Wednesday, December 30, 2009
And I don't just mean the HuffingtonPost/DailyKos/MoveOn.org crowd. There's even a sense at the New York Times that the President's faction has failed to grab history by the tail. Witness this column by Bob Herbert, who protests the tax on so-called "Cadillac health plans," those which cost more than $23,000 for family coverage or $8,500 for single coverage. Because these dollar amounts will not adjust with inflation, Mr. Herbert notes that an increasing number of people will be subject to the tax as the years roll by.
Of course, Mr. Herbert is carrying water for organized labor, which is a staunch opponent of the "Cadillac tax." One of Big Labor's major successes has been to negotiate juicy health benefits, especially for retirees. (This is especially true in the public sector, as described in a new book by Steve Greenhut.)
Conservatives haven't really weighed in on the "Cadillac" tax. Good: Let the unions fight their own battle. It is a tax hike, which any conservative should oppose. However, if it were re-cast in a different bill, it could be used to fund a universal tax credit or voucher, which would reduce Medicaid and SCHIP dependency. Indeed, lest we forget, this is the path Senator McCain took in his presidential campaign, and which I discussed favorably at the time.
Tuesday, December 29, 2009
Monday, December 28, 2009
Tuesday, December 22, 2009
Federal Regulatory Burden on Health Care Increased By Over Half in Ten Years - John R. Graham - Critical Condition on National Review Online
Monday, December 21, 2009
Reduced Medicare Benefits Will Increase Cost of Private Insurance - John R. Graham - Critical Condition on National Review Online
Tuesday, December 15, 2009
The Loneliest Voice in the Wilderness: The Council of Economic Advisers - John R. Graham - Critical Condition on National Review Online
Monday, December 14, 2009
Monday, November 30, 2009
Sunday, November 29, 2009
Saturday, November 28, 2009
Wednesday, November 25, 2009
Tuesday, November 24, 2009
Monday, November 23, 2009
More on the Grinding Pace of the Health-Care Take-Over - John R. Graham - Critical Condition on National Review Online
Friday, November 20, 2009
Thursday, November 19, 2009
Friday, November 13, 2009
Thursday, November 12, 2009
Wednesday, November 11, 2009
Tuesday, November 10, 2009
On the Grinding Pace of the Health-Care Take-Over: A Historical Perspective - John R. Graham - Critical Condition on National Review Online
Monday, November 9, 2009
Friday, November 6, 2009
The AMA Is More a Monopoly in Crisis Than a Professional Association - John R. Graham - Critical Condition on National Review Online
Thursday, November 5, 2009
Friday, October 30, 2009
An Incredibly Out of Control Health Bill - John R. Graham - Critical Condition on National Review Online
Wednesday, October 28, 2009
Thursday, October 22, 2009
Tuesday, October 20, 2009
Monday, October 19, 2009
Friday, October 16, 2009
Thursday, October 15, 2009
Wednesday, October 14, 2009
Read the Article at HuffingtonPost
Friday, October 9, 2009
The Death of Employer-Based Benefits Is Nigher Than I Thought - John R. Graham - Critical Condition on National Review Online
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Wednesday, October 7, 2009
Tuesday, October 6, 2009
Friday, October 2, 2009
Wednesday, September 30, 2009
Friday, September 25, 2009
Thursday, September 24, 2009
Tuesday, September 22, 2009
Friday, September 18, 2009
Wednesday, September 16, 2009
Tuesday, September 15, 2009
Monday, September 14, 2009
Friday, September 11, 2009
The media will not figure this out, but a couple of stories the last few days suggest that this is already happening, and describe a negative relationship between union power in medical services and access to care. Read more at State House Call.
Thursday, September 10, 2009
Wednesday, September 9, 2009
Tuesday, September 8, 2009
Friday, August 28, 2009
Friday, August 21, 2009
Thursday, August 20, 2009
Wednesday, August 19, 2009
Tuesday, August 18, 2009
Monday, August 17, 2009
Thursday, August 13, 2009
Wednesday, August 12, 2009
Tuesday, August 11, 2009
Monday, August 10, 2009
Thursday, August 6, 2009
Wednesday, August 5, 2009
Tuesday, August 4, 2009
Last Friday, the House Energy & Commerce Committee marked up HR 3200, the government take-over of Americans' access to medical services. The Blue Dog Democrats inserted an amendment that they figure will insert some fiscal responsibility into this monstrous bill.
Boy, are they wrong. The Medicaid amendment that they passed will cause states to accelerate their already out-of-control spending on Medicaid.
Medicaid is a program for low-income households that is jointly financed by the federal and state governments. It has always contained a flawed incentive that causes states to overspend: the FMAP, which is the percentage of total Medicaid costs paid by the federal government. Because FMAP has been at least 50%, state politicians have an incentive to spend one dollar to pull down at least one dollar from the residents of the other 49 states (as laundered by the federal government).
This has caused Medicaid spending to increase even faster than the bankrupt Medicare program for seniors. President Obama made it worse in February, when he signed the so-called "stimulus" bill, which significantly increased the federal match.
The Blue Dog deal would make states finance 7% of the proposed, permanent, Medicaid expansion. They appear to believe that by forcing states to swallow some of the cost of the Medicaid expansion (which was originally 100% federal) they could dampen it somewhat.
No way! If states only have to spend $7 of their own residents' money to pull down $93 of federal money, they will go into a feeding frenzy the likes of which we've never seen in the history of Medicaid.
(In case you doubt that the FMAP already creates horrible incentives for states, you might have missed the $540 million settlement that the U.S. Department of Justice made last month with two Medicaid fraudsters who wrongly billed the program for school-based health services. The busted scammers? New York State and New York City.)
Thursday, July 23, 2009
Wednesday, July 22, 2009
Tuesday, July 21, 2009
Monday, July 20, 2009
SCHIP (State Children's Health Insurance Program), of course, creates a "race to the bottom" of government dependency because a state has to spend its own taxpayers' money to "prime the pump" that fills the trough with federal dollars. One silver lining to the cloud of recession is that most states simply do not have access to enough of their own taxpayers' funds to execute this raid.
We can all be thankful.
SCHIP expansion is popular, because it's "for the kids" and the expansion is primarilly financed by taxes on smokers. What the NY Times neglects to note is that SCHIP crowds out private coverage by at least 56%, which will get even worse as states enrol kids from higher-income households, as I've discussed before.
Furthermore, the Wall Street Journal notes a side effect of Government's unhealthy addiction to tobacco taxes - violent crime as states "go to war" on cigarette smuggling (which would not exist without discriminatory taxation).
We are effectively in an era of neo-prohibition, where governments' demonize smokers' peaceful habit in order to seize their earnings to fund a state take-over of children's access to medical services.
Thursday, July 16, 2009
Wednesday, July 15, 2009
Tuesday, July 14, 2009
Friday, July 10, 2009
Thursday, July 9, 2009
Gutsy move: He's a leader in the industry (health insurance) that 4 of 10 people believe is most responsible for increasing health costs, and "enjoys" a reputation as low as tobacco and oil companies.
More importantly, he was a key player in Governor Romney's reform that mandated universal health coverage, about which he was skeptical (as described very forthrightly in his blog, and about which I recently scribbled.) The media and voters are going to expect him to have some solutions to the health crisis.
Because of the likelihood of a national coverage mandate, and Mitt Romney's continuing presence as a presidential candidate, Baker the politician's views on health reform will be at least as interesting as Baker the health-plan CEO's.
This is an interesting finding, and one that I would never have thought to pursue. Why did CIGNA do it? My guess us that men will soon be getting messages that we should bring our wives to the doctor with us: It may motivate us to swich to generic prescriptions, when appropriate, to keep costs down.
What will the government do to screw this up? I can see a flood of nonsense from the political class that consumer-driven health care is disadvantagous to women (which is actually an old tactic), because they are "forced" to make decisions about treatment based on costs.
Wednesday, July 8, 2009
Indeed, I sort of fell for it myself, when I sarcastically noted that if the government exerts absolute control over citizens' access to medical services, and forbids them spending directly for care, they cannot go bankrupt from medical costs.
But then news from Canada led me to believe that people do go bankrupt from medical costs. After all, if you are sick enough and the government will not treat you in time, a lot of costly problems will pile up.
All we needed was some good research on the relative rates of medical bankruptcy in the two countries. Well! What do you know? Brett Skinner & Mark Rovere of The Fraser Institute has rode (ridden?) to the rescue with a well researched article concluding that the rate of medical bankruptcy is about the same in Canada and the U.S.
No "medical bankruptcy" under government-monopoly health care? Don't you believe it.
Tuesday, July 7, 2009
The obvious remedy? Bail out SCHIP's sales & marketing operation. 350 self-styled advocacy groups joined U.S. Secretary of Health & Human Services Kathleen Sebelius for a teleconference where she announced her intention to release $40 million of a budgeted $100 million for "outreach".
Release the hounds!
If she really wanted to enrol kids in SCHIP, instead of perverting civic groups through government handouts, she'd offer commissions to insurance brokers to sign up kids.
Obviously, that would be unacceptable - because insurance brokers are businesses, not community activists.
Was ACORN on the teleconference? I have no idea. I think it's time for a stronger spotlight of transparency on groups that accept taxpayers' money to promote government dependency for health care.
Monday, July 6, 2009
Maine, of course, is the home of the two Republican U.S. Senators potentially most favorable to the idea of the government controlling people's access to medical services. So, the SEIU (Service Employees International Union), which would like nothing more than to take over American health care, has poured money into the state.
Fortunately, the Maine Heritage Policy Center's Crisis to Cure tour, which the New York Times notes, emphasizes the costs of current government intervention, especially Maine's failed Dirigo plan.
Frankly, I'm surprised that the New York Times would deign to report that there's an alternative to "reform" that gives more power to government, instead of the people. Kudos to the Maine Heritage Policy Center!
Thursday, July 2, 2009
Speaking of our political class, if I had a dime for every time President Obama or another of our betters announced that increasing coverage through more government programs would result in better access to primary care and less ER use, I'd be able to pay my taxes many times over.
There is no evidence of such an effect, as recent analyzes of the Massachusetts "reform" that introduced "universal" coverage have discussed (here and here). In a previous analysis of hospital ER use in California, I found the same effect. Indeed, ERs were far more likely to be jammed with people who had coverage, and whose symptoms could have been better handled in a primary-care physician's office, than the uninsured.
Will our rulers, who want to impose their vision of health "reform" on us, learn from this evidence? Fat chance!
Overcome by a wave of nostalgia for lost liberties, I decided to have a quick look at evidence of the effect of "universal" health care in the scholarly literature:
Exhibit A: an article from 1973 reporting a survey of Montreal households conducted over 12 months in 1969 and 1970, just before "universal" coverage was imposed by the provincial government of Quebec in 1971. The survey did conclude that higher-income households used more medical services than lower-income households did. Furthermore, 4/5ths of ER visits were for non-urgent reasons.
Sounds like those folks needed "universal" coverage, right? Wrong.
Exhibit B: the same authors published a subsequent article in 1978, which reported that ER visits increased by 14% annually in the five years after "universal" coverage versus 7% in the five years prior. Before "universal" coverage, 33% of patients surveyed had attempted to contact a physician before going to the ER and 63% were successful. After "universal" coverage, 39% of patients had attempted to contact a physician but only 38% were successful. Most of the increase in coverage happened through the ER, not primary-care doctors.
Three decades later, Massachusetts is learning the same lesson - or not.
Wednesday, July 1, 2009
Critical examination of Massachusetts' experience with a government-run health-care "market" (e.g. Connector) are prevalent in this blog. Recent analyzes from the consumer-directed reform camp, by Grace-Marie Turner & Tara Persico, as well as Michael Tanner have focused on the budget-busting increases in costs and the absence of incentives for patients to use medical services appropriately (although Mr. Tanner does allude to adverse selection, the topic of this post).
Mr. Baker of Harvard Pilgrim points out that merging the small-group and individual markets, as the Connector does, creates an incentive for individuals to game the system by only buying health insurance when they become sick. Before the "reform", Massachusetts imposed guaranteed issue and community rating on the individual market, so people were already motivated to wait until they became sick to buy health insurance. (This is a key reason why the Bay State ranks so poorly in the U.S. Index of Health Ownership.)
However, this adverse selection was minimized because state law allowed insurers to exclude pre-existing conditions for up to six months. Under the Connector, which merges the small-group and individual markets, it would have to do the same for the much larger small-group market alongside the individual market.
Follow me so far?
Insurers were unwilling to do this in the small-group market, so they had to remove the exclusion in the individual market. The tax for not obeying the mandate to have health insurance is about $900 annually, or $75 monthly), which people are content to pay if they know they can wait until they get sick and get individual coverage through the Connector with no exclusion for pre-existing conditions.
Result? Death spiral! Mr. Baker reports that Harvard Pilgrim's individual policies written since the "reform" only last five months, and the premiums are ramping up fast.
What will the state do? Well, I suspect it will do what all government's do when their policies fail: impose more government.
Tuesday, June 30, 2009
This woman has a €2,500 deductible and pays a monthly premium of €350, with no employer contribution. Sure, it's a plan decided by a cartel of health insurers and the government, but freedom to choose a plan other than one her employer chooses, and controlling the first €2,500 spent on ambulatory care costs looks a lot like "consumer-driven" health care. In fact, I'd bet that deductible is a lot bigger share of her real income than a similar one would be for Americans, because we earn so much more.
On the other hand, this poor woman would undoubtedly be classified as "underinsured" by the Commonwealth Fund. But let's keep that a secret: We wouldn't want her to learn that she's actually endorsing a system where patients, not government, control more of their health-care dollars.
[See M. Cannon & M. Tanner, Healthy Competition, 2nd ed. (Washington, DC: Cato Institute, p. 53) for a discussion of international comparisons of out-of-pocket spending.]
While the Gray Lady promoted the notion that the American people are ga-ga for a so-called "public option" for health insurance (actually a swamp of new federal bureaucracies, if Sen. Kennedy's bill is any indication), the WaPo/ABC folks are close to pushing the panic button on the plan for a government take-over. Read entire post here.
Monday, June 29, 2009
What part of "government failure" don't these folks understand? Healthy San Francisco is a tax-hike levied in accord with the gospel of the Church of Universal Coverage (as defined by Cato's Michael Cannon). It taxes small businesses (mostly restaurants) to fund the county's public-health bureaucracy, and declares that it is "covering" all San Franciscans.
I have written about it's tax-hiking ways before, and noted that it has failed to attract private hospitals and physicians to accept its "coverage." Healthy San Francisco claims that its members are enrolled in medical homes. I took a gander at its website, and saw that it has added a grand total of two private providers to its "network" of public-health centers and community clinics.
However, one private provider is the Sr. Mary Philippa Health Center, the charity wing of St. Mary's Medical Center (which is part of the mega-system Catholic Healthcare West). It's a fine center for poor people, no doubt, but I believe that non-profit hospitals affiliated with communities of faith have been doing this long before the Mayor of San Francisco got involved.
The second private provider is the Chinese Community Health Association, undoubtedly a similarly motivated organization.
Noticeably absent from "The Care Network" are any mainstream hospitals or physician practices.
High taxes and limited choice: Is this the future of U.S. health care?
Friday, June 26, 2009
New York, New Jersey, and California are all in the tank of IHOP's measurements of individual ownership versus government control over health care. The editorial quotes IHOP's diagnosis that "New York suffers from government health programs that are out of control, a grossly overregulated private insurance market and almost completely uncompetitive provider markets."
IHOP edition 3 is due to be published later this summer. I don't want to leak the results, but if you are a betting man, I would not recommend putting any money on New York moving up the rankings.
Wednesday, June 24, 2009
Tuesday, June 23, 2009
(I was privileged to have testified to the House Health & Human Services Committee on the resolution.)
A previous version of this amendment (Prop 101) was on the ballot in November 2008, but was very narrowly defeated, thanks largely to former governor Napolitano and her allies. With Ms. Napolitano now in DC, the opposition to health freedom will not be so effective in 2010.
Monday, June 22, 2009
Friday, June 19, 2009
Thursday, June 18, 2009
The rest were Americans shopping for cheap prescription drugs or who needed treatment when they were in Mexico for business or vacation. Many Mexicans go home for treatment because of cost or cultural and linguistic issues. However, the striking trend is the growth in “binational plans”, which cover U.S. businesses near the Mexican border. These plans started in 2000, and now cover 150,000 workers. Certainly, most of these are Mexican immigrants, but I anticipate that more employers will seek such benefits for their American employees in California, and investors will capitalize Mexican clinics and hospitals to serve their needs.
The primary reason will be to escape California’s expensive regulatory burden on health facilities. California hospitals shift the costs of treating Medicare and Medicaid patients (for whom government reimbursement does not cover costs) to private insurers. Professor Daniel Kessler of Stanford University figures that premiums for private health insurance would be about 11 percent lower without this cost shift – a “hidden tax: that private insurers can avoid by leaving the state. California hospitals also suffer under laws that drive up their costs: for example, seismic retrofitting and nurse-patient ratios, which Mexican ones do not.
Plus they have to deal with a militant union, the California Nurses Association, whose members are free to parade in front of the Capitol by the hundreds in support of more government interference in health care. The political momentum in California, and the nation, will make our hospitals more accountable to government and less accountable to patients.
Read more in my latest Capital Ideas.
Wednesday, June 17, 2009
A 30-yr old man was diagnosed with stage IV melanoma: skin cancer that has migrated inside and invaded his chest and bowel. Although the skin cancer was diagnosed years ago, the stage IV was diagnosed late. Now, that may be because of the government monopoly's lack of access to specialists, but it may also be idiosyncratic. Even with the best access to health care, doctors can't catch everything.
In this case, what happened after the diagnosis is what's truly appalling. Because his home-province of Ontario does not have the capacity to treat this advanced cancer, the Ontario Health Insurance Plan (OHIP), which has absolute control over every Ontarian's insured health care, must contract with U.S. providers. Scheduled for treatment in Detroit, OHIP screwed up the paper-work and he could not go.
Once things were sorted out, OHIP no longer contracted with the hospital in Detroit (right across the river, as mentioned above), so he has to go to Buffalo, NY - four hours away.
Tragically, he hasn't been able to work, and his wife has just had a baby. The family relies on the charity of neighbors for the baby's clothes and other needs.
No "medical bankruptcy" under government-monopoly health care? Don't you believe it.
Tuesday, June 16, 2009
My first reaction was: "How naive are the doctors?" Come on! Surely they realize that "Medicare/Medicaid/SCHIP for all" would erode private coverage and subject physicians to ever declining reimbursements and more control of their profession by Uncle Sam. Like similar government programs, these drawbacks would not cause it to "fail", but lead to perpetual demands for even more money and control. A federal cap on punitive damages, on the other hand, would be a fragile thing, constantly threatened by trial lawyers.
The AMA has endorsed legislation by Rep. Gingrey, a physician from Georgia, that would impose a cap of $250,000 on punitive damages - like California's MICRA. (The AMA website reports a stale version of the bill. The bill in the current, 111th, Congress, is H.R. 1086.)
As readers know from my postings on federal pre-emption of states' product-product liability law for FDA-approved medicines, I lie pretty far on the states' rights end of the spectrum when it comes to federalism in civil liability. And I lean heavily towards the same policy for medical malpractice.
H.R. 1086 asserts the interstate commerce clause, which I simply don't see relevent to medical care. Yes, the federal government pays for a lot of medical care, through Medicare, Medicaid, etc., but that is an unrelated problem. H.R. 1086 also preserves states' rights by allowing a state law that caps punitive damages at either a higher or lower rate than the proposed $250,000 to trump the proposed federal cap. (Many states do not have punitive damange caps, as I report in the Index of Health Ownership, using research by my colleague Lawrence McQuillan.)
So, a federal cap on punitive damages, as proposed by H.R. 1086, is not the worst thing since unsliced bread, but it still lets the "camel's nose under the tent." The important benefit of leaving medical-malpractice law to the states is that states with appropriate limits on the ability of trial layers to go wild will see more appropriate medical care and immigration of doctors from states with out-of-control med-mal.
The fact is, nobody know the "perfect" level of liability for med-mal punitive damages. Observing the behavior and movement of doctors in different states, in response to different reforms, allows every state to reform its laws as needed.
Friday, June 12, 2009
Ms. Tucker is a 59-year old American lawyer living in Canada who somehow has a personal acquaintance with a well-known NY Times columnist. Originally she was given a long waiting time for diagnosis, but through personal effort, she shortened the wait.
That means that she bumped someone else. It is well researched that access to health care in Canada is determined by socioeconomic level. Indeed, the "income gradient of health" is steeper in Canada than the U.S. The College of Family Physicians of Canada estimates (p. 7) that 15% of the population has no primary-care doctor and these are certainly lower-income people.
Wednesday, June 10, 2009
Mr. Hennessy has done a fine job summarizing the bills. What's in it for states? Here's where I had to laugh.
Mr. Kennedy's bill proposes "Gateways" (which we've all seen before, as "exchanges" or "connectors"). Because the reform includes a tax (which, in a remarkable abandonment of legislative responsibility, he surrenders to the Secretary of Health & Human Services to determine), it envisions Gateways being established by states to facilitate individuals and businesses finding health insurance that suits their purposes.
However, it also creates a new species of government agent: "Navigators", which are private-sector outfits that get government hand-outs to help you "navigate" the exchange. Incredible! They haven't even't established any Gateways yet, and they're already admitting that they'll be too confusing for ordinary folks to understand!
(Don't I wish the government would give H&R Block or TurboTax a hand-out to help me "navigate" the tax code...)
Who will line up for this new boondoggle, winning a government contract to be a Navigator? Darned if I know, but if you ask me, Americans should navigate away from this health-care take-over as quickly as possible.
Tuesday, June 9, 2009
In the Merritt Hawkins survey, waiting times average about three weeks!
What the media generally ignored was doctors' participation in state Medicaid programs: It is all over the map. Overall, 55% of surveyed doctors reported participating in Medicaid, but there is huge variation across cities, and differences between the recent results and those from five years ago.
For example, 11% of surveyed cardiologists in Boston reported accepting Medicaid patients n 2004, versus 100% in 2009. On the other hand, 80% of Philadelphia cardiologists reported Medicaid participation in 2004, but only 8% did in 2009!
This remarkable instability is hard to understand. It indicates that Medicaid is out-of-control, changing reimbursement policies erratically and dramatically. It's certainly no model for health reform.
Monday, June 8, 2009
Friday, June 5, 2009
We agree with the problem. (In fact, it's worse than she thinks, because limiting us to health benefits of our employers' choice puts almost everyone who works as an employee under a "monopoly": Most have a "choice" of one plan.) But we have better solutions. Here are two:
- Give people the same tax break if they buy their own health insurance, instead of forcing them into health insurance that their boss chooses.
- Let people buy insurance that is portable across state lines.
By the way, if the so-called "public option" is really voluntary, will the share of my taxes that will undoubtedly bail out its cost over-runs be voluntary, too?
Wednesday, June 3, 2009
Both health-insurance regulators (Insurance Commissioner Steve Poizner and Cindy Ehnes of the Department of Managed Health Care), as well as Los Angeles City Attorney Rocky Delgadillo, went on a tear against health insurers who had rescinded policies previously issued to individuals, whom the insurers alleged had materially misrepresented their health status when they applied for coverage.
Because the rescissions occurred after the individuals had submitted expensive claims, the over-seers figured that the insurers had engaged in the illegal practice of "post-claims underwriting". It was really much ado about very little (if not exactly nothing), as I wrote in a series of posts from October 24, 2007 through September 12, 2008. (You can hyperlink back through the series from the latest one.)
But Commissioner Poizner is in election mode - for governor this time - so he has obliged Ms. Girion and the LaLa Times with some new proposed regulations against the health insurers' practices.
The proposed regulations are a bonanza for trial lawyers, and will reduce Californians' ability to find inexpensive health insurance in the individual market. For example, in order to reduce ambiguity, the proposed regs state that: "Whenever possible, information from a PHR (Personal Health Record).....shall be relied upon in addition to, or if sufficient, instead of health history questionnaires."
Hang on: Are Personal Health Records now tools that relieve applicants from truthfully answering applications? Is "PHR" even a regulated term? In court, will a PHR, of whatever quality, over-ride an applicant's hand-written application? This is a Pandora's box.
Furthermore, if the applicant does not answer questions clearly, which are important for underwriting, the new regs oblige the insurer to "pursue alternative methods of obtaining such information, including but not limited to telephone interviews, medical records, or other sources of information."
Whoa again: Does this mean that if I caught some infection from a yak during my time in the Peace Corps in Mongolia, and fail to disclose it on my application, then the regulator will prevent the insurer from rescinding my policy because it failed to make inquiries to the Mongolian Ministry of Health?
It looks like all the burden of proof lies on the health insurer (which has no previous information about the applicant) and none lies on the individual (who has all the information). This makes responsible underwriting impossible.
Industry sources have told me that last year's regulatory rampage has already made them gun-shy about issuing individual policies in California, and they are rejecting many more applications. These proposed regulations will likely make the situation worse.
Tuesday, June 2, 2009
Another feature of the PCA is the requirement that states establish "exchanges", from which residents could buy health insurance. Once again, I believe that the proposal would be ineffective. Worse, it reflects a fundamental misunderstanding of the risk-pooling function of health insurance. (Unfortunately, it's the same misunderstanding that most people have.)
Congressman Ryan carefully distinguishes an "exchange" from a Massachusetts-style "connector" by the fact that participation in an exchange would be voluntary, whereas a "connector" requires every one to buy health insurance. Well, fair enough, but his Q&A's also show that the "exchanges" would not work as advertised, unfortunately.
First, let's note one of the reasons for the exchange: The Q&A states that "a single patient venturing into the individual market does not have the benefit of spreading risk (and costs) in a broader risk pool." This is almost completely untrue, as demonstrated by Professor Mark Pauly and colleagues (which I discussed in a recent briefing paper, especially pp. 30-31). And it would be even less true if the government reformed the tax code so that we could buy guaranteed renewable, health-status insurance, that lasted our whole lives (as described by Professor Cochrane.)
Second, the PCA promotes states' instituting "voluntary" exchanges, but health plans within the exchange will guarantee issue policies. I.e., people who are already sick will enter the exchanges to buy insurance and those who are healthy will avoid the exchanges. Obviously, this will result in death spirals within the exchanges.
The PCA anticipates that insurers within the exchanges will re-insure each other, as occurs in Switzerland and the Netherlands. However, participation in those countries is mandatory. There's no point re-insuring risk in the exchanges if only sick people buy policies via the exchanges!
The Patients' Choice Act is a serious, good-faith effort to reform health care with minimum government, but it needs a serious make-over.
Monday, June 1, 2009
Produced by U.S. Senator Coburn (R-OK), Senator Burr (R-NC), Congressman Ryan (R-WI), and Congressman Nunes (R-CA), the PCA immediately drew some heavy criticism by freedom-loving policy analysts Michael Cannon and Michael Tanner (a.k.a. "the two Mikes") over at the Cato blog.
The PCA would compels states to institute a number of policies. The first one that I found questionable is "auto-enrollment". This means that when you get a job, or a driver's license, or show up at the ER, you are "auto-enrolled" in a health plan. The Congressional authors cite the experience of auto-enrollment in 401(k) plans as an example of how it overcomes eligible beneficiaries' inertia in the face of complex choices.
Well, maybe so, but health insurance is quite different. First, suppose I move to Florida to start a new job and get a new driver's license when I arrive there. I am just about dumb enough to "auto-enroll" in both the default plan that my new employer offers me and the default plan offered by the DMV.
Also, if the hospital ER also offers auto-enrollment (which I suppose would happen if I went to Florida without a job and did not get a driver's license), that procedure misses the whole point of health insurance. It's kind of like the auto-body shop auto-enrollling you in car insurance when you show up after an accident! What kind of a self-destructive car-insurer would sign on to such a program?!?!
The other big difference between health insurance and a 401(k) is that if I stop contributing to my 401(k), the balance just sits at Fidelity (or Vanguard or Merrill Lynch,or wherever) until I roll it over. If I stop paying health-insurance premiums, I obviously auto-disenroll from the plan, defeating the whole purpose. Because nobody seriously proposes that a tax credit alone will fully fund a health policy, but that working people will pay some of their wages in premium, this will result in significant drop out.
Which brings us back where we begun: uninsured people. We either believe in individual choice, which will result in a certain number of uninsured under any scenario, or we believe in mandatory health insurance.
There really is no middle way.
Friday, May 29, 2009
The WSJ also ran an op-ed on "Parliament and the Laffer Curve" explaining that the exclusion of "expenses" - very broadly defined - from British legislators' taxable compensation has led to taxpayers paying for cleaning moats and repairing duck ponds in politicians' country estates. The op-ed diagnosed the erupting scandal in terms equally applicable to American health care: "Members of Parliament face a 100% tax rate on their unclaimed allowances."
The current tax treatment of employer-provided health insurance causes Americans to over-insure. And (unless they have a Health Savings Account) the type of insurance they have is use-it-or-lose-it. Failure to consume health services of even marginal value means forgoing those benefits forever.
Thursday, May 28, 2009
A recent white paper by the New England Healthcare Institute suggests that access to primary care in Massachusetts is actually worse than in other states, where health insurance is voluntary. Remaking Primary Care: From Crisis to Opportunity, reports data from the Massachusetts Medical Society. The share of primary-care practices accepting new patients dropped significantly from 2006 to 2008: 90% to 78% in pediatrics, 69% to 52% in internal medicine, and 75% to 65% in family medicine (p. 13, figure 3).
However, the same page cites a national survey with data from 2003-2004, that 94% of primary-care practices were accepting new patients. However, only 74% were accepting new Medicare patients, and only 64% were accepting new Medicaid patients (footnote 20).
The message is pretty clear: more government coverage equals less access to care.
Wednesday, May 27, 2009
But good ideas never die: the principle behind Prop 101 is now championed by State Rep. Nancy Barto, who invited me to testify to the Arizona House of Representatives Health & Human Services Committee yesterday on HCR 2014, which contains substantively the same language as Prop 101.
Like Prop 101, HCR 2014 is a proposed constitutional amendment. However, Prop 101 required an expensive drive for citizens' signatures to get on the ballot. If HCR 2014 passes the legislature, it will go on the ballot without the need for signatures (likely in November 2010), and the campaign will have more money to educate the public.
So, although Prop 101 failed at the ballot box last November, it obviously had enough of an impact to convince the majority in the legislature that it was worth championing. Indeed, after the hearing (in which the comittee passed the bill in a 6-3 vote), we had a press conference in which the Speaker of the House, Kirk Adams, announced his commitment to pass the resolution through the whole House.
The new resolution has more precise language than Prop 101, and the likelihood of the federal government monopolizing access to health care is much greater now than last November. These might be enough to influence the majority of voting Arizonans to protect their health services from government take-over when they see the amendment on the ballot.
As well, I'm obliged to compliment Rep. Barto on her command of the issues. Many health-policy analysts have seen Republican politicians flounder when challenged on issues of the uninsured, international comparisons of health outcomes, and the "fairness" of allowing individuals to navigate their own choices in health care. Rep. Barto was well prepared, citing reports by analysts such as Mike Tanner of the Cato Institute, and alluding to research by the NCPA's John Goodman, and other health-policy scholars.
On key issue that came up was the fate of a successful state constitutional amendment protecting health freedom, if the federal government were to take over health care. Some witnesses suggested that the U.S. Constitution's supremacy clause would invalidate the relevent clause in Arizona's state constitution.
Well, I'd prefer that the U.S. Constition's 10th amendment win that fight, but I'm not going to predict the outcome of a state's judicial challenge to an (as yet undefined) federal "universal" health plan. For those interested in preparing for such a fight, I'd recommend Levy & Mellor's The Dirty Dozen: How Twelve Supreme Court Cases Radically Expanded Government nd Eroded Freedom, especially chapter 1.
Thursday, May 21, 2009
As I wrote a while back, the primary beneficiaries of government-monopoly health care are public-sector unions. Behind every effort to increase government control of health care, you'll find a union boss. This was embarrassingly disclosed by Gov. Schwarzenegger, fed up that the SEIU was bullying the White House into withholding California's Medicaid bailout (as punishment for the governor's reducing home-health-care workers' wages to plug the deficit).
I believe that one important reason for the failure of the government to monopolize health care has been the discord between the SEIU and the CNA/NNOC. This erupted during the 2007 debate over health reform in California, where the SEIU supported Schwarzenegger's scheme for compulsory enrolment in private insurance, whereas the CNA supported pure single-payer. The CNA's ally, state senator Sheila Kuehl, killed Schwarzenegger's bill in the senate.
So, if these two powerful unions have buried the hatchet, we should expect to see an even more comprehensive assault on individual choice in health care, as they combine to lobby for government take-over in every state capitol and DC.
Wednesday, May 20, 2009
Two of the initiatives would have broken into two piggy-banks funded by previously approved taxes for mental health and children's health, and rolled those dollars into the general fund. I'm glad that the voters rejected them, but I've previously argued that the original taxes were also harmful, although they were sure winners years ago at the ballot-box.
But fans of Big Government need not despair: President Obama has recanted his previous nullification of the Golden State's Medi-Cal (Medicaid) bailout. Perhaps he was embarassed when Gov. Schwarzenegger and his subordinates disclosed that the Service Employees International Union (SEIU) participated in his teleconference with the White House, when they discussed reducing wages to home-health workers. Certainly, the SEIU expressed extreme displeasure that the governor disclosed this information.
But the federal bailout of Medi-Cal will not suffice to feed the relentless growth of California's government-run health-care behemoth. What's next? Well I've been around long enough to be pretty confident that I can identify the next target: those pesky smokers.
In case anyone wants to prepare for that fight, here's my 2006 paper debunking the notion that hiking California's tax on smokers will solve any problems, either health or budget related.
Tuesday, May 19, 2009
Probably not: Depending on how many cars were sold to corporate fleets versus how many to individuals, the price of cars to corporate fleets would rise. Renters would pay a higher price.
So, governments generally allow different prices to prevail in markets - but not when the government competes against private customers. For example, it is illegal for a private patient or organization to pay less than the government for prescriptions. We've known for years of evidence that this increases prices to private buyers of medicines (which I discussed in a 2003 report, pp. 10-12, 25-26).
This has not stopped states and the federal government from acting aggressively to artificially increase Rx prices for American patients. The latest is a multi-state and federal lawsuit against Wyeth Pharmaceuticals, in which 16 states and the U.S. are colluding on a lawsuit charging that private hospitals got lower prices for Protonix Oral and Protonix IV acid-reflux medicines than state Medicaid programs were able to negotiate.
The business case for these discounts was that the patients would be loyal to those medicines once discharged from the hospitals, and encourage their doctors to keep them on those meds as out-patients.
Horror of horrors! Competition between Wyeth and other drug-makers who make different therapies for acid-reflux disorder (such as a certain purple pill). And the states were little more than ineffective bystanders. Well, we just can't have that.
The result of this lawsuit will not be lower Rx prices to state Medicaid programs: Rather, it will be higher drug prices for hospitals and out-patients, and a higher likelood of fewer patients having access to a broad choice of anti-reflux therapies.
Monday, May 18, 2009
Unfortunately, because of the federal tax-code, state reformers often throw "exchanges" (a.k.a. "connectors") in the mix: Witness Massachusetts or (most recently) Utah. Nevertheless, the option of an exchange embraces a fundamental flaw in the way most people think about health insurance: That employer-based groups pool risk better than individuals.
No: they do not. If they did, we would get all of our insurance from our employers - including life, homeowner's and auto. Our great ally James Capretta has written an excellent essay in National Review which appears to suggest pooling small businesses in large groups as an advantage of health-insurance exchanges:
"Moreover, job-based coverage doesn’t work nearly as well for workers in smaller firms. Insurers charge premiums based on the known risks of the group they are covering, and the smallest firms simply are not big enough to spread these risks broadly. Most states have rules requiring insurers to treat all small businesses as if they were part of one large group, but there’s usually some give in the rates they can charge, allowing for adjustment based on a business’s recent claims history. Consequently, it is not uncommon for a small business with one or two workers newlyiagnosed with cancer to see premiums jump 20 or 30 percent, and sometimes even more, in just one year."I may have misunderstood the paragraph. However, a "known risk" is not, of course, a "risk" at all, and the aggregate risk of all the employees in any one firm is trivial to the block of business of the health insurer.
If this understanding of pooling risk were correct, then the small business with one or two workers newly diagnosed with cancer, whose premiums jump 20% or 30%, would have had its problems solved by the small-group reforms of the early 1990s. Many states imposed a modified community rating on small-group policies, but this neither contained premium hikes nor insured more small businesses (as I wrote about in my analysis of Gov. Schwarzenegger's failed California reforms.)
The problem with the small-group market is not instability of insured risks, but instability of employment. One or two people quitting or new ones getting hired changes the health-risk of the small business. So, small businesses and carriers write policies that last only one year, which is a ridiculous term for health insurance.
It works okay for auto or homeowner's insurance, because you are insuring against an acute event (e.g. theft or fire). However, catastrophic health events last longer than one year. If you were free to buy your own health insurance, you'd never buy a policy with a one-year term. You'd buy one with guaranteed renewability, and a mechanism to ensure the insurer did not "game" the block of business, by investing in health-status insurance as described by Professor Cochrane).
Even with the current prejudice against individuals buying their own health insurance, the individual market functions much better than the media reports. Professor Pauly has studied the data and concluded that guaranteed-renewability works quite well even in today's malformed individual-insurance market, (as I reviewed in my analysis of Senator McCain's presidential proposal).
Mr. Capretta (whom I've had the pleasure of meeting a couple of times when the zookeepers allow me out of the cage to mix with my betters) also has another important essay in the Weekly Standard, in which he recommends health-insurance exchanges. I'm not against an exchange qua exchange, but we've got to clear our heads of the notion that people can only buy health insurance effectively buy shopping in large groups, like mastodons marauding the pre-historic tundra.
Thursday, May 14, 2009
So, I suppose I'd better write something positive about "corporate health care" before folks start thinking I'm an MSNBC reporter in camouflage. I was impressed to see news from Pfizer that the firm will give its medicines for free to anyone unemployed during 2009 and had been using Pfizer meds for at least three months before losing his job.
Sure, the press release was a little gushy, but the program is straight-forward enough: Just fill in a one-page application (on the honor system, apparently) and you get free meds for a year. Why Pfizer issued the press release before the program is actually launched on June 1, I cannot say, but this sounds like the real deal.
So, unemployed people will get their meds for free for a year (or until they get new jobs). That's great, but there are a few things this program will not do, for which I'm sure it will draw criticism:
- It will not employ even one more government bureaucrat to administer another welfare program.
- It will not give the government more control over which medicines doctors prescribe, in the name of "cost-containment."
- It will not add one cent to the unfunded liabilities of the welfare-state programs that will burden our descendants with a massive tax load.
So, no, Pfizer's new program to expand access to medicines does not achieve all the goals of "universal" health care, but it's a start!