Setting up a health insurance system that offers the right incentives to patients and providers for cost-effectiveness and innovation is a fundamentally difficult task, and those practical challenges don’t disappear just by invoking talismanic phrases like “universal coverage” or “single-payer.”
The worst thing about Obamacare is not the web site glitches or the employer mandates or even the high marginal tax rates. The worst thing is that the Obama folks regard catastrophic health insurance (what I call “real insurance”) as bad and they view “insurance” that covers every little expense as good. I think it’s the other way around.
Even if you think that people will skimp on checkups if they have catastrophic coverage, then the right policy is to subsidize checkups, not insulate them from the cost of all medical services.
I like to say that as individuals, we want unlimited access to medical services without having to pay for them. Comprehensive health insurance does offer that. However, collectively, that does not work. If medical services aren’t rationed by individuals making choices, they have to be rationed by bureaucrats.
That brings us to the Independent Payment Advisory Board, or what Sarah Palin called the death panels. The IPAB is the only economically meaningful mechanism for reducing spending under Obamacare. Fifteen bureaucrats in Washington will tell doctors and patients what to do and what not to do.
If Obamacare remains in place, then I predict that in ten years IPAB will be the most powerful agency in Washington. More powerful than the Fed, the NSA, or the IRS. In fact, the health care reformers on the left want it that way. Former Senator Tom Daschle explicitly said that we need something like the Fed to run health care.
Have a nice day.
Well, from the little I’ve read about it, the IPAB may be a little TOO independent, actually, meaning there are some questions about the legality of the power and influence the IPAB is supposed to begin peddling…er, pardon me, exercising. If it is going to become as powerful as you think, it’s going to have to beat some legal challenges on its way to becoming so.
If we have a regime like the current one, legal challenges mean nothing.
The prospect of a legal challenge depends on who the judges are. The Democrats intend to pick all the judges from now on. If you think the Republicans are going to hold both the White House and the Senate after 2016, you’re an optimist. Given the GOP’s poor record in Capitol Hill showdowns, the Democrats can get their way just by holding one or the other. And that’s just in the short term.
In the long term, the Democrats are confident – based on demographic shifts (cheered on by myopic free-marketeers and libertarians), brainwashing of millenials, identity politics, and general Republican political ineptitude – that they will not be held to account for the degradation of the quality of health care for the middle and working classes that the IPAB will eventually implement. Much to my regret, I think their confidence is justified. The VA scandals are a window into what is in store for the vast majority of us. As Arnold says, have a nice day.
You gents are overlooking the fact that the IPAB may very well come under assault from the left when some gay homeless guy can’t get a liver transplant.
You’re assuming that the Left genuinely cares about the poor. I think what they really care about is being in control of the rest of society, and all the jazz about caring for the poor and “social justice” is just a rationalization of their will to power. But perhaps I’m unduly cynical.
djr, please be assured it’s not cynicism. It’s observation and math.
I disagree healthcare is desired, to be healthy is desired. I want as little healthcare as I can get away with as it is generally inconvenient, time consuming, and painful, even if free. If healthcare is what it should be, the necessary, not the desired, then experts should be deciding, and insurance should be reserved for the desired.
You obviously have never met my mother, who is a health care super-consumer because she doesn’t have to pay for anything. She recently went to the emergency room for some minor back pain because she wanted a prescription and it was the weekend and her regular doctor was unavailable. Total bill for a few minutes of visit and some pills of mild painkiller? Over $1K. She would have popped an ibuprofen and forgot about it if her copay was greater than $10, but it’s only $3. Have a nice day.
I am the opposite of your moms. I was going to ask how healthcare became a positional good but your example reminds me there are people who love being catered to even in a medical setting.
My experience with elderly relatives is similar, and I am at a loss, like Lord, to understand it. Maybe when I am 65 and looking at the Grim Reaper around the corner, I, too, may be seeing 4 different specialists every 3 to 6 months.
I would say the error is in the expert spending that much on it rather than her seeking it and unless the system can be designed to change that, then what she pays will be irrelevant, after all, if she were destitute, she would not have to worry about any costs and higher costs will just assure she arrives there sooner.
There is also an issue of shopping for price and of do it yourself, it is not only either you get care or not.
Examples:
1. Some Mexican Americans and many Amish folks go to Mexico of cheaper care.
2. Some people go to the ER for care that can be gotten elsewhere cheaper.
3. One can evidently often save large amounts of money by traveling within the USA for care.
Arnold, I couldn’t agree with you more. I’ve worked for about 15 years as both a consultant and banker in the health care sector, and my experience has been that the primary driver of increasing costs is that their is a big difference between the users of health care, and who pays for it, at least on a procedure by procedure basis. Until this fundamental issue is addressed, be it for Medicare, Medicaid, ACA or whatever, the system will continue to be dysfunctional and expensive. The analogy that I like to use is that if auto insurance was structured similar to health insurance, your insurance company would be responsible for paying for each oil change, each time you put air in your tires etc. Although perhaps some people would benefit, anyone with an iota of mechanical aptitude and common sense would likely pay more, due to the perverse incentives to run your car into the ground and have your insurer pay for the repairs.
Have a NICE day, more like. NICE is the British equivalent (http://en.wikipedia.org/wiki/National_Institute_for_Health_and_Care_Excellence) and it’s been about for closer to 20 years now. It’s more powerful than anything IPAB will be able to do, since healthcare is mostly nationalised in Britain. I think Americans may really overestimate how terrible such an institution is. British people are mostly happy with the healthcare provision they get, and there’s no talk of “death panels” and in fact hardly anyone complaining about NICE at all. The biggest concern should perhaps be that a US federal agency will be run far less competently than an equivalent British one, and I would say this is not a crazy belief to have.
The problem many of us could see with IPAB in the USA is that because of politics it might OK expensive care that that does not show net benefits, for example for the politically powerful elderly.
In my research, the greatest driver of health costs are expensive procedures that actually work (bypasses, transplants, chemotherapy, et al)
The IPAB will never go near these, and thus will have a very marginal impact on costs.
There is at least in theory a debate we could have as follows:
is it worthwhile to have attentive medical and mental health care for free during one’s entire old age, but then get no extraordinary care when death approaches?
This is to some extent what Britain does. Ambulances are free, public health nurses will visit you for free, drugs are cheap, etc………but if you get terminal cancer, bye-bye.
I do not think that the American political system could stand the honesty of that discussion. Our desire to save lives runs too deep I think.
Here is Dr Nortin Hadler on heart bypass:
Your book makes the case that too many people are having bypass surgery without much advantage. Under what circumstances do you think bypass surgery is appropriate?
H: None. I think bypass surgery belongs in the medical archives. There are only two reasons you’d ever want to do it: one, to save lives, the other to improve symptoms. But there’s only one subset of the population that’s been proved to derive a meaningful benefit from the surgery, and that’s people with a critical defect of the left main coronary artery who also have angina. If you take 100 60-year-old men with angina, only 3 of them will have that defect, and there’s no way to know without a coronary arteriogram. So you give that test to 100 people to find 3 solid candidates—but that procedure is not without complications. Chances are you’re going to do harm to at least one in that sample of 100. So you have to say, “I’m going to do this procedure with a 1 percent risk of catastrophe to find the 3 percent I know I can help a little.” That’s a very interesting trade-off.