

64 Andrew' October 20, 2013 at 10:01 am

Yes and no. Imagine free money for prostitutes. No supply side reforms would matter. At least no one wants health problems.

65 EMichael October 20, 2013 at 10:12 am

Every time I hear liability reform mentioned in regards to curbing costs, I wonder why people have not bothered to look at the results in the states that actually did tort reform, and the effects of such.

It meant nothing in terms of healthcare costs and their increases.

66 E October 20, 2013 at 10:39 am

Very true. The reason why tort reform is such a popular proposal is that conservatives hate trial lawyers, and physicians have a financial interest in such legislation. It’s a great distraction from actual, less popular reforms that can control costs.

67 Yancey Ward October 20, 2013 at 11:05 am

The reason why tort reform is such an unpopular proposal is that liberals love trial lawyers and their political donations.

68 EMichael October 20, 2013 at 12:40 pm


Lack of any change in healthcare costs has nothing to do with it.


69 Rahul October 20, 2013 at 11:01 am

Interesting. I did not know this. Have a source / link?

If true, it just means liability is not a major cost driver for healthcare? Or…? Did states with tort reform see a fall in malpractice insurance premiums at least? If so, providers ate away the surplus?

I’m curious, if not liability reform, which are the cost drivers that matter?

70 Jan October 20, 2013 at 12:23 pm

I understand, but don’t necessarily agree with, conservatives’ desire to place strong limits on settlements and do tort reform more generally. Arguing that tort reform produces savings, improves outcomes and significantly impacts supply is at this stage not a winning approach, due to lack of good evidence. Here is what I think is a fair synthesis of the state of play.

71 E October 20, 2013 at 12:30 pm

Here’s a good post on the subject that may address your question:

If not tort reform, the relevant cost drivers are almost certainly price and utilization.

72 EMichael October 20, 2013 at 12:42 pm

And another.

Problem with conservatives is that the idea that costs are raised by “ambulance chasers” is too much fun to stop just because the facts are different.

73 Rahul October 20, 2013 at 1:46 pm

I don’t think this is specific to conservatives. What are liberals doing to address fundamental supply side issues?

The Republican-Democrat fight seems largely about allocation: Who pays and for what.

But show me how any one party is doing significantly better on supply side improvements?

74 Careless October 20, 2013 at 2:30 pm

Any time you have to ignore other studies plus pretend that anecdotal stories don’t exist, it’s going to be a hard sell (regarding the suggestion that it hasn’t resulted in doctors moving to Texas, which it has)

75 Jan October 20, 2013 at 3:25 pm

Nah, the TX physician supply issue has been sliced and diced every which way. The only way tort reform was associated with an increase in docs is if you simply add up the number of licenses in the state over the post-tort reform years and ignore all other factors, like the rapid rise in TX population over the same period and whether licensed docs were actively practicing. Compared to the national average, the TX physician to patient ratio actually got worse after tort reform.

76 Dan Weber October 20, 2013 at 4:13 pm

The problem is that placing a cap on damages still isn’t taking away the doctors’ motivation to over-test. A lawsuit capped at $250,000 damages is little different from a lawsuit capped at $5 million as far as the risk profile of a doctor is concerned.

The legal standard for damages is not “is this a good procedure?” or “is this procedure worth the money?” It’s “did the doctor do what other doctors in the community do?” If other doctors send everyone with slight back pain to the local back surgeons for a consult, you had better do the same.

77 EMichael October 20, 2013 at 5:09 pm

For that to make sense, you have to believe the lessening of damages by $4,750,000 did not work, but the last $250,000 will.


78 Dan Weber October 20, 2013 at 5:17 pm

The problem isn’t the amount of the damages. The problem is being drug into court at all. Even victories are expensive.

The vaccine courts are a good model. They were created precisely because it was simply too much of a hassle for drug manufacturers to deal with the liability from the very rare (but very real) side effects that vaccines cause.

79 EMichael October 20, 2013 at 5:38 pm

So you think no doctors should be dragged into court? Or do you think that many doctors are being dragged into court for no good reason?

80 Rahul October 20, 2013 at 10:36 pm

@Dan Weber:

I don’t understand. If the average lawsuit suddenly dropped from millions to $250k shouldn’t malpractice premiums drop instantly? Have they?

Assuming there’s truth in doctors often complaining that these premiums are a major cost of doing business, if prices didn’t drop, doctors ate the surplus?

81 Dan Weber October 21, 2013 at 11:02 am

Rahul, I don’t take the doctor’s lobby at their word.

“Tort reform” is a political football that both sides like to kick around, because (as others have said) one party loves it and the other party hates it, so it’s an easy way to score political points.

What’s more needed is a way for doctors to be able to deny treatment that is unlikely to do any good. There are a huge pile of issues standing in the way of that, and the legal environment is just one of them. and should capture some of the social and economic pressures on doctors.

If every doctor in your area is doing an MRI after a fender bender, and the medical research says it is useless, right now it is just too risky for one doctor in the area to buck the trend, because the standard of malpractice in America is “what do other doctors in your area do.” Whatever there is to do about tort reform, it needs to give that doctor tools so that he doesn’t worry about court for doing what the research (and what doctors in other countries!) says is a prudent course of action.

The real bar we need is to say that some procedures help, but we won’t do them because they are too expensive. (Most other countries take care of this with explicit or implicit rationing.) If we can’t stop the useless-but-expensive procedures first, though, there’s no point trying for this one.

82 MikeDC October 20, 2013 at 1:17 pm

The most egregious supply side problems, which all of the problems you cite flow from, are price controls from the government (which doctors hate) and barriers in the labor market largely controlled and preferred by doctors (professional licensing, medical schools, occupational training and work rules, etc).

A fair trade might be to try to do away with both.

83 Rahul October 20, 2013 at 1:51 pm

I get the latter part, but I don’t get the part about price controls. Can you elaborate?

(a) If price controls were keeping prices artificially low, wouldn’t abolishing them lead to higher prices?
(b) If price controls keep prices artificially high, why would doctors hate them?

84 MikeDC October 20, 2013 at 7:12 pm

The answer is (a) (but).

The question was how to increase the supply of medical services, not how to keep prices low. That being said, getting rid of price controls is playing the long game to lower prices as well. Three things come to mind.

1. Yes, it will introduce more high-priced services, but high-priced, low-quantity services are generally needed to test and introduce any new product. Yesterday’s $500 DVD player is today’s $30 DVD player. By allowing price discrimination at the high end of things, you get cheaper prices down the road.

2. Price discrimination on the low end allows doctors to be more charitable with their time and expertise than they’re allowed under law (historically, doctors charged less to the poor, but still treated them. Medicare actually makes this illegal). Allowing doctors to charge less when they see fit will reduce prices and expand the supply to those who need it most.

3. Generally speaking, the prescribed costs lists are stock, political (e.g. “the doctor fix”), and slow to incorporate new information and changes in use. Worse, they tend to reinforce existing ways of doing things (use the approved and cheap method with the high and dependable reimbursement rate, not the new/less common rate that raises more questions and has a lower profit ratio).

85 Rahul October 20, 2013 at 10:29 pm

I doubt US healthcare needs more cutting edge $500 DVD players to be invented as urgently as it just needs more universal access to standard, age-old technology.

I don’t see it as a stagnation of innovation crisis; more as a access to routine care crisis.

In general, I don’t like price controls either. But in this case I am not convinced they are a big part of the story. If you are searching for a market-distortion, rather focus on how AMA is throttling doctor supply.

86 MikeDC October 21, 2013 at 1:51 pm

It’s not like one has to search hard for market distortions here. The fact that the AMA throttles the supply does not detract from the fact that price controls both throttle the immediate supply and also reduce long-run increases in supply.

They’re not mutually exclusive, nor are they meant to be. Further, most standard, age-old technology is less standard and less good than we think. The closer one looks (at pretty much any industry), the more one sees room for improvement. Making everything the medical equivalent of McDonalds or Taco Bell may slightly increase supply, but there’s a lot more benefit to be gained by getting Panera or Five Guys in the business.

87 Dan Weber October 20, 2013 at 4:16 pm

We’ve seen several local health care markets in which more specialists showing up in a town doesn’t drive down the cost of that specialty. In fact, it drives up the total amount spent on that specialty without any change in patient outcomes. Yes, this is not what Economics 101 would tell you happens. Real life wins out over the models we give to freshmen.

I worry that a national policy to simply increase doctor supply could lead to more cost increases.

88 EMichael October 20, 2013 at 6:08 pm


89 ThomasH October 20, 2013 at 9:07 am

I’d prefer a different way of increasing revenue than deductability of state income taxes, say by turning deductions into partial tax credits at some rate less than 35% so that on balance revenue rises. Although if we imputed corporate income to shareholders and indexed and allowed averaging over the holding period of capital gains, higher top marginal rates should not be ruled out

90 Jan October 20, 2013 at 9:30 am

1000 times yes on the more immigration of doctors. Repeal of state income tax deduction seems like a 2% chance to me.

91 ThomasH October 20, 2013 at 9:36 am

Also, catastrophic/normal expenditures are not quite the right way to limit costs. Even low cost early interventions that save larger expenditures later (e;g. contraceptives) could be free or cross subsidized.

92 John Thacker October 20, 2013 at 9:52 am

Preventive care does tend to be free in catastrophic high deductible plans. I’ve had two, with different employers, and preventative care was perfectly free.

Not always clear to me that contraceptives are a perfect example of that argument; unlike vaccines, which are cheap but need to be administered by a medical professional, it would probably be easier to simply have oral contraceptives (which are also cheap) over the counter like condoms. For oral contraceptives, the barrier in needing to make an appointment and take time off work has always been larger for the women I know than the direct cost.

Unfortunately, one of the changes that PPACA made was to forbid OTC medicines from being paid for from HSAs (with an exception for insulin in states where it’s OTC.) I understand the concern about “use it or lose it” FSAs and people going on spending sprees for band aids, but HSAs roll over year to year. It’s a philosophical difference, but one that makes it more difficult for oral contraceptives to both be OTC and effectively free on catastrophic plans.

93 prior_approval October 20, 2013 at 10:05 am

‘Preventive care does tend to be free in catastrophic high deductible plans.’

Vaccinations, to give a concrete example, are free in such plans?

94 dead serious October 20, 2013 at 10:18 am

I have a high deductible plan and vaccinations are (supposedly) free for children. For adults, I don’t know. I doubt the flu vaccine is covered.

As is true with all health plans these days, there are myriad caveats, riders, and gotchas.

95 Andrew' October 20, 2013 at 1:30 pm

What is the expected net savings ($) for a flu vaccine (and others)?

96 Andrew' October 20, 2013 at 10:19 am

Often. Although what then keeps rhe administering doctor from ovee charging? But that should depend on the plan. Not your intuition that all vaccines are always preventive.

97 Andrew' October 20, 2013 at 9:54 am

Pulling out is free.

98 visigoth October 20, 2013 at 10:53 am

It is and the oral contraceptives are NOT a great poster-boy for going OTC. There are complications with the hormonal style pills that are nothing to sneeze at and their frequency is somewhat predictable to a decent gyno. No, I don’t think they have proven safe enough in all female populations to be sold like gum but if that were part of an over-all de-federalization of medicine it would probably be worth it.

99 Careless October 20, 2013 at 2:37 pm

Yeah, they really cause lots of problems in countries where they’re easily available (completely legally or not) OTC. [this was sarcastic]

100 Edward Burke October 20, 2013 at 9:47 am

“It has to be seen as easy for young, healthy people to buy health insurance on the exchanges, otherwise they probably will not work.”

Not only must the process be easy: enrollment ostensibly must make economic sense to prospective enrollees. The disincentives seem built in to the Affordable Care Tax Act, though: under-26ers can stay on a parent’s health plan, the penalties for 27-to-29 year olds’ failure or refusal to enroll seem often enough less than assessed health coverage premia. The “death spiral” looks not only possible but quite likely, if not unavoidable, as ACTA is presently constituted.

101 prior_approval October 20, 2013 at 10:03 am

‘enrollment ostensibly must make economic sense to prospective enrollees’

This is the sort of thinking that is most striking about the world’s most expensive health care system – the entire system demonstrably makes no economic sense compared to all of the other health care system models used in the rest of the world, and yet the concern is how having health insurance in America needs to make economic sense to those acquiring it.

102 Edward Burke October 20, 2013 at 10:18 am

Almost as sensible as the US “system” of education, hunh? Few of its features make pedagogical sense, and many directly foster illiteracy, innumeracy, and anti-social or criminal behaviors. (Perhaps possibly maybe our anthropology is unsound.)

103 visigoth October 20, 2013 at 10:57 am

Easy-shmeezy… When the website works it is delivering bad news. Costs are up ALONG with deductibles. I met a guy whose family deductible has gone to $26,000! What does that mean? It means he is essentially NOT covered even paying the higher premium! What kind of gymnastics will ensue to get that deductible burned off? The doctors will now kickback to the patients; perhaps an improvement but not one likely to bend that ol’ cost-curve down. But up.

104 EMIchael October 20, 2013 at 1:47 pm

Was this the guy on Hannity?

Anecdotal, unverifiable accounts are a waste of time.

105 EMichael October 20, 2013 at 5:16 pm


You do understand that the max family OUT OF POCKET allowed by the ACA is $12,700?

So your friend is wrong, and so are you.

106 Vivian Darkbloom October 20, 2013 at 5:56 pm

Actually, the maximum family out of pocket allowed by the ACA has been deferred for a number of large insurers until 2015. So, it is entirely possible that visigoth (and his friend) are not wrong.

107 EMichael October 20, 2013 at 6:11 pm

See deductibles.

Which are clearly not included in that delay.

Man saying he knows someone with a $26,000 deductible is lying.

108 Jonfraz October 20, 2013 at 12:11 pm

There will be no death spiral. That fear is overwrought. At worst there will be an increase in prices until they stabilize at a sustainable level (still subject to general healthcare inflation of course). That has been the experience of states that enacted ACA-like insurance regs without a mandate. There are two reasons for this. The first is that most people in the work force still get their health insurance through their employer; and that adds a huge pool of young (=under 40), healthy people to the pool. The second is that there really is no huge pool of chronically ill people lacking coverage long term (short term gaps in coverage are another matter); most chronically ill people do have coverage through their own employment, a spouse’s (or domestic partner’s), or via a public program. The remarkably low enrollment in the high risk pool plans created initially by the ACA is instructive here.

109 Jay October 21, 2013 at 11:44 am

“The first is that most people in the work force still get their health insurance through their employer; and that adds a huge pool of young (=under 40), healthy people to the pool”

Do you mean the pool of exchange insurers? It isn’t the same pool as an employer provided insurance pool so I’m not sure I know what you mean. I believe when they talk about the death spiral it is purely in the individual market pool’s offered by the exchanges having nothing to do with the employer pools.

110 Andrew' October 20, 2013 at 9:52 am

Again, even if the computer gives you a reach around, that doesn’t equal working. Working would be a one line tag saying interstate is now legal.

111 Eli Rabett October 20, 2013 at 9:53 am

Single payer w/o the insurance company leeching.

112 visigoth October 20, 2013 at 10:57 am

Almost a sentence. Forward.

113 John Thacker October 20, 2013 at 9:53 am

Tyler mentions moving people from Medicaid to the exchanges. Interestingly, Wisconsin has announced plans to do just that, to move people from the upper end of their income range for Medicaid (which was previously expanded) onto the exchanges (subsidized.) Unfortunately, their exchange is working as poorly as anywhere else. (The states that have announced lots of signups from the PPACA really have mostly Medicaid signups, some of which from expanded eligibility, some of which who were always eligible but didn’t know.)

114 Jonfraz October 20, 2013 at 12:12 pm

State-created exchanges have generally been successful (with the sorts of minor bugs that plague any new app). It’s the federal exchange that is buggier than a termite mound.

115 Andrew' October 20, 2013 at 9:55 am

Aca is nearly the opposite of the heritage version.

116 Aaron October 20, 2013 at 9:51 pm


117 Boonton October 20, 2013 at 10:15 am

It’s interesting that when many critics of Obamacare are forced to actually produce suggestions for an alternative, the end up essentially proposing Obamacare. For example, ‘federalize medicaid’?! Obamacare expands Medicaid and offers to pay 90% of the cost. Not quite a total federal takeover of Medicaid but certainly moving in that direction.

As for adverse selection with the exchanges. A few issues I think have to be addressed:

1. Naturally sick people who do not have the option to get insurance from work or from a spouse’s work will want to try to buy it from the exchange.

2. Exchanges, though, will also appeal to small businesses (who can buy policies from them for employees) as well as freelancer types. One suspects these groups would be healthier or at least as healthy as the average.

3. A lot of ‘adverse selection’ happens by age and income. If you’re really sick you’re probably really old or not able to earn an income. That means Medicare and Medicaid (and disability) are the huge magnets for ‘adverse selection’.

4. If exchanges did become ‘adverse selection’ magnets, that begs an important question: Are these people currently getting care? If so who is paying for it?

This seems like an important question because assuming these people are getting care, then all of them piling into the exchange should cause other sectors to experience lower costs. If sick people leave employer provided care, for example, costs of employer health insurance falls which means either larger take home pay for workers or higher corporate profits. Both cases increase Federal taxes since both are taxed more than employer benefits. Not saying these two things cancel each other out perfectly but in principle the exchanges could become something like an insurance company of last resort for the sick and the subsidies could be paid for by savings in the sectors that are currently paying for them.

118 Careless October 20, 2013 at 3:10 pm

Obamacare expands Medicaid and offers to pay 90% of the cost.

I forget, does Tom Lehrer have a line about the Old Dope Peddler giving a discount for new customers

119 byomtov October 20, 2013 at 10:20 am

Eliminating the deduction for state income taxes doesn’t seem like a very good way to raise revenue unless you also eliminate deductions for other state and local taxes. Otherwise it becomes fairly easy for states to shift their tax structures to emphasize deductible taxes.

More important, this doesn’t seem like a particularly equitable change, since the effect on people in identical financial circumstances who live in different states will be unequal. That’s a pretty striking flaw.

120 Moom October 20, 2013 at 10:29 am

While your NY Times piece was a worthwhile attempt to have a rational debate about health care policy, I would question your suggestion to shift Obamacare more in the direction of only offering catastrophic coverage. I realize those smaller medical expenses add up, but you also want coverage that makes regular medical care affordable. While one of the goals of health insurance is to allow for security against the damage ruinous medical bills can bring about, good health insurance should also help people to live healthy lives. Routine medical care doesn’t need to be free, but it should not be priced so high that individuals have to make painful economic decisions about routine care which can have long-term effects on health.

121 Boonton October 20, 2013 at 10:55 am

I think the problem is that catastrophic coverage is not as cleary seperated from regular care as it’s advocates would like. Many conditions like diabetes are chronic which are best managed with regular appointments and medication any one of which is not a ‘major procedure’ but add up to a lot of cost to the patient who has to pay OOP. Other conditions like cancer are becoming like that as well.

This happens to a lesser degree with other types of insurance. Some auto insurance companies, for example, may offer free repairs of small dings in windshields on the theory that by preventing them from becoming full cracks whatever is spent fixing dings is made up by preventing a handful of major accidents each year. But the relationship between regular stuff and major prevention is never going to be as solid as it is in healthcare. Regular oil changes, for example, are unlikely to prevent as much dollar cost in accidents as the insurance company would incur. Health, though, is likely much different. A woman whose had an incidence of cancer in the past will prevent more major costs by having a $500 scan each year than if she ‘skips’ it because it’s not a ‘catastrophic’ item.

122 Jonfraz October 20, 2013 at 12:15 pm

Any deductible for catastrophic coverage should not be annual, but for life. Once you hit it (for any given illness or injury) you should be 100% covered afterwards.

123 tt October 20, 2013 at 10:32 am

did you say any of this when the law was actually being debated ?

124 EMichael October 20, 2013 at 10:40 am

Of course not.

Amazing to me that even now it is the same old tired plans that have not worked where they were tried(tort reform); high deductible plans(that have been around for year and had no effect); and selling insurance across state lines without minimum coverage standards(yeah, that worked great in the credit card business).

125 Andrew' October 20, 2013 at 1:37 pm

Yes he did and 2Nd commenter is wrong.

126 EMichael October 20, 2013 at 3:03 pm

Cause you say so?

We have had high deductible plans for decades.

Tort reform for decades.

A race to the bottom in the credit card business that has overcharged Americans for decades.

First two have done nothing but made out healthcare system worse, and the application of the last would devastate it even worse.

But you think, despite all of the evidence, you are right.


127 Jay October 21, 2013 at 11:48 am

Funny you say “Cause you say so?” as all of your points can be responded to in much the same way. Provide citations or evidence or don’t be critical when people refute you similarly.

128 Boonton October 20, 2013 at 10:38 am

This is also why I think Tyler’s suggestions are a bit misguided politically. Republicans don’t want a flat tax, they want lower taxes on the rich. Eliminating the deduction for state income taxes doesn’t do that and if you slated the money to pay for the Federal gov’t paying for Medicaid then you can’t use it to lower tax brackets. It also harms Congressional Republicans since states, relieved of Medicaid, will be able to cut their budgets and taxes which will allow sitting Republican congresspersons to be challenged by a new round of Tea Party types who will assert they reduced gov’t at the state level while the ‘establishment republicans’ expanded it (the argument that they did so only by the Feds taking on Medicaid requires an attention span in excess of 30 seconds).

Republicans also don’t want to help the poor, they want to punish them to signal that they ‘reward responsibility’. Let’s remember both Romney and Ryan ran on restoring horrible spending cuts to Medicare. The logic is clear, Medicare is for people who ‘deserve’ it by looking like the people who fought World War II. Medicaid is for the ‘49%’ who don’t deserve it (so is unemployment, food stamps, and so on). A grand bargain that would work for Republicans? We’ve seen it twice now. Reagan I and Bush Jr I. Tax cuts on top, big spending on the bottom for those who ‘deserve’ it (i.e. old people who worked and anything related to defense). At that point all the talk about debt and deficits will magically disappear. (Evidence: Reagan on deficits when he was running against Carter. Newt Gingrich shut down the gov’t supposedly to save us from the debt. Bush/Cheney ‘deficits don’t matter’. What reason is there to think the same pattern wouldn’t repeat with a major Republican victory?)

129 visigoth October 20, 2013 at 11:01 am

I don’t think you will see debt and deficit talk disappear but we shall see. In any case, the status quo is coming down. The new Medicaid/Obamacare payment regime is destroying a hundred and fifty year old county hospital here. Forward.

130 Boonton October 20, 2013 at 3:22 pm

The ‘Medicaid regime’ is destroying a 150 yr old hospital? How? Lobby your state to put more money into Medicaid. How did the hospital exist for 150 years when Medicaid has only been around since the late 60’s? How come the US has thousands of hospitals who are taking Medicaid and not closing?

131 Jay October 21, 2013 at 11:52 am

Please provide evidence for your assertions as they are flat out wrong. Please point me to the last Republican bill that only cut taxes to the rich. Bush tax cuts? Nope, try again. Also please provide evidence that Romney and Ryan want to restore spending cuts to Medicare. The way I understand it is that in the Ryan budget he was using the same cuts to Medicare as Obama did in the ACA and not pushing for more.

Considering that the last time there was a balanced budget was under Newt Gingrich, its funny you bring him up in a “deficits don’t matter” point.

132 Joss Delage October 20, 2013 at 10:39 am

Why write an how-to article on reaching a 3rd or 4th best way, as opposed to one explaining how to get to a best option? The GOP is in bad need of idea leadership in this area (and others).

133 EMichael October 20, 2013 at 10:54 am

The common thread I here is how the ACA is so unfair to the young people forced into buying insurance. If I ignore the fact that they do receive a pretty large benefit from coverage as in no financial disaster if they contract a serious illness of have a serious accident, I still am trying to figure out how many of these people exist that are being hurt by the forced coverage.

Subtract 26 and under
Subtract those who have insurance through their employer
Subtract those who have had health problems in the past
Subtract those who are planning on starting a family
Subtract those making $30,000 or less(the cost is insignificant unless they actually get sick and actually have a great need)

And I am sure there are more reasons I have missed.

How many people am I actually talking about?

And why do I think the number is insignificant?

134 Andrew' October 20, 2013 at 1:39 pm

Then get rid of it and nothing will happen. Or did your boys do it to make sure we knew they were who we thought they were.

135 EMIchael October 20, 2013 at 1:51 pm

Umm, cause you do not want people accessing your healthcare system without paying? And that they will need a decent healthcare system down the road?

136 Phill October 20, 2013 at 3:21 pm

Other people’s, especially other poor and black people’s, interests do not factor into this, obviously. They should act as perfect rational agents with perfect information at all times.

All forms of behaviour incentives are examples of horrendous government paternalism; we must at all costs defend people’s right to live miserable lives, because our right to personal property is greater than their poor choices. There is no such thing as bad luck, look at how I’ve bootstrapped myself!

Oh, unless we’re talking about reproductive issues. Then women should do what we tell them to.

137 visigoth October 20, 2013 at 11:03 am

We used to hear all the time about those poor folks who had to choose between food and medicine. Well, that decision has been taken from your incompetent hands. The verdict is: Medicine.

138 Phill October 20, 2013 at 3:22 pm

How is that supposed to work? Is this because of that small business who decided to not hire a sixth employee because when they cross 49 employees they may have to pay a penalty?

Lower income brackets get subsidized.

139 Lonely Libertarian October 20, 2013 at 11:30 am

I suspect the first and second best solutions would start with more aggressive efforts to bend the cost curve – supply side things and some patent reform and drug price reduction efforts. Price transparency and price posting would also bring some significant changes. Until we start taking money AWAY from all of the healthcare providers we are stuck trying to make something that consumes nearly a fifth of our GDP “affordable” The task becomes a whole lot easier when health care requires half that – and even easier when it requires a quarter of that as it does in Singapore.

We continue to ignore the fact that the current system is designed to make a lot of people very happy – and not all of them are insurance company “leeches”. Doctors need to make LESS – hospitals need to be paid LESS. Those 2000 PET scan machines need to be used A LOT LESS. None of this will/can happen overnight – but unless we reform Health Care Costs nothing else makes any real difference – it is only painting over the real problem – too many people make too much money in our system of Health Care.

140 Boonton October 20, 2013 at 3:40 pm

Not an impressive sounding libertarian to me. Why exactly is it the gov’ts job to ‘bend’ a curve? I think there’s a good argument that health costs suffer from ‘cost disease’ which is a natural condition (namely if one product experiences prolonged productivity increases that are less than others, it’s cost will rise relative to everything else). In that case ‘bending the curve’ policies that go beyond simply trying to tackle minor inefficiences are going to either not work or only work the way price controls work, by creating artificial shortages.

141 JosieB October 20, 2013 at 5:47 pm

I think price transparency would be very helpful, and I’m sorry the ACA didn’t require it. Many of the insurance policies offered on the exchanges seem to have high deductibles, which would motivate people to shop for the best prices when seeking non-emergency care. This information is completely unavailable now.
With transparency in pricing, medical providers would have to become more efficient. It might lead hospitals to add second daily shifts to maximize usage of expensive mammogram and MRI machines. It might cause a doctor to lease his office space to another doctor to start a part-time practice in the evenings and on Saturdays. It might lead more drugstores open drop-in clinics for flu shots, immunizations, stitches for minor cuts and prescriptions for ear or sinus infections.
People respond to price incentives. Why not give them the information they need to do this?

142 yenwoda October 20, 2013 at 2:17 pm

There are a lot of ways to describe this proposal, but “New Bargain” is awfully euphemistic for an idea that boils down to repealing Medicaid and gutting the ACA subsidies.

143 steve October 20, 2013 at 3:32 pm

On immigration, there arent that many foreign docs who want to come here. You need a pretty big gradient to get people to want to come here, and that gradient isnt high enough. There are close to zero Western European doctors who have immigrated here.

“If insurance picks up too many small expenses, it encourages abuse and overuse of scarce resources.’ –

This is wrong in two ways. First, spending on those small things accounts for very little of our spending. Always remember health care spending demographics. The large, large majority of our spending is on chronic care and on procedures, including stuff like chemotherapy and surgeries. Secondly, there is a large body of literature showing that when people have to pay for the small stuff they dont choose well. They avoid buying the wrong stuff and end paying much more in the long run. But of course, insurance covers those big bills later. Much better to go with value based insurance where you waive fees and deductibles for care that actually reduces costs in the long run.


144 Alan October 20, 2013 at 4:00 pm

Any health policy should have two goals, to ensure that business is profitable and to allow the sickly to quietly slip out of the gene pool.

145 mulp October 21, 2013 at 1:49 am

Come on, say it.

Treat patients like cars in a free market – if you can’t pay, then your body is seized and sold at auction for repair and resale, or chopped up and sold for parts and scrap.

It solves the organ shortage problem, especially when the young healthy don’t buy health insurance, but live dangerously.

146 lj October 20, 2013 at 4:28 pm

Re: [2. I view this reform as more likely to come through a Republican President than a Democrat. A Republican has to do something which counts as “getting rid of Obamacare,” yet simply returning to the status quo ex ante would not be so popular with mainstream voters. ]

And going back to the status quo would be like nuking the U.S., a status quo health care system, which was the source of all of our problems.

147 Floccina October 21, 2013 at 12:36 pm

1. IMO the fact that costly regulation is done at the state level means that it would be dangerous to pay for more health care at the national level. So before you move medicaid to the federal level the federal gov. should take over medical licensing and regulation.
2. First shouldn’t we get rid of the employer mandates?
2. Shouldn’t we get rid of the mandated coverage for cheap thing like birth control before we do anything major?

148 Albigensian October 21, 2013 at 4:04 pm

“repeal the deductibility of state income taxes …”

BUT that’s going to be a hard political sale in states with high income taxes.

Many of these are Democratic-majority states, and a few are large, important ones such as California and New York.

SO, politically that disadvantages Democrats. And therefore it’s not likely to happen unless it’s paired with something that disadvantages Republicans by an equal amount.

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