Topic: Health Care & Welfare

David Hyman on PPACA Implementation

David A. Hyman is the H. Ross & Helen Workman Chair in Law and director of the Epstein Program in Health Law and Policy at the University of Illinois Urbana-Champaign, as well as an adjunct scholar at the Cato Institute.

Earlier this month, Hyman gave the following erudite presentation on the implementation of the Patient Protection and Affordable Care Act – which he calls PPACA, not “ObamaCare” or “the Affordable Care Act” – at a faculty seminar hosted by the University of Chicago’s MacLean Center for Clinical Medical Ethics.

Hyman’s remarks begin at about 5:00.

Be sure to read Hyman’s excellent satire, Medicare Meets Mephistopheles.

Number of VA Employees

After my blogpost yesterday about Department of Veterans Affairs spending, my research assistant Nick created the chart below on the number of VA employees. Wow, you don’t often see bureaucracies expand that rapidly! A 56 percent increase in just 13 years, from 219,000 to 341,000 employees. The VA has 100,000 new employees just since 2006.

The data is from this OPM website, which also provides a breakdown for agencies within departments. About 90 percent of VA employees are in the Veterans Health Administration, which is currently in the news for its horrendous mismanagement.   

Why Measles Outbreak Is Newsworthy

A small measles outbreak recently made national news, yet another testament to our progress in eradicating disease. Measles is serious stuff. It leads to hacking cough, a spotty rash, and sometimes, death. The disease is so contagious that it will infect nine out of ten unvaccinated people exposed. The outbreak started when a Christian mission brought the disease back from the Philippines. The infected passed it along to several Americans who refused to get vaccinated or those too young to be vaccinated.

Contagious, deadly diseases like measles were once common, even among the wealthiest. For example, King Louis XIV of France lost his son, grandson, great-grandson, and brother to smallpox. Smallpox used to kill some 400,000 Europeans annually in the late 18th century, and in the 20th century alone, it claimed hundreds of millions of lives across the globe.

Now, these diseases are rare and cause far fewer deaths:

 

In this recent measles outbreak, only 68 people were infected. Despite the low number, that constitutes an 18-year high of measles infections in the United States. And that number may have been lower if doctors hadn’t misdiagnosed their patients, which occurred because the disease is so unusual nowadays. This is all good news. That such a small outbreak makes national news and constitutes an 18-year high is a testament to the human progress we have made in eradicating disease.

More Competition Would Lower Health Insurance Premiums

I know, not exactly a shocking revelation! Nevertheless, here’s an article from today’s Washington Post:

With much of the focus on Obamacare now on how much individual premiums could increase next year, a new analysis suggests there’s one way to keep them in check — more competition. That’s the conclusion of a new report from economists Leemore Dafny, Christopher Ody and Obamacare architect Jonathan Gruber.

If every insurer that had sold individual policies in 2011 participated in Affordable Care Act insurance marketplaces this past year, average premiums for a benchmark exchange health plan would have been 11.1 percent lower in 2014, the economists found.

Big insurance companies generally took a cautious approach to the new exchanges in 2014, limiting their participation in the health-care law’s first year amid concerns about too many sick patients signing up for coverage. The Affordable Care Act exchanges were created as a way for people to buy their own insurance if they couldn’t find affordable options elsewhere, like through an employer.

The Affordable Care Act exchanges are supposed to fuel competition in the individual market, which hasn’t traditionally been all that competitive. Before the health-care law, a single insurer covered more than half of the individual market in 30 states, according to the Robert Wood Johnson Foundation.

A point I’ve been trying to make for a while is that there is a large untapped source of competition out there which could help lower prices: foreign insurance companies.  With or without ObamaCare, American consumers would be better off with more companies in the market, and the nationality of those companies does not matter.  Unfortunately, my sense is that foreign companies are not all that interested in entering the U.S. health insurance market.  Maybe it’s too daunting a prospect (it’s a highly regulated market), or maybe they just haven’t thought of it.  In case it’s the latter, I’m going to keep putting the idea out there, in the hopes that it reaches the right person.

Veterans Benefits vs. Veterans Hospitals

Of all the Obama administration’s scandals—Benghazi, IRS/tea party, AP/Fox News, the near daily rewrite of Obamacare, and more—perhaps none is as telling as the unfolding VA Hospital debacle, now reaching seven states, with officials in the Albuquerque, New Mexico, hospital busy destroying records to cover their tracks, we learn today from the Daily Beast. And it isn’t simply because the outrage over the VA scandal, unlike with the others, is bipartisan that the scandal is so telling. No, it’s telling because it says so much about what’s wrong with the president’s political vision.

This is an administration, after all, that’s dedicated, root and branch, to government. (Recall the much parodied “Life of Julia” White House cartoon from the 2012 campaign—the story of a woman whose entire life was lived through government.) No problem for Mr. Obama is too trivial or too personal not simply for state but for federal attention, no less.

With veterans, of course, a measure of public responsibility is in order, whether justified as entailed by the conscription policies of the past or by the contractual arrangements of the all-volunteer military today. But how that is done is no small matter. To be sure, veterans hospitals preceded the great wave of veterans returning from World War II: in fact, 54 existed in 1930 when Congress created the Veterans Administration. But as those veterans were returning, Congress in 1944 passed the GI Bill, which was noteworthy for two of its core programs: low-cost mortgages, and cash payments of tuition and living expenses to attend college, high school, or vocational education.

Note the difference, however, between those programs and the VA hospitals. Congress didn’t build houses for the returning veterans, or build colleges or vocational schools. It simply gave the vets “vouchers,” as we’d say today, which they could use in the already existing, largely private housing and educational markets. But on the hospital side, service was to be provided by the government itself. Ever more VA hospitals were built—some 152 hospitals exist today. And they’re run with all the efficiency and accountability we’ve come to expect from government institutions.

Indeed, the Daily Beast story today puts some perspective on that. Looking at the long wait times to see a cardiologist in the Albuquerque VA hospital, the reporter Jacob Siegel writes:

There are eight physicians in the cardiology department. But at any given time, only three are working in the clinic, where they see fewer than two patients per day, so on average there are only 36 veterans seen per week. That means the entire eight-person department sees as many patients in a week as a single private practice cardiologist sees in two days, according to the doctor.

For perspective, 60% of cardiologists reported seeing between 50 and 124 patients per week, according to a 2013 survey of medical professionals’ compensation conducted by Medscape. On the low end, the average single private practice cardiologist who participated in the study saw more patients in a week than the Albuquerque VA’s entire eight-person cardiology department.

The lesson is clear: Even in those cases where there’s a credible argument for the government to be involved with a service, it’s far better for it to stay out of the business of actually providing the service—far better to leave it to private individuals and institutions to provide it through the competitive markets that reason and experience tell us will ensure both liberty and efficiency. This latest scandal, if we learn the right lesson from it, may be a blessing in disguise.

A Drop in Mortality Is Stale News

The New York Times reported that a drop in mortality in Massachusetts not seen elsewhere can be attributed to its adoption of mandatory health care coverage:

The death rate in Massachusetts dropped significantly after it adopted mandatory health care coverage…offering evidence that the country’s first experiment with universal coverage…has saved lives… In contrast, the mortality rate in a group of counties similar to Massachusetts in other states was largely unchanged.

Implying causality based on this evidence is misleading in several ways as discussed here. In particular, I take fault with mentioning mortality reductions only in locations with mandatory health care coverage even though mortality has been dropping throughout the United States and the world since at least the 1960s. According to the World Bank, American males’ mortality rate has dropped by 3.6 percent between 2000 and 2007—a greater rate over a shorter time period than covered in this study. Over the same period, American females’ mortality rate has dropped by close to four percent.

The mortality rate is dropping, on average, throughout the United States, yet only Massachusetts adopted the mandatory health care law. Therefore, we may conclude that reductions in death rates happen for many reasons that do not restrict human freedom. One possible cause is new technologies that inform and enable proactive people to improve their health, ushered in through greater economic freedom. Check out Cato’s new website, HumanProgress.org, to see more positive changes to our health that are highly correlated with liberty.

Minimum Wage Increase Not the Answer in Hawaii

According to reports, lawmakers in Hawaii agreed to a four-step increase in the minimum wage from its current level of $7.25, rising to $10.10 by 2018. This increase would make them just the third state to impose a double digit minimum wage, along with Connecticut and Maryland. Proponents of the increase point to the high cost of living on the island, and say that, without this increase, low-wage workers will be consigned to living in poverty. They also point to the low unemployment rate in the state as a sign that the labor markets could absorb the increased minimum wage without significant job loss. These arguments fail to look at who the proposed increases would actually affect and do not properly account for the adverse effects this legislation could have on some segments of the population.

Despite claims to the contrary, relatively few Hawaiians would benefit from the increase. For one, the median wage for many sectors that are targeted by minimum wage legislation is already above the $10.10 goal: the median wage for bellhops in 2012 was $10.12, for cashiers it was $10.41 and for amusement and recreation attendants it was $11.87. Older, more experienced workers more likely to support a family are more likely to earn above the median wage, and thus be unaffected by the minimum wage hike.  According to testimony before the state legislature, only around 14,000 people worked at the current minimum wage or less in 2012, but even this might overstate how many people would benefit from the increase; many of these workers were teenagers or secondary earners, after accounting for this, the number of full-time workers who are also the head of household falls to 3,700. Depending on which poverty measure you look at, there are between 173,000 and 231,000 people in poverty in Hawaii, so the tiny proportion of families that could benefit from the increase is little more than a drop in the bucket when looking at their broader poverty problems. The plight of these people is not trivial, but introducing broad ineffective policy that introduces distortions into the entire labor market is not the answer.

While it is true that topline unemployment rate (4.7 percent over the past four quarters) is significantly lower than the national average (7.1 percent), as is often the case, looking solely at a headline statistic leaves out many of the nuances needed to understand the context. When people not attached to the labor force or involuntary working part time for economic reasons are accounted for, their unemployment rate rises to 11.3 percent, closer to the national average, so claims that the labor market is strong enough to absorb the distortions of the minimum wage increase are not true.