Archive for category: Health Policy

I tweeted this factoid yesterday, but wanted to post on it too, because I think it illustrates the difference bewteen health insurance and health care.

A number of supporters of the current Senate bill have been pointing to RomneyCare to argue that mandates and exchanges can be wildly successful in providing care. But a September 2009 Kaiser Commission review of the MA experience had this to say:

According to a March 2009 Urban Institute report, health reform has improved access to health care services for newly insured and previously insured adults. Over ninety percent of adults in Massachusetts have a usual source of care and most reported seeing a doctor in the previous year. However, the affordability of health care remains a barrier to receiving care for some residents. Of the total population, 21 percent went without needed care in the previous year because of cost. People with disabilities and those in fair and poor health experienced the greatest barriers to accessing care.

There is some good in this snippet. It says that people–presumably some of them for the first time in a while–are getting primary care. But it’s also saying that more than one-fifth of them are forgoing medically necessary care because the health insurance they have is too stingy to make that medically necessary care affordable.

The MA program is not dissimilar to the Senate bill. It allows for policies with deductibles of up to $4000 for families and other out-of-pocket fees, though it actually has lower out-of-pocket limits than the Senate bill. What MA considers to be an affordable premium is not all that different from what would be required under the Senate bill. (While I don’t think all the Senate subsidy levels have been released, making a one-to-one comparison impossible, it appears that the Senate bill offers an affordability opt-out for the affluent–families making $114,401–that the MA program doesn’t have, but requires the middle class to pay higher premiums–$441/month versus $364/month for a family making $66,150; go figure, the House of Lords screwed the Middle Class again).

So we should assume that the Senate bill would have similar outcomes as the MA program (though with a much weaker mandate, it would achieve much lower levels of coverage). And one outcome appears to be that the middle class is being forced to buy insurance, but that insurance is not making health care affordable when people need it the most.

It’s one thing to require people to buy insurance if it is affordable and it guarantees that it’ll actually get them the care they need. But if it doesn’t (and the Senate bill wouldn’t for the middle class), then it just becomes a wealth shift from the middle class to the health care industry.

In a post citing liberally from a Matt Yglesias post naming me,  Ezra takes on the argument that the health care bill, as currently conceived by President Lieberman, would be a bailout of the insurance industry.

There’s an argument on the left that the health-care bill represents a “bailout” to the insurance companies. Matt Yglesias puts this in the proper context:

I’ve seen Marcy Wheeler characterize the plan as an “industry bailout.” And, indeed, if I were a small government conservative one political tactic I would employ would be to start characterizing all initiatives involving government spending as a “bailout.” You could say that [the stimulus]’s provisions funding K-12 education are a “bailout for teacher’s unions.” You could call [cap and trade] a “bailout for windmill makers.” And you can call the health care bill an “insurance company bailout.” But the mechanism by which insurers can get extra money under reform is that … more people get health insurance at a price they can afford.

For the record, I’m not positive I’m the one who did say that, but I’m not opposed to the invocation of my name in that context. I do, however, find Matt’s insinuation that I’m making the same kind of cynical argument conservatives do disingenuous at best. Particularly coming from a guy who claims that requiring middle class families to pay almost 10% of their income in premiums alone–more than 3 times as much as some experts say is affordable–is “a price they can afford.”

Ezra, for his part, argues (again) that profit is not in and of itself a bad thing.

To put this a bit more sharply, if I could construct a system in which insurers spent 90 percent of every premium dollar on medical care, never discriminated against another sick applicant, began exerting real pressure for providers to bring down costs, vastly simplified their billing systems, made it easier to compare plans and access consumer ratings, and generally worked more like companies in a competitive market rather than companies in a non-functional market, I would take that deal. And if you told me that the price of that deal was that insurers would move from being the 86th most profitable industry to being the 53rd most profitable industry, I would still take that deal.

Now, I’ve got a few nits. Ezra may not have seen the CBO directive that Jon Walker pointed to the other day, which suggests Harry Reid will be unable to insist on a 90% Medical Loss Ratio, the provision that would have forced insurers to spend 90% of premium dollars on care. And there are reasons to doubt that all the measures pressuring providers to bring down costs incent the right behaviors; while some are much-needed reforms, some may actually lead to more spending. But those nitpicks aside, Ezra rightly points out the aspects of this reform that a real improvements over what we’ve got now.

That said, Ezra’s further examples (and Yglesias’) just prove the point those of us opposed to the bill in current form have been making, because they show the importance of functioning markets.

The profit motive is not, in and of itself, a bad thing. The Apple computer I’m typing on, the Netflix movie I wish I were watching, the pork buns I wish i were eating — it all comes from profit. But Apple isn’t allowed to have slaves build its computers, Netflix can’t destroy the incentive to make films by pirating all of its DVDs, and Momofuku can’t let rats infest its kitchen because exterminators are expensive.

First, let me deal with Matt’s analogies. Some stimulus money goes to schools. That money is either appropriated at the state level through regular somewhat democratic appropriation processes (in which case it’s a bailout for states, and the teacher’s unions will be put in position of negotiating for fewer job cuts or wage decreases). Or it will be awarded to school construction contractors in localized markets that are both competitive and (because of transparency attached to the stimulus) very transparent.

Cap and trade has, in fact, been called a bailout–but of Wall Street, not wind turbine manufacturers, because it’ll just create another big derivatives market. But for companies trying to reduce their greenhouse gas emissions to meet caps, yes, they may choose to buy wind turbines. Or they may choose any number of other ways to generate power releasing fewer greenhouse gases. The point is, though, there are many choices, and some, but not all of those choices, are markets in which there is real competition (and utilities are big enough they’ve got some power to influence these markets).

Now onto Ezra’s analogies. I’m most intrigued by his Momofuku parallel, because it does point to one aspect of health care reform–the regulations requiring insurers reveal a lot more information about their businesses, which hopefully will make it easier to pressure health care providers to improve their practices. But the analogy fails on a key point: consumers’ source of pressure on Momofuku not to let rats take over its kitchen is twofold. We trust health inspectors will find the rats and issue a report making the rats public. And, very importantly, Momofuku has to compete with hundreds of other restaurants, and any hint that it’s got a rat problem would make it competitively disadvantaged compared to these other hundred restaurants. Unlike Momofuku, Blue Cross in most markets has only a few other competitors. So a better analogy than Momofuku is probably school lunch programs, which are regulated by the USDA, but which aren’t exposed to real competition. And, as it turns out, school lunches don’t match the quality of meats offered at fast food restaurants which are exposed to competition.

In the past three years, the government has provided the nation’s schools with millions of pounds of beef and chicken that wouldn’t meet the quality or safety standards of many fast-food restaurants, from Jack in the Box and other burger places to chicken chains such as KFC, a USA TODAY investigation found.

The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program “meets or exceeds standards in commercial products.”

That isn’t always the case. McDonald’s, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.

That’s not rats, but it is a significant issue affecting quality. Increased transparency is not sufficient to force larger bureaucracies to improve quality. It’s an important element, but it’s not enough.

Read more →

I believe that if the Senate health care bill passes as Joe Lieberman has demanded it–with no Medicare buy-in or public option–it will be a significant step further on our road to neo-feudalism. As such, I find it far too dangerous to our democracy to pass–even if it gives millions (perhaps unaffordable) subsidies for health care.

20% of your labor belongs to Aetna

Consider, first of all, this fact. The bill, if it became law, would legally require a portion of Americans to pay more than 20% of the fruits of their labor to a private corporation in exchange for 70% of their health care costs.

Consider a family of 4 making $66,150–a family at 300% of the poverty level and therefore, hypothetically, at least, “subsidized.” That family would be expected to pay $6482.70 (in today’s dollars) for premiums–or $540 a month. But that family could be required to pay $7973 out of pocket for copays and so on. So if that family had a significant–but not catastrophic–medical event, it would be asked to pay its insurer almost 22% of its income to cover health care. Several months ago, I showed why this was a recipe for continued medical bankruptcy (though the numbers have changed somewhat). But here’s another way to think about it. Senate Democrats are requiring middle class families to give the proceeds of over a month of their work to a private corporation–one allowed to make 15% or maybe even 25% profit on the proceeds of their labor.

It’s one thing to require a citizen to pay taxes–to pay into the commons. It’s another thing to require taxpayers to pay a private corporation, and to have up to 25% of that go to paying for luxuries like private jets and gyms for the company CEOs.

It’s the same kind of deal peasants made under feudalism: some proportion of their labor in exchange for protection (in this case, from bankruptcy from health problems, though the bill doesn’t actually require the private corporations to deliver that much protection).In this case, the federal government becomes an appendage to do collections for the corporations.

Mind you, not only will citizens be required to pay private corporations. But middle class citizens may be required to pay more to these private corporations than they pay in federal and state taxes. Using these numbers, this middle class family of four will pay roughly 15% in federal, state, and social security taxes. This family will pay around $10,015 for their share of the commons–paying for defense, roads, some policing, and their social safety net share. That’s 15% of their income. They will, at a minimum, be asked to pay 9.8% of their income to the insurance company. And if they have a significant medical event, they’ll pay 22%–far, far more than they’ll pay into the commons. So it’s bad enough that this bill would require citizens to pay a tithe to a corporation. It’s far worse when you consider that some citizens would pay more in their corporate tithe than they would to the commons.

And, finally, while the Senate bill does not accord these corporate CEOs a droit de seigneur–the right to a woman’s virginity the night of her marriage–if Ben Nelson (and Bart Stupak) get their way, it would make a distinction in this entire compact for how the property of a woman’s womb shall be treated.

Single payer for the benefit of corporations

And for those who promise we’ll go back and fix this later, once we achieve universal health care, understand what will have happened in the meantime. The idea, of course, is to establish some means to get people single payer coverage (before Lieberman, this would have been through a public option or Medicare buy-in) and, over time, expand it.

In fact, this bill will move toward single payer, too–though not the kind we want. For the large number of people who live in a place where there is limited competition, this bill will require them to get health care through the oligopoly or monopoly provider. Read more →