Topic: Health Care & Welfare

Local Musician Tired of Being Hassled by the Man

A recent article on the new Massachusetts health insurance law quotes an aspiring young musician who is skeptical of both the individual mandate and the subsidies designed to help low-income individuals satisfy the mandate:

“I’m aware that I lead a lifestyle where you have to live really cheaply. So something I think about is what if I tried to do something to make a little more money?” said Crosby. “What if I get a job and I start having to pay several hundreds of dollars for health insurance just because I come out of making a low income? Sometimes I think the state does things that encourage people to stay poor.”

Rock on, Ryan Crosby.  Rock on.

Health Care Policy Interview

I am interviewed by Max Borders here.

There are various views on the right. Mine is probably a bit unusual. But the right is often put in the position of trying to defend our existing so-called private insurance system. I prefer to think of our insurance system as not being very private and being sort of more corporatist in the sense of designed by government and implemented by private firms.

There’s lots more. And even more in Crisis of Abundance.

Faith-Based Health Insurance Reform

I had the opportunity yesterday to meet with Tim Murphy, Massachusetts secretary of health and human services, to discuss Governor Romney’s Massachusetts health care reform.  Secretary Murphy, who is smart, knowledgeable and personable, clarified a great many questions about the plan.  Unfortunately clarity was not reassuring.

Secretary Murphy essentially confirmed that the concerns I raised in my recent Briefing Paper were correct.  But he said we shouldn’t worry about them.  For example, there were questions about whether the Massachusetts Health Connector, the new government agency that operates as a clearinghouse for the individual and small group health insurance markets, would have the power to limit the insurance plans it would offer.  The Heritage Foundation had insisted it had no such authority.  However, Secretary Murphy confirmed that it did.  He believed, however, that this would not be a problem for two reasons: 1) he had faith that the board would not abuse its power and would offer a wide range of plans, and 2) if a future board did attempt to limit the type of available plans, people could choose to buy plans outside the connector.  He was confident that the Connector would not squeeze out an independent market in small group and individual insurance, although he admitted that the Connector would not be competing on an even playing field.

He also said that we shouldn’t worry about new mandated benefits driving up the cost of the mandatory insurance policy, because voters would object to rising costs and resist any new mandates.  He said that if the program’s cost rises too much voters will demand that the program be cut back.  And he admitted that the plan was a form of managed competition, but believed that they had devised the right incentives and penalties to make it all work.

In essence, this is a faith-based health insurance program.  Governor Romney has set up a program that depends on future insurance providers, legislators, governors, and voters all behaving in exactly the way he expects.  For example, legislators will never respond to special interests by adding new mandates and regulations.  Voters will react to rising costs not by asking for increased subsidies but by cutting back on the program.  (Can anyone recall the last time voters did that?).  Businesses won’t drop health insurance coverage and let taxpayers pick up the tab.

Maybe Governor Romney and Secretary Murphy are right, though I wouldn’t hold my breath.  But shouldn’t we wait and see what happens before other states or the federal government rush to copy it?  The Heritage Foundation has announced a major effort to convince other states to adopt Massachusetts-like reform.  California, Louisiana, Maryland, Michigan, Wisconsin, and the District of Columbia are reportedly considering it.  Lawmakers in those states should think twice about going down this road toward more government control of the health care system.

The American Meddling Association

The American Medical Association has long ceased to be a serious advocate for doctors. It instead has become a propaganda arm for the wackier factions of the public health movement. The Chicago Sun Times reports that at its annual meeting this week, the AMA is considering throwing its support behind a move to tax soda sales, with proceeds going to various anti-obesity measures. This, despite little evidence that soda consumption is linked to weight gain (non-diet soda consumption has remained virtually unchanged since 1988). Not to mention the fact that if we’ve learned anything about sin taxes, it’s that they’re inevitably used for projects far removed from those educational programs promised when they’re enacted.

The soda tax endorsement comes on the heels of the AMA’s embarassing attempt to pass off a web-based survey (which the organization later admitted was an “advocacy” tool) about alcohol consumption as scientific research, complete with a fake margin of error. Last year, the same organization and its president expressed shock that – gasp! – most minors get their first taste of alcohol from… their parents. Seems to me that the supervising eye of a parent would be the ideal circumstance under which a minor would get his first sip of beer or wine, wouldn’t it?

Consider these other action items from the agenda for the AMA’s annual meeting this week:

  • Support a 50 percent reduction in salt in processed foods, fast foods and restaurant meals over the next decade.
  • Oppose beer ads on college sports broadcasts.
  • Prepare a report summarizing video game research, including emotional and behavioral effects and addictive potential.
  • Push to ban smoking in all public places and workplaces.
  • Support mandatory school instruction on the dangers of Internet pornography.

Meanwhile, as it continues to tell parents how to raise their children, and push for government regulation of private behavior, the AMA has been conspicuously silent, passive, or just plain wrong on issues you’d think would be high-priority for a group that claims to represent doctors: The relentless DEA campaign against doctors who specialize in pain management, for example. Pain activists say the AMA has been AWOL. And not only didn’t the AMA oppose many of the more onerous HIPAA regulations, it lobbied for their enforcement. The organization has also taken a relatively passive stance of the federal prohibition on medical marijuana, which puts political drug eradication goals ahead of patient care.

The AMA’s percentage of revenue from membership dues has fallen over the last few years. It now counts just 26% of U.S. physicians among its dues-paying members.

Given the organization’s priorities, I can see why. Journalists should keep that figure in mind when reporting on official AMA positions. The group certainly doesn’t represent the opinion of all doctors. Of, for that matter, even a majority of them.

Since When Does the Right Have Any Health Care Prescriptions?

Ezra Klein responds to my post on the Citizens’ Health Care Working Group, where I lament that its tax-and-spend approach to health care shows that it was hijacked by the left—despite having a business-community chairman and Bush’s HHS Secretary on the panel. Klein provides an alternative interpretation: “the right’s prescriptions on health care didn’t even convince the panel’s Republican ringers.”

I’m new to the blogosphere, so I’m not clear what the rules are regarding subtlety. My point was that the right doesn’t have any prescriptions or even premises when it comes to health care—at least, not of their own. To compensate, they adopt the left’s premises (“we need to expand health coverage”) and prescriptions (“we need a Medicare Rx benefit”). For examples, click here, here, here, here, here, here, here, here, and here. Even when the right comes across a good idea (e.g., health savings accounts), they often gravitate toward it not because they understand why it’s a good idea, but because they think it serves leftist premises (“HSAs will … reduce the number of uninsured!”). The exception that proves the rule would have to be the GOP’s Rep. John Shadegg and Sen. Jim DeMint, who have a smashing health care proposal and who know why it’s a good proposal.

In general, Republicans and conservatives do not understand health policy, and do not have a health policy agenda that distinguishes them from the Left. Then, lo and behold, we get the GOP’s top health care guy sitting on a panel that (tentatively) recommends universal coverage financed by tax increases.

Go figure.

Private Answer to Stem Cell Debate

Harvard has announced that it is launching a privately funded, multi-million dollar program to clone human embryos for use in stem cell research. In this 2004 column, I argued for exactly this kind of private sector initiative to solve the politically divisive debate over stem cells.

I wrote in part,

By its very nature, government politicizes everything it touches. Science is no exception. Stem cell research needs neither government money nor politics. It is better to get the government out and let the private sector continue its good work. Those people calling for increased funding could take out their checkbooks and support it. Those who oppose embryonic stem cell research would not be forced to pay for it.

Harvard is proving one again that civil society can do what government can’t.

Holt & HSAs: Perhaps Fruitful after All

Matthew Holt writes:

The argument I want to have is a theoretical one about what would happen if we had essentially a completely personalized account-based system, as he advocates in his Large HSA proposal.

Holt raises important questions about what would happen under a system of large HSAs, where workers would get a large but limited tax break for cash that they (and/or their employer) deposit in an HSA – tax-free cash that workers could use for health savings, spending, or insurance as they wish.

Holt’s first concern is that “a significant number of people would take the money and buy no or minimal insurance coverage.” That some would choose to drop health insurance is certainly a possibility. I have two responses. First, that is already an option. People can and do choose to “go bare” and use their money for savings or other spending. The large HSA approach could marginally increase the number of people who do that, but only if the newly “bare” actually put money aside for future medical expenses. (Actually, large HSAs could even encourage today’s non-saving uninsured to start saving for their health expenses.) That brings me to my second response. If large HSAs do increase the number of people who “go bare,” the only people they would add to the ranks of the uninsured would be savers. As those “health savers” build up large balances in their large HSAs, it will occur to them, “Gee, one serious illness could wipe out all the money I’ve got stashed in my HSA.” How do people typically protect their assets from such unforseen losses? Insurance. So there’s a built-in incentive for health savers to purchase insurance.

Holt’s second concern goes like this: Were we to allow people to take all of their health benefits in the form of a cash contribution into a large HSA, and let them choose how to allocate those funds (among savings, spending, and insurance), that would begin a process known as “risk segmentation.” As I describe in my paper, some people would “go bare,” many would purchase less comprehensive health coverage, and many would migrate to the individual insurance market, where their premiums (typically) would be based on their individual health risk. What concerns Holt is that sicker people would have to pay more for health insurance, to the point where many sick people could not afford it.

My response is not that sick people should not be subsidized.  (I would prefer that they not be subsidized by government, but let’s assume that all options are open.) It is that sick people should not be subsidized through the vehicle of “insurance.” Attempting to deliver such subsidies through “insurance” destroys much of the good that insurance markets accomplish. Insurance premiums cease to deliver price signals about the costs of bad behaviors (e.g., smoking, obesity, waiting until you’re sick before you buy insurance). Many consumers drop insurance rather than pay the higher-than-necessary premiums, which increases the number of uninsured and tempts government to force people to buy insurance. Most importantly, when patients are spending someone else’s money, we lose a very important ally in the fight to curb wasteful medical expenditures: the patient. Instead of nagging providers about delivering value for the dollar, patients – especially the high-cost ones – line up with providers on the side of more spending. 

My preference is to let insurance markets do all they can do to improve efficiency, particularly by encouraging patients to pay directly more often. Some people will still require assistance, though with a more efficient health care sector their numbers should be smaller. We should subsidize those who remain directly, with cash.

I’m not sure how much of this Holt will find persuasive. Given that we agree that providers are riding the gravy train, I would think that having millions of patients nagging providers about value would hold some appeal.

He and I agree on something else. HSA supporters too often ignore these issues.