Results for “age of em”

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Ralph Sisson, a loyal MR reader, asks me:

Why do the other first world countries focus on costs more than we do? They also pay for care, for the most part, via insurance. Even countries with the same level of personal income focus more on costs.

Putting normative questions aside, let's focus on the positive comparison.  I can think of a few factors here:

1. Americans have the "anything I want, whenever I want it" mentality of consumer spending.  Look at Sunday closing laws in Europe.

2. Because of an accident of history, we covered old people first with government $$ and that set a precedent.  It's especially hard to say no to people who are close to dying and that got us out of the habit of saying no.

3. Americans are more likely to have a "can do" mentality than are people from most other countries.

4. Americans are more likely to have a self-image of being the richest people in the world and not facing financial limits.  We derive more of our self-esteem from this self-image.

5. Compared to some Asian cultures, the more individualistic American approach lends itself to the view that an individual life must be extended at all costs.

6. The U.S. regulatory climate tends to be more pro-business, which in this context means pro-doctor and pro-hospital.  Those people are always willing to tell us to do more and spend more and we seem always willing to listen.

7. Tying health insurance to employment makes it harder for people to see what they are really paying and how much it lowers their net wage.

You can try the cross-sectional approach but with France and Switzerland as other big per capita spenders, I am not sure where this leads.  The fully governmental systems, such as in the UK, have low expenditures but it's also an open question whether low prices and low quantities will follow from the same explanatory factors.

Any thoughts?

The idea is to create long-term care insurance that would be available
to anyone, including those who are already disabled. People would be
automatically enrolled, unless they chose to opt out, and would pay a
premium in exchange for the opportunity to receive cash benefits to
cover the cost of home care, adult day programs, assisted living or
nursing homes after they had been enrolled for at least five years.
Premiums and benefit levels would be set by federal health officials,
but advocates predict that the program would provide beneficiaries with
a minimal sum, around $75 a day.

The proposal has gained momentum in recent days as Democrats in both
the House and Senate cast about for cash to help finance a final health
package. Because the program would begin taking in premiums immediately
but would not start paying benefits until 2016, congressional budget
analysts have forecast that it would generate a nearly $60 billion
surplus over the next 10 years, cash that would help the larger
measure's balance on paper.

Here is the full story.  Now reread that last sentence and ask yourself how many different ways there are to do this and whether all of them will fail to pass.

Here is my NYT column this week and not surprisingly it covers health insurance.  Excerpt:

At this point, it seems more plausible that the cost of health
insurance will keep rising, just as the costs of health care services
have continued to climb. The upshot is that the burdens of mandatory
purchase, the subsidy costs and the associated implicit marginal tax
rates will all increase, eventually to the point of unsustainability.

A further problem is “mandate creep,” which we’ve seen at the state
level, as groups lobby for various types of coverage – whether for acupuncture, alcoholism and fertility treatments, for example, or for chiropractor services or marriage counseling.

There are now about 1,500 insurance mandates among the various states,
and hundreds of others are under consideration. The dynamic at work
here is that the affected groups have a big incentive to push for
mandates, while most other people are unaware of the specific issues
and don’t become involved.

Because mandates don’t stay modest
for long, health insurance would become all the more expensive. The
Obama administration’s cost estimates haven’t considered these
longer-run “political economy” issues.

There is more to the argument and I urge you to read the whole thing.  Do not forget my penultimate paragraph:

We’re often told that America should copy the health care institutions
of Western Europe. Yet we’re failing to copy the single most important
lesson from those systems – namely, to put cost control first. Instead,
we’re putting our foot on the gas pedal and ratcheting up the fiscal
pressures on the system, in the hope that someday, somehow, it will all
work out.

Of course much of this piece also can be taken as a plea for more government-supplied insurance; that debate didn't fit in the 900-word limit.  The more important lesson, for the time being, is that we're on the verging of passing a policy that simply cannot and will not work.