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Tilting at Windmills

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February 8, 2008
By: Kevin Drum

THE HEALTHCARE INSURANCE BIZ....Tyler Cowen argues against healthcare mandates:

The way most goods and services become excellent — I mean really excellent — is through competition. Yes, right now health insurance has lots of screwy incentives, most of all cost shedding. But if you stifle competition and write off hope of getting a better-functioning private insurance market...well...I believe you have not thought long and hard enough about just how much of the social value on Planet Earth has come, ultimately, from competition in the provision of goods and services.

....If someone needs covering, for whatever reason, give them some stuff. If need be give them some government stuff. Some kind of plan. Give them whatever. But don't overregulate private insurance companies and take them off the table as a source of future productivity improvements and super cheap coverage, however partial it may be.

Here's what I don't get. If you were to argue that we should do away with group insurance entirely and move back to a 19th century model in which people simply pay doctors and hospitals for their services directly, I'd get it. I wouldn't be in favor of it, but at least I'd understand the argument: namely that this sets up a competitive industry with plenty of price signalling, and competitive industries are, in the long run, the most efficient and most innovative.

But that's not what's on the table. Instead, Tyler is arguing for keeping the insurance industry competitive. But I simply don't see what that buys us. Even if the health insurance industry were dramatically improved, this wouldn't especially make healthcare any more efficient. It would only make the insurance industry more efficient. That would be nice, but hardly earthshaking — and in any case, many decades of keeping healthcare insurance regulation at a modest level have produced one of the least efficient industries on the planet. What makes us think that's going to change anytime in the near future?

Competitive industries, generally speaking, are good things. But right now in the United States we have a Rube Goldberg system that gives us the worst of both worlds: the administrative inefficiencies and lack of universality that comes from a private system, combined with the bureaucracy and lack of effective price signalling that comes from shielding consumers from having to pay for healthcare directly. The former could be addressed with national healthcare, which is difficult but at least feasible. The latter, conversely, could be addressed only by getting rid of employer-supported healthcare and forcing consumers to buy either health insurance or health services directly with their own money. That's just flatly not going to happen. It's an absolute political nonstarter.

It seems to me that libertarians would be better off accepting that, and instead spending their time figuring out the best possible way to construct a national health plan that still retains elements of competitiveness and incentives to innovate. It wouldn't be perfect from their point of view, but it would be better than banging their heads against a wall that just gets higher and harder every year. Healthcare is an unusual market, and it's one in which "insurance," which is something of a misnomer in the first place, simply hasn't produced either innovation or lower costs, and probably never will. Why keep fighting for it?

UPDATE: Matt unpacks "It's an absolute political nonstarter" here and makes the appropriate point a little more plainly than I did: a more efficient health insurance industry might be a good thing in some purely economic sense, but it would produce results that are wildly unacceptable to the electorate. It ain't gonna happen.

Kevin Drum 2:21 PM Permalink | Trackbacks | Comments (67)

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Comments

This is an honest question, so please don't attack me: what about the unemployed? I'm as unsympathetic to the "Libertarian" POV as possible, and I'm no friend of Tyler Cowen. HRC, in the campiagn literature I've received, claims she will "provide quality, affordable healthcare for every American..." I'm broke, I can't afford anything. What happens to me? This really seems like a headtax that I would have to pay to corporations.

Posted by: Yes I'm Unemployed...I'm still human on February 8, 2008 at 2:28 PM | PERMALINK

This is another classic example of taking a flawed assumption and running with it - to reach an absurd conclusion.

First - assume competition is always the best way to produce a good or service.

Then argue.

Notice - no empirical data supporting the first assumption.

Are great highways in Germany the result of competition? No.

Are the better cell service available in Europe and Asia the results of competition? Somewhat - but there's a lot of channeling regulation.

Is there any evidence that competition works in the health care industry. NO - the contrary. In fact, health care violates lots of assumptions of Marshall's micro-economic theory. Perfect information, etc.

So once again you get a rather silly circular argument that boils down to this:

I assume that competition is the best and only way - therefore competition is the best and only way!

Posted by: Samuel Knight on February 8, 2008 at 2:29 PM | PERMALINK

I'm aware of the fact that her campaign promises "subsidies" for those who are unemployed. But so what? If the premium is $2000/year, and I receive a subsidy of (say) $50/year, I suppose I should be grateful, but I can't afford $1950 per year.

I actually brought this up at Left Coaster in comments (a pro-Clinton site) and the editor just heaped total scorn on me. Evidently the unemployed are scum and deserve to go to hell.

Posted by: Yes I'm Unemployed...I'm still human on February 8, 2008 at 2:32 PM | PERMALINK

Competition argument is complete B.S.
Anybody who raises it is a fool, ignorant of health system economics, or a lacky.

Competition for what?

Insurance industry competes to select for the healthiest and wealthiest. The compete to avoid insuring anybody who is sick or might get sick. They compete for who can pay out the least in "medical loss" (what you and I call care).

Complete and total nonsense. Even conservative economists who are knowledgeable about health industry actually work acknowledge this.

Posted by: Dr.SteveB on February 8, 2008 at 2:33 PM | PERMALINK

"Competition" is just a buzzword used to justify deregulation. The fact is that too much deregulation is worse than too much regulation. (Try to imagine a sports league with no rules. It might be exciting for a bit, but in the end, it wouldn't work.)

Posted by: Cap'n Phealy on February 8, 2008 at 2:34 PM | PERMALINK

Just to add to what Samuel Knight (accurately) pointed out, the market is always molded by the business governance system. There's no such thing as a "market" that passively churns out correct answers. The market is more like a dynamic optimization program that plots the most efficient path TO the answer set by the governance system, IF you're lucky.

Posted by: James R MacLean on February 8, 2008 at 2:35 PM | PERMALINK

Generally agree. My only thought is that most medical care is local so an individual market, while theoretically more efficient, won't work because doctors and hospitals have local monopolies over treatment, particularly in rural areas. ("I'm having a heart attack! Let's hop a plane to Louisiana for cheaper treatment" doesn't work.)

To the extent that insurers "add value" they do so by negotiating cheaper prices for members. So, I guess if you make that more efficient, that's something.

That said, I think the administrative headaches caused by private insurance outweigh the negotiated cost savings.

Posted by: brad on February 8, 2008 at 2:37 PM | PERMALINK

Instead, Tyler is arguing for keeping the insurance industry competitive. But I simply don't see what that buys us.

Very simple Kevin. It's called the free market. By keeping the insurance industry competitive, we create many different companies from which consumers can buy insurance. If one company is too expensive or their insurance is of poor quality, the consumer can go to another company and get a better deal. Through this process, consumers get what they want at the best price and best quality of product. This is basic economics 101 and pretty easy to understand.

Posted by: Al on February 8, 2008 at 2:38 PM | PERMALINK

This does not surprise me, coming from Tyler Cowen. I often enjoy Marginal Revolution, and his book Discover Your Inner Economist was entertaining.

But the book, which focuses a lot on incentives, misses something basic - incentives are frequently created by those in power, rarely by those who have none. His example of how to have better meetings gives suggestions, none of which can be implemented by the attendees. The convener is generally a manager, who has powerful incentives for meetings to be just as they are, wasteful and long.

Health care can never be a true market, because we regard some level of care as a right. It also suffers from difficulty in market segmentation (I'd like the bargain MRI, please). So applying market discipline to it won't work, because we aren't willing to let the market do what it does, which is ration on some basis (generally, price).

Therefore, we, not as individuals because we don't have the power, have to collectively provide incentives to maximize not profit, but care. If that means dismantling some of the existing structure, so be it (all we have to do is get around the lobbies for doctors, drug companies, insurance companies, for-profit hospital chains,..., hmmmm).

Posted by: androcass on February 8, 2008 at 2:38 PM | PERMALINK

"The latter, conversely, could be addressed only by getting rid of employer-supported healthcare and forcing consumers to buy either health insurance or health services directly with their own money. That's just flatly not going to happen. It's an absolute political nonstarter."

Why would politics be involved Kevin? What's to stop employers from simply deciding to say "screw it" and to stop providing any health care to anyone? Even if this means a one time shot of cost to pay off former employees and increasing current employees' wages because of the freed up money now going to pay for their health insurance, it would remove a major headache for them. Are major employers, say more than 50 employees, now required by law to provide health care insurance for their employees that would require political action to undo?

Posted by: Chicounsel on February 8, 2008 at 2:38 PM | PERMALINK

Competition is only effective when the entry barriers are low. The Free Market is only effective when one or both parties can walk away.

The Health Care industry fits neither of these requirements.

What is needed is a two tiered system like they have in HK. A base level of care from government employed doctors & Hospitals and for people who would prefer private care can purchase their own private health insurance.

Posted by: Dervin on February 8, 2008 at 2:41 PM | PERMALINK

It seems to me that libertarians would be better off accepting that, and instead spending their time figuring out the best possible way to construct a national health plan that still retains elements of competitiveness and incentives to innovate.

Well, at the risk of offending you & yours, Kevin (which I certainly don't mean to do, as they're lovable if round), it seems to me that your cats would be better off spending a little less time at their food bowls, and a little more time scampering around your backyard. Thing is, it just isn't going to happen, so you buy diet cat food & moderate their portions. You do this because you know better & their input isn't necessary. I feel the same way about libertarians.

Whoa -- I feel almost Republican in my desire to force my policies down the throats of the opposition.

Posted by: junebug on February 8, 2008 at 2:42 PM | PERMALINK

Kevin Drum >"...Why keep fighting for it?"

Because it is all they have left ?

Seriously the "no fault" auto insurance solution as well as the "no fault" divorce solution have been more successful than people are willing to admit. How about "no fault" health care ? A person gets what they actually need and those that go out of their way to ignore medical advise pay for it via higher premiums over time. Of course a non externality measuring system would have to be used but that would be an all around improvement for everyone.

Of course that is far too sane a response to ever be take seriously.

And so it goes...

"...it's the ideas that count, not the number of trees you kill to print them." - Phil Carter@Intel-dump.com

Posted by: daCascadian on February 8, 2008 at 2:46 PM | PERMALINK

There's one other factor Cowen -- and many others who discuss this stuff -- keep forgetting:

Medical practitioners.

Yes, the insurance companies are a bloated mess who, IMHO, should be turned into non-profits (a suggestion I've made long before Michael Moore did). And considering all the medical issues I've dealt with, it's a miracle I haven't called for them to be blown to tiny pieces.

But doctors of all stripes, specialists, etc. also need to find a way to cut their costs. Tort reform will only save them so much on their premiums, and they sure as hell won't pass that savings on to their patients.

This isn't to say they should be forced to live like paupers or that they don't deserve to make money. But they are part of the problem when it comes to charging outrageous rates, and that aspect needs to be considered as well.

(And no, I don't have any good solutions. I just find it ricockulous that doctors can charge hundreds of dollars for a few minutes of work, yet no one every bring them up when discussing how to control costs.)

Posted by: Mark D on February 8, 2008 at 2:57 PM | PERMALINK

I'd believe these "free market competition" arguments a lot more if they began with: "First we need to loosen the monopoly stranglehold that the AMA has on the number of medical doctors in the US."

Posted by: Tripp on February 8, 2008 at 3:00 PM | PERMALINK

What this establishes is that Tyler Cowen is an idiot, and his opinions need not be further considered. Variations on universal care are observed to work in all the other developed countries -- better care, cheaper (and it's recently been established that overweight people generally die in cost-efffective ways, so the naysayers don't have that counterargument anymore). If you study a graduate textbook in microeconomics (I'm thinking of Kreps, which my wife used when she got her degree) one of the predicted-by-theory failures discussed is health insurance (especially in a world of genetic testing). The health insurers do not profit by making people live long healthy lives; they profit by avoiding sick customers. Furthermore, if you charge the known-healthy much more than they cost, they will opt out, reducing profit, forcing another rate hike, and another round of opt-outs by the not-too-unhealthy. Repeat this process until nobody is insured. Employer-funded group health sort of works by creating bigger pools of people who are all opted in by default, but that doesn't seem to be doing so well anymore.

It's busted in theory. It's busted in practice. Anyone who claims to be an economist and doesn't know this, is a charlatan, and should be ignored. Take away that man's podium, he does not deserve it.

Posted by: dr2chase on February 8, 2008 at 3:00 PM | PERMALINK

Market Fundamentalism is dogma, and its response to heretical teachings is to ignore them and continue to repeat the same lines (hey, it's better than burning people at the stake).

Well functioning competitive markets require that consumers be knowledgeable about their alternative purchases and be able to calculate the tradeoffs. Otherwise competition won't help. This should be obvious to anybody with half an ounce of common sense (i.e. someone not blinded by false dogma) and which economists like Joe Stiglitz have studied scientifically.

Problem 1: it's hard to get accurate information on health care alternatives. You go to the doctor to find out what you need. While I'm all in favor of educated and appropriately skeptical patients, if you can't rely on your doctor's expertise to some extent, then there's no point in seeing them. Of course the same doctor is likely going to administer any prescribed treatments. Economists will rightly tell you that this is a potential conflict of interest. Of course it's grossly impractical to do it otherwise. Live with it - I'm sorry if that interferes with plans for Libertopia.

Problem 2: insurance companies are also hard to get accurate information on. While medical insurance may cover small things, it's the big ticket items that worry me. As with other types of insurance you pray you don't collect, and collecting is a fairly rare event. Hence you don't get enough information to evaluate the quality of what you're buying.

I could add other problems, like the risk involved in making an error in your choice (very big, hence leading to great risk aversion), the cost of collecting and analyzing what information is available, yada, yada, yada.

Bottom line: any economist who can't see these problems, and how they make the health care market different from the market for shoes, cars, food, housing, etc., etc., etc. is either an idiot, or, more likely, so concerned with keeping allegiance to the Faith of Supposedly Free Markets, that they remain willfully ignorant. Maybe they're doing the right thing - you never know when burning at the stake might come back.

Posted by: alex on February 8, 2008 at 3:03 PM | PERMALINK

The best answer is Medicare For All -- universal, single-payer, nonprofit medical insurance under open, transparent, accountable, efficient public administration.

But we will never have that in the USA, because the "politically possible" goal in the USA is not to provide equitable, efficient, effective medical insurance; the "politically possible" goal is to make the rich and powerful richer and more powerful.

That's why presidential candidates who propose universal, single-payer, nonprofit medical insurance under open, transparent, accountable, efficient public administration are asked questions about UFOs in the fake, phony "debates" sponsored by the giant corporations that own and control the mass media from which most Americans get most of their information.

Posted by: SecularAnimist on February 8, 2008 at 3:04 PM | PERMALINK

Unlike other industries, the "competition" in medical insurance is not to see who can deliver the greatest value at the lowest cost to the consumer.

"Competition" in medical insurance is to see who can collect the most money from consumers while delivering the least value.

Posted by: SecularAnimist on February 8, 2008 at 3:10 PM | PERMALINK

dr2chase: What this establishes is that Tyler Cowen is an idiot ...

That's quite unfair. Tyler Cowen is simply living in the 19th Century and posts to his blog via a time warp.

Posted by: alex on February 8, 2008 at 3:10 PM | PERMALINK

This isn't to say (doctors) should be forced to live like paupers or that they don't deserve to make money. But they are part of the problem when it comes to charging outrageous rates, and that aspect needs to be considered as well.

I'm not a doctor, so I can't speak to this more specifically, but I'm pretty sure it's not the people who are actually practicing medicine who are gaming the system here. I do think they bear some culpability for the way things are, but more because they encourage our insatiable appetites for expensive & frequently unnecessary tests, procedures, & (most of all) pharmaceuticals. I don't think that, with the exception of some specialists, they're living high on the hog -- particularly when you consider their investments in formal & continuing education.

Posted by: junebug on February 8, 2008 at 3:14 PM | PERMALINK

Aside from SecularAnimist, with whom I emphatically agree (as usual), I'm not hearing any response. Since I know a large proportion of the readers of this site are HRC supporters, I was hoping you might have something to say to me. Anyone?

Posted by: Yes I'm Unemployed...I'm still human on February 8, 2008 at 3:16 PM | PERMALINK

If they want competition have them compete against the government. The government will manage healthcare like they already do with medicare. There are approved compensation amounts. If a private insurer can deliver the same services for less than what the government pays, they can keep the difference. Let them earn their profit.

Posted by: coltergeist on February 8, 2008 at 3:16 PM | PERMALINK

What we first need to see is a public plan successfully competing with private plans. What's kept single-payer so politically nonviable is the mistaken notion that "the American government can't do anything right". Well, people need to be *shown* that a public plan can work and that people would prefer the public plan when given the choice. Then you should see enough popular support for single-payer and you would have the administrative capability up and running.

Posted by: Doc at the Radar Station on February 8, 2008 at 3:25 PM | PERMALINK

Not so simple, Al. Corporations do not define efficiency in terms of quality products or customers served, but in terms of profits generated. They happily produce inferior quality as long as consumers buy.

Health insurance companies do not compete for customers by offering the highest quality at the lowest price. They compete with each other for profit by actively avoiding the very customers who need their products the most, or demanding different prices depending on the characteristics of the customers. And they are already quite efficient--they pick and choose whom they will cover, and often refuse to pay valid claims when they guess incorrectly.

Health care simply does not respond well to market forces. Consumers cannot shop for the highest quality at the lowest price--they need service now or they die. Even for routine care the nature of the product makes it counterproductive to switch providers based on quality and price. Purhasing health care simply cannot be logically compared to the choice between a Ford and a Chevy.

Collective action would pay huge dividends here, and health care is arguably a public good (I for one want the poor to see a doctor when the flu pandemic hits). We should demand that government spread the risk of catastrophic financial loss by covering everyone. This would create a market similar to that in other things government buys a lot of--such as roads and weapons--that includes incentives for efficiency and innovation while keeping costs down.

Posted by: R. Stanton Scott on February 8, 2008 at 3:25 PM | PERMALINK

I don't think healthcare should have ANYTHING to do with employment status. Making it dependent on the employer takes control away from me, makes me overly dependent on the employer, BURDENS small business, and makes it harder for any business to compete with overseas competitors that do not have to pay for health insurance.

Posted by: jerry on February 8, 2008 at 3:28 PM | PERMALINK

'Unemployed' Bush has the answer: simply go to an emergeny room. Hillary wouldn't be quite that blunt, but she wouls have similar advice.

Posted by: IPD on February 8, 2008 at 3:42 PM | PERMALINK

The "Market" is only efficient at creating better profit. Any better good and services are just a side effect. The insurance companies do not compete to provide better service, they compete to get more people to pay them to do less. The most efficient market machine is one that produces nothing and takes in money for doing so. That is the norm towards which all capitalist ventures lean.

Posted by: Martin on February 8, 2008 at 3:51 PM | PERMALINK

jerry wrote: "I don't think healthcare should have ANYTHING to do with employment status."

I agree. It makes no sense whatsoever that medical insurance is tied to your job.

I would prefer the Medicare For All proposal that Rep. Dennis Kucinich campaigned on: universal, single-payer, nonprofit medical insurance under open, transparent, accountable, efficient public administration.

However, even a right-wing so-called "free market" approach, where individuals purchase their own medical insurance directly from for-profit insurance companies, would be preferable to the present system where most medical insurance is a "benefit" provided by employers.

Rather than having my employer provide (and administer at considerable cost) what they think is an appropriate medical insurance plan as a "benefit", let them pay me enough money that I can afford to purchase whatever medical insurance I think is appropriate for me.

I don't really see who "benefits" from the current arrangement of employer-provided medical insurance.

Posted by: SecularAnimist on February 8, 2008 at 4:01 PM | PERMALINK

Oh yes, the Market cure all. Its done wonders for my Cable, phone (land and cell), oil prices, utilities, transportation needs, (Did you hear the new One Bag limit for Airlines), oh hell yeah! Always makes products better! Fuckin-A-Right buddy and if you don't like your a goddamn communist!

Posted by: Henk on February 8, 2008 at 4:01 PM | PERMALINK

junebug,
I'm not a doctor, so I can't speak to this more specifically, but I'm pretty sure it's not the people who are actually practicing medicine who are gaming the system here. I do think they bear some culpability for the way things are, but more because they encourage our insatiable appetites for expensive & frequently unnecessary tests, procedures, & (most of all) pharmaceuticals. I don't think that, with the exception of some specialists, they're living high on the hog -- particularly when you consider their investments in formal & continuing education.

Unnecessary tests and drugs and malpractice insurance (which you did not mention) are not the main component of health care costs.

Doctors and hospitals are. As you point out the barrier one must scale to become a Doctor is high indeed. I say it is artificially high in order to constrain the number of Doctors licensed to practice medicine in the US.

How many qualified applicants are turned away from Medical School? A great number. Why don't we open new medical schools? The AMA won't let us.

Posted by: Tripp on February 8, 2008 at 4:02 PM | PERMALINK

One thing bugs me about the US health 'care' discussion, and that's the talking point that the concept of single payer, universal care is 'socialism'. WTF.

I am waiting for a pragmatic politician to explain to the mental midgets of the media and congress that one should think about it as a large group self insuring against expensive health care costs, the large group being the 200 million US working adults. What is wrong or socialistic with self-insuring? It's a natural instinct to protect your own, isn't it???

Such a self-insurance system wouldn't work if the group was small because of extreme cost risks, but for a population of hundreds of millions the concept is so obvious. You end up with one admin system, one claims system, one payment system, one drug buying system, etc.etc. with the attendant efficiencies of scale, as opposed to the thousands of insurance systems, with inefficient replication of the administration systems. out there today.

Either I'm missing something, or I'm ignorant, or I'm naive, or I'm stupid. Don't answer that.

Posted by: IPD on February 8, 2008 at 4:03 PM | PERMALINK

That's quite unfair. Tyler Cowen is simply living in the 19th Century and posts to his blog via a time warp.

So, just a charming anachronism, not unlike smallpox or gangrene. I think I'd be ok with that, if he were advertised as a fullofshitologist, instead of someone whose opinions should actually be respected. Look at all the crazies who have been wrong, wrong, wrong, who still get a forum. "Dow 36000", my ass (that was someone else, whose name I really ought to remember so I can be sure to avoid his misinformation).

We need a blog along the lines of "___ is full of shit, and here's why. Don't let him/her fill your head with crap."

Posted by: dr2chase on February 8, 2008 at 4:10 PM | PERMALINK
I don't think that, with the exception of some specialists, they're living high on the hog -- particularly when you consider their investments in formal & continuing education.

Here's the big problem I have with the way it works now:

If I have insurance, the doctor has an agreement with the insurance company on the max amount allowed. That amount is different for each insurer, and other factors go into the equation (where they live, the procedure, etc.).

If I do NOT have insurance, then I get screwed with whatever the hell the doctor wants to charge. I won't know how much it will be beforehand, I have no chance to negotiate the rate with the doctor, and get no kind of discount or consideration if I can't pay it.

IMHO, that's just plain fucked up.

Again, I wish I had some grand plan to fix it, but I really don't.

Posted by: Mark D on February 8, 2008 at 4:10 PM | PERMALINK

The problems with the private health insurance industry are plain to see. They are plain to see if you are a doctor, a drug rep, a nurse, a patient, a med student, an economist, an actuary, a person that watches the news. These problems are old news, they can be adequately explained by anyone, they pass the common sense test, they fit economic theories, it's all out there.

Yet I never see guys like Cowen actually step up and address the problems and how the health insurance industry is capable of overcoming them. They just spout more free market dogma, talking about how competition is good and makes for better and cheaper, ignoring the fact that the health insurance industry has done neither. These people can't be taken seriously by this point.

Posted by: joshua on February 8, 2008 at 4:13 PM | PERMALINK

I invite / dare anyone who is older than 30, has insurance through a company, and thinks they are 'insurable' to test that assumption.

You'll need to find an insurance broker who'll talk to you without putting your data into a computer--you don't want your info going to that insurance reporting database because that'd become a permanent record.

Be honest with the broker-- any ER visits or hospitalizations (even if not your fault)? Allergies? Prescription medicines other than, perhaps, the birth control pill?

Illnesses like walking pneumonia or bronchitis? BMI over 30, regardless of how good of shape you're in (doesn't have to be from fat. Muscle can do it too)? Injuries from risky behavior like skiing or biking?

You'd be surprised what ordinary illnesses of life can put you into a high-risk category. It isn't just cancer or chronic illnesses like diabetes or hay fever (what, you didn't know hay fever can make you uninsurable?).

I've had self-pay for 7 years and pay about $320/month (California Kaiser HMO). A good friend--younger than me, also in CA--is high risk because of a few small illnesses. She pays over $900/month. That's for 1 person in her 30's.

If you told her a few years back, when she was in her 20's, that she'd soon be uninsurable she wouldn't have believed you.

Posted by: Kathryn in California on February 8, 2008 at 4:15 PM | PERMALINK

Yes I am Unemployed: I will take a stab at it. I believe her program includes subsidies to people who cannot afford plans, which will certainly exceed $50 per year! I also believe part of the plan is to make available to those in need access to the Medicare System, as well as access to the same program that congress uses for its members.

As far as I am concerned, the only way to make the program work is to ensure that people in true need get whatever subsidy is needed for them to buy a policy, in the form of a tax credit, or the offering, as I said, of cheaper alternatives through the public health sector with credit subsidies again for those under the poverty line, and decreasing scaled subsidies for those over the line until you get to some set yearly income level at which you are expected to participate in the health system, and not sit it out and got the emergency room when you need help which all of us end up paying for.

I surely wish Obama would use some of his political capital to argue in favor of single payor. It would be bold and would show me he has political courage, and that his mantra of a better world was not just brilliant rhetoric. I see no way to improve our system without all people participating in it, either through single payor, or mandatory insurance with subsidies for those who truly cannot afford.

Posted by: Jammer on February 8, 2008 at 4:21 PM | PERMALINK

Why is health care for-profit in the first place? I have yet to hear anyone (even the most diehard libertarians) demand that firefighters turn a profit. Or the police (though there are rumors that the MA staties will be issueing more tickets to prevent a budget shortfall). Why isn't health care on the same basis as basic safety protection?

Posted by: gifgrrl on February 8, 2008 at 4:45 PM | PERMALINK

"...the best possible way to construct a national health plan that still retains elements of competitiveness and incentives to innovate."

Here's a start:

1. Offer Medicare-for-all.
2. Let any private insurance company offer the same protection without the right to reject any willing customer.
3. Give NO subsidy to any private company.
4. Let the market works its miracles.

What believer in universal coverage could object?
What believer in the magic of the market could object?

Posted by: xtalguy on February 8, 2008 at 4:47 PM | PERMALINK

IPD - Yes it does seem that the govvernment could provide health insurance and be more efficient due to economies of scale. In theory, the same is true of food, clothing, automobiles, etc. In principle, socialism should work better and more efficiently than free enterprise.

Yet, that isn't so in practice. The US Post Office is terrifically inefficient. Socialist and communist countries are typically less wealthy than capitalist countries. E.g., compare East Germany vs West Germany. Or, Taiwan and Hong Kong vs. PRC. Or North Korea vs. South Korea.

Posted by: ex-liberal on February 8, 2008 at 4:52 PM | PERMALINK

I can't see free market economics applying to healthcare. Free market economics deals with delivering widgets. Healthcare is not a widget.

It behooves us that we have a healthy population. This is more like national security than industry. So IMHO we should treat UHC like we treat national security. We all pay taxes to fund our Dept. of Defense, why not a true Dept. of Health. Course the downside of that is that we might end up with something as bloated as the Pentagon budget.

Posted by: optical weenie on February 8, 2008 at 4:54 PM | PERMALINK

ex-liberal,

Are you stuck in a time warp or what? The Post Office is terrifically inefficient?! East and West Germany?! North Korea is communist?

You seriously need to download those patches, man. You are way way out of date.

Posted by: Tripp on February 8, 2008 at 5:11 PM | PERMALINK

ex-liberal:

rather than compare apples to chickens, why not compare apples to apples? There's no country anywhere that spends more per capita on healthcare than this one. There's about TWENTY countries who manage to deliver superior results(*) spending less money, and they do it with universal coverage. Some of them use government insurance, some of them use government healthcare, some of them use mandates and subsidies. It doesn't "seem" that this could be more efficient -- every single vaguely comparable place it's been tried, it IS more efficient. Our infant mortality rate is a crime -- and you choose to defend it by diverting our attention to the post office and godless communism.

(*) Superior results = greater life expectancy at birth, lower infant mortality, greater percentage of life healthy. Furthermore, a recent study that got some press indicated that obesity is NOT a cause of increased healthcare costs, because it apparently causes people to die relatively young from cheap-to-treat afflictions.

Posted by: dr2chase on February 8, 2008 at 5:12 PM | PERMALINK
….The US Post Office is terrifically inefficient. Socialist and communist countries are typically less wealthy than capitalist countries….ex-lax at 4:52 PM
Actually, if you knew anything, you would know that the post office is highly efficient and that Medicare provides service with a 2% overhead while your so-called efficient capitalists have a much higher rate. Your other nonsense is simply John Birch strawmen marching.

Yes I'm Unemployed...I'm still human at 3:16 PM.
Perhaps there is more information here or here

Posted by: Mike on February 8, 2008 at 5:18 PM | PERMALINK

Jammer wrote: "I surely wish Obama would use some of his political capital to argue in favor of single payor."

If Obama argued in favor of single payer he wouldn't have any "political capital". The corporate-owned mass media would brand him a lunatic-fringe candidate; corporate-shill "debate moderators" like Tim Russert would ridicule him with questions about UFOs; then he'd be excluded from the corporate media's fake, phony "debates"; and corporations would fund challengers to his Senate seat the next time he's up for re-election.

Polls consistently show that clear majorities of the American people support Medicare For All -- universal, single-payer, nonprofit medical insurance under open, transparent, accountable, efficient public administration.

That's why America's Ultra-Rich Ruling Class, Inc. is determined to ridicule, marginalize, exclude, and otherwise silence any political candidate who advocates that path to the American people.

That's why any presidential candidate who actually hopes to be elected has to declare single payer to be "socialized medicine" or at a minimum "politically impossible" and bow before the insurance corporations if they want to raise hundreds of millions of dollars of corporate money to run a "serious" campaign.

Posted by: SecularAnimist on February 8, 2008 at 5:51 PM | PERMALINK

Didn't France get the blue ribbon when it came to World Health Organizations evaluation of health care systems??

From my recollection of when i lived there it was cheap if not free...

Posted by: survivin in tejas on February 8, 2008 at 5:57 PM | PERMALINK

I just checked out the links of Clinton's and Obama's health care plans provided by dr2chase, and one thing besides the 'info' provided by the sites..."Obama will..." all the way down the page. It's the second sentence in every paragraph. It's almost a little creepy. No, not creepy, it just unnerved me a bit because it's so deliberate...and astentasiously manipulative in a 'dear, leader' sort of way...or something. I dont' know. I wonder what effect it has on someone who is reading it but who isn't conscious of the deliberate placement. Like a 'sublimblinal'(GWBush) message or something. Somebody, anybody?

Posted by: aleealee on February 8, 2008 at 6:05 PM | PERMALINK

aleealee - that's subliminable

Posted by: optical weenie on February 8, 2008 at 6:22 PM | PERMALINK

I will take a stab at it. I believe her program includes subsidies to people who cannot afford plans, which will certainly exceed $50 per year! I also believe part of the plan is to make available to those in need access to the Medicare System, as well as access to the same program that congress uses for its members.

Thanks, Jammer.

As far as I am concerned, the only way to make the program work is to ensure that people in true need get whatever subsidy is needed for them to buy a policy,...

Hmmm. Mostly pretty good, although I confess I'm mainly interested in what is LIKELY to happen. I am skeptical that the subsidies would survive the implementation process. I think it would be passed, and then we'd see a new era in the criminalization of poverty. Sorry, that's what I believe will actually happen.

I surely wish Obama would use some of his political capital to argue in favor of single [payer]. It would be bold and would show me he has political courage, and that his mantra of a better world was not just brilliant rhetoric.

Me too. I see Frankly0 decided to sit this one out.

Posted by: Yes I'm Unemployed...I'm still human on February 8, 2008 at 7:03 PM | PERMALINK

I think you've mistaken me for someone else -- I provided no links to health care plans. In this primary, I support whoever will do best against McCain; the differences are not large enough to get exercised about, and perhaps Obama can be educated about health care, just as perhaps Clinton can be educated about Iraq. I'm really not worried about "their words being thrown in their face" later on -- remember George W. "no nation building" "uniter not a divider" Bush? Like anyone gives a crap about this fiddly what-you-said-when-you-ran-for-office stuff? All this looking for clues in the phrasing of web sites strikes me as being very much like reading tea leaves and goat entrails. The plan is to win in November, getting a Democratic president, and as many Democrats into Congress as possible. The Republicans are a disaster, and must go.

And I don't really have my mind made up yet. I originally favored Obama, then Edwards, then Obama, and now I am neutral betweeen Obama and Clinton. And what I really care about, is who can get elected -- Clinton's got some hard-core haters, and Obama's amazingly charismatic, but there's nothing new to throw at Hillary -- anything old and recycled will sound stale, and stale is "not news", hence it will probably not be reported (seriously, I think things really are that stupid). I'm a little bummed at the whole dynasty thing, but that sort cuts both ways -- golly, remember how awful it was when Clinton was president, and we all had jobs, and the budget was balanced, and we weren't pissing away trillions of borrowed Chinese dollars on the wrong war? Boy, I sure wish life could suck like that again. Bring on the interns in blue dresses, beats the heck out of a half a million (or so) dead Iraqis.

For God's sake, keep your eye on the ball, and don't get distracted by irrelevant details.

Posted by: dr2chase on February 8, 2008 at 7:13 PM | PERMALINK

I'll pile on ex-liberal too. Prior to the collapse of Soviet (and Soviet-controlled) communism, most of the eastern European countries had very good basic health care. The discrepancies in wealth were due to several factors, incredibly bloated military and national police forces being one and economies tied to the Soviet Union being another.
When the Soviet Union collapsed (may St. Ronnie hear my prayers!), the economies of any country tied to it collapsed as well, (East Germany, Roumania, Bulgaria, the Baltic States). Poland and Czechoslovakia, being slightly more western-oriented, managed much better. During the Soviet Union's hegemony, the economic distortion was due as much, if not more, to Russian demands (looting if you will) as it was to the Communist system. By forcing their clients to provide products at reduced prices, the Soviet government allowed the population of the Soviet Union to live at a higher level than their own economy actually provided. The citizens of the Russian Federation have been forced to deal with the collapse, not only of Soviet Communism, but also the Soviet Empire in eastern Europe.
And the USPS? When was the last time you sent a letter via FedEx?

Posted by: Doug on February 8, 2008 at 7:25 PM | PERMALINK

Insurance companies make money by 1) insuring only healthy people, 2) shedding sick people, and 3) increasing the bureaucratic hassle so much that covered claims are delayed and sometimes never paid. Unless these incentives are changed, you cannot create a practical private insurance system.

Large risk pools, and standardized claims reporting and paying systems is a start, but it still doesn't change the incentive from not insuring sick people to producing better outcomes as a means of making a profit. If insurance rates are based on the larger risk pool and its decoupled from employers such that the individual can keep it after changing jobs, then there might be an incentive to see that the insureds are healthier. Of course, people change insurance all the time so more mobility might still not produce a more efficient health care industry.

Posted by: BobPM on February 8, 2008 at 7:30 PM | PERMALINK

Libertarians live in a Giant Ideological Fantasy Bubble.

America is on the road to ruin until it can get rid of all the Ideological Bubbleheads of ALL political stripes and start focusing on practical solutions.

Throughout human history, whenever you see massive human suffering, sickness, and death, you can bet your bottom dollar that there is some Giant Ideological Bubblef*k to blame, whether its the French Revolution, The Third Reich, the Crusades or something as boring but deadly as our country's Mega-F'ed Health Insurance System.

All Ideological Bubbleheads need to go away or face jail. The blood of history is on their hands.

Posted by: BombIranForChrist on February 8, 2008 at 8:31 PM | PERMALINK

the confuision is easily explained: too many people believe health insurers are health care providers.

In fact, insurers sell insurance.

Insurance is roughly a promise to pay in the event of a covered contingency. The health insurance industry spends millions and millions in legal fees and personnel to make sure that very little is covered.

That's how they manage to make billions and billions in profits from comparatively small premium payments.

Health care providers are those individuals and institutions that provide health care. They often look to health insurers to PAY for the care they provide.

This somehow has translated into: health care providers don't provide care unless the health insurer agrees to pay.

This clearly is wrong.

End of lesson.

Posted by: getaclue on February 8, 2008 at 9:06 PM | PERMALINK

Geezus, Kevin, another healthcare post and you STILL won't talk about vouchers. Nice way to NOT advance the goalposts on this issue.

Posted by: SocraticGadfly on February 8, 2008 at 9:26 PM | PERMALINK

>"First we need to loosen the monopoly stranglehold that the AMA has on the number of medical doctors in the US."

Tripp nailed it early on in this thread. This is the root of the problem. A private monopoly is in control of a critical resource that (for practical purposes) cannot be obtained anywhere else.

Until this issue is addressed, the arguments will merely be about how the wealth is being transferred rather than the massive scope of the transfer.

Posted by: Buford on February 8, 2008 at 9:40 PM | PERMALINK

Why keep fighting for it?

Because giving up means abandoning the field to the economically illiterate. See above.

Posted by: Fubar on February 8, 2008 at 10:24 PM | PERMALINK

Sorry this one is off topic on health insurance but cannot resist:

If the free markets are so great, why is the government bailing out the banks and the mortgage lenders now? Why does wall street run crying to the Fed to lower interest rates when the markets drop a bit?

I think we should cut all this crap about free markets in the U.S. What we have is "privatisation of profits and socialisation of risk". In other words welfare for billionaries.

Posted by: ppk on February 8, 2008 at 11:06 PM | PERMALINK

I'm always amazed by how easily people fall into the economics trap when discussing these things. Most of the developed world (and I dare says the undeveloped world as well) sees health care in terms of a moral imperative for a civilized society, not as a job creation engine. The idea of accepting worse health care because some parasitic company benefiting from the current madness might go out of business is horrifying.

The whole idea that something must pay for itself directly to be worthwhile is anathema to a well-run society. Do you expect the sewage systems to pay for themselves? Garbage collection? The fire department? The legal system? The National Guard? There are things that a society does despite the cost because they make things better for everyone.

One of the reasons why public transit is such a disaster in North America is that we haven't escaped the self-funding fallacy. Good public transit systems in our major cities would have all sorts of wonderful secondary effects; reduced congestion, less pollution, more mobility for the elderly and the poor, less road maintenance, easier access to jobs for the young, less contested parking, a more pleasant downtown environment, the list goes on. But in North America, public transit never escapes the economics trap; if it can't be proven to pay for itself with ticket sales, it is considered wasteful.

Beyond that, the whole idea that competition will produce better results than a government-run single-payer health insurance system is laughable and obviously false. A privately run system must make a profit, while a government-run system need not. A government-run system is beholden to the voters and the taxpayers (ie: the citizens, the people it is responsible for keeping healthy), while a privately-run insurance system is beholden only to its shareholders. And those who site the waste and inefficiency inherent in government bureaucracy obviously haven't worked in private industry; I've seen every bit as much incompetence, wastage, bureaucracy, arrogance and stupidity in the offices of private companies as in government offices.

All medical care should be free. For everyone. It is one of the most essential parts of the social safety net in most developed countries. It is the moral thing to do, and it is the sane thing to do for a society; the secondary effects are extremely valuable.

But first and foremost, a civilized society takes care of its members, and that means free health care for all.

Posted by: Anonymous on February 8, 2008 at 11:10 PM | PERMALINK

All of this "monopoly stranglehold" talk about doctor shortages doesn't sound right to me. The midcareer primary care doctors (internists, family practitioners) that I know make about $60 / hour. This doesn't include the unpaid part of their practice, which is call coverage (one night / week, one weekend per month). By the way, this is not in some low-cost rural community, but in the San Francisco bay area.

Private insurers routinely deny or lowball reimbursements. Medicare is threatening to cut doctors' reimbursements by 15% over the next two years (front page of the AMA News this week). Doctors cannot form large group practices to negotiate with reimbursers, because of antitrust law.

If doctors are charging monopoly rents, they are surely doing a crummy job of it.

For the record - I'm not a doctor, but my spouse is.

Posted by: divF on February 8, 2008 at 11:51 PM | PERMALINK

The best we can hope for in the US is not Medicare for all but rather Medicaid for all. Expanding Medicaid for all Americans basically makes Health Care affordable for anyone. It pays subsidies based on need and is a partnership between public and private entities. That could actually pass in this day and age. Arguing for single-payer in the current US political climate is very much like talking about a UFO.

Posted by: Da5id on February 9, 2008 at 12:28 AM | PERMALINK

"our insatiable appetites for expensive & frequently unnecessary tests, procedures, & (most of all) pharmaceuticals" -

Oh please. I just had a mammogram, after putting it off literally for years, remembering the agony of the last one. They found some abnormalities, and I had to go in again, for ones that were even worse. I'm praying everything is okay and I don't have to have a biopsy or worse, but even if they let me off this time, I'm already dreading the mammogram I'll have to have next year.

Have you ever had a colonoscopy, or even a sigmoidoscopy? How could anyone have an "appetite" for one of these tests, never mind an insatiable one? Ever had a cardiac catheterization? Those can kill you, I've heard, or permanently disable you.

As for pharmaceuticals, no one wants to take pills that make them gain weight, give them dry mouth, make your hands shake so you can hardly write, etc.

You are just repeating right-wing boilerplate. Nobody likes medical treatment, we do it because we need it. Wait 'til you're older, you'll see.

Posted by: Nancy Irving on February 9, 2008 at 2:09 AM | PERMALINK

"Insurance" is exactly what is wrong with our medical care. "Insurance" puts an entire industry of non-medically trained individuals sucking large amounts of money out of medical care and making decisions they are not remotely qualified to make on behalf of doctors and patients.

Expand the VA system. It works.

Posted by: arteclectic on February 9, 2008 at 12:11 PM | PERMALINK

Health Insurance is both a utility and a commodity. Like all utilities the cost goes down (and generally the quality goes up) as the pool of contributors become larger. This is true with electricity, gas, water and sewage.

Case in point is the St. Louis area's water utility.

St. Louis has a lot of food processing industries that consume and use water in their products. The most prominent being Anheuser-Busch. Anheuser-Busch is perhaps the wealthiest company in the city, located on the Mississippi River, it has it's own water treatment plant. It doesn't need to buy water from the city. But it's plant is mandated, by law, to buy a portion of its water from the local water utility.

The reason is the formula for utilities breaks down the minute you allow subscribers to opt out.

Busch represents the wealthy subscriber that could obviously opt out as it could produce its own water. This would force water rates up on the rest. Soon poor subscribers opt out by digging wells or some other method because the burden on them has gone up. As the burden goes up more and more subscribers opt out or find alternative means.

Eventually you are left with something that looks like our current health care system.

Let me tell you that St. Louis has some of the best water coming out of the tap in the country. It taste great, it's better for you than the stuff you buy in the bottle because it has fluoride in it, and it is very cheap.

Anheuser-Busch and other industrial consumers don't really object because they understand the model, their cost is still low, and the quality is high.

Because Health care insurance is a utility, it functions best if we treat it as such.

Posted by: Pallomine on February 9, 2008 at 3:20 PM | PERMALINK

All insurance is a form of socialism.

I buy car insurance, you have an accident, my money goes to fix your car.

That's a form of socialism.

It isn't less social if its run by a private company. It isn't more social if its run by the government.

Posted by: Bubbles on February 9, 2008 at 3:28 PM | PERMALINK

"doctors are paid $100.00/minute." someone said. Although not a direct quote, I get the gist of this. Doctors are, somehow, overpaid, for what they do in the few minutes of time they spend with each of us in our office visits.
I understand that this is a sore point with many patients. I can remember once being told by an MD that, 'He is not paid for what he does, but for what he knows.' And when I thought about this, I could understand his point...at least to a degree. Even in the few minutes an MD spends with a patient (if He/She is good at His/Her job, they rule in or rule out so many possible diagnoses or problems that are not evident to the visible eye of the patient who is under examination.

More important to me it seems is to recognize that the Health Care Insurance Industry is but an interloper in the actual delivery of Health Care to Patients.
Insurers do not and can't examine, test or diagnose problems a patient may have.
Yet, they function to interfere with the examination, testing or diagnoses AND ESPECIALLY THE TREATMENT of patients.
Insurers, as interlopers COST THE PAYERS OF THEIR PREMIUMS 30% MORE MONEY. Money that could be spent on actual treatment for Health care Problems.
In addition...just what is the purpose of paing taxes if not to provide for the COMMON GOOD. Highways, bridges, roads, schools sewers are certainly for the common good. HOW IS IT, that HEALTH CARE is not considered part of the common good. Do you really want to worry about catching TB from your neighbor because our 'Private health care system' doesn't cover it or your neighbor and their school age children can't afford it or your gov't won't fund the Public Health Care efforts needed to follow up on these cases that put you and your family at risk because they want Blue Cross to Pay for it.

I could give you 50 examples of how keeping Health Care a 'Private/for Profit system can kill you or your childre: enough to make you cry. And still enough unknowing Americans will fear so-called demonized 'socialized medicine' that only seeks to make sure that ALL people you come in contact with, who might infect you, are disease free. And yes, this comes for the tax base, just like every other first and second world country in the world. As I said, what is a better use of taxes than protecting families and children from disesase and death from preventable causes. Personally, i would rather have my health than a new Park, a new Monument, a new library, a new Civic Building. These things are wonderful, but life and health are so much better.

Posted by: Merg on February 9, 2008 at 7:09 PM | PERMALINK

getaclue: That's how they manage to make billions and billions in profits from comparatively small premium payments.

i was seriously ill for the first time in my life last fall. medical bills totaled thousands of dollars but i knew i had insurance.

well..

many bills they pay immediately...but a trend has emerged.

there are some bills they don't pay until after i make at least 3-calls to their voicemail from hell.

in talking to doctors offices who are waiting for payment....they say the insurance company is hoping i will write a check and pay out of my own pocket just to avoid the hassle...

its not working in my case...but it is in how many others..

not to mention all the time wasted with the calls..and follow up paperwork from the ins. co. to tell me i will be rejected..until the 3rd or 4th try when miraculously they decide i am covered..

Posted by: mr. irony on February 11, 2008 at 4:22 AM | PERMALINK




 

 

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