Tag: Obamacare

Rwanda and the Psychic Benefits of Universal Coverage

Last week, The New York Times published an article subtitled, “In Desperately Poor Rwanda, Most Have Health Insurance.”  The main theme was the contrast between Rwanda’s compulsory health insurance system and the as-yet-non-compulsory U.S. health insurance market:

Rwanda has had national health insurance for 11 years now; 92 percent of the nation is covered, and the premiums are $2 a year.

Sunny Ntayomba, an editorial writer for The New Times, a newspaper based in the capital, Kigali, is aware of the paradox: his nation, one of the world’s poorest, insures more of its citizens than the world’s richest does.

He met an American college student passing through last year, and found it “absurd, ridiculous, that I have health insurance and she didn’t,” he said, adding: “And if she got sick, her parents might go bankrupt. The saddest thing was the way she shrugged her shoulders and just hoped not to fall sick.”

I don’t see anything absurd here, but I do see something remarkable. Rwanda is so poor, its per capita income is about 1 percent that of the United States ($370 vs. $39,000).  Its health care sector is an international charity case: “total health expenditures in Rwanda come to about $307 million a year, and about 53 percent of that comes from foreign donors, the largest of which is the United States.”  That’s roughly $32 per person per year, which doesn’t buy much.  Dialysis is “generally unavailable.”  As are many treatments for cancer, strokes, and heart attacks, making those ailments “death sentences” more often than in advanced nations.  Life expectancy at birth is 58 years, compared to 78 years in the United States.  Rwandan children are 15 times more likely to die before their first birthday (7 vs. 107 deaths per 1,000 live births) and 25 times more likely to die before turning five (8 vs. 196 deaths per 1,000 live births) than U.S.-born children.  (If you want to meet some Rwandan kids struggling to make it to age 5, read my friend’s blog, Life of a Thousand Hills.)  And yet, the saddest thing is a healthy-but-uninsured American college student.

What the Times sees as a paradox isn’t really a paradox.  Yes, the poorer nation has a higher levels of health insurance coverage.  But the wealthier nation does a better job of providing medical care to everyone, insured and uninsured alike. The Times reports that Rwanda’s national health insurance system isn’t fancy, “But it covers the basics,” including “the most common causes of death — diarrhea, pneumonia, malaria, malnutrition, infected cuts.”  Surely, the Times must know that anyone walking into any U.S. emergency room with any of those conditions would be treated, regardless of insurance status or ability to pay.  The same is true of other acute conditions, like heart attacks and strokes, for which uninsured Americans receive better treatment than insured Rwandans.  True, some uninsured Americans end up filing for bankruptcy, but let’s be clear: while bankruptcy is no day at the beach, suffering bankruptcy because you got the treatment is better than suffering death because you didn’t.  (As for dialysis, the United States already has universal coverage for end-stage renal disease through the Medicare program.)  The Healthcare Economist puts it this way: “Would you rather be sick in the United States without insurance or sick with insurance in Rwanda?”  You get the point.  If there’s a paradox here, it’s that insurance status does not necessarily correlate with access to medical care: uninsured people in the wealthy nation actually have better access to care than insured people in the poor nation.

An even bigger paradox, though, is Rwandan attitudes toward the United States. The United States generates many of the HIV treatments currently fighting Rwanda’s AIDS epidemic, as well as other medical innovations saving lives there and around the world.  More than any other nation, we create the wealth that purchases those and other treatments for Rwandans and other impoverished peoples.  The United States is probably closer to providing universal access to medical care for its citizens – and, indeed, the whole world – than Rwanda.  Rwanda’s “universal” system leaves 8 percent of its population uninsured. Though official estimates put the U.S. uninsured rate at 15.4 percent, the actual percentage is lower; and again, uninsured Americans typically have better access to care than insured Rwandans.  The real paradox is here that Rwandan elites think the United States is doing something wrong. Why?

Here’s one answer: Rwanda’s government explicitly guarantees health insurance to its citizens, and for some people that guarantee has value apart from any health improvements or financial security that may result.  Dr. Agnes Binagwaho, “permanent secretary of Rwanda’s Ministry of Health,” illustrates:

Still, Dr. Binagwaho said, Rwanda can offer the United States one lesson about health insurance: “Solidarity — you cannot feel happy as a society if you don’t organize yourself so that people won’t die of poverty.”

Set aside that a (permanent) third-world bureaucrat is telling the United States how to keep people from dying of poverty.  Binagwaho cannot feel happy without that government-issued guarantee.

How might such a guarantee increase happiness? It could make people happier by reassuring them that they themselves will be healthier and more financially secure (self-interest), or that others will be (altruism).  Yet altruism and self-interest probably cannot explain the “happiness benefits” that people enjoy when governments guarantee health insurance.  As I have argued elsewhere, the jury is out on whether broad health insurance expansions like ObamaCare result in better overall health; they may, but it is entirely possible that they would not.  The jury is also out on whether ObamaCare will produce a net increase in financial security.  It will subsidize millions of low-income Americans, but it will also saddle them with high implicit taxes that could trap millions of them in poverty.  Meanwhile, ObamaCare’s new taxes will reduce economic growth and destroy jobs.  If such a guarantee doesn’t improve health or financial security, it’s not worth much in terms of altruism or self-interest.

But there’s another potential “happiness benefit” that might accrue to supporters of a government guarantee of health insurance: it could make them happier by allowing them to signal something about themselves – e.g., that they are compassionate.  If people use a government guarantee of health insurance in this way, that could explain why Rwandan elites feel bad for uninsured Americans.  They may feel empathy for uninsured Americans because they perceive the American electorate has not sent uninsured Americans a valuable signal (“We care about you!”).  Meanwhile, the act of expressing pity for uninsured Americans allows Rwandan elites to signal something about themselves (“We are compassionate!”).  Robin Hanson has a lot to say about why people might use health insurance and medical care to signal loyalty and compassion.

My hunch is that this is an under-appreciated reason why some people support universal coverage: a government guarantee of health insurance coverage provides its supporters psychic benefits – even if it does not improve health or financial security, and maybe even if both health and financial security suffer.

If that’s the case, then we’re facing the same problem that Charles Murray identified in Losing Ground, his seminal work on poverty:

Most of us want to help. It makes us feel bad to think of neglected children and rat-infested slums…The tax checks we write buy us, for relatively little money and no effort at all, a quieted conscience. The more we pay, the more certain we can be that we have done our part, and it is essential that we feel that way regardless of what we accomplish…

To this extent, the barrier to radical reform of social policy is not the pain it would cause the intended beneficiaries of the present system, but the pain it would cause the donors. The real contest about the direction of social policy is not between people who want to cut budgets and people who want to help. When reforms finally do occur, they will happen not because stingy people have won, but because generous people have stopped kidding themselves.

One thing is for certain.  When Rwandan elites pity uninsured Americans, there is something very interesting going on.

While I’m at it, the health-policy advice I offered to China and India also applies to Rwanda:

Does not the fact that “these countries lack the fiscal resources required for universal coverage because of their…low average wages” suggest that many residents have more pressing needs than health insurance? For things that might just deliver greater health improvements? In a profession where universal coverage is a religion, such questions are heresy, I know.

China and India are in the process of a slow climb out of poverty. It is entirely possible that the best thing those governments could do to improve [health care] markets and population health would be to enforce contracts, punish torts, contain contagion, and nothing else.

Of course, if Rwandan elites support universal coverage largely because they want to signal something about themselves, this advice may fall on deaf ears.

Obamacare Is Unconstitutional

The very day President Obama signed the Patient Protection and Affordable Care Act, aka Obamacare, Virginia’s attorney general filed a lawsuit in federal court challenging the constitutionality of the health care overhaul. Virginia’s complaint alleges, in relevant part, that the PPACA’s requirement that every individual purchase health insurance or pay a fine – the “individual mandate” – is unconstitutional because Congress lacks the power to enact it.

The U.S. Government filed a motion to dismiss, claiming that Virginia lacked standing to bring this suit but also that the Commerce Clause, the Necessary and Proper Clause, and Congress’ taxing power all justify the individual mandate. Virginia responded, in relevant part, that the Commerce Clause does not grant Congress unbridled authority to regulate inactivity and force every man, woman, and child to enter the marketplace or face a civil penalty.

Cato, joined by the Competitive Enterprise Institute and Georgetown law professor (and Cato senior fellow) Randy Barnett, filed a “memorandum” – not called a “brief” because this is district (trial-level) court – supporting Virginia’s position and explaining that neither of the Government’s fallback positions legitimizes the individual mandate. We point out that the Necessary and Proper Clause is not an independent source of congressional power, but enables Congress to exercise its enumerated powers. Similarly, the taxing power does not authorize the individual mandate because the non-compliance penalty is a civil fine – and it would be unconstitutional even if it were a tax because it is neither apportioned (if a direct tax) nor uniform (if an excise tax). Moreover, Congress cannot use the taxing power as a backdoor means of regulating an activity unless such regulation is authorized elsewhere in the Constitution.

You can read our memorandum here.  The Government now has an opportunity to reply to the arguments raised by Virginia and those supporting its position (including us), and then the court will entertain oral arguments on the motion to dismiss.  We can expect a ruling this fall.

House GOP Announces First Vote to Repeal ObamaCare

House Republicans say they will force a vote to repeal ObamaCare’s individual mandate, which will subject nearly all Americans to fines and/or imprisonment if they do not purchase a government-designed health insurance plan.  They are soliciting public feedback on their America Speaking Out website, which explains:

We need to repeal and replace the health care law with common sense reforms that will actually lower health care costs and let Americans keep the plan they have and like. That’s why Republicans are offering a proposal to repeal the requirement forcing Americans to buy government-approved health insurance. Twenty states and the nation’s leading small business organization agree that this law is unconstitutional and that’s why they are suing to overturn it. The federal government shouldn’t be in the business of forcing you to buy health insurance and taxing you if you don’t.

I’d rather see the entire law repealed – including the price controls on health insurance, the trillions of dollars in health insurance subsidies, the CLASS Act, etc..  Why not do it all at once, just so you don’t miss anything important?

But this vote is unlikely to succeed, so I suppose there will be time for votes repealing the whole thing.

Massachusetts Treasurer on ObamaCare: ‘We Should Stop It’

Massachusetts Treasurer Tim Cahill, who is running for governor as an independent, claims that former governor Mitt Romney’s 2006 health care law “has created a huge hole in our budget,” and has this to say about ObamaCare:

If the federal plan is the Massachusetts plan writ large, then we should stop it, because we’re going to be in the same place four or five years down the road.

Indeed, ObamaCare is the Massachusetts plan writ large.

Repeal the bill.

Dartmouth Withstands the NYT, but the Left Cannot Withstand Dartmouth

Research by scholars at Dartmouth Medical School suggests that Americans waste gobs of money on medical care.  Last week, The New York Times ran a fairly lame critique of the Dartmouth research, by Reed Abelson and Gardiner Harris.  Kate Steadman of Kaiser Health News provides a good synopsis of expert reaction to the story and writes, “Conservative and libertarian health policy bloggers were largely silent, ignoring the debate.”  Although this libertarian wasn’t exactly ignoring the debate, the categorization is largely fair.  More about that in a moment.

Abelson and Harris’s portrayal of the Dartmouth research is completely at odds with my understanding of that research.

Decades ago, Dartmouth researchers stumbled across what may be the best method of detecting wasteful spending in an economic sector as complicated as medicine.  They noticed that patients in some areas consume a lot more medical care than patients in other areas — more office visits (to specialists in particular), more diagnostic tests, more procedures, more hospitalizations, et cetera.  And they began to question whether the patients who consume more care actually benefit from that additional care.  They have therefore spent the past few decades measuring both geographic variation in medical consumption, as well as any benefits for which they can find data.  Do patients in high-spending areas start out sicker than patients in low-spending areas? Do they end up healthier?  Are they more satisfied with their care?  My sense is that the Dartmouth researchers are scientists trying to capture the empirical reality of America’s health care sector.  They have been doing this for a long time, they are very good at it, and they consistently find that a lot of the medical care that Medicare patients consume appears to provide no value.

That finding has drawn intense criticism, not least from health care providers in high-spending areas, whose resource use it calls into question.  Dartmouth researchers have tried to address those criticisms by approaching the issue from whatever angles the data will allow.

  • It is possible, and many critics claim, that high-spending regions spend more because they treat sicker patients.  The Dartmouth folks have therefore controlled for patients’ health status, then measured whether patients in high-spending areas experienced better outcomes.
  • It is certain, as critics also note, that those controls are imperfect.  Dartmouth researchers have therefore controlled for the ultimate outcome — death — by measuring geographic variation in Medicare enrollees’ medical consumption in the last six months of life.  That too is an imperfect strategy, as Reed and Harris note.  It is possible that high-spending regions are doing things that keep some Medicare patients alive and out of that cohort.
  • Dartmouth researchers have compared variations in spending to measures of quality other than health outcomes, including “process” measures that show whether doctors are following evidence-based treatment guidelines.
  • To determine whether patient preferences are driving geographic variation, they have compared consumption patterns to surveys estimating patients’ preferences for more- vs. less-aggressive treatment.

These various strategies consistently show that a large share of medical spending cannot be explained by either patient preferences or better health outcomes.  Indeed, they have even found that higher spending often correlates to lower-quality care.  These findings suggest that perhaps one-third of U.S. health care spending — which amounts to about $700 billion per year, or 5 percent of U.S. GDP — is not making patients any healthier or happier.

These research strategies are not perfect, either individually or in the aggregate, because the data are imperfect and medicine is extraordinarily complex.  (If this stuff could be measured perfectly, it wouldn’t be medicine.)  Furthermore, even if the Dartmouth studies fully controlled for health status and patient preferences, their findings would not prove that all the extra money is being wasted. It may be, for example, that the additional money spent in high-spending areas generates new knowledge that helps save lives  in low-spending areas too.

Nevertheless, this central finding has held up to many different research strategies.  The Dartmouth crowd has produced a sizable and credible body of research that suggests as much as one third of U.S. health care spending — roughly the annual economic output of South Carolina — is little more than a wealth transfer from taxpayers and premium-payers to health care providers and medical suppliers.

Given all this, it was bizarre to see Abelson and Harris claim, “Measures of the quality of care are not part of the formula” (which is untrue), and “Neither patients’ health nor differences in prices are fully considered by the Dartmouth Atlas” (the presence of “fully” makes this claim merely unfair and misleading).  I agree with my left-leaning friends.  This was shoddy journalism.

I have seen only one conservative comment on the Abelson-Harris story.  Since OMB director Peter Orszag invokes the Dartmouth data in his argument for ObamaCare, my conservative friend celebrated Abelson and Harris’s attack on those data.

My conservative friend is in error — but so is Orszag.  As I wrote above, the Dartmouth folks are merely trying to capture what is happening in the world that surrounds us.  So long as the Dartmouth research holds up to scrutiny, advocates of free-market health care reform should embrace it, for two reasons. First, embracing reality is generally a good idea.  Second, the Dartmouth research makes the case for free-market reforms, and against the Obama-Orszag agenda.  The Dartmouth Atlas focuses almost exclusively on the Medicare program, where economists of all stripes acknowledge that government-imposed price and exchange controls, coupled with a lack of patient cost-consciousness, are the driving forces behind persistent excessive spending and a lack of focus on value. (Dartmouth researchers opaquely refer to Medicare’s fee-for-service price and exchange controls as “the current reimbursement system.”) These are not products of the free market.  The wasteful health care spending identified by Dartmouth researchers must be laid squarely at the feet of the Left — or as I affectionately call them, the Church of Universal Coverage.

My conservative friend(s) would do better to respond that a free market can reduce unwarranted variation in health care spending, while government can’t — not in Medicare, and not even in the Veterans Health Administration.

Watch Me Debate the Constitutionality of Obamacare!

Two weeks ago I provided an update on the state of the lawsuits challenging Obamacare and mentioned that I’d be debating the law’s constitutionality at the University of Washington in Seattle.  This event brought my debate tour full circle, because it was UW Law School two months ago that couldn’t find anyone to speak to the serious constitutional defects in the so-called reform.

My debate, against constitutional law professor Stewart Jay, went very well: It was, I hope, both entertaining and enlightening.  Curiously, Prof. Jay insisted on repeating that my arguments boiled down to policy disagreements and “rhetorical flourishes.”  He also accused me of asking courts to make policy rather than defer to Congress’s constitutional powers.  This was all a bit rich coming from someone whose legal arguments focused on standing and ripeness – important in the cases at hand, but 150 people didn’t turn out to hear about technical doctrines – and whose main presentation centered on the need to reform a broken health care system. 

Indeed, Prof. Jay repeatedly criticized my unwillingness to tackle the issue of “spiraling premiums” – which I eventually addressed, though I had been under the impression that the debate concerned constitutional law, not how to reform the system or why reform is needed.  He also mischaracterized the state lawsuits as focusing on exaggerated claims about the cost of expanding Medicaid.  (When the law isn’t with you, argue the facts and when the facts aren’t with you, argue the law – and if both are against you, I guess just be argumentative… )

But don’t take my word for it, watch the whole thing here.  Many thanks to the UW chapters of Young Americans for Liberty (part of the Students for Liberty network), Young Democrats, College Republicans, and the Federalist Society – as well the law school itself – for organizing and sponsoring the event.

If You Like the VA, You’ll Love ObamaCare

The Obama administration sold – well, it pitched ObamaCare to the public with this promise: “It’s time we put the health of American families back in the hands of consumers – not the insurance industry.”

The Veterans Health Administration shows how incompetent the federal government is when it comes to making medicine a patient-centered enterprise.  After decades of mistreating veterans, the VHA achieved some successes in the past decade or so, such as adopting electronic medical records and improving on some measures of quality.  Yet serious deficiencies remain.  Today’s Los Angeles Times reports that the VA’s disability system is a nightmare for soldiers and sailors disabled in combat:

John Lamie survived six roadside bombings in Iraq, only to have the Department of Veterans Affairs refuse to accept three months’ worth of medical tests he underwent for jaw and shoulder wounds — tests performed by VA-approved doctors at VA facilities…

Many veterans wounded in Iraq and Afghanistan are being buffeted by a VA disability system clogged by delays, lost paperwork, redundant exams, denials of claims and inconsistent diagnoses. Some describe an absurd situation in which they are required to prove that their conditions are serious enough for higher payments, yet are forced to wait months for decisions.

“You fight for your country, then come home and have to fight against your own country for the benefits you were promised,” said [Clay] Hunt, 28, who served in Iraq and Afghanistan as a Marine Corps sniper.

It took Hunt, who lives in Brentwood, 10 months to receive VA disability payments for his injuries after the agency misplaced his paperwork…

Some veterans wait up to six months to get their initial VA medical appointment. The typical veteran of the Iraq or Afghanistan wars waits 110 days for a disability claim to be processed, with a few waiting up to a year. For all veterans, the average wait is 161 days…

Lamie, 25, an Army combat engineer who risked his life uncovering and defusing roadside bombs in Iraq, declared bankruptcy in April. He is unable to work because of his combat injuries, he said, and VA delays have left him short of cash to support his wife and four children. He gets $311 a month in food stamps.”I did everything the VA asked of me, but they block you at every turn,” Lamie said from his home in Georgia. “They play with people’s lives…They drag their feet, hoping you’ll give up. A lot of people do. Not me.”…

When he volunteered for the Marine Corps, Hunt recalled, a selling point was lifelong medical care if he were wounded.“But then the time comes to get those benefits, it turns into a lifelong battle with the VA to get what you were promised,” he said…

The experience has left [Lamie] drained and disillusioned. He said he couldn’t even look at his old Army uniform anymore.

“I can’t stand the sight of it after what I’ve gone through with the VA,” he said. “I’m not proud anymore.”

ObamaCare will produce similar horrors, and for the same reason: all economic systems serve the people who control the money.  Under ObamaCare and the VA, patients don’t control the money.  The government does.

Returning that money to consumers would put patients first, whether they’re veterans or other civilians. But such reforms won’t mean a thing until we repeal ObamaCare.