I found two novel (to me) and interesting points in the heath insurance reform plan put forward by Avik Roy of the Manhattan Institute. (His Forbes articles here.)
First, the ACA establishes that it is ok to help people by subsidizing their purchase of private health insurance. It is not necessary to provide completely free insurance, medicaid, VA, medicare, and so on.
Yes, the health insurance you can buy has been salted up with extras, competition severely restricted, and large insurers so deeply in bed with their regulators that to call insurance "private" is a stretch and "competitive" a dream. But people do have to pay something, if they want better coverage they have to pay more, and the insurers are still nominally private companies.
Second, it is ok to ask people to contribute pretty substantial copayments. That's a vital component to getting a functioning health care market.
Avik cleverly suggests to ACA opponents not try to throw the whole thing out. Instead, expand on these good parts. Keep the exchanges, reform and open them up, reform the policy requirements, then slowly transition medicare, medicaid, and even veterans and government workers to exchange policies. Shh, don't call it a "voucher."
If King v. Burwell surrenders to simple logic, it's clear that there will be a quick renegotiation: what reforms do ACA opponents get in return for allowing federal subsidies. These points offer an interesting direction for that negotiation.
It is sad that the ACA's legal problems are completely unrelated to its economic problems. Whether subsidies go through Federal or State exchanges is an economically irrelevant question. And the Federal Government has the constitutional power to pass all sorts of economically disastrous laws. This divergence is leading to particularly pointless arguments.
Friday, June 19, 2015
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The problem with these analyses is that they focus on how to set up payment systems and not on why, exactly, health care costs less in other countries. The ACA system isn't tremendously different from the Swiss system. They have an individual mandate, co-pays and deductibles, tiered benefits for certain drugs, and so on to encourage consumer discretion. In addition, the US system has single payer coverage for the aged (Medicare) and the poor (Medicaid).
ReplyDeleteThe difference isn't in the setup as much as it's in the details. Some examples:
I frequently travel to Italy. A few years ago while in Italy I realized I had forgotten my blood pressure medication. I went to a pharmacy and since I didn't have a doctor's prescription I had to pay cash. It was 1/3 of the cash price in the U.S.
Congress enacted Medicare Part D, aka "The Pharmaceutical Industry Gift Act", without placing any kind of controls on prices paid. A program as large as Medicare can easily negotiate discounts, and most countries don't hesitate to do so for their national health plans. Except the U.S.
Last year an orthopedic group ran afoul of the government because they were importing Synvisc (injected in knees for arthritis) that had been exported to other countries. They did that because they could get a better price than in the U.S., where it is made. Well, that just ain't allowed. Witness the furor over Americans obtaining prescription drugs from Canadian pharmacies.
Why is there such a large price differential for drugs? Is there anyone with more than a room temperature IQ who can't figure out how that happened?
In 2003 I set up a procedure room in my office. I needed a table for fluoroscopy procedures. The cheapest "official" table from medical supply companies was about $1500. I had a carpenter custom build one to my specs for $500.
The equivalent of a Sears Craftsmen cart that costs $100 will easily run several hundred dollars when purchased from a medical supply company.
There are often significant differences in how care is provided. Once again, drawing on my experience in Italy speaking to both doctors and patients, I note that what would be handled by a pain specialist in the US is usually handled by a GP in Italy. In addition to improper and/or inadequate treatment (usually consisting of narcotics and back braces) I found that Italian GPs were surprised to learn that US pain specialists do procedures to treat pain. It's much cheaper to just throw drugs at the problem. If I were an Italian GP I probably wouldn't bother with a pain consult either. If you think paying doctors to do things is bad, wait until they're paid not to do things. This is what's coming in the U.S.
How about our neighbor to the north? Canada publishes benchmarks for time to obtain care as well as the actual amount of time waited. The benchmark for elective joint replacement is to be seen by the surgeon within 3 months and have the surgery within 6 months. The Ontario web site shows that in Windsor they are pretty close to meeting this goal; 90% get their hip surgery within 6 months (it is silent regarding the other 10%). The wait for cardiac bypass averages 50 days. The wait time for getting tubes put in your child's ears for chronic infections is 104 days. That will certainly keep costs down as opposed to the US system. In the rural areas it's even worse. What US citizen will tolerate that kind of wait? http://www.ontariowaittimes.com (or pick any province you like - they all have these sites).
In conclusion, the problem isn't so much in the way coverage is provided as in the implementation of the coverage and the government favors purchased by various industries. As they say in engineering "Speed, quality, price. Pick any two." I'm sure someone will chime in about our "terrible" quality statistics in the US. Go ahead. Make my day.
"Second, it is ok to ask people to contribute pretty substantial copayments. That's a vital component to getting a functioning health care market."
ReplyDeleteThis is the core of the problem. Without "skin in the game" there is no market discipline. OTOH, we as a society don't want anyone to have financial barriers to needed care. Maybe there are some die-hard libertarians who figure if you can't afford care you should just die in the street, but that dog won't hunt among the vast majority of Americans, many of whom would probably die in the street under those circumstances.
I submit that there is no solution to this problem. Financial disincentives and no financial barriers to access are mutually exclusive.
The argument is really over how much the disincentive should be. I think the goal is "uncomfortable but not impossible" and all of these arguments hinge on where that line is drawn. Where along the spectrum do you want your system to sit between a completely free market with its price discipline at one end and the social principle that no one should lack health care because of cost?
"it's clear that there will be a quick renegotiation"
ReplyDeleteIf King v. Burwell goes against the Administration (which I think would be a terrible result for several reasons) then it seems to me that the Democrats should say the Republicans have a choice:
1) there can be a quick, temporary fix in place until December 31, 2015 by which time the Republicans must put forward their comprehensive proposal to replace ObamaCare (this should not be a hardship for the Republicans since they have been promising such a plan for several years now so the Republican plan must be in an advanced stage of preparation by now. ;-) ) OR
2) a permanent, unconditional, fix to the King v. Burwell issue.
I don't know why you think the Republicans should come up with a plan. If the ACA doesn't survive this challenge you can ask the Republicans to submit their proposal but like the ACA it will be written on K Street and will not address any of the important issues. Anyone who tries to tackle the real problems will not survive the next election.
ReplyDeleteMedicare Part D won't be fixed, insurers will still control access to care, people will still be financially destroyed by the ChargeMaster fee schedule, and it will still cost 6x more for a Medicare patient to have a spine injection at the hospital as opposed to the office setting.
"a permanent, unconditional, fix to the King v. Burwell issue"
ReplyDeleteAn unconditional fix? In D.C.? We'd be lucky to keep it under 300 pages. There are too many votes to buy.
The following video criticizes Canadian health care. Canada saves money by making patients wait and sometimes die before they can be treated. Sally Pipes understands and lived under Canada's national health care system. She gives some personal stories and other facts.
ReplyDeleteThe Difference Between Canada and the U.S. Health Care Systems (video 7:34) Through the Cato Institute.
The British National Health Service (NHS) is skimping on maternity care, but reports great statistics. This puzzles me.
Bed shortage forces 4,000 mothers to give birth in lifts, offices, and hospital toilets
08/26/09 - Daily Mail UK OnLine. (Via Don Surber)
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[edited] Surber: Here is how free, socialist health care works in England. I thought their infant mortality rate was so much better. I mean, they would not lie about something like that. They spend half what the United States spends.
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I am puzzled by multiple reports that the US spends much more than Europe on health care and gets much worse results. But, the above instances give me doubts. Supposedly, Europe spends less for better results, but how is this done? I never see details. Their bureaucrats have solved the problem, but won't tell us how? Are they fudging their numbers like the US Veterans Administration was lying about waiting times?
If Europe spends less by delivering less, then that is not remarkable. If the US spends more because of runaway medical litigation and defensive medicine, then that is a legal problem, not a healthcare extravagance.
The current ObamaCare plan is to reduce health care costs by just spending less. Just like people could reduce their food costs by eating less. It seems that the dedicated experts in the government have not discovered the underlying reasons which could be addressed. Reducing health care costs by delivering less healthcare is not what I think people want of the evolving US "health care system".