Tag: health benefits

Cannon’s Second Rule of Economic Literacy

…appears at the end of this a poor, unsuccessful letter I sent to the editor of the Washington Post:

After quoting a scholar who expresses the economic consensus that the rising cost of employer-purchased health benefits “means lower wages and salaries,” “New study shows health insurance premium spikes in every state” [Nov. 17] immediately contradicts that consensus by stating, “employers are attempting to shift health costs onto their workers” by “asking employees to shoulder a larger share of the premium.”

If workers bear the cost of employer-paid health benefits in the form of lower wages and salaries, then increasing the employee-paid portion of the premium is not a cost-shift.  Workers would have borne those costs either way.

Employers cannot shift to workers a cost that workers already bear.

See Cannon’s First Rule of Economic Literacy.

Wash. Post, CBS, NBC Should Disclose Receipt of ObamaCare Subsidies

It’s not an easy period for major media organizations, what with all this creative destruction revamping that sector of the economy.  So the Washington Post Co. couldn’t help but be pleased when it received a $570,000 bailout from ObamaCare’s Early Retiree Reinsurance Program.  That program allows the Obama administration to run up the national debt another $5 billion by doling out cash to corporations that provide retiree health benefits.   The CBS Corporation received more than $720,000.  General Electric, a part owner of NBC Universal, Inc., cleared nearly $37 million.

Since The Washington Post, CBS News, NBC News, and MSNBC have now received subsidies (the latter two indirectly) from this very controversial law, their reporters should disclose that fact to their audiences when reporting on ObamaCare.  A disclaimer like this should suffice: “The Washington Post Corporation has received subsidies under the health care law.”  That would be consistent with how NBC discloses its relationship with General Electric:

Oh, and kudos to the marketing whiz who decided to call all these ObamaCare spending programs “slush funds.”

KFF/HRET Survey Part II: Isn’t This Good News, Too?

As I blogged earlier, yesterday the Kaiser Family Foundation and the Health Research & Educational Trust released their survey of employer-sponsored health benefits in 2010.

For most of this survey’s history, it included a very useful graph of the average growth rate of employer-sponsored insurance premiums.  Here’s the graph from their 2007 survey:


(The grey and light-green lines represent year-to-year growth in overall inflation and wages, respectively.)

Unfortunately, 2007 was the last year that KFF/HRET included that graph in their annual survey.  Had they included that graph this year, it would have shown an even more heartening moderation of premium growth:

A lot of things can drive premium growth.  I discussed a couple of them in my last post.  Some factors that could cause premium growth to moderate might not be all that welcome; if insurers dumped all their sick enrollees, for example.  But absent dramatic evidence of that, isn’t this good news?  And isn’t good news worth highlighting?

KFF/HRET Survey, Part I: Some People Don’t Know Good News When They See It

Every year, the Kaiser Family Foundation and the Health Research & Educational Trust produce the leading survey of employee health benefits.  Yesterday, KFF and HRET issued their survey of health benefits in 2010 with a news release that begins:

Family Health Premiums Rise 3 Percent to $13,770 in 2010…

Premiums rose by just 3 percent?  Great news!  Last year, KFF/HRET guesstimated that the average cost of family coverage could hit $14,539 in 2010.  Working families saved hundreds of dollars!

Not so fast, says KFF/HRET.  The main reason premiums rose less than expected is that “businesses have been shifting more of the costs of health insurance to workers through … deductibles and other cost-sharing,” said KFF president and CEO Drew Altman.  Actually, deductibles and other cost-sharing do not shift health insurance costs; they reduce the amount of insurance.  What they shift is the cost of health care, from the insurance pool to individual members of the pool.

Nevertheless, greater cost-sharing does appear to be a significant factor behind the minimal growth in premiums:

Many employers are … raising the annual deductibles workers must pay before their health plans begin to share most health care costs.  A total of 27 percent of covered workers now face annual deductibles of at least $1,000, up from 22 percent in 2009, the survey finds.  Among small firms (3-199 workers), 46 percent face such deductibles…

Among other plan types, only consumer-driven plans (which are high-deductible plans that also include a tax-preferred savings options such as a Health Savings Account or Health Reimbursement Arrangement) saw growth in their market share.  Such plans now enroll 13 percent of covered workers, up from 8 percent last year…

“Consumer-driven plans have clearly established a foothold in the employer market, tripling their market share from 4 percent in 2006 to 13 percent today,” said study lead author Gary Claxton, a Kaiser vice president and director of the Healthcare Marketplace Project.

“This may be helping to stem the rapid rise in premiums that we saw in the early 2000s, but it also means employer coverage is less comprehensive,” says Altman.

Yes, and that’s generally good news too.  Federal tax law encourages workers to increase their consumption of employer-sponsored insurance at the expense of other stuff they value more.  In a 2004 study for the Cato Institute, Christopher Conover estimated the tax preference for employer-sponsored insurance leaves Americans more than $100 billion worse off each year.  That same tax preference also fuels the “relentless” rise in health insurance premiums.  The trend toward greater cost-sharing shows that private markets are responding to rising prices the way they should: by limiting consumption of low-value items.

Maulik Joshi, who is “president of HRET and senior vice president for research at the American Hospital Association,” worries, “High out-of-pocket expenses … affect health care decisions for patients… [H]ouseholds will face difficult choices, like forgoing needed care, or reexamining how they can best care for their families.”  Exactly.  Someone needs to choose between health care and other uses of money.  Avoiding those difficult choices is not an option.  The best available evidence suggests that consumers do a remarkably good job with those decisions.  The only lamentable part is that employers are deciding how to make health insurance less comprehensive (greater cost-sharing vs. managed-care controls), instead of workers making those decisions for themselves.

But isn’t this generally good news?  Apparently not to the folks at KFF and HRET.  In a subsequent post, I’ll explore the negative spin they put on what their survey found.

Should Congress Even Try to Achieve Universal Coverage?

If the goal is to improve health, then the answer is clearly no.

Ironically, even though universal coverage is presumably about helping the sick, the Democrats’ pursuit of universal coverage demonstrates not how much, but how little they care about their neighbors’ health.

Economists Helen Levy and David Meltzer explain, in a book published by the Urban Institute, “There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on…other possibilities,” such as clinics, hypertension screening, nutrition campaigns, or even education.  In the Annual Review of Public Health, they explain further:

The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions…Understanding the magnitude of health benefits associated with insurance is not just an academic exercise…it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized.

If Democrats were serious about improving health, they would first gather evidence about which of those strategies produces the most health per dollar spent.  (As I recommend elsewhere, the $1.1 billion Congress allocated for comparative-effectiveness research should just about do the trick.)  Democrats would then fund the most cost-effective strategies, which may or may not include broader insurance coverage.

But the fact that Democrats are pursuing universal coverage without any such evidence necessarily means that they are willing to sacrifice potentially greater health improvements to achieve…whatever else they hope universal coverage will achieve.

Universal coverage is not about improving public health.  It is about subordinating health to some X-factor that supporters value even more.

Which leads to an even more intriguing question: what is that X-factor?

Financial security?  (If so, would universal coverage achieve that?  Or are there better strategies?)  Political power?  Dependence on government?  Industry subsidies?  The appearance of compassion?

I’d like to see that question put to the group.

(Cross-posted at National Journal’s Health Care Experts Blog.)

Obama Adopts the Mikulski Principle

Economists have advanced many theories of taxation. But as usual, the one that seems to explain the policies of the Obama administration best is what I call the Mikulski Principle, the theory most clearly enunciated in 1990 by Sen. Barbara Mikulski (D, Md.):

Let’s go and get it from those who’ve got it.

Just take a look at the myriad taxes proposed or publicly floated by President Obama and his aides and allies:

As the links will indicate, not all of these taxes have been formally proposed, and some have already run into sufficient criticism to have become unlikely. But together they illustrate the mindset of an administration and a Congress determined to extract as much money as they can from Americans rather than cut back on expenditures, which have doubled in about eight-and-a-half years.

Indeed, the administration’s programs remind us that today is July 2, the 233rd anniversary of the day on which the Continental Congress voted for American independence, issuing a document that declared, among other things,

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.