We are often told by the advocates of government-run health care that a single-payer system would be innocuous because our masters inside the beltway would not actually own hospitals or employ clinicians. Well, the WSJ Health Blog demonstrates the vacuity of that assertion by explaining the latest P4P proposal from the single-payer system known as Medicare:
“Pay for performance,” one of the great health-care buzzwords of the moment, is often described as paying hospitals more if they take better care of patients. In a 104-page proposal unveiled today, Medicare offers a twist: Pay hospitals less if they aren’t among the top performers.
The problem with this bureaucratic stroke of genius is that Medicare’s current payment scheme only pays 95% of costs (that’s costs, not charges). So, how much further below costs are they planning to go?
Medicare would withhold 2% to 5% of hospitals’ reimbursement funds — with some payments excluded — and use it to create a big incentive pool. The incentive money then would be parceled out to two groups of hospitals: those that score the highest on a set of quality indicators, and those that show the most improvement.
And which hospitals would be hit the hardest by this idiotic scheme?
The biggest losers, at least early on, could well prove to be hospitals in the middle of the quality continuum, notes Arnold Epstein, chairman of Harvard’s Department of Health Policy and Management. That’s because the worst-performing hospitals have the most room to improve — making them candidates for bonuses.
In other words, a hospital whose performance stayed at the 70th percentile could be penalized so that a bonus could be given to a hospital rising from the 5th percentile to the 35th percentile. This is an idea so dumb only a government bureaucrat could think of it.
Here’s news flash. A hospital cannot stay open if it is paid less money for its services than it costs to provide those services. In 1980, before Medicare began implementing its various price control schemes, there were 7,000 hospitals in theU.S. Now, there are fewer than 5,000. Many rural areas have no hospital at all.
The primary effect of government price controls, as any economically literate person knows, is shortages. Unfortunately, our masters in Washington have never absorbed this blindingly obvious fact. Thus, they will continue to produce schemes like this latest P4P boondoggle, and the inevitable result will be widespread shortages of primary care and hospital services.
And don’t forget: Medicare doesn’t own any hospitals or employ any physicians. Yet its bureaucrats are using the power of the purse to do serious damage to the health delivery system. How can anyone with an IQ exceeding single-digits think this situation will improve if we give these clowns the whole system?
A favorite talking point of the anti-market crowd holds that Health Savings Accounts won’t work because they will undermine the beneficial effects of large all-inclusive “risk pools.”
HSAs would, according to the “risk pool” argument, create mutually exclusive insurance markets for the “healthy and wealthy” and the “sick and poor,” allowing insurance companies to pillage the latter. The problem with this meme is summarized by David Gratzer in The Cure:
The flaw in this … argument is that there really is no nationwide pool of insured people that cross-subsidizes each other’s premiums … Insurance companies do not cross-subsidize each other.
In other words, HSAs cannot drain the “healthy and wealthy” from risk pools—because such pools do not exist. In fact, as Gratzer explains, they don’t even exist within individual insurance companies:
Even within large insurance carriers there are separate pools across different states and for various types of customers.
So, the idea that Health Savings Accounts will allow low risk patients to abandon their high risk brethren to the depredations of “big insurance” is based on a myth.
I have commented before on the determination of “universal health care” advocates to promote their agenda even if it means ignoring the voters and their elected representatives. One could hardly ask for clearer a demonstration of this arrogance than the recent actions of Governor Rod Blagojevich of Illinois.
At issue is the expansion of an Illinois program financed by federal SCHIP funds. Ignoring the intended purpose of these funds (i.e. to cover low-income children), Blagojevich wants to divert the money to adult coverage. The Chicago Sun-Times reports:
Blagojevich said Monday he’s going ahead with plans to add about 147,000 parents and caretakers to the Family Care insurance program, despite lawmakers’ objections.
Apparently unaware of constitutional limitations on his office, Blagojevich believes that the Illinois governorship confers dictatorial powers:
“I’m going to continue to do what I think is right, and that’s one of the good things about being governor,” Blagojevich said at a news conference in Chicago. ”You can do things like this.”
Understandably, members of the state legislature are not amused by the governor’s delusions of grandeur:
Lawmakers insist he doesn’t have the authority to spend money on programs and services not approved by the Legislature.
State Senator Brad Burzynski expressed his frustration as follows:
“I’m thoroughly amazed by his attitude and his agency’s. Never have I seen anything like this from any administration.”
But Mr. Burzynski is destined to see more of such behavior. The advocates of socialized medicine don’t care about the democratic process. They are determined to force their agenda on the country, and they regard legal and constitutional limitations as mere inconveniences.
I have been fearful that John McCain’s occasional use of phrases like “safe importation of drugs” meant that he was eventually going to endorse the re-importing of pharmaceuticals from Canada. Alas, AP has confirmed my fears:
Republican presidential contender John McCain on Saturday said he wants to again allow the importation of prescription drugs from Canada as a way to bring health care costs under control.
Although I have discussed various arguments against this notion before, the myth that re-importation will reduce domestic drug prices deserves to be debunked again. As Nina Owcharenko, of the Heritage Foundation, puts it:
Economists, both liberal and conservative, agree that drug prices will not drop in the United States as much as they will rise abroad. The Congressional Budget Office concluded that allowing importation would reduce prescription drug spending by only about 1 percent and that importation from Canada would result in a “negligible reduction in drug spending.”
In promoting this bad idea, McCain joins the dubious company of Hillary Clinton and Ron Paul. That he has aligned himself with a confirmed statist like the former and a certified wackjob like the latter should give his supporters pause.
One the weirdest delusions nursed by advocates of “universal coverage” is their belief that a state decree requiring everyone to buy insurance will solve the uninsured problem. Like so many ideologically-driven fantasies, this delusion has not been treated well by the world of objective fact.
Exhibit A in the case against mandated universal coverage is the Massachusetts meltdown. The public has been subjected to an enormous amount of propaganda about Romneycare, but the fact is that it began disintegrating as soon as it came in contact with the real world. As Sally Pipes puts it:
Romney’s Massachusetts plan has been troubled from the start, performing particularly well with members of the media but less well with the premium-paying public. Universal coverage was jettisoned almost at the outset, when officials accepted the argument that the plans were not affordable for 20 percent of the uninsured.
And just weeks before go-live, the situation has not improved. Michael Tanner points that out at the Cato blog:
The latest reports from Massachusetts warn that with just seven weeks left until the state’s mandate for individual health insurance goes into effect, more than 100,000 residents have failed to buy the required insurance. That represents nearly 20 percent of the state’s uninsured population and more than half of the uninsured with incomes too high to qualify for subsidies.
No matter how many lame excuses are offered up by advocates masquerading as policy analysts, the Massachusetts experiment is failing because it’s a bad idea that ignores the basic laws of economics.
A new study has identified yet another problem with state and federal laws requiring people to carry health insurance. Not only do such mandates encroach on our basic liberties while failing to achieve their ostensible goal of providing for universal coverage, they increase unemployment:
Laws that require employers to provide health insurance to employees will cause one in 10 of those workers to lose their jobs, according to a report on health-care reform.
Like arbitrary increases in the minimum wage, health insurance mandates increase costs for small businesses. These small businesses are then forced to cut costs anywhere they can:
The cost of providing health insurance is so great that most businesses covered by ‘pay or play’ laws will be forced to cut back on hours and jobs just to stay afloat.
And, as usual, it is low-income workers who will be hurt the most by government meddling in the market:
The “working poor” earn too much to qualify for and benefit from proposed laws that would mandate employer-sponsored coverage. Many other low-wage workers would get no benefit because they would no longer have a job.
I’ve said it before, but it bears repeating: mandates don’t have magical powers. If the market distortions that lie at the heart of the uninsured problem aren’t addressed, arbitrary government decrees will only produce more market distortions.
Even the LA Times is getting heartburn over Hillary Clinton’s’s refusal to release records and memoranda relating to her health care task force:
Sen. Hillary Rodham Clinton presents herself as the candidate best able to give the nation better healthcare at lower prices, thanks in part to the searing experience she gained in trying to overhaul the healthcare system during her husband’s presidency … But a big part of that history is being concealed. Hundreds of pages of memos and correspondence involving the healthcare plan of the early 1990s have been withheld.
Hillary has responded to increasing pressure by telling a series of hopelessly implausible whoppers to the effect that she has no power to release the paperwork. But many are skeptical, including former Democrat senator Bob Kerrey:
If these documents were negative to [Clinton campaign rivals] Barack Obama, John Edwards or Rudy Giuliani, they would be out yesterday.
Hillary wants to be President. Shouldn’t we get a look behind the curtain to see how skillfully she manages the wheels and gears of executive power?
While our “leaders” in Congress debate expansion of the State Children’s Health Insurance Program, the voters of Oregon have resoundingly rejected a similar effort in their state. Per the WSJ:
Oregon voters passed judgment Tuesday on a plan that would have made their state children’s health insurance program “universal” … the referendum took a major shellacking, with voters siding three to two against.
Which begs the following question: If the advocates of “universal” health care can’t get it done in the deep blue state of Oregon, where can they get it done?
A central issue in the debate over health care reform is spending. The consensus seems to be that the steady increases we have seen in health care expenditures as a percentage of GDP are symptomatic of a dysfunctional delivery system badly in need of repair.
Not everyone endorses this gloomy perspective, however. In a recent article in the Quarterly Journal of Economics, Robert E. Hall and Charles I. Jones argue that, as our incomes grow, it makes perfect sense to invest more money in good health and longer life:
Is the growth of health spending a rational response to changing economic conditions—notably the growth of income per person? We develop a model based on standard economic assumptions and argue that this is indeed the case.
Unfortunately, being economists, these guys use a good bit of impenetrable jargon:
Standard preferences—of the kind used widely in economics to study consumption, asset pricing, and labor supply—imply that health spending is a superior good with an income elasticity well above one.
Huh? All they’re saying here is that health care is a species of luxury good. Thus, as our disposable income increases, we choose to devote more of it to health care. And, Lefty agitprop notwithstanding, we’re getting our money’s worth.
Over the past half century, Americans spent a rising share of total economic resources on health and enjoyed substantially longer lives as a result.
Something to think about the next time some advocate of government-run health care uses rising costs as a justification for turning our entire medical delivery system over to Uncle Sam.
Ezra Klein touts the latest Commonwealth Fund agitprop as proof that American health care is going to Hell in a hand basket. Ironically, in his zeal to trash the U.S. system, he fails to notice that many of the survey’s findings undermine the case for universal health care. For example:
- The U.S. had better wait time stats for non-emergency surgery than any of the countries sporting “universal coverage,” except for Germany.
- Exactly the same percentages of Canadian, Australian, and U.S. patients reported inconvenience accessing care on weekends, nights, and holidays.
- The percentages of Canadian and U.S. patients reporting medical errors were comparable, particularly when the margin of sample error is considered.
- Fully 19% of Australians and 12% of Canadians had out-of-pocket medical expenses exceeding $1,000, their “free” coverage notwithstanding.
The significance of these data is pretty hard to miss. Despite enjoying “universal coverage,” Canadian and Australian patients face many of the same problems that irritate U.S. patients.
This will suggest to anyone not imbued with progressive piety that “universal coverage” is no panacea for America’s health care ills. Not that objective data matter greatly to Klein and his fellow zealots.
A lot of donkeys are braying about Rudy Giuliani’s radio ad in which he has the audacity to applaud the American health care system. Specifically, they’re making a din about Hizzoner’s comparison of U.S. and British survival rates relating to prostate cancer:
My chance of surviving prostate cancer — and, thank God, I was cured of it — in the United States? Eighty-two percent. My chance of surviving prostate cancer in England? Only 44 percent under socialized medicine.
The percentage of people diagnosed with prostate cancer who die from it is much higher in Britain than in the United States … 57 percent of Britons diagnosed with prostate cancer died of it; and, consequently, just 43 percent survived.
And here’s how the latter brings the point home:
Nationally, American cancer survival rates are significantly better … And here is the politically salient question: If you have cancer, would you rather be an American with insurance or an Englishman without? The answer is obvious.
Indeed it is. Giuliani’s political ad, like all examples of the genre, makes considerable use of hyperbole. But no matter how much racket the jackasses make, his basic point is irrefutable.
+ May 2009
+ May 2008
+ May 2007