"Underinsured" in Germany?

Back on April 27, Senator Tom Coburn and Professor Regina Herzlinger published an op-ed (inexplicably) in the Huffington Post. Needless to day, it generated a firestorm of comments. I was just rereading it and saw this endorsement of "universal" health care, German-style, in the comments.

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.]

Spinning the Health-Care Polls

Perhaps humbled by its shellacking for hosting and broadcasting the Obama-infomercial on Wednesday, ABC and its collaborators at the Washington Post put a very different spin on a health-reform poll that has essentially the same results as the New York Times' one a few days ago.

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.

Healthy San Francisco a Model for U.S.: Sebelius, Obama

The Sacramento Bee reports that U.S. Health & Human Services Secretary Kathleen Sebelius and President Obama have praised Mayor Gavin Newsom's Healthy San Francisco municipal bureaucracy as a model of U.S. health reform.

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?

Wall Street Journal Cites Graham in Review of Failing States

Today's Wall Street Journal noted yours truly's U.S. Index of Health Ownerhip in its lead editorial. Describing the "Albany-Trenton-Sacramento disease" of high-rolling state governments, bloated with tax revenue but in continuous budgetary crises, the editorial fingered bad health policies as a key element of the problem.

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.

Medicare's Administrative Costs

One of the "zombies" in the health-care debate that refuses to die is the notion that a Medicare-like "public plan" does/would have lower administrative costs than private health plans. It's kind of like saying that Government Motors (formerly General Motors) will out-compete Toyota and Honda because of lower administrative costs. Nevertheless, former Labor Secretary Robert Reich brought it up again in a Wall Street Journal op-ed. I challenge it here.

Obama's Shifting Health-Care Message

As James Capretta notes, President Obama is realizing that his message — namely, that his reform will not result in you losing your health plan or doctor, is losing credibility and he is scrambling to find a new one. The new one seems to be that “if we do nothing” you will lose your health coverage anyway, because rising costs will make it increasingly unaffordable to employers.

But this is an incredibly self-important statement: Read more at National Review Online's The Corner (6/23 06:05 P.M. on the time-scroll).

"Single Payer" Health Care: "Solidarity" or Anti-Civil Rights

Last week, I participated in a radio interview with a couple of public-health doctors. Today, I posted a short column reflecting on the experience.

Arizonans to Choose Health Freedom in 2010

As the U.S. government rushes to pull us all into a government-run health-care system, one state is preparing to say "hands off my health care." The Arizona State Senate yesterday approved HCR 2014, a proposed constitutional amendment that forbids the government from forcing any citizen to participate in a government-run health-care system. The resolution will be on the ballot in November 2010.


(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.

Former Health & Human Services Secretary on Government Take-Over of Health Care

Secretary Michael O. Leavitt & PRI Senior Fellow Jeffrey H. Anderson on the Trojan Horse, in the Washington Times.

Government Rationing Access to Health Care

Michael Hiltzik in Los Angeles Times had a not-too-bad column discussion government deciding what health care you get, but it was still pretty pro-government. My comments on National Review Online's The Corner (6/22 07:18 P.M.).

The New York Times Misleading Health-Reform Poll

In it's madcap dash not to lose the momentum (alas, already lost) for a government take-over of health care, the New York Times blared a headline suggesting that almost three quarters of people want government-run health care. The truth is different, as I wrote in National Review Online's The Corner.

Yours Truly on the Radio

Two new audio files of recent radio interviews with yours truly: KQED-AM (San Francisco NPR affiliate) and KION-AM (Salinas, CA) on health reform.

Safeway's Health Benefits & Consumer-Driven Health Care

Two more from yours truly in National Review Online The Corner blog, discussing a letter of mine in the Wall Street Journal on Safeway CEO Steve Burd's contribution to the health-reform discussion, and shouting out Greg Scandlen for his op-ed on consumer-driven heath care in the Boston Herald (6/19 01:36 P.M. and 01:50 P.M. on the scroll).

Medical bankruptcy in Canada

Another post at National Review Online's The Corner that addresses what happens when the government denies medical care in Canada (6/18 06:04 P.M. on the scroll).

On Tyler Cowen on Medicare; and VAT

Yours truly over at National Review Online's The Corner, reluctantly criticizing Professor Tyler Cowen on Medicare and enthusiastically criticizing a Value Added Tax (VAT) to fund government health-care take-over through a "public option" (at 6/18 9:11 A.M. and 09:24 A.M. on the timestamped scroll).

A Margarita with Your Medicine? Growing Medical Tourism in Mexico

Research by Professor Steven P. Wallace of UCLA, and colleagues, concludes that almost a million Californian residents crossed the border into Mexico for treatment in 2004, of which half were Mexican immigrants – both legal and illegal.

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.

The Loneliness of the Long-Distance Canadian Cancer Patient

It's been a while since I've discussed my homeland, Canada, and I'm not usually one to traffic in horror stories of government-monopoly health care. But this story from Windsor, Ontario (right across the river from Detroit) is too appalling to pass up.

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.

A new health reform website, Health Care Horserace, interviewed me discussing the players in the debate and what is likely to occur, for their "Paddock" feature.

Obama, AMA, & Med-Mal Reform

Before President Obama's speech to the AMA yesterday, there was some speculation that he would offer a federal "fix" of punitive damages in medical-malpractice cases in return for the doctors' endorsing a so-called "public option" for health insurance (in reality, another government program in need of perpetual taxpayer bailouts).

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.

Barack Obama & The Dartmouth Atlas: A Dangerous Mix

Barack Obama's delusion that he can reduce health spending and income disparities through government power is a classic socialist fallacy: My latest column at KQED's Healthy Ideas.

Mr. Kristof's Disgraceful Column

Nicolas Kristof wrote one of the most appalling columns I've very read to advocate for a government take-over of health-care. He writes about an American professional who immigrated to Vancouver (where I lived for 8 years before immigrating to the U.S.), who had a hunky-dory experience after a stroke.

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.

More on Obama's Health-Care Rally in Green Bay

Over at National Review Online's The Corner (06/12 01:25 p.m. on the scroll).

Obama in Green Bay, WI

National Review Online has been covering a lot of the action on health care, especially on The Corner blog. I wrote about the president's trip to Green Bay to launch his health-care ground offensive. (The scroll is date-stamped: I'm at 6/11/09 05:06 p.m.)

Navigating Sen. Kennedy's Gateways

Keith Hennessy appears to be the first one to break Sen. Kennedy's health-reform bill, posting a draft that was clearly still being written. Since then, I've received a good copy that's over 600 pages long via e-mail, and Mr. Hennessy has also posted an agreement by three Committee Barons in the House of Representatives, the so-called "Tri-Committee Health Reform Proposal" (or Tri-Tip, for short, I guess). The Tri-Tip largely agrees with Sen. Kennedy's bill.

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.

Provider Participation in Medicaid: All Over the Map

The other day, the media gave good coverage to a report by a Dallas consulting firm, Merritt Hawkins, which surveyed waiting times for specialists in U.S. urban areas. Reporters were shocked to see waiting times measured in weeks, but in Canada, the waiting times are months. Look at the Fraser Institute’s latest waiting time survey (2008): 36.7 weeks for orthopaedic, 16.1 weeks for gynecologic, 12.5 weeks for internist, 7.3 weeks for cardiovascular, etc. And these are not for the operations: These waiting times are from the date your primary-care doc refers you until your first consultation with the specialist.

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.

Medicare Spending Has Increased 1/3 More Than Other Spending, Since 1970

Advocates of government-run health care claim that Medicare spending growth has been slower than private health spending. However, they come to this conclusion by conveniently ignoring out-of-pocket costs. PRI Senior Fellow Jeff Anderson presents a more thorough analysis, concluding that Medicare spending growth has significantly outpaced U.S. health expenditures other than Medicare & Medicaid, the flagship government programs, in this month's Health Policy Prescription.

Research on "Medical Bankruptcy" is Analytically Bankrupt

The media re-broadcast an article that concluded that 62% of U.S. personal bankruptcies are "medical bankruptcies". The article was so off-base, John Goldman's Health Policy Blog nominated my dissection of it as an entry in the "Worst Study of the Year Award"!

Sebelius & Insurance Monopoly

In a real howler, US Secretary of Health & Human Services Kathleen Sebelius said that a so-called "public-option" is necessary because people in some parts of the country are subject to a health-insurance "monopoly" of one carrier.

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:

1. Give people the same tax break if they buy their own health insurance, instead of forcing them into health insurance that their boss chooses.
   
2. 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?

New Rescission Regs Will Hurt

It's been a while since the topic of "rescission" of individual health-insurance policies hit the headlines in California. Los Angeles Times reporter Lisa Girion and colleagues took credit for a previous regulatory flurry against health plans' rescissions, which peaked in February 2008.

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.

Why No Health-Tax Reform? A Conservative's Inside View

I'd say that almost no serious health-policy believes that employers alone should get the huge tax-break they do for offering health benefits as a part of compensation. And yet, it persists, despite scholars from both left and right having attacke it for years. Over at KQED's Healthy Ideas blog, I try to explain why conservative analysts have not yet convinced conservative politicians to fully embrace this reform.

Audio-Visual of Arizona Legislative Testimony

As previously reported, I spoke to the Arizona House of Representatives Health & Human Services Committee on May 26. The written testimony is posted here, and the audio-visual archive is here. I follow Christie R. Herrera at 1'36' and finish at 1'49.

Patients' Choice Act: "Exchanges"

Yesterday, I wrote critically about the "auto-enrollment" feature that the federal government would require states to institute if it passed the Patients' Choice Act, a proposal by four outstanding Congressional Republicans. I concluded that the requirement would not be effective.

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.

Patients' Choice Act & "Auto-Enrollment"

On May 20, the insightful policy analysts Joe Antos and Grace-Marie Turner editorialized in favor of the "Patients' Choice Act" in the Wall Street Journal, where they labelled it the "GOP's health-care alternative."

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.