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Feb 21, 2013

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Roch

Wait. The governor, who is co founder of a chain of urgent care centers and multimillion dollar investor in a pharmacy chain, decides he favors medicaid expansion after all? And his Tea Party supporters are dismayed?

Andrew Brod

I get why they're dismayed, but perhaps they shouldn't be surprised.

And politically, it's smart. Dave Weigel: "He knows full well that the Republican-run legislature has to sign off on the plan. Either legislators affirm it, and help out Scott in 2014, or they buck him, and make Scott seem -- for the first time in recorded history -- like a centrist. When Charlie Crist has joined the Democratic Party and beats you like a rug in early polls, that's a decent menu of choices!"

Andrew Brod

Of course the other news is that Pat McCrory looks more extreme than Rick Scott.

polifrog

$20,000 for the cheapest government plan for five.
The penalty/tax for not paying $2000.

This is a fixed ratio, the Roberts ratio if you will.

How is this the least bit sustainable?

David Hoggard

Your simplistic take is obviously not sustainable, frog. But neither is the status quo.

Your solution is what?

polifrog

This two year "no-brainer", is brain-dead.


oorps

David Hoggard

So, then, your solution is euthanasia instead of health care coverage. Correct?

Andrew Brod

I too can draw random pretty lines on a graph and make up labels for them.

Okay, that's unfair. Frog must have gotten the graph somewhere, right? As it turns out it's from this article, in particular the first reason why governors should supposedly reject Medicaid expansion. (The second reason is that "Medicaid hurts the poor," so you know what kind of article this is.)

Anyway, in that first item, the NR article says the graph is based on "data from Heritage." That's the Heritage Foundation, the gang who are very bad at such things as math and numbers. In previous comments, I believe I've called them the "math makes my brain hurt" crowd; others agree.

So I was right in the first place. Citing a Heritage Foundation graph is basically the same as drawing random lines.

polifrog

No, Dave. For those states that chose to opt out ObamaCare steps in. The idea that the poor would be left out is unfounded.

If that is the case, two or three years of sweeteners are little more than vaseline.

And, of course, we all know, being a commons, ObamaCare's end result will be euthanasia. I doubt any form of vaseline will be offered at that point.

And, Doc. How does the chart not fit with this often repeated description of the incentive to the states to expand medicare?:

...the federal government will cover 100 percent of added costs for the newly eligible population for the first three years. After that, federal cost-sharing will decline slightly, but still will remain at 90 percent from 2020 forward (although states would be on the hook for half of any additional administrative costs).

Any amount the states pay for expansion is, by definition, going to be a burden on the states. Furthermore, it is a burden the states will have no control over. And what is to say that the federal government won't lower the 90% to 50% then 25%?

Finally, the 90% that comes from the federal government is only a "discount" to the states, but what does that mean when that 90% "discount" is funded by the citizens of the state via federal taxes? It means there is no "discount".

Allow me to explain.

The 90% is being sold as a federal gift. While I can see something being a federal gift if it goes to a single state or a handful of states, as there are states from which to transfer the gift, I can not see how there can be a gift to all states, as there is no state to transfer the gift from when all states are recipients. Thus, if something is a "gift" to all states then the states are essentially funding the "gift" via the federal government while tolerating federal government control and federal government graft.

Thus, there is nothing free here.

'Shell game' comes to mind, 'smoke and mirrors' and the professor patsies watching who seem oblivious to such confidence games being played on the nation.

David Hoggard

Your point, frog, was that the thing is unsustainable... And I agree. Every graph there is shows an untenable and unsustainable growth in the uninsured.

So what, short of euthanasia, makes those graphs finally head south? It is a serious question.

Before Obamacare, doing nothing wasn't working out so well. The cost graphs were up. With Obamacare, doing something doesn't seem to work out either... The cost graphs are up.

Make them go down for me.

polifrog

Sorry, Dave...

We weren't "doing nothing" before ObamaCare; we had been effectively divorcing the consumer from the prices of the products they desired for decades and regulating the providers as though cost were no concern... "if it saves even one life". Regulatory burdens translate into high costs and high costs kill too.

The consequences were predictable and ObamaCare only exacerbates the disconnect between producer and consumer.


Remember the H1N1 scare?

President Obama has declared H1N1 swine flu a national emergency, clearing the way for his health chief to give hospitals wider leeway in how they handle a possible surge of new patients, administration officials said Saturday.

The president granted Health and Human Services Secretary Kathleen Sebelius the power to lift some federal regulations for medical providers, including allowing hospitals to set up off-site facilities to increase the number of available beds and protect patients who are not infected.

If the regulations needed to be lifted why are they in effect at all? Needless regulations raise the cost of healthcare thus killing people.

The fact is that the problems we have today we did not always have. The problems began after WWII and we need a rethink that erases and rejects the mistakes made since then.

Won't happen...

We are living Brod's big government/low growth desire:

oorps


Andrew Brod

Look at all those data points with government spending at very high shares of GDP. Obviously those aren't data points from the U.S. economy. Which makes this graph not very meaningful for us.

But the colors are nice enough.

polifrog

Dave, I bumped into this article today:

I got the idea for this article when I was visiting Rice University last year. As I was leaving the campus, which is just outside the central business district of Houston, I noticed a group of glass skyscrapers about a mile away lighting up the evening sky. The scene looked like Dubai. I was looking at the Texas Medical Center, a nearly 1,300-acre, 280-building complex of hospitals and related medical facilities, of which MD Anderson is the lead brand name. Medicine had obviously become a huge business. In fact, of Houston’s top 10 employers, five are hospitals, including MD Anderson with 19,000 employees; three, led by ExxonMobil with 14,000 employees, are energy companies. How did that happen, I wondered. Where’s all that money coming from? And where is it going? I have spent the past seven months trying to find out by analyzing a variety of bills from hospitals like MD Anderson, doctors, drug companies and every other player in the American health care ecosystem.

I guess it should be no surprise this issue is tangential both physically and bureaucratically to the government induced issues associated with the cost of higher education.

=====

Doc, each data point represents a nation. But I believe the chart is skewed somewhat by faux GDP via currency "printing", QE in its various forms, etc. by the less productive big government economies.

Andrew Brod

No, each data point represents a year for a nation. Shouldn't you understand the graphs you post?

polifrog


If I say on the graph below each data point represents a year for a nation will you show us how much you know and correct me or will you feign ignorance and comment on the pretty colors again?

Andrew Brod

I never feign ignorance. My goal is to be the opposite of you.

Okay, so now each data point is a nation. Even so, there are problems. First, the data you use are figures for nominal, not real, GDP. Growth is generally measured using real GDP. You're mixing inflation in with actual growth.

Second, according to those data, the average GDP share of government spending in the U.S. (at all levels: local, state, and federal) from 2001 through 2011 was 38%. There are two data points that look like they're about 38 on the horizontal axis, one at about 1.5% or 1.6%, the other a tad below 5%. Neither number is what the data set says for U.S. average nominal growth. So it's still not clear what these numbers mean.

But this is all really beside the point. Contrary to what you and other unsophisticated conservatives believe, most liberals don't really want government to keep expanding and expanding. I realize that this is the only way you can understand liberalism, but it's just not true.

More to the point, since you put my name on this, the above is most certainly is not what I want. We saw what happened with state ownership of everything, in the USSR and elsewhere, and it was a great half-century-long ad for capitalism.

The topic of this thread is the expansion of government to do a particular activity that the private sector is clearly, obviously, doing badly, namely providing health insurance to the poor and working poor. It does not follow logically that advocating that government do this one thing is tantamount to advocating that government do everything.

David Hoggard

Extraordinary article, frog. Thanks. Very eye opening. I'm actually surprised that you recommended it...

"...Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.

Moreover, the only players in the private sector who seem to operate efficiently are the private contractors working — dare I say it? — under the government’s supervision. They’re the Medicare claims processors that handle claims like Alan A.’s for 84¢ each..."

polifrog

I cite the article because I felt the article gives a fair representation of the issue, Dave.

The quotes you pull...

I suppose most would see that as the solution and stop. I don't. I see those a patches for a deeper failure. One has to ask, why do those patches seem to work? The answer is they act as a form of "consumer pressure" on health care suppliers.

If that is the case, then the real question is, why are health care suppliers freed from consumer pressure in the first place?

I believe the answer to that is ... wait for it ... a failure in the free market, in particular, the way insurance operates within a free market.

TBC ... short on time right now

David Hoggard

Agreed. It is a fair representation of the issue, and quite alarming overall. Extraordinarily comprehensive, well written and actually made me understand the whole thing much better.

The free market sucks at providing health care according to his research, anecdotes and reporting. Also, tort reform (Safe Harbor) has to occur... or, as the author prescribes: "we must shame the Democrats" into undertaking this. He even gives a nod or two to parts of ObamaCare as heading in the right direction.

And, as you must know, I didn't cherry pick the quote I posted... it came from the author's conclusions.

You did read it, didn't you?

David Hoggard

By the way. It's David.

polifrog

David, (sorry about 'Dave') admittedly I skimmed a number of pages describing billing fiascoes in the middle until I got to the end:

Put simply, the bills tell us that this is not about interfering in a free market. It’s about facing the reality that our largest consumer product by far — one-fifth of our economy — does not operate in a free market.

I part ways with the heavy handed solutions offered as band aids to keep in place a broken and bleeding system, but I find it helpful to recognize agreement up to that point.

My solution?

I would start by recognizing that government solutions of the sort already tried have mostly served to exacerbate problems while taking note of where they seem to have done some good. For example, you pointed out where government intrusion has served to control costs via medicade.

Why does medicade work in keeping prices down? The answer is that it acts as much like a discriminating price conscience consumer as a government program can.

If government can act as a discriminating consumer and reduce costs, what happened to actual price conscience consumers? Where have they gone and to the degree they exist, why are they ineffectual?

While it is useful to recognize that "one-fifth of our economy — does not operate in a free market" we should also note that a large part of that economy is directly tied to insurance costs that are not definite like the value of a car or a house, but are in fact indefinite.

Could it be that rather than health care being the problem, that insurance is?

Perhaps the conditions for market destruction can arise from free market dynamics in insurance similar to the way that monopolies break markets.

Imagine you sell windows and you recognize a small portion of your customers have limitless pockets. Which customers would most keep your attention, those with shallow pockets that shop your prices, or those with limitless pockets that do not even bother to price your goods? How effective would price conscience consumers be in controlling the pricing of your windows when you have even a small contingent of consumers with infinitely deep pockets? How long would those prices remain displayed? Which market would you endeavor to grow and service? And which market does ObamaCare endeavor to grow?

I believe that in the same way a monopoly breaks a market by limiting competition for consumer dollars, full coverage insurance destroys markets by eroding the value oriented consumer base. In both cases the provider has full control over pricing.

Thus far our society's response to this market failure has been to expand the market of limitless pockets via minimum insurance coverage standards, subsidies for those who can't keep up, and forcing people to buy insurance they don't need to feed the limitless pockets of consumers who no longer shop value.

It is long overdue for us to recognize that the combination of free markets and full coverage insurance or even near full coverage insurance results in market failures and that the solution is to limit the maximum coverage one can purchase for healthcare.

We need to break the dependence our healthcare industry has on the non price conscience consumer. If we ever see price tags associated with healthcare services again we will have returned to a healthy market, but not until then.

Yes, a government solution.

Ed Cone

Price controls seem to work pretty well in a lot of other places.

That's one weird thing to me about our healthcare debate -- there are time-tested, highly functional, less expensive alternatives in use around the world, but we're not allowed to mention them because, um, USA USA!, or something.

polifrog

Price control?

We have a healthcare market dominated by a minority of price insensitive consumers and in which the majority, who are price sensitive shoppers, are either forced into bankruptcy to keep up or if not poor enough, are shut out.

Insurance is a product that can be anathema to a healthy market, but then it is the free market's socialism.

Ed Cone

Price control, as discussed in the second link here.

Andrew Brod

It's well understood that health-care consumers are price-insensitive shoppers, but it's equally well understood that the biggest culprit is health insurance. Therefore, price-insensitive consumers are in the majority, not the minority, because 84% of all Americans have health insurance. If price insensitivity is the problem, then it's not caused by a minority wrecking things for the rest of us.

Of course price insensitivity isn't the problem per se. It just is. Calling it the problem is like blaming bad food on lowbrow consumer tastes, or bad fashion on consumers' bad fashion sense. Demand is what it is, and a libertarian should know that.

But I don't want to make this about semantics. The relative price inelasticity of health care is indeed one of the factors that make the health-care market so unlike most other markets.

polifrog

Doc.:

Of course price insensitivity isn't the problem per se. It just is.

If that is the case, then why was it not a problem before the advent of pervasive full and near full coverage medical insurance?

Price insensitivity is not the given you presume it to be.

polifrog

Oh, and the minority I was referring to consists of those who have full or near full coverage. I don't know what that percentage is, but I assume it is a minority. I was not referring to all insured, but rather only those insured who have no incentive to shop.

The rest have either no insurance or insurance enough that they have sufficient skin in the game to wish they could shop for their medical needs or at least know the prices of medical procedures upfront.

They can not because there is one market that matters most to our health care industry, the fully/near fully insured non shopper.

It is that broken market we are all forced to navigate.

Andrew Brod

"Why was [price insensitivity] not a problem before the advent of pervasive full and near full coverage medical insurance?"

I don't see the point of the question. I've acknowledged that health insurance renders consumers less price-sensitive. Everyone who studies health care knows this. Would consumers be more price-sensitive if there were no health insurance? Sure, but so what?

Health insurance wasn't a creation of the government. It was a market reaction to the pathologies of the health-care market. Government has encouraged employer provision of health insurance by not taxing it, but it didn't create health insurance.

polifrog

"Would consumers be more price-sensitive if there were no health insurance? Sure, but so what?"

Price sensitive consumers force discipline on markets.
=====

Health insurance is a creation of free markets; I never implied otherwise.

In fact, I suggested market failure:

I believe that in the same way a monopoly breaks a market by limiting competition for consumer dollars, full coverage insurance destroys markets by eroding the value oriented consumer base. In both cases the provider has full control over pricing.

Rather than deal with that market failure in the way that it dealt with monopoly market failures, by dismantling the market failure, government exacerbated the problems created by over zealous insurance by encouraging the creation of more price insensitive consumers.

Businesses freed from the discipline of price sensitive consumers act no different than monopolies which are likewise freed from price sensitive customers. In each case the result is the same, rising prices.

And you say, "So what"?

Andrew Brod

I didn't say "so what?" to the problems created by private health insurance. Much of health-care reform is devoted to address that problem.

What's curious is your apparent belief that private health-care markets would run just fine if there were no health insurance. It's wrong but it's an interesting claim.

Also curious is your new-found willingness to admit the existence of market failure. I thought libertarians didn't believe in market failure.

Andrew Brod

The primary market failure created by private health insurance is adverse selection. Likely cures include single-payer health insurance and various provisions of Obamacare, such as the individual mandate.

Consumers being less price-sensitive than you'd like is not a market failure.

polifrog

Brod:

What's curious is your apparent belief that private health-care markets would run just fine if there were no health insurance.

I never said that, nor would I.

I said:

It is long overdue for us to recognize that the combination of free markets and full coverage insurance or even near full coverage insurance results in market failures and that the solution is to limit the maximum coverage one can purchase for healthcare.

I believe that within the free market can be found a market breaking attribute, namely full and near-full insurance coverage for health care. (Monopolies are a separate and unrelated example of a market failure)

If enough people take advantage of or are cajoled into full/near full coverage health care, they can have an out sized detrimental impact on the market due to the depth of their pockets as well as their lackadaisical attitude toward prices.

How else do you explain the lack of pricing in the health care market, but that the health care market caters to the deep pocketed fully/near fully insured who care nothing about prices while the rest are left dazed and confused by providers who refuse to communicate market information via pricing.

The solution is not to abandon insurance, but to reign in full coverage to the point that information is once again communicated between provider and consumer via pricing.

I don't know what the maximum full coverage allowed should be. 50%? 75%? I don't know at what point people will once again feel as though they have skin in the game, but I do know that expanding full coverage to more people is the exact wrong thing to do.

David Hoggard

"The solution is not to abandon insurance, but to reign in full coverage to the point that information is once again communicated between provider and consumer via pricing."

I'm not sure if it is THE solution, but it does make sense, on some levels, as part of a solution.

However... when patients have, say, 50% coverage - and treating their cancer costs, say, $700k - the remaining $350k is still financially ruinous (happened to my family). I get your point that through "skin in the game" price pressures the $700k could drop to, say, $500k - but that still leaves me $250k to pay out of pocket.

I'm financially (and emotionally) ruined either way. Just a matter of degrees.

My family has the cheapest BCBS policy there is. It is already a 70% "major medical" individual policy but still runs $800 per month (and rising), which is a burden that many many families cannot possibly afford. If (when) we incur another 'catastrophic' event... I'm counting on moving my family to your house - because mine will be gone.

polifrog

50% feels painful to me too, David. I imagine something around a 75% to 85% cap would do the job, but as I mentioned before, I don't know.

My mother-in-law has awesome insurance through her husband who was once a mine worker (UMWA). Her costs are nothing beyond a 5$ copay for medicines. Nothing. She has endured a lot of back surgery, but no financial burden. Credit the unions which were necessary in what was once their one company town. Good for her. But I know first hand what a Lexus insurance plan does to a person's shopping prowess and their willingness to go to the doctor for the most minor nothing.

Ed Cone

So the solution is a regulation on the free market for insurance products?

OK, then, we're no longer arguing about regulation being the wrong fix for healthcare markets. That's a key point. Now we're discussing the type(s) of regulation needed.

One problem with the skin in the game plan is that it doesn't get at the big costs of major and chronic illnesses. Skin in the game is great for some services and products, but I don't see how it encourages preventative health or makes much difference when (as Hoggard says) needs are immediate and costs extreme.

polifrog

Regulation in the way that antitrust is regulation, yes.

but I don't see how it encourages preventative health or makes much difference when (as Hoggard says) needs are immediate and costs extreme.
Then you don't understand markets.

The fact is that most healthcare needs are not immediate and can be shopped. That, of course, does get directly to the cost of chronic illness care.

As for the smaller portion of healthcare cases that are emergency related, most if not all services overlap with the needs of the chronically ill, and with prices for those services posted over the "chronic illness window" it would become difficult if not immoral to charge much more for the same services administered via emergency care.

As for preventative care, if that care or choice is seen as a saving some people will choose to, for example, brush their teeth. Some will not. That is the way of choice.

A further incentive to choose preventative care would be the lower premiums associated with insurance. In a functioning market such incentives would be much more effective than they are in our broken market.

This would be a real fix but unfortunately band aids for our broken system is preferable to too many.

Andrew Brod

Chris Christie blinked too.

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