Third-Party Payment Is the Root Cause of Health System Dysfunction

(A version of this column was published by RealClearHealth.)

Largely absent from the vigorous debate over reforming the nation’s health care laws is the understanding that simply being covered by health insurance does not reduce health care costs.

Before the Affordable Care Act (ACA) passed in March 2010, President Obama repeatedly promised that the typical family’s health premiums would go down by (sometimes “up to” but frequently “on average”) $2,500. That decline did not occur because the ACA strengthened the control that insurance companies—as opposed to patients—have over health care spending. In fact, Americans’ increasing dependence on health insurance over the last seven decades has been a major contributor to exploding health costs.

The Unindicted Conspirator: High Healthcare Spending and the Rise of Third-Party Payment

The healthcare sector has come to be dominated by third-party payers. Insurance companies and government bureaucracies pay the bills for the medical care that Americans consume, and they have become an unquestioned fixture of the healthcare landscape. Meanwhile, the growth in third-party payment has coincided with a massive increase in healthcare costs and a decline in quality.

Read my new research paper, published by The Mercatus Institute at George Mason University, at this link.

Average Wait Time to See A Physician Up 30 Percent in Three Years

Merritt Hawkins, a physician-staffing firm has published its periodic survey of waiting times for appointments with physicians in 30 metropolitan markets. The results:

Average new patient physician appointment wait times have increased significantly. The average wait time for a physician appointment for the 15 large metro markets surveyed is 24.1 days, up 30% from 2014. 

Appointment wait times are longer in mid-sized metro markets than in large metro markets. The average wait time for a new patient physician appointment in all 15 mid-sized markets is 32 days, 32.8% higher than the average for large metro markets.

California Single-Payer Bill Looks Backward, Not Towards A New Era of Patient Choice

(A version of this Health Alert was published by the Orange County Register.)

Here we go again. The California state legislature is considering yet another bill to impose a so-called single-payer, government monopoly, health care system. This has long been an obsession of the militant California Nurses Union, because a health system under total government control would suit the narrow interests of union leaders. They would accrue power similar to that wielded by other public-sector unions and might even be able to negotiate contracts similar to those enjoyed by state and local employees, which are driving public finances across the state into the ditch.

Whither Goes Your Health Insurance Premium?

AHIP, the trade association for health insurers, has a nifty infographic answering the question: “Where does your premium dollar go?”

Obviously designed to defray accusations that health insurers earn too much profit, the infographic shows “net margin: of only three percent. A full 80 percent of our premium dollar goes to paying medical, hospital, and prescription claims.”

Fair enough. However, the elephant in the infographic is the 18 percent of premium that goes to “operating costs.” Lest you think that’s a synonym for “overhead” or “bureaucracy,” AHIP helpfully explains: “Operating costs include consumer-centric activities such as communicating with members, running customer service operations, quality reviews, and data analysis, among other activities.”

Well, readers have to judge how “consumer-centric” those operations are.

Veterans Health Administration Realizes It Should Buy, Not Build Software

Imagine if you learned a government agency built its own office furniture, HVAC, or telephones. Even if there were a massive amount of corruption in government purchasing, it would be remarkable if a bureaucracy could do a better job building than buying.

Yet, for decades, the Veterans Health Administration has tried to do that with its Electronic Health Record (EHR). I cannot think of another health system that has built its own EHR, rather than buy it from a vendor. It makes as little sense as a health system manufacturing its own MRI machines.

The Logic Defying CBO Obamacare Replacement Score Breaks Its Own Rules

(A version of this column was published by Forbes.com)

Dr. Tom Price, the U.S. Secretary of Health & Human Services has said the Congressional Budget Office’s recent “score” of the Republican Obamacare replacement bill defies logic. Even worse, it defies the very rules which govern the CBO.

The 2016 Budget Resolution, agreed by both the House and Senate in May 2015 directed the CBO to do so-called dynamic scoring of major legislation.  Dynamic scoring includes proposed laws’ macroeconomic effects. It is especially important when new laws cut taxes, as the American Health Care Act would do. Old fashioned, static analysis does not result in accurate estimates.