Tag: national health care

The Difference between the Health Care Systems in Canada and the U.S.

Sally C. Pipes understands Canadian health care. As the former assistant director of the free-market Fraser Institute, she lived under Canada’s national health care system and has researched it extensively.

The Canadian experience with national health care has produced waiting lines, rationed care and has not produced the preventive and patient-focused care that it has promised, says Pipes, who is now president of the Pacific Research Institute and author of the new book, The Top Ten Myths of American Health Care.

She spoke at the Cato Institute July 15, 2009.

For market-based solutions to health care reform, visit Healthcare.Cato.org.

The Economic Case for Health Care Reform

There’s an old Yiddish saying that, “If my bubba had wheels she’d be a trolley.” So goes the logic of the Obama administration in their paper released yesterday, “The Economic Case for Health Care Reform.” Their claim is that reducing health care costs would help the economy. Yes, if health care costs were reduced it would likely help the economy, though we should remember that the health care industry is part of the economy.

There is nothing in Obamacare, however, that will reduce costs. In fact, expanding coverage may cause costs to rise. One study by MIT’s Amy Finkelstein suggests that the prevalence of insurance itself has roughly doubled the cost of health care. So, if Obama succeeds in expanding insurance coverage, it’s very likely to increase the cost of care.

Take Massachusetts for example. Three years ago, Massachusetts governor Mitt Romney signed into law one of the most far-reaching experiments in health care reform since President Bill Clinton’s ill-fated attempt at national health care. Proponents promised the reforms would reduce health care costs, suggesting the price of individual insurance policies would be reduced by 25-40 percent. In reality, however, insurance premiums rose by 7.4 percent in 2007, 8-12 percent in 2008, and are expected to rise 9 percent this year. This is compared to a nationwide average increase of 5.7 percent over the same three years. Nationally, on average, health insurance for a family of four costs $12,700; in Massachusetts, coverage for the same family costs an average of $16,897.

In fact, since the bill was signed, health care spending in the state has increased by 23 percent. Thus, despite individual and employer mandates, the creation of an insurance connector and other measures that increase insurance regulations, Massachusetts has failed to bring costs down.

President Obama and Congressional leaders have endorsed expanding coverage in similar ways to Massachusetts. The proposals would undoubtedly make it easier for some people to get coverage, but would also raise insurance costs for the young and healthy, making it more likely they would go without coverage. This leaves two choices: revert to the individual mandate (President Obama opposed the mandate as a candidate) or increase subsidies to try to cut costs to young and healthy individuals, thereby adding to the already substantial cost of the proposed plans.

Ultimately, controlling costs requires someone to say “no,” whether the government (as in single-payer systems with global budgets), insurers (managed care) or health care consumers themselves (by desire or ability to pay). In reality, any health care reform will have to confront the fact that the biggest single reason costs keep rising is that the American people keep buying more and more health care.

How Does It Feel to Be at the Table Now?

On Monday, the Obama administration held a well-publicized love-fest with lobbyists for the health care industry.  It turns out that rather than a “game-changer,” the event was a fraud.  And the industry got burned.

At the time, President Obama called it a “a watershed event in the long and elusive quest for health care reform”:

Over the next 10 years — from 2010 to 2019 — [these industry lobbyists] are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.

By an amazing coincidence, $2 trillion is just enough to pay for Obama’s proposed government takeover of the health care sector.

Yet The New York Times reports that isn’t the magnitude of spending reductions the lobbyists thought they were supporting:

Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending… [C]onfusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.

Health care leaders who attended the meeting…say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts…

My initial reaction to Monday’s fairly transparent media stunt was: “I smell a rat.  Lobbyists never advocate less revenue for their members.  Ever.” The lobbyists are proving me right, albeit slowly.  (Take your time, guys.  I don’t mind.)

The Obama administration seems a little less clear on that rule.  Again, The New York Times:

Nancy-Ann DeParle, director of the White House Office of Health Reform, said “the president misspoke” on Monday and again on Wednesday when he described the industry’s commitment in similar terms. After providing that account, Ms. DeParle called back about an hour later on Thursday and said: “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”

How did the industry find itself in this position? Politico reports:

The group of six organizations with a major stake in health care…had been working in secret for several weeks on a savings plan.

But they learned late last week that the White House wanted to go public with the coalition. One health care insider said: “It came together more quickly than it should have.” A health-care lobbyist said the participants weren’t prepared to go live with the news over the weekend, when the news of a deal, including the $2 trillion savings claim, was announced by White House officials to reporters.

Gosh, it’s almost like the White House strong-armed the lobbyists in order to create a false sense of agreement and momentum.  Pay no attention to that discord behind the curtain!

At the time, I also hypothesized that this “agreement” was a clever ploy by all parties to pressure a recalcitrant Congressional Budget Office to assume that the Democrat’s reforms would produce budgetary savings.  “Otherwise, health care reform is in jeopardy,” says Senate Finance Committee chairman Max Baucus (D-MT).  Turns out there was no agreement, and the industry was just being used.

American Hospital Association president Richard Umbdenstock was more right than he knew when he told that group’s 230 members:

There has been a tremendous amount of confusion and frankly a lot of political spin.

Merriam-Webster lists “to engage in spin control (as in politics)” as its seventh definition of the word “spin.”  Its second definition is “to form a thread by extruding a viscous rapidly hardening fluid — used especially of a spider or insect.” Which reminds me…

CORRECTION: My initial reaction to Monday’s media stunt – “I smell a rat” – was transcribed incorrectly.  It should have read, “I smell arachnid.”

(HT: Joe Guarino for the pointers.)

A Not So Happy Anniversary for the “Massachusetts Model”

Three years ago yesterday, then-Governor Mitt Romney signed into law the most far reaching state health care reform plan to date.  At the time, we warned that the plan, with its individual and employer mandates, new regulatory bureaucracy (the Connector), and middle-class subsidies would result in “a slow but steady spiral downward toward a government-run health care system.” Sadly, three years later, those predictions appear to be coming true.

  • While the state has reduced the number of residents without health insurance, some 200,000 people remain uninsured. Moreover, the increase in the number of insured is primarily due to the state’s generous subsidies, not the celebrated individual mandate.
  • Health care costs continue to rise much faster than the nationally. Since the program became law, total state health care spending has increased by 23 percent. Insurance premiums have been increasing by 10-12 percent per year, nearly double the national average.
  • New regulation and bureaucracy is limiting consumer choice and adding to costs.
  • Program costs have skyrocketed. Despite tax increases, the program faces huge deficits in the future. As a result, the state is considering caps on insurance premiums, cuts in reimbursements to providers, and even the possibility of a “global budget” on health care spending.
  • A shortage of providers, combined with increased demand, is increasing waiting times to see a physician, especially primary care providers.

With the “Massachusetts model” being frequently cited as a blueprint for state or national health care reform, it is important to recognize that giving the government greater control over our health care system will have grave consequences for taxpayers, providers, and health care consumers. That is the lesson of the Massachusetts model.