Topic: Health Care & Welfare

HSA Realism

John Hood has a column today on Health Savings Accounts that cites Michael Cannon’s recent paper on the topic.  As Hood notes,

You can learn more about some of the issues involved – fairness to the health and sick, tax benefits for the wealthy and poor, adverse selection and the stability of health-insurance pools – by reading an excellent paper out last month from the Cato Institute. Michael Cannon, director of health policy studies at the libertarian think tank, has produced one of the better policy studies I’ve read on any subject in a long time. It takes the concerns of critics seriously – studying carefully and then rejecting some, studying and agreeing with others, and proposing changes that will make consumer-driven health care make more sense for more Americans over time.

Health Savings Accounts are one of the most important health care innovations of recent history, with the potential to significantly increase consumer involvement in health care decision-making.  But they are not a silver bullet.   The Left has long had a “utopian complex,” believing that some simple legislative change can solve this or that complex problem.  Lately, too many conservatives have fallen in to that trap as well.  Cannon’s paper is an important contribution to the debate that should be read by both supporters and opponents of consumer-driven health care reform.

Thud, Part II

In an email, Stuart Butler of the Heritage Foundation took issue with my characterization of his proposal (which has now been introduced as federal legislation) to foster health policy experimentation among the states. So I thought I might elaborate. (Readers can get the particulars of the proposal in Stuart’s paper.)

The system Stuart proposes seems predisposed to increase government health care spending and to produce little or no free-market reform.

Under his proposal, states would petition Congress for the funding or flexibility to experiment with different reforms within their borders. If the past is any guide, states would be more likely to request more federal money than either deregulation or less federal money. For example, we could count on states to ask Congress to fund expansions of government programs or the creation of state-chartered “purchasing pools.” It is less likely that states would request market-based reforms, such as capping and block granting federal Medicaid spending. Proposals to expand health savings accounts or eliminate the exclusion for employer-sponsored insurance in certain states would never get off the ground, for they would run afoul of the Constitution’s requirement that “all Duties, Imposts and Excises shall be uniform throughout the United States.” (Stuart argues that “other site-specific programs involving federal tax changes, such as enterprise zones, have passed muster.” But even if we could have the feds devise different tax rules for different states, would we want them to?)

Even if some free-market reforms could get approved, they would be less likely to survive than big-government reforms. To qualify for reauthorization, reforms would have to meet “clear and measurable goals, including coverage increases and quality improvements.” Yet new government programs would always have an advantage at “increasing coverage” because the state could always claim “you’ve got Medicaid!” even if you can’t get a doctor’s appointment. Free-market reforms – by definition – do not force coverage on people. With regard to quality, government programs whose funding is in the balance could force delivery of whatever the feds label “quality” health care, even if some patients get hurt. Meanwhile, if patients’ preferences deviate from the quality measures, market-based reforms lose because markets actually try to satisfy those diverse preferences. Finally, government-expanding reforms generally bestow benefits on concentrated interests, while market-based reforms (e.g., HSAs) produce benefits that are more diffuse. Thus big-government reforms would have a leg up in the political process that sets and evaluates compliance with performance measures. In short, free-market advocates don’t exactly dominate health policy, and would not dominate this process. The proposal thus ignores the lesson of O’Sullivan’s First Law.

It’s not that this is designed to be a big-government proposal. But it is not designed to be a limited-government proposal, which makes it almost certain that it would be hijacked by the forces of big government. That is why my initial impression boiled down to: Congress creates a commission, gives more money to the states.

But hey, I might be wrong. I’d like to hear Stuart’s thoughts.

Time to Boycott AMA Members?

A quick look at the press releases coming from the AMA during their annual meeting this week revealed numerous protectionist or otherwise paternalistic positions taken by the physician lobby. The august AMA House of Delegates approved resolutions that called for:

  • greater efforts by health insurers to make price information available to patients (physician, heal thyself)
  • a prohibition on direct-to-consumer advertising of every new drug until physicians feel they’ve had enough time to learn about the drug (pity the poor MD who doesn’t know the answers to his patients’ questions – and First Amendment be damned!)
  • regulation of nurse practitioner-run clinics, which offer affordable access to basic care (and pose a threat to physician incomes; blogged previously here)
  • ending alcohol ads on college sports telecasts, smoking bans, warning labels on video games,” etc., etc.
  • urging the Food and Drug Administration (FDA) to revoke the ‘generally recognized as safe’ (GRAS) status of salt and to develop regulatory measures to limit sodium in processed and restaurant foods,” etc., etc.
  • requiring Americans to purchase health insurance (which increases the appetite for physician services; blogged previously here)

Paging Dr. Bastiat …

But not all was venal and meddlesome in Chicago this week. On a (barely) positive note, the AMA gave a “cautious green light” to the practice of “solicitation of organs from potential donors who have no preexisting relationship with the recipient.” So for all of you who are reading this while your blood is flowing through a dialysis machine, and who don’t want to be one of the thousands who will die on the kidney transplant waiting list this year, if you go out and try to find someone who will give you a kidney so that you can live, the AMA has decided that would be “ethically acceptable.” There. Feel better? 

Voluntary Charity vs. Government Charity

Chris Edwards’ post on FEMA brought to mind a 2002 New York Times article, which I recently found on FreeRepublic.com. The article concerned fiscal shenanigans at the United Way, and FreeRepublic.com allowed readers to post comments. The following were representative:

“Why anyone would give money to (through) the United Way so they can skim their take is beyond me. Pick your favorite charity or cause, and give to them.”

“If anyone at work asks you to give through United Way, point them to the Salvation Army. The difference is like night and day.”

Pity we never see comments like:

Why anyone would give money to FEMA is beyond me. Pick your favorite charity or cause, and give to them.

If anyone at work asks you to contribute to Medicaid or Food Stamps, point them to the Salvation Army. The difference is like night and day.

As I told a (hostile) room of graduate social work students this morning, when charity is coerced, charities don’t have to try nearly as hard.

AMA to the Devil: “Let’s Make a Deal”

A reporter at the AMA annual meeting informs me that the House of Delegates has adopted a resolution with the adorable title of “Individual Responsibility to Obtain Health Insurance.”  An early draft [.doc] of the resolution (prepared by the AMA’s Council on Medical Service, and which may have been modified before passage) recommends this change to AMA policy:

That our American Medical Association support a requirement to purchase a minimum of catastrophic and preventive health insurance coverage for individuals and families earning greater than 500% of the federal poverty level, with substantial tax penalties for noncompliance. 

Once sufficient government subsidies are put in place, the resolution calls for slapping everyone with an individual mandate and “substantial tax penalties for noncompliance.”

As I wrote earlier, the AMA has a long history of using state power to restrict consumer freedom when that freedom might threaten its members’ incomes.  Yes, the AMA used to oppose tax-and-mandate schemes.  But ”in light of shifting public opinion in favor of requiring some individuals to purchase coverage” the AMA now supports requiring consumers to purchase a product that — wait for it — increases the quantity of physician services that consumers demand.

The Council’s reasoning also includes this gem:

In considering an individual requirement for health insurance, the Council believes that at some point incomes rise to a threshold where personal responsibility should be required…

Hmm.  And when incomes rise even higher, say to physician-like levels, what should be required then?

In September, Cato will publish a book by professor of law and medicine David Hyman that catalogues the damage done by physicians’ last deal with the devil.

The AMA: Protectionist to the Core

Radley Balko catalogues some of the wackier things going on at the American Medical Association annual meeting this week.  However, those who were worried that the AMA may have abandoned its old tricks should have no fear.

Among the topics the AMA will consider this week is a call for increased regulation of “convenience clinics” that offer an alternative to the physician’s office (and thus threaten physicians’ incomes).  Such clinics are mushrooming in locations like retail stores.  They provide quick access to basic care by trained nurse practitioners, who refer patients to physicians when necessary.  According to a Chicago Tribune report:

“We see lots of minor illnesses like colds, sore throats, and write a lot of prescriptions, typically for viruses,” said Maxwell, who views her clinic as a complement to a physician’s care. “It’s a place they can go when the doctor’s office is closed.”

…As at most other retail clinics, the operators say their offices are open seven days a week, with evening hours, and no appointment is necessary. A doctor comes by to review charts and other decisions made by the nurse practitioners but typically does not see patients.

Such clinics advertise that they will treat patients with routine maladies in 15 minutes or less, the amount of time you might spend in a waiting room at a doctor’s office as physicians pack more patients into a day.

There’s a very simple solution that the AMA could recommend to physicians who feel threatened by the competition:

  1. Expand your office hours;
  2. Shorten your waiting times;
  3. Lower your prices.

But that’s wishful thinking.  The AMA has a long history of using state power to restrict consumer freedom when that freedom might threaten its members’ incomes.  That unsavory tradition is alive and well.