Tag: Health

The Truth about Medical Bankruptcies

During his speech to Congress last night, President Obama declared that health care costs “causes a bankruptcy in America every thirty seconds.” His numbers are just a little bit off.

If what President Obama said were true, there would be approximately 1.05 million health care related bankruptcies in this country every year. However, in 2007 (the last full year for which there is data available, there were a total of only 815,000 non-business bankruptcies nationwide. Moreover, according to a study by Dr. Ning Zhu at UC-Davis, only 5 percent of bankruptcies are caused by medical bills. That suggests that in 2007 there were about 41,000 health care related bankruptcies. Too many, to be sure, but a far cry for 1.05 million.

Haven’t we learned from those weapons of mass destruction in Iraq that facts matter when a president says we absolutely have to do something now?

Coordinated Care Versus Government

With such a diversity of health care options, some say that health care lacks coordination and integration. But does that failure to coordinate care indicate a failure of markets or government?

In today’s Cato Daily Podcast, adjunct scholar Arnold Kling, who recently co-authored the Briefing Paper, “Does the Doctor Need a Boss?,” discusses why a private overseer would be more beneficial to patients and doctors than a government bureaucracy.

“My view as a market person is that we really don’t know what the best health care system is yet,” says Kling. “…Let’s allow some trial and error experimentation by the market and let the market determine what the best system is.”

Kling is the co-editor of EconLog, a weblog devoted to economic issues and author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care.

The Obamacare to Come…

In Barack Obama’s inaugural address, he once again made it clear that he intends to fix our “too costly” health care system in order to “raise health care’s quality and lower its cost.” This is to be expected. Then-candidate Obama made health care reform a major issue during the campaign, and his actions sincesuch as naming former South Dakota Senator Tom Daschle as both Secretary of Health and Human Services and White house “health czar”—suggest that health care reform remains at the top of his agenda.

But what will Obamacare look like? The president has not yet released a plan, but from his campaign statements, the plan outlined by Senate finance committee chairman Max Baucus, a bill introduced by Sen. Ron Wyden (D-OR), and Secretary Daschle’s book, it’s possible to glimpse at the basic components.

Mandates: Almost certainly President Obama will propose a mandate on businesses to provide health insurance to their workers. There may or may not be an exemption for small business or some type of tax credit to offset costs. And, while President Obama opposed an individual mandate during the campaign, all the other Democratic plans embrace such a requirement, and the logic of President Obama’s plan leads inexorably toward an individual mandate.

Minimum Benefits Package: Both President Obama and congressional Democrats have long supported a requirement that all insurance plans offer a standard minimum package of benefits.

Regulation: All the Democratic plans call for a host of new regulation on insurers, including insurers to accept all applicants regardless of their health (guaranteed issue) and would forbid insurers from basing insurance premiums on risk factors such as health or age (community rating). There may also be a requirement that insurers pay out a minimum amount of premiums in benefits.

Subsidies: Low- and likely middle-income Americans will be subsidized. The changes in the SCHIP program passed by the House earlier this week, allowing states to subsidize children from families earning up to 400 percent of the poverty level, suggests the direction that any reform bill will take.

Imposed Cost-Effectiveness: Secretary Daschle, in particular, has called for a government panel to study the comparative effectiveness of various treatments and establish standards of practice for providers. A key battle will be over whether these standards become mandatory, effectively denying patients a full choice of treatments.

A Government-Plan: Both the president and leading Democratic health reformers embrace the concept of a government health care program similar to Medicare operating in competition with private health insurance.

The net result of a plan based on these concepts will be a system in which, while privately-owned health insurance will continue to exist, the government makes all the important decisions. As my colleague Michael Cannon has pointed out, that’s “socialized medicine” no matter how it is disguised.  And, it is bad news for American patients, health care providers, and taxpayers.

Who’s Blogging about Cato

  • While running an online poll on Sanjay Gupta’s appointment, Ann Althouse quotes Michael D. Tanner on his views about the office of surgeon general.
  • Jason Shafrin cites a December Cato forum in which panelists Glen Whitman and Ezra Klein debated the state of the nation’s health care. A podcast from the forum, “Does America’s Health Care Sector Produce More Health?” is available here.

  • Insider Online contributor Alex Adrianson blogs about the most recent edition of Cato Journal, with an article by J.R. Clark and Dwight R. Lee that examines the relationship between government interference in the market and censorship.