The economics of Graham-Cassidy

by on September 19, 2017 at 1:20 am in Economics, Law, Medicine | Permalink

It is good for forcing some fiscal discipline on health care, but state governments are fiscally too weak to take over America’s public sector health care finance.  That is the message of my latest Bloomberg column.  Here is one excerpt:

There is another problem with state experimentation in this context. So many health-care problems are on the supply side, namely weak incentives for quality care, barriers to entry and innovation, and regulations that raise costs but don’t improve safety. Ideally policy experimentation could cover all of these dimensions, but almost all of the debate is on the side of financing and insurance coverage. With a more or less fixed set of supply-side institutions, simply pushing more financing decisions into state governments may not produce much, if any, improvement.

So overall the reform doesn’t seem to be feasible.  But here is the part to bug you:

It is a legitimate worry that Graham-Cassidy might cut health-care benefits in an unequal fashion, but the bill may be more egalitarian than it at first appears. Due to the embedded formulas, the bill redistributes resources to red states, in particular states that have not already accepted the Medicaid expansion from Obamacare. Often those are rural states, some of them in economic decline. Favoring such states does have an egalitarian aspect, even if the Republican Party isn’t very effective in explaining the policy in those terms.

The biggest losers from Graham-Cassidy are likely New York and California, two states with very costly Medicaid rolls. That might appear anti-egalitarian, but is it really? The beneficiaries in those states tend to be relatively young, and thus their human capital endowments, in the form of future life enjoyment, are usually quite high. All things considered, a 28-year old lower middle-class immigrant in Los Angeles is arguably better off than a 61-year-old in Nebraska with $100,000 in the bank. Giving a benefit to the red state individual actually may reflect the more egalitarian sentiment, although that’s not usually how health-care policy discussions are framed by either Democrats or Republicans.

Like it or not, the forward-looking perspective is probably the correct one here.  One not altogether illogical response is to treat this as a reductio ad absurdum on egalitarian ideas.  Another response is to base health care policy more on efficiency, and again to discard the egalitarian ideal, which in turn would resurrect some chance of being able to defend redistribution toward the young.  What doesn’t make sense is to invoke egalitarian ideals only selectively, as people are fond of doing.

1 Anon7 September 19, 2017 at 1:35 am

The critters running California’s legislature (compared to them Gov. Moonbeam is a paragon of fiscal responsibility) don’t care very much about how to fund single-payer, so why should anyone else?

2 Zach September 19, 2017 at 4:13 am

The nice thing about fighting for public health care in the states is that you don’t really need to worry about how to pay for it because there are countless examples around the world of how you can get the same health outcomes for half the US health expenditure per capita. You really can promise the moon because it’s trivial to accomplish at a lower cost than what the US pays now (trivial in principle; exceedingly difficult in law).

IMO public healthcare advocates in CA and elsewhere have the right tactic of overpromising. Democrats love to play on an uneven field and propose fully formed law while Republicans promise fantasies (aka virtually every major Trump reform). There’s a time for doing that and it’s after you win the ideological battle.

3 mulp September 19, 2017 at 4:26 am

So, why don’t the Swiss pay 30-40% less if it’s trivial to cut costs? Are the Swiss totally incompetent?

4 priortest_3 September 19, 2017 at 4:36 am

Actually Switzerland does pay about 30% less – https://en.wikipedia.org/wiki/Healthcare_in_Switzerland

5 dearieme September 19, 2017 at 7:56 am

That doesn’t count because Switzerland is a small country. Or, an even more favourite American excuse, that doesn’t count because Switzerland is so-o-o homogeneous.

6 Alan Goldhammer September 19, 2017 at 7:59 am

@dearieme – just as Switzerland, both Germany and The Netherlands utilize regulated insurance companies to deliver universal healthcare in those countries. This approach works well and is an option to the the Sanders’ Medicare for All approach.

7 Ricardo September 19, 2017 at 8:27 am

Alan, adopting Swiss or Dutch health care policy amounts to tweaking Obamacare. These countries have individual mandates, community rating and are even more strict on how much insurance companies can charge older clients. It is tough to rally the troops behind, “Small, incremental changes to Obamacare, now!” And the Republicans would never go for it.

8 Zach September 19, 2017 at 7:24 pm

Not incompetent, but, like the States, rich enough to overpay for the same outcomes as their neighbors.

Of course a lot of excess health spending is spent domestically and just gets funneled back into buying other stuff. As long as the revenue stream funding it is pretty stable and spending is more or less predictable (both more or less satisfied in the States) it’s not a huge problem other than making then States a little less competitive.

9 Anon September 19, 2017 at 11:34 am

The U.S. federal government already spends more on healthcare as a % of GDP (10%) than those European countries, just on Medicaid and Medicare. So obviously there is no way we could save money by going single payer.

10 Ricardo September 19, 2017 at 1:30 pm

No, Medicare and Medicaid (including the states’ share of the latter) is about 6.5% of GDP.

https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html

11 Anon September 20, 2017 at 11:28 am

Total gov’t spending on healthcare is 10% of GDP (e.g. https://www.usgovernmentspending.com/healthcare_spending) and covers much less than everyone in the country. So the point remains.

12 Anon7 September 19, 2017 at 7:20 pm

Yes, let California try to do it without all of those federal subsidies. I’m sure there will be more than enough money to be able to cover all of the illegal immigrants too.

13 mulp September 19, 2017 at 3:53 am

“a 28-year old lower middle-class immigrant in Los Angeles” likely costs taxpayer very little.

Eliminate subsidies to buy insurance and he stops, shifting the costs paid by his premiums to others buying insurance. If you think he’s on Medicaid, then cutting him from the rolls when he has few if any medical bills, taxpayers save little.

If he gets shot, which is more likely than a traffic accident injury, or has a traffic accident, the bills for services the law mandates will be paid in part and slowly, shifting provider costs to others or taxpayers in hospital bailouts.

Of course, the thing hurting rural States is the phase outs of hospital bailouts based on everyone having insurance from an insurer or Medicaid.

The only way to rationalize the cuts in health care spending is by firing health care workers and rationing care overall.

And spending more money in rural States will depend on hiking pay to get workers to move to backwaters, or waiting for newly trained workers from the area filling the jobs, given immigrants will be reduced.

Money is just a proxy for work. Without workers, money has no meaning.

14 mulp September 19, 2017 at 4:21 am

By the way, Obamacare gave bigger pots of cash per capita to rural States because they had the highest fraction of uninsured or uninsured population. Kentucky got a significant economic boost from implementing Kynect with lots of new clinics with new workers starting to care for people in rural communities, either by hospitals or by free clinics struggling to deliver care in buses or church basements as best they could.

Kentucky probably got $2 billion in added payment of wages in health care from the Feds than were paid in added taxes for obamacare. And Kentucky was already getting substantially more Federal money than it paid in taxes, fees, etc. As do all the predominantly rural States. The urban States already send lots of money by way of the Federal government to rural States.

Even the States that punished their working poor out of Obama spite get lots of wealth redistributed from the Obama supporting States thanks to pols like LBJ and FDR who bought blue dog support for their bills. All those States were mostly Democratic controlled when the national welfare system was constructed.

15 Arnold Layne September 19, 2017 at 4:59 am

So, the AMA was right back in the day to oppose medicare/medicaid. Please take it all back. Take back all the money you pay out to us docs in reimbursements and for paying for resident training, and in return, please get out of the business of legislating how much we should get paid and how our work is supposed to be done. Please stop experimenting with our markets with your complex, artificial marketplaces and well-intentioned Rube Goldberg abominations. It’s all getting too much to handle.

Thanks.

16 Borjigid September 19, 2017 at 9:07 am

No, that doesn’t sound like a good idea at all.

Thanks though.

17 Anon September 19, 2017 at 11:36 am

That would be wonderful. Also, gut the AMA of course- talk about experimenting on our markets with artificial marketplaces!

18 Jan September 19, 2017 at 6:03 am

I completely disagree with the notion that a transfer to states where the median patient is older from those where they are younger is somehow egalitarian. Let’s not forget, many of those poorer, older, less healthy–and, yes, red–states did not expand Medicaid or set up well-functioning exchanges. It was a decision their political leaders made. It is an option they still have, but they don’t want to prioritize helping their poorer residents access health care. Perhaps they believe they have good, principled reasons for that.

Beyond the point that many health spending drivers are supply side and determined by federal policy (e.g. how many foreign docs do we let in?), I just don’t seeing many states that have not taken steps to make health care more accessible and efficient suddenly deciding this a priority. For example, I could see some of them taking the money and doing something simple and ideologically driven that sounds nice but doesn’t really help on either front. And that is a real possibility, because Graham Cassidy doesn’t require states to cover more people or lower the per unit cost of care.

19 pyroseed13 September 19, 2017 at 9:09 am

Jan, I feel like you, like a lot of liberals, are trying to have it both ways on this issue. Liberals like to argue that we need federal policy in health care so all people are treated equally. The bill gives money to states that didn’t expand Medicaid, and now we are being told that their residents must suffer because their states made a policy choice to not help their uninsured residents. Ok, but why should any of that matter if you want all people to have insurance?

20 Jan September 19, 2017 at 12:31 pm

I’m not arguing that we need federal policy to treat everyone equally. That’s largely what the ACA enabled already, but some states still put up roadblocks. If repeal fails I think they will likely come around. Even if not, it doesn’t make sense to completely redesign a national framework that works for most states.

21 Greg September 19, 2017 at 11:38 am

I think the “good, principled reason” for not expanding medicaid is that it’s a fiscal time bomb?

22 Jan September 19, 2017 at 12:22 pm

It’s the most cost effective insurance there is. If you’re worried about fiscal time bombs look at Medicare.

23 Anon September 20, 2017 at 11:30 am

Medicare is a federal program.

Nissan Versas may be the most cost effective transportation there is, but that doesn’t mean states can afford to offer them to all constituents.

24 Anonymous September 19, 2017 at 7:15 am

Here is a simple question. Is there any chance passing a bill like this produces happy voters 2 years after? I think no-way, based on recent town hall experiences, which makes me wonder what is really going on.

25 Boonton September 19, 2017 at 7:31 am

What’s really going on is budget rules. A massive tax cut cannot expand the deficit ten years out. That doesn’t mean a tax cut that causes a larger deficit today must generate surpluses in the near future so it all evens out by year 10, that means you can pass a tax cut that causes a $500B deficit increase today and keep that going for 9 years but if you yank it back in year ten you are fine because the final year’s deficit is no larger.

Sound familiar? That’s because it was the how the Bush tax cuts were done.

The Republicans would like to do large tax cuts with no expiration. That means they need some large source of funding to avoid the ten year deficit rule which would require more votes to break. Hence the efforts to sneak a ‘repeal and replace’ health bill that only seems to increase the number of uninsured.

26 dan1111 September 19, 2017 at 7:38 am

I think the main motivation here is the Republicans’ desire to deliver a repeal of Obamacare, not funding for tax cuts.

They are in big political hot water if they can’t follow through on their repeal promise. And some of them might actually want to repeal it, too.

27 Alan Goldhammer September 19, 2017 at 8:01 am

While it is something they campaigned on, Boonton is correct; Obmama care repeal results in the ability to do a bigger tax cut under the budget rules and is really the primary driver.

28 Anonymous September 19, 2017 at 8:08 am

So what then, is an entire Republican Congress ready to do that deal, and retire on their earnings?

Because surely less healthcare for the Republican base, and lower taxes for the rich, is playing too much into the hands of their opponents.

A formula to lose elections.

29 Boonton September 19, 2017 at 9:13 am

The system is producing sub-optimal results. Some Republicans are gerrymandered into ultra-safe districts where no Democrat can challenge them unless the mood of the country swings not to 52% Democratic but 58% or more. In those ultra-safe districts they worry more about challenges from the right in primaries and/or the danger that Trump can still get his base to turn out for massive rallies against whoever he wants to bash in his latest tweet.

On the Senate side you have Republicans who might be betting that a massive tax cut could score the funding they need to overcome those angry about gutting their healthcare. Plus with so many quickie versions of repeal/replace that have come and gone its possible for most Republicans to claim they voted against at least a few of the bills even though one might still pass….anyone who needs to play the ‘reasonable moderate’ in a general election can gaslight the voters to some degree.

30 John Thacker September 19, 2017 at 10:28 am

Of course, part of the problem is that all the Democrats, along with some Republicans, are absolutely dead set on preserving the tax breaks most overwhelmingly tilted towards the wealthy and top 5%, like the SALT deduction and the mortgage deduction.

31 John Thacker September 19, 2017 at 10:28 am

So as a result, the possible pay-fors keep decreasing, even though the original stated goal has been a permanent cut.

32 dan1111 September 19, 2017 at 7:34 am

Politics often leads to worst-of-both-worlds compromises. Frequently, there is no coherent middle ground between two different visions for policy, but that is where it ends up. Frequently, good policies require discipline and hard choices, but the edges all get rounded off for political reasons. And so you end up with a mess.

Obamacare is an example of the same. It wasn’t what anybody really wanted, didn’t really work well, and certainly didn’t “produce happy voters 2 years after”.

33 Anonymous September 19, 2017 at 7:55 am

You are right. It did take more than 2 years for the dust to settle on Obamacare. A tangled graph.

http://www.kff.org/interactive/kaiser-health-tracking-poll-the-publics-views-on-the-aca/#?response=Favorable–Unfavorable&aRange=all

I think people started to think about real ACA benefits they enjoyed as repeal loomed. Hence more support for ACA then, than when it was just harmless fun opposing it.

So I’m still not getting it. Even if it is only a *risk* of higher premiums and reduced coverage, you would think that would be too risky for any incumbent. Voters too easily will see it as something taken away. The hardcore might be ok with that, but swing voters are not hardcore.

34 Boonton September 19, 2017 at 9:26 am

Something to keep in mind, the US has multiple health care systems. Most older people are covered by single payer systems (Medicare, Medicaid, VA and combos of those 3). Most younger people are covered by parents or work or by Medicaid if they are poorer and lucky to live an a state that took an expansion. Obamacare is actually a very small slice of the population that doesn’t fit into those large boats, gig workers who have to buy their own insurance, the self-employed, those who make reasonably good money but work for a place with crappy or no coverage.

So when you talk about people getting mad at their coverage being cut, you are talking about maybe 10M people who buy coverage directly or lower income people who get Medicaid. The first group is actually not large enough to matter in most local elections and some of that group consists of healthier people who are willing to risk a year or two of no coverage. The second group doesn’t vote or breaks with their state anyway so hurting them doesn’t actually hurt Republicans. Ironically many of these areas are also dominated by older people who will go for a conservative message about getting rid of ‘socialized medicine’ when they enjoy Medicare with promises from the same politicians to ‘not touch it’!

Where this is going IMO is single payer. Medicare/caid ‘for all’ or a buy in. Kind of like how the Republicans not supporting EITC or payroll tax cuts for the lower and middle brackets ended up bringing back more support for min. wage increases. If people on the big boat (say medicare) don’t care if you sink the smaller boat or even worse are lead to believe the bigger boat is safer seeing the small boat sunk, then it makes more sense to put as many people on the big boat as possible.

35 JonFraz September 19, 2017 at 12:56 pm

Medicare is NOT single-payer– it must be paired with some sort of Medi-gap policy to cover what Medicare does not.

36 Boonton September 19, 2017 at 1:10 pm

True, strictly speaking even single payer really means a single payer for the bulk of medical costs but other payers fill in. A ‘Medicare for all’ system would likely mean you have Medicare as your base coverage but employer/private purchased plans would cover a portion of your costs. In the UK, for example, you can buy private coverage that gives you options the National Health system doesn’t cover. Even in a pure single payer world, most people would expect to pay for at least a few medical costs (for example, cold medicine).

37 Greg September 19, 2017 at 11:47 am

ACA caused huge premium increases and reduced coverage for many people

38 Mark Thorson September 19, 2017 at 12:09 pm

I overheard one the employees at Trader Joe’s say she could qualify for health care with 15 hours a week before the ACA, but now it’s 30 hours. She was not happy about that.

39 JonFraz September 19, 2017 at 12:58 pm

There is no evidence that the ACA caused “huge premium increases”. Correlation != causation– and in fact, premium inflation has been going on for decades. There is no evidence that it’s any worse (and some evidence it may be less bad) under the ACA.

40 Boonton September 19, 2017 at 1:17 pm

Employer provided insurance costs maybe $6500 a year for a single person. That would mean someone you think you overheard at Trader Joe’s who had coverage working just 15 hours a week would represent Trader Joe’s kicking in $8.33 per hour to cover that person. What does Trader Joe’s pay? Min Wage? If she wasn’t happy working 30 hours/week why not work 15 hours a week for $8.33 or more and then just buy coverage for $6500 (most likely it would cost her much less but coming to the exchanges with a $6500/yr budget for a single person does command some nice buying power).

ACA caused huge premium increases and reduced coverage for many people

There was some modest increases on employer provided plans but overall very little premium increases. If anything companies went into the Obamacare exchanges with very *low* premiums giving customers a bargain for a few years until they increased them up to market rates.

Be very wary of those who would conduct this discussion by not citing actual data but simple anecdotes of things they think they hear people talking about.

41 David Wright September 19, 2017 at 5:49 pm

JonFraz: There is no evidence that the AVA caused huge premium increases across the board. But there is clear evidence that it caused some premium increases across the board, and clear evidence that it caused huge premium increases in some particular instances. It caused some premium increases across the board because it made individual-market insurance cover things that it previously typically hadn’t, such as maternity care and contraception. And it caused massive premium increases for anyone who previously had catastrophic coverage, which means pretty much anyone in the individual-market who was reasonably well-off, healthy, and financially literate.

42 JonFraz September 20, 2017 at 1:49 pm

Re: It caused some premium increases across the board because it made individual-market insurance cover things that it previously typically hadn’t, such as maternity care and contraception.

We can debate whether contraception should or should not be covered– but it is very cheap (much cheaper than childbirth!) and not a cause of premium inflation under the ACA. Maternity services and child birth are not cheap– and that is exactly why they should be a covered service under any healthcare policy worthy of the name. Yes, some few people saw large increases in premiums– but they also got much better policies as a result. Notably (which you do not mention) because those policies no longer featured lifetime or annual caps. In fact I suspect that is the major source of the increases: if an insurer is only on the hook for, say, a grand total of 50K (and some policies had even lower limits) the premiums will not be that pricey; but if the liability is open-ended, then yes premiums will go up noticeably. Megan McCardle had an idea of creating a single payer government program for catastrophic expenses, which would limit the exposure of insurers to very high dollar claims– it is something we ought consider. But meanwhile it is unacceptable that health insurance should “run out” and leave anyone not a billionaire ruined as well as in desperate health straits.

43 Frederic Bush September 19, 2017 at 7:47 am

Why do you think the red states will use the money in a redistributive fashion? If these states had wanted to provide healthcare solutions for the poor they would have expanded Medicaid in the first place. Just because the state is relatively poorly off does not mean they won’t spend the money in a way that primarily benefits the wealthier people in that state.

44 John Thacker September 19, 2017 at 10:38 am

If these states had wanted to provide healthcare solutions for the poor they would have expanded Medicaid in the first place.

One problem is that the Medicaid expansion formula was tilted in such a way that made it much more expensive and unsustainable for those states than for other states.

States run Medicaid. Within the amount of federal money, states can choose some details of coverage, both who is eligible and what the reimbursement level is (which has a lot to do with how many doctors accept Medicaid patients.)

In general, Republican states were more likely to restrict Medicaid to a poorer slice of the population, but have higher reimbursement rates close to the Medicare reimbursement rate. Democratic states were more likely to have wider eligibility for Medicare but lower reimbursement rates. (This is unsurprising, because we’ve seen in a number of debates that Democrats are generally satisfied if people technically have insurance coverage, regardless of whether and how people can use it or whether it shows up in the mortality or morbidity stats.) Republican states thus were better for doctors and the poorest of the poor, Democratic states better for the slightly higher than poor or near-poor.

The extra Medicaid money was available for expanding eligibility. (And once eligibility was expanded, it couldn’t be returned without forfeiting a lot of money, including original money, even though some of the extra money was temporary.) There was no requirement to increase provider payments. Democratic states generally had wider eligibility, so it cost them much less (and in some cases none) to meet the eligibility goals without cutting reimbursement. Republican states would pay a lot more to expand eligibility without cutting reimbursement levels.

So the free money had a pretty big thumb on the scale in favor of the existing “wide eligibility, low reimbursement rate” states, but of course when you get to write the bill yourself, you write it to help your own states. It’s quite unsurprising that the distribution of Graham-Cassidy benefits ends up helping the Republican states by more than the PPACA formulae.

45 Frederic Bush September 19, 2017 at 11:06 am

The Feds were paying 90% of the expansion costs, were they not? State level differences seem pretty small when you’re only paying 10% of the delta. Also, there wasn’t a single blue state with higher costs that would’ve decided to back off? I think ideology is a much better explanation than expense here as for why some states decided to refuse.

Also, I seem to recall that the Dems were shocked that states would refuse the expansion. I really don’t think it was written as a partisan giveaway — they expected every state to do it, and in fact it took a Supreme Court decision to prevent that from happening.

46 Clag September 19, 2017 at 11:51 am

Well it was mandated, so yes they expected every state to have to do it. But yes, ideology i.e. fiscal restraint was the reason why some places did not adopt it. A change you can never roll back that the federal government covers less of each year and may drop at any time- pretty obvious what the intent was.

47 JFA September 19, 2017 at 7:47 am

“All things considered, a 28-year old lower middle-class immigrant in Los Angeles is arguably better off than a 61-year-old in Nebraska with $100,000 in the bank.”

Many things that are “arguably better” are in fact not. While the “all things considered” seems inclusive, it appears to only consider “human capital” to be used in future earnings. Is Tyler trying to say that the present value of future income streams (seemingly non-age adjusted) should be used in thinking about inequality? If this is how we are to consider inequality, perhaps a young adult in South Sudan is better off than an 88-year-old Medicare recipient in his last month of life. Maybe we should tax that South Sudan young adult and redistribute his money to the Medicare recipient. I mean, given the future income streams of the two, this only seems like the right thing to do.

Also, I don’t see Tyler applying the cost of living adjustment argument in this case. If you included that adjustment, the lower middle class 28-year-old immigrant in LA would probably not be “arguably better off” than the 61-year-old in Nebraska with $100k in the bank.

Keep in mind that Tyler is talking about transferring money and that ideas of health inequality (especially between young and old) are left out of the equation.

48 Albert September 19, 2017 at 10:00 am

That’s what I thought, there’s no way anyone who actually lived in both environments would say that. I’d rather make 50k in Nebraska than be a 28yro immigrant in LA, much less 100k.

49 Anonymous September 19, 2017 at 11:52 am

Have, not make

50 Agra Brum September 19, 2017 at 2:16 pm

yes, a 61 year old in Nebraska with $100k in the bank is about to get medicare and social security, and has enough to buy a relatively decent home straight up.

51 dearieme September 19, 2017 at 7:59 am

“The biggest losers from Graham-Cassidy are likely New York and California”: a consummation devoutly to be wished.

52 Anonymous September 19, 2017 at 8:04 am

Don’t you have a Brexit to fork up?

53 Boonton September 19, 2017 at 9:33 am

Indeed, the Republican party really needs to not reach out to the rest of the country. Best to try to keep governing with a minority of voters and gaming election rules, loopholes and other tricks instead of actual democratic consensus.

54 Anon7 September 19, 2017 at 7:33 pm

Last time I checked Republicans won the most votes in the only fully popular branch we have, namely, the House of Representatives (so they’d still have more seats even without gerrymandering). So spare us the drivel about “democratic consensus.”

55 Moo cow September 19, 2017 at 10:48 am

Yeah, fuck those places where a disproportionate share of our exports and gdp are produced.

56 Frederic Bush September 19, 2017 at 8:10 am

I also think the argument from human capital goes in the other direction. Which is better, to direct resources at sick people who are at the beginning of their economic lifespan or at the end? People don’t realize their human capital if they die young.

57 rayward September 19, 2017 at 8:11 am

There’s a habit of avoiding the issue by simply redefining terms. It’s annoying but far better than simply lying. Cutting costs in health care would mean a smaller share of the economy for health care, which also means fewer jobs in the one sector that has been growing the fastest and providing many of the jobs taken by those on the lower end of the income scale. Wouldn’t that be anti-egalitarian? Cutting the cost of health care without cutting those jobs would require addressing the wide disparity in incomes of those in the industry, with physicians, hospital executives, and insurance executives taking deep cuts while allowing jobs on the lower end to continue growing (to, for example, care for an aging population). It would also require an honest assessment of the benefits derived from very expensive medical facilities and equipment, diagnostics, and end of life care. Of course, even raising such issues brings charges of death panels. Cutting costs in health care is everyone’s stated goal, until the cutting gets personal. The broad question is whether cutting costs is worth universal care: we can afford high costs or universal care, but not both.

58 msgkings September 19, 2017 at 11:43 am

Basically this. The reasons the US will always have the most expensive care in the world are 1) It’s a rich country, among the very richest but mainly 2) Every dollar saved spending less on medical care is a dollar less of income for someone. No one wants to give up those dollars without a fight.

59 Anonymous September 19, 2017 at 11:56 am

“Every dollar saved spending less on X is a dollar less of income for someone. No one wants to give up those dollars without a fight.”

Isn’t this basically true for any X

60 msgkings September 19, 2017 at 12:07 pm

Yes it is, but driving down healthcare costs is the big fight, and the one with so much government involvement hence the massive focus on it. Also, everyone consumes it at some point. Not nearly enough people were sad that Travelocity took $ from the travel agents. But the AMA is a lot more powerful, as are the insurance companies. Health care is different than other forms of consumption, something the total deregulation freaks will never understand.

61 Todd K September 19, 2017 at 8:16 am

Picky point: Tyler wrote: “some [rural states] even in ecnomic decline.”

I don’t think any rural states are in economic decline but might be wrong. Can anyone name some? That is, the state’s GDP per capita is lower today in 2016 dollars than it was in 2000.

62 Jan September 19, 2017 at 6:17 pm

There are plenty of rural states in economic turmoil. You can futz with the timeframe, and most have still had some real growth over the last 5 years, but look at WY, WV, ND, SD, IA, NE, MT, KS, LA. Relative to the rest of the country, they’ve been declining or stagnant.

https://fredblog.stlouisfed.org/2017/06/how-is-your-state-doing/

63 asdf September 19, 2017 at 8:44 am

The Latino immigrant in CA or NY has low IQ and is a net lifetime tax liability and shouldn’t be here. If they were removed from the country it would mean more tax dollars for the rest of us. Bringing them here was an attempt by coastal medical interest to increase demand for their services while restricting supply, knowing that middle class whites across the country would be forced to pay for it.

People in the middle of the country are right to recognize this as the scam it is and play the game accordingly.

64 Anonymous September 19, 2017 at 9:38 am

An absolute minimum of history should be required for anyone worried about “Latinos in California.”

California was named by Spanish explorers in the 1500s. Latinos have been living there ever since. That is 500 years, if you are counting. And then the US came to them, in a disagreement settled with the Treaty of Guadalupe Hidalgo. That 1848 treaty allowed resident Latinos to choose US citizenship, while promising to protect their property rights.

We are a merged nation, by treaty.

65 chuck martel September 19, 2017 at 9:45 am

Their IQ probably isn’t as low as yours.

66 msgkings September 19, 2017 at 11:44 am

BOOM. Finally chuck scores a direct hit.

67 Boonton September 19, 2017 at 9:50 am

NY and CA are net tax contributors to the US economy.

68 John Thacker September 19, 2017 at 10:25 am

Though they should be even more, since the state and local tax deduction is an enormous gift to the wealthy.

69 Boonton September 19, 2017 at 11:29 am

The wealthy in Red Middle and Southern states are also allowed to deduct state and local tax costs. We hear over and over we must abolish the estate tax because it’s ‘double taxing money already earned’ (although I don’t think waiting for your relative to die and leave you money is earning anything). I’m not clear why that particular deduction is a ‘gift’ versus all others.

Anyway whose stopping Red states from producing or attracting more wealthy people who will pay into the states taxes and then with the deduction use their tax savings to spur the local Red economies by spending more money?

70 eccdogg September 19, 2017 at 9:26 am

The details may be off when it comes to funding levels, but I generally like this plan. Most US States are the size of medium sized European countries (a few are as big as large European countries). There is little reason that they cannot implement their own healthcare systems. There is no need for a one size fits all. If single payer is the answer then California can show us the way.

Now the funding cuts in this bill may be too dramatic, but as a structure I think the idea of block granting medicaid + lots of freedom for the states in implementation of the program+ expansion of medicaid to near poor and those with pre-existing conditions (perhaps with premiums) is a good idea. Then get rid of all the other crap in Obamacare. I think I would figure out how much Obamacare subsidies + medicaid expansion would be forecast to cost this year then set that as a block grant amount to the States proportional to population. Then cap that number at a fixed % of GDP. If the States want to spend more they will have to tax more.

71 John Thacker September 19, 2017 at 10:18 am

Don’t the Canadian provinces run health care? Interesting point that Canada features more federalism than the US (of the Graham-Cassidy style, in a way, since there are large equalization payments made at the federal level but then provinces set a lot of policy, sort of like how block grants would work in practice.)

Are the states really fiscally weaker than the provinces?

72 John Thacker September 19, 2017 at 10:19 am

Of course, those who fear single-payer above all might be correct to note that Graham-Cassidy, as a Canadian-style healthcare solution, would probably enable some states to experiment with single-payer when they’ve failed to do so so far.

73 Edward Burke September 19, 2017 at 11:21 am

“What doesn’t make sense is to invoke egalitarian ideals only selectively, as people are fond of doing.”

–or: “(W)hat doesn’t make sense is to invoke egalitarian ideals at all, since the dread persistence of untethered idealism continues to yield utopian political discourse and dystopian political expectations.”

74 chuck martel September 19, 2017 at 11:33 am

Policy experimentation should commence at a simpler level. Set up health care programs in the veterinary sphere before going after humans. It’s a big market.

For the veterinary services sector in the U.S. economy, the indirect and induced impacts of its services are $13.4 billion and $18.8 billion, respectively. Combining the direct, indirect and induced impacts, the total value of economic activity generated in the U.S. economy as a result of veterinary services in 2014 was $63.1 billion, for an economic multiplier of roughly 2.1. To achieve this economy-wide impact required 729,089 employees in veterinary medicine and the supporting sectors, who, combined with veterinary and veterinary-related businesses, provided federal, state and local taxes of $10.3 billion.

75 Floccina September 19, 2017 at 1:25 pm

The problem for the republicans is that PPACA is a very Republican plan though poorly implemented. It attempted to get people to do the responsible thing and buy insurance but because it was implemented by the compassionate and economics ignoring democrats, the penalty was not made big enough to get the job done:

So the Republicans could, because of loss aversion and because people (me for example) have changed coverage based on the law, take it slow and one step at a time and do the following:

Remove the 3 to 1 rule. See here because with income subsidies there’s no reason to force a subsidy of older people by younger people.
Slowly each year raise the allowable deductibles until they get very high, like $30k per year or $250k lifetime.
Either fix or eliminate the employer mandates, by fix I mean, do not completely exempt part-time workers (maybe make employers pay a percent based on hours worked), and do not exempt employers based on the number of employees they have.
Allow insurers to create plans that only cover care with strong evidence of proven net benefits.
And most importantly raise the penalty to where you are forcing almost everybody to get health insurance.

Then think about how to get the states to eliminate regulations that drive up cost without providing proven net benefits.

http://un-thought.blogspot.com/2017/01/what-should-republicans-do-about-ppaca.html

76 JonFraz September 20, 2017 at 1:53 pm

30K is approaching median individual income and it is immensely too large a deductible for anyone who is not extremely wealthy. Healthcare deductibles for the average person should be in the same range that deductibles for home owners or auto policies are. Why is that not common sense?

Also, “young people” and “old people” are not permanent categories (unlike, say, race). Young people become old people. In effect, community rated premiums are a form of consumption smoothing.

77 byomtov September 20, 2017 at 4:48 pm

Young people become old people. In effect, community rated premiums are a form of consumption smoothing.

Yes. And smoothing is probably needed because at some point health care costs start rising a lot faster than income. It’s a fundamental problem that should be better understood.

78 Anon7 September 19, 2017 at 8:40 pm

The primary rationale for Obamacare is to redistribute resources towards poorer, sicker people, not to curb “free-riders.”

79 byomtov September 20, 2017 at 12:45 am

the bill redistributes resources to red states, in particular states that have not already accepted the Medicaid expansion from Obamacare.

Is this supposed to have something to do with fairness?

If some states didn’t want the Medicaid expansion too bad for them. Idiots.

Suppose I offer to give every GMU faculty member $100. You turn it down, for whatever reason. You are not now allowed to complain that it is unfair that some people got $100 and you didn’t.

80 Anon7 September 20, 2017 at 4:47 am

They weren’t idiots for refusing to accept a Trojan horse as a “gift.”

81 byomtov September 20, 2017 at 4:49 pm

Then why are they complaining?

Comments on this entry are closed.

Previous post:

Next post: