[March 31, 2008 @ 3:36 pm] David Catron

Single-payer activists tell us that Medicare-for-All would be nothing like socialized medicine because health care providers would not be directly owned and operated by our masters in D.C.  In the real world, however, the golden rule (He who has the gold, rules.) applies to health care just as it does to everything else.

If government bureaucrats control who gets paid and how much, they may as well employ the doctors and own the hospitals. Anyone doubting this should read Jerry Cromwell’s post at Health Affairs, in which he describes how Medicare’s clumsy cost control strategies have destabilized acute care hospitals:

Stability reigned until Medicare’s per case bundled payment arrived, reinforced by aggressive government denials of inpatient coverage for simpler procedures (e.g., laser eye surgery). Stays became shorter, and less complex surgery migrated to ambulatory settings …


Acute inpatient surgery became far more complex and much more costly, on average. It also involved a higher proportion of uninsured patients as ASCs siphoned off better-paying patients … the industry was hemorrhaging inpatient cases that left many fixed costs of operating a full service facility uncovered.

All of this disruption might have been worth it if the goal of saving money had been reached. But health care inflation continues apace, Medicare is in serious financial trouble, and the patients are coughing up more out-of-pocket money than ever before. Moreover, it has created a whole new problem—-physician-owned ASCs and specialty hospitals:

ASC and specialty hospital physician-owners refer uninsured and Medicaid patients to acute hospitals more often … ASCs and specialty hospitals reap the benefits of physicians referring more complex, costly patients to acute general hospitals while focusing on less complex, more profitable patients …

This has, of course, done considerable damage to acute care hospitals. And the vicious cycle of meddling continues as various interested parties request (you guessed it) more government intervention. Cromwell himself, apparently missing the larger significance of his own analysis, thinks the solution is government-imposed “universal coverage.”

The real solution is, however, less rather than more government. There’s a lesson here for anyone capable of thinking outside of the ideological box: When government controls the purse strings, it can and will control the health care delivery system. Thus, there would be no practical difference between Medicare-for-All and socialized medicine.

[March 30, 2008 @ 3:19 pm] David Gratzer
[March 28, 2008 @ 11:39 am] David Catron

Yesterday, two friends with finely-tuned BS detectors e-mailed me the link to Jacob Hacker’s recent paean to government-run health care. I’m glad they did, for if ever an article needed debunking this is it. I realized that when I saw that Hacker begins the piece a red herring:

‘Socialized medicine’ is the bogeyman that just won’t die … The epithet has been hurled at every national health plan since the New Deal … Republicans from President Bush on down have invoked the specter of socialism …

Yawn … Needless to say, none of this BS addresses the serious arguments that have been made against government-run health care. When Hacker finally gets to the substance of the debate, he deploys the usual tired canards. He even drags out the hoary “just look at Medicare” meme:

To see the advantages of public insurance, just look at the program that once prompted the fiercest charges of socialized medicine, Medicare. Since the introduction of cost controls in the 1980s, Medicare’s expenditures have grown at a substantially slower rate than spending on private insurance …

Evidently, Hacker hasn’t heard that Medicare is going broke. Just this week, the Medicare trustees called (yet again) for serious reforms that will prevent a fiscal train wreck. Having thus demonstrated his ignorance about Medicare, Hacker then proves he knows nothing about health care inflation:

Medical inflation in most of the industrialized world has slowed dramatically, as the health policy specialist Chapin White has shown. But without such coordinated restraint, U.S. spending on health care has continued to rise rapidly.

Sorry, dude, wrong again. As Michael Tanner demonstrates in a recent analysis (to which I link in this post), rampant health care inflation is a global phenomenon. Hacker also demonstrates that he hasn’t done his homework on the history of health care in the United States:

Back in the 1940s and ’50s, corporate America promoted private benefits as an alternative to government insurance on the grounds that they offered better value … Corporate America, too, seems more ambivalent than ever about the Faustian bargain it made to kill national health insurance in the 1940s.

As anyone who has bothered to do the reading knows, corporate America got involved in health care when the government froze wages while making insurance premiums tax free. In other words, the government that Hacker so admires created the mother of all perverse incentives.

These items represent but a taste of the dishonesty and ignorance that pervade Hacker’s op-ed. Nonethless, the usual suspects have quoted this drivel as if it were a serious contribution to the debate. By doing so, they demonstrate that they are so steeped in their ideology that they are incapable of critical thinking.

[March 25, 2008 @ 10:58 am] David Catron

Michael Tanner of the Cato Institute has written an excellent policy analyis showing that the health care systems of other countries often don’t live up to the claims made for them by American advocates of government-run health care. His findings include the following:

  • Health insurance does not mean universal access to health care.

  • Rising health care costs are not a uniquely American phenomenon.

  • In countries emphasizing government control, patients face waiting lists and rationing.

  • The most successful nationalized systems incorporate market mechanisms.

One of the most interesting features of Tanner’s analysis is his international comparison of out-of-pocket patient spending. In 8 of the 12 countries examined, patients cough up more of their own money as percentage of total health care expenditures than we do in the U.S.

As shown on page 27 (figure 4), the citizens of Canada, Norway, Japan, Italy, Portugal, Spain, Switzerland and Greece face higher out-of-pocket expenditures than Americans. Moreover, out-of-pocket expenditures in France and Germany are about the same as ours.

This is a long paper (about 35 pages, not including the notes), but it is well worth the time it takes to digest it.

[March 23, 2008 @ 9:44 pm] David Catron

The National Federation of Independent Business recently hosted a mandate debate between Michael Cannon of the Cato Institute, Sherry Glied of Columbia University, Bob Moffit of the Heritage Foundation, and Peter Harbage of the Center for American Progress.

Cannon, at one point in the discussion, questioned the fairness of forcing healthy young people to buy insurance when they may wish to use their resources for other priorities. Glied, who supports mandates,  responded with the following example of liberal fascism:

I don’t think there is anything objectionable to the idea of the government saying, ‘Look, you may have your own list of priorities, but we want you to reorder them a little bit.’

The other day, I wrote a post about the paternalism that animates the pro-mandate crowd. Well, one could hardly ask for a clearer confirmation of their condescending attitude than Glied’s statement. They believe that government is more qualified to set your personal priorities than you are.

Moffit also makes some good points against mandates. A video link to the whole debate can be found at Cannon’s latest post at the Cato blog.

[March 20, 2008 @ 3:27 pm] David Catron

Megan McArdle is uneasy with the condescending attitude toward the hoi polloi that informs ”progressive” enthusiasm for health insurance mandates:

I’m persistently disturbed by the notion that most of our fellow citizens are intellectual children who need to be forced to do what is good for them even at massive cost to their liberty, and ours.

This was written in response to the following blather from the ever-clueless Ezra Klein:

Mandates matter because, sometimes, folks have to be protected from their worst instincts. That’s why we force everyone to pay into fire departments through taxes.

The fire department meme is, of course, a perennial favorite of single-payer advocates, and McArdle exposes its essential ignorance:

This is not true. We force everyone to pay into fire departments because fires have very bad negative externalities: if your house catches on fire, unless you live on a rural farm, there’s a good chance that your neighbor’s house will burn down too.

Klein—like most advocates of government-run health care—is too lazy to learn the fundamentals of economics, yet he and his fellow travelers want to “protect” us from ourselves.

McArdle is right to be disturbed by the paternalism that animates single-payer advocates. At bottom they are nothing more than busybodies who want to run our lives for us.

It is from them that we need to be protected.  

[March 19, 2008 @ 7:40 am] David Catron

The vaunted Massachusetts “universal coverage” plan has let so many patients fall through the cracks that a key Boston health care system is going broke providing care to the uninsured. The Boston Globe reports that Cambridge Health Alliance is facing a “catastrophic” loss:

The alliance … says it is being hit hard by the state’s new healthcare reform law, which has left it responsible for providing free care for those without insurance while reducing the hospitals’ compensation for such services.

This system has historically treated a lot of uninsured patients and been compensated by the state for doing so. But when “reform” was enacted, funding for such care was slashed. No one panicked, though, because the plan was going to fix the uninsured problem. Oops!

Despite the state’s efforts to enroll all low-income residents in free or subsidized insurance programs, many still do not have coverage.

The result will be a $25 million loss for the Cambridge Health Alliance and a probable reduction in force affecting 300 jobs. And, the fantasies of “progressive” health care wonks notwithstanding, no hospital system can survive for long in the face of such losses.

How could this happen? The Massachusetts health care initiative was all about universal coverage. It even came with the kind of health insurance mandate that politicians and pundits keep telling us is the key to making reform work.  So, what gives?

What gives is reality. The whole universal coverage movement is based on the myth that the uninsured problem is the primary challenge facing American health care and that government can fix it with some silver bullet (like mandates).

As I have said before, the uninsured problem is a symptom. Any reform effort that focuses on that issue without addressing the underlying disease (government interference in health care)  is doomed to failure. How many hospitals and doctors will be driven out of business before our “leaders” face this reality?

[March 15, 2008 @ 9:17 pm] David Catron

The WSJ Health Blog notes that Wal-Mart has saved its customers more than $1 billion with its $4 generics program:

Wal-Mart’s doing a bit of chest thumping this morning, claiming that its $4 generics program has saved consumers $1 billion — $1,032,573,012.61 as of March 10, to be precise.

These savings were brought about not by government cost controls but by that bête noire of faux-progressives everywhere—free market competition. And it is probable that actual consumer savings far exceed the Wal-Mart numbers:

The ripple effects of the program may have driven additional consumer savings, the company pointed out. Competitors including Kroger and Target followed Wal-Mart with their own $4 generics programs.

The market works, folks. Wal-Mart wants customers in its stores rather than those of its competitors, so it provides cheap genereic drugs to draw them in. If the government would get the hell out of the way, similar things would happen throughout health care.

[March 13, 2008 @ 3:40 pm] David Catron

An Ontario woman did not rate timely care despite a cancer diagnosis and a huge tumor. Per the Globe & Mail:

Inside Sylvia de Vries lurked an enormous tumour and fluid totalling 18 kilograms. But not even that massive weight gain and a diagnosis of ovarian cancer could assure her timely treatment in Canada.

So, where do you suppose she had to go to get treatment? She was, of course, forced to seek care south of the border:

Fighting for her life, the Windsor woman headed to the United States. In Pontiac, Mich., a surgeon excised the tumour – 35 centimetres at its longest – along with her ovaries, appendix, fallopian tubes, uterus and cervix.

A happy ending? Not quite. Canada’s vaunted health care system decided to add insult to injury:

The Ontario Health Insurance Plan says it won’t pay for the $60,000 cancer treatment because Ms. de Vries did not fill out the correct form seeking preapproval for out-of-country care.

This is typical of Canadian health care folks: lousy care, long waits, and bureaucratic paperwork.

And yet our “progressive” friends want us to emulate Canada’s system. Are they really that dumb?

[March 11, 2008 @ 10:48 pm] David Catron

Shawn Tully advises the readers of Fortune Magazine that John McCain’s health care plan is better than the alternatives offered by Hillary Clinton and Barack Obama:

For all its problems, at least it puts the consumer in charge … It will create a world where health care is treated as the precious resource that it is, rather than a costless entitlement; where nationwide competition pushes down the price of catastrophic care and consumers focus their attention and budgets on what’s really crucial to their health.

And what do the Democrat presidential candidates offer?

The Democrat plan exacerbates the fundamental problem in the American health-care system, which is that no one has any incentive to care about price. Creating a huge new medical superstructure would shift far more spending to third-party providers … giving consumers even less incentive to concern themselves with the price of an MRI …

Tully closes with a statement of fact that should be blindingly obvious to any economically literate observer.

The price of health care is never going to get under control until patients get what they deserve: the right to be customers too.

McCain’s health care plan makes it clear that he understands this. It is not by any means perfect, but it is vastly superior to the alternative.

[March 10, 2008 @ 10:23 pm] David Catron

Free market reform advocates object to single-payer health care for a variety of reasons, including our belief that such a system would involve government micromanagement of hospitals and doctors. As if to prove our point, Medicare is about to send out an army of auditors whose primary mission is to put the clinical and billing decisions of providers under the microscope:

‘What we have here is bureaucrats and government contractors coming in and trying to second guess what doctors and nurses have done in a hospital setting,’ said Don May, vice president for policy at the American Hospital Association.

The ostensible purpose of the nationwide audit is to recover overpayments made by Medicare, which sounds innocuous enough. But the CMS bureaucrats have devised a system whose incentives are virtually guaranteed to produce corruption among the auditors. Hows that? Because these private auditing outfits don’t get paid unless they find “errors.”

The program’s critics say that contractors have too much incentive to question as many claims as possible. That’s because they get to keep about 20 percent of the overpayments … The auditors will keep a tidy percentage for their services.

Robert Centor is among those who finds this incentive structure disturbing:

I hope that … bothers you as much as it does me. Clearly the auditors have a financial incentive to err for their own profit.

Why would a physician be worried about this? Well, in a pilot project conducted in three states, a primary (and highly controversial) source of “recoveries” involved the alleged lack of medical necessity for a variety of services:

What gets health care providers most upset is when auditors determined a procedure or hospital admission was not medically necessary.

The auditors will be looking at medical charts for patients long ago discharged from the hospital and deciding retroactively that the doctor should not have ordered a given medical procedure or hospital admission. In other words, CMS has authorized commission-paid hirelings to overrule the decisions of your doctor. 

Once the flying monkeys have descended upon your community hospital and “discovered” all of the “errors,” Medicare automatically deducts the money from current payments. And if the hospital or doctor believes the finding to be unfair, they can appeal to …. Medicare. Anyone want to guess how many decisions get overturned?

This is exactly how a single-payer health care system would work—arbitrary bureaucratic decisions from on high. If this doesn’t scare you, you’re not paying attention. There is no such thing as benign government management.

[March 8, 2008 @ 6:01 pm] David Catron

I love the NHS. It is such a rich source of schadenfreude. Every day it provides fresh evidence that government-run health care stinks. Per Reuters:

A patient was told there was no reason why he couldn’t have surgery in a hospital, despite the smell caused by a dead rodent trapped in the building’s ceiling.

Yep. You read that right. There was a decomposing rodent in the ceiling and the people running the hospital basically told the patient to quit bitching and get on the operating table. The patient declined to do so:

Despite being told that the trust’s infection control experts had stated that Mr Cowper was not being exposed to an infection risk, he decided not to proceed with the operation.

Talk about your temperamental patients! Next he’ll be asking the NHS to meet basic hygiene standards. And who knows how long it will take to get the procedure rescheduled:

Cowper, 19, told the Sun newspaper he had waited 11 months for the operation.

I’m betting that wait will seem like the blink of an eye compared to the time it takes him to get back to the front of the line again.

[March 7, 2008 @ 10:32 pm] David Catron

Most single-payer advocates believe that our health care system would operate more efficiently if it were “managed” by our masters inside the Beltway. David Strom of the Minnesota Free Market Institute uses the following hypothetical scenario to show why they are wrong:

An economist examines consumers’ automobile purchases and comes to the conclusion that the market is completely out of whack … consumers are making irrational decisions about what cars to buy, raising the costs of automobile purchases far above what is economically sensible.

What to do about this awful situation? Get some experts to tell everyone how to spend their automobile dollars! 

Consumers could save huge amounts of money by buying the “best” cars based upon cost, safety, fuel consumption, and other criteria set up by experts. Better yet, by standardizing automobiles society could benefit from diverting enormous resources to other, more worthy social goods.

Sound crazy? Well, both contenders for the Democratic Presidential nomination advocate something very like this for health care. And most “progressives” support their view:

The next wave of health care “reform” is driven by this logic. The solutions being peddled to an unsuspecting public include dramatically more government regulation, imposing “best practices” requirements on doctors and hospitals, and reducing the already restricted consumer sovereignty in health care.

The problem, of course, is that such systems always fail. Why? Because no panel of policy wonks can possibly possess the information conveyed in a market-determined price:

Experts cannot adequately account for diverse consumer preferences; innovation will slow to a crawl as research and development gets centralized; and lack of competition will inevitably cause industry to stagnate and become increasingly inefficient. The history of socialist experiments bears these criticisms out.

Well, Strom must be a knuckle-dragging reactionary who wants to thwart the will of the people and maintain the status quo … right? Wrong.

There is no doubt that our current health care system needs reforms … The solution, though, is not more government intervention in the system, but less.


The logic of consumer sovereignty which works in the automobile, housing, food, and consumer products sectors of our economy should be applied to the medical sector as well.

Is it really that simple? Yep.

[March 6, 2008 @ 8:01 am] David Catron

Jonathan Cohn is more thoughtful than most journalists who write about health care (admittedly, not a high bar to get over), but his mistrust of the market usually leads him astray on the question of reform. Thus, when he pans John McCain’s proposals, it suggests that the Senator is on the right track:

The main thrust of [McCain’s] plan is to change the tax treatment of health benefits … so that people have more options for insurance … and grow more sensitive to how much their health care costs.

This would be an excellent policy. Perverse tax incentives have created many of the problems that bedevil U.S. health care. Predictably, Cohn dislikes the idea and attempts to make it sound scary by conjuring up the dread spectre of adverse selection:

It’s quite possible that only relatively healthy people would opt into the individual market … Once these more robust specimens fled employer groups, however, the cost of insurance for those remaining behind would go up …

The problem with this argument, as I have pointed out before, is that it assumes a cross-subsidization of insurance premiums that simply doesn’t happen in the real world. And, as if to prove that he doesn’t understand economic incentives, Cohn goes on to praise one of the worst flaws in McCain’s plan:

[McCain] understands that we waste all sorts of money on care that is either unnecessary or counterproductive. To thwart this, he has embraced an idea known in wonkier precincts as ‘pay-for-performance.’

The most ironic aspect of Cohn’s enthusiasm for P4P is that it would produce something closely akin to … well … adverse selection. As soon as providers start getting dinged for the poor outcomes that inevitably accompany the chronically ill, they will begin “firing” those patients.

Exacerbating the various logical flaws in his argument, political bias keeps popping up in Cohn’s analysis of McCain’s health care positions. He solemnly advises his readers of the Senator’s most irredeemable flaw:

He’d act less like [Teddy Roosevelt] than William Howard Taft-and even a little like George W. Bush … President Bush has embraced these ideas …

Cohn is wrong about health in general and McCain’s plan in particular. McCain’s health care policy positions are not without flaws, but they are vastly superior to anything proposed by Hillary Clinton or Barack Obama.

[March 4, 2008 @ 1:27 pm] David Catron

The state of California has decided to slash Medicaid payments to physicians by more than $50 million. AMNews reports that Dr. Richard Frankenstein, President of the California Medical Association (CMA), thinks the state has created a monster:

Cutting funding for health services, particularly when it costs California valuable federal matching funds, is neither humane nor financially sound.

He’s right, of course. The cuts are indeed inhumane because they will reduce primary care access for California’s poorest patients:

A 2001 California HealthCare Foundation survey found that 55% of primary care doctors and 50% of specialists accept Medicaid patients. The new Medicaid cuts mean these numbers will decline further.

And they are fiscally irresponsible because these patients will have to avail themselves of the more expensive ER alternative:

More program enrollees will wind up in the emergency department because they could not get primary care … They’re going to end up going to the hospital at the last minute and getting very expensive care.

The CMA plans to fight the cuts. It’s probably an exercise in futility, but Dr. Frankenstein hopes to stitch together a compromise:

We absolutely do not think this is set in stone, and we are exploring our options about what we can do to turn it around.

This is what always happens when government controls the health care purse strings. Arbitrary funding cuts are a way of life.

Government-run health care is an unholy monster, cobbled together from the corpses of failed Lefty ideas. It needs to be destroyed once and for all.

[March 2, 2008 @ 10:13 am] David Catron

In January, I wrote about Canadians coming to the U.S. in search of I.C.U. beds. Well, it would appear that emergency cardiac patients are also being rushed southward for care. The Globe & Mail reports the following:

421 emergency cardiac patients have been sent to the United States from Ontario since the 2003-2004 fiscal year to Feb. 21 this year.

Many of these patients receive unsuccessful treatment in Canadian hospitals and must be sent to the U.S. for heart catheritization.  The Globe & Mail describes the case of Kaukab Usman: 

[Usman] had a heart attack after a gym workout in Windsor on Dec. 9. She was rushed to hospital and given clot-bursting drugs. When they failed, she was sent to Henry Ford Hospital in Detroit, where she had angioplasty on one clogged artery and two stents inserted.

So, why is the vaunted Canadian single-payer system unable o provide proper care for these patients? Canadian Medical Association president Brian Day offers the following:

‘We keep coming back to the same root cause,’ Dr. Day said in a telephone interview from Ottawa. ‘The health system is not consumer-focused.’

In other words, the people who run Canada’s single-payer system are insulated from their “customers,” and thus have no incentive to provide good service.

We are told that government-run health care would be cheaper and more efficient that the current U.S. system. Well, the costs of Canada’s system are rising at unsustainable rates and it can’t provide necessary care.

Is this the kind of system we need in this country? I don’t think so.