Tag: Obamacare

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.

The Economist: “Efforts to Challenge Obamacare Are Gaining Momentum”

From a recent news item in The Economist:

[M]illions of Americans…think that Barack Obama’s health-insurance laws must be overturned…[P]olls suggest that many Americans still dislike them…

At the federal level Republican leaders in Congress have jumped on every bit of negative news—for example, a recent report from the Congressional Budget Office suggesting that the reforms will cost more than originally forecast—as just cause for overturning them…

The real action is outside Washington, though. Virginia, Utah and Idaho have outlawed the new individual mandate, which will require everyone to purchase health cover, and other states are looking at similar measures. Elsewhere, opponents have taken to the ballot box. Missouri will hold a referendum in August on the matter. Perhaps half a dozen other states may see a constitutional amendment blocking Obamacare on the ballot in November.

Critics have also filed various lawsuits challenging the constitutionality of health reform. In the most prominent nearly two dozen states, almost all led by Republicans, have banded together. Their chief legal argument is that the new individual mandate is unconstitutional. On May 14th the National Federation of Independent Business, a trade group representing small companies (who worry especially about the costs of compliance with the new law), declared that it too would join in.

Repeal the bill.

ObamaCare’s Price Controls Threaten HSAs

John Goodman is correct that ObamaCare’s individual mandate – and Kathleen Sebelius’s power to make the mandate more burdensome at whim – threaten the continued existence of health savings accounts (HSAs).  But ObamaCare’s price controls are no less a threat.

The new law requires insurers to charge enrollees of the same age the same average premium, regardless of health status.  That’s a price control, and it will cause premiums for healthy people to rise dramatically and thus lead to massive adverse selection.  Healthy people will gravitate to less-comprehensive insurance – in particular, HSA-compatible high-deductible plans – where the implicit tax is smaller.

As premiums for comprehensive plans spiral upward (ultimately causing comprehensive plans to disappear) and as ObamaCare proves more costly than projected, supporters will be desperate for new revenue.  They will call for the elimination of both HSAs and high-deductible health plans on the grounds that those products – not the price controls, mind you – are causing the market to unravel.

HSAs allow young and healthy consumers to avoid the raw deal that ObamaCare offers them. And that’s precisely why ObamaCare’s supporters will try to kill HSAs. We will end up repealing one or the other.

Update on the Legal Challenges to Obamacare

Since I first issued my challenge to debate “anyone anytime anywhere” on the (un)constitutionality of Obamacare, a lot has happened.  For one thing, Randy Barnett and Richard Epstein, among many others, have published provoctive articles looking at issues beyond the Commerce Clause justification for the individual mandate – such as the argument that Congress’s tax power justifies the mandate penalty and that the new Medicaid arrangement amounts to a coercive federal-state bargain.  (Look for to a longish article from yours truly due to come out in next month’s issue of Health Affairs.)  For another, as Michael Cannon noted, seven more states – plus the National Federation of Independent Business and two individuals – have joined the Florida-led lawsuit against Obamacare.  Perhaps most importantly, such legal challenges are gaining mainstream credibility.

Here’s a brief look at some important legal filings from the past 10 days:

  1. On May 11, the U.S. government filed a response to the Thomas More Center’s lawsuit asking a federal court in Michigan to enjoin Obamacare on various grounds, including, distinct from other suits I’ve seen, religious liberty violations from having to pay for abortions.  The government argues that the plaintiffs lack standing because it’s unclear whether the individual mandate will harm them and in any event this provision doesn’t go into effect until 2014 at the earliest. The government also predictably argues that the mandate is a valid exercise of Congress’s power to regulate interstate commerce and to provide for the general welfare.  There is nothing surprising here and we now await the court’s preliminary ruling.
  2. On May 12, the U.S. Citizens Association (a conservative group) and five individuals filed a new suit in Ohio, as Jacob Sullum notes.  In addition to the government powers arguments that are being made in most Obamacare lawsuits (most notably the state suits), this suit claims a violation of: the First Amendment freedom of association (the government forces people to associate with insurers); individual liberty interests under the Fifth Amendment; and the right to privacy under the Fifth Amendment’s liberty provision, Ninth Amendment retained rights, and the rights emanating from the First, Third, Fourth, Fifth, and Ninth Amendments (such is the Court’s convoluted jurisprudence in this area).  I’ll add that the attorney filing this suit, Jonathan Emord, worked for Cato over 20 years ago.
  3. On May 14, Florida filed an amended complaint that, along with adding seven states, two individuals, and the NFIB – so all potential standing bases are covered – beefs up relevant factual allegations and, most importantly, shores up a few legal insufficiencies to the previous claims.  This is a solid complaint, and alleges the following counts: (1) the individual mandate/penalty exceeds Congress’s power under both the Commerce Clause and taxing power and, as such, violate the Ninth and Tenth Amendments; (2) the mandate violate’s the Fifth Amendment’s Due Process Clause; (3) the mandate penalty is an unconstitutional capitation or direct tax because it is unapportioned; (4) the Medicare expansion constitutes a coercive federal-state bargain that commandeers state officials; (5) a different formulation of coercion/commandeering; and (6) interference with state sovereignty and functions under the Tenth Amendment.   After further briefing, oral arguments on the government’s expected motion to dismiss are scheduled for September 14 in Pensacola.
  4. At least one enterprising analyst has determined that the 2,400-page bill lacks a severability clause.  This means that if one part of the bill is struck down as unconstitutional, the whole thing falls! – and would mean that the drafters committed legal malpractice of the highest order.  I guess it goes to show that nobody has read the whole thing.

Finally, if anybody is reading this is in Seattle, I’ll be debating Obamacare at the University of Washington Law School next Thursday, May 27 at 4:30pm.  This debate, sponsored by a number of groups, including the law school itself and the Federalist Society, is free and open to the public.  For those interested in other subjects, I’ll be giving a different talk to the Puget Sound Federalist Society Lawyers Chapter the day before at 6:30pm at the Washington Athletic Club ($25, rsvp to Michael Bindas at mbindas [at] ij [dot] org).  The title of that one is “Justice Elena Kagan?  What the President’s Choice Tells Us About the Modern Court and Confirmation Process.”  Please do introduce yourself to me if you attend either event.

NFIB: ObamaCare Is Unconstitutional, ‘Threatens Individual Freedom’

The National Federation of Independent Business — the nation’s largest small-business lobby — will join the lawsuit that 20 attorneys general (including one Democrat) have brought against ObamaCare. 

According to the Associated Press, NFIB found ObamaCare’s individual mandate particularly offensive:

The National Federation of Independent Business will join the argument that Americans cannot be required under the Constitution to obtain insurance coverage, the group’s president, Dan Danner, said in an interview…

The new law allows government “to regulate you just because you exist,” said Danner. “If you can regulate this, where do you stop? Do you tell people, ‘We are going to mandate that everybody exercise?’ We think this is an overreach by the government. It goes too far, and threatens individual freedom.” [Emphasis mine.]

Repeal the bill.