Topic: Health Care & Welfare

Republicans for Big Brother

The Cato Institute has noted for some time that conservatives and Republicans have abandoned their limited-government principles when it comes to health policy.  Examples can be found here, here, here, here, and here

The New America Foundation just made our job a little easier, by producing a paper titled, “Growing Support for Shared Responsibility in Health Care.”  In this context, “shared responsibility” means allowing the government to force all Americans to purchase health insurance – a power the Left has craved but no government had dared assume until Massachusetts did so this year.

The paper helpfully compiles a list of comments that Republicans and Democrats have made in support of this new expansion of government power.  The Republicans included:

  • Massachusetts Gov. Mitt Romney (no surpise there)
  • Former Bush HHS Secretary Tommy Thompson
  • California Gov. Arnold Schwarzenegger
  • Former Bush Treasury Secretary Paul O’Neill
  • Former House Speaker Newt Gingrich

One might add to that list the Heritage Foundation (whose health policy scholars wrote the Massachusetts mandate) and Ronald Bailey of Reason magazine. 

Next to those, Schwarzenegger is probably the biggest disappointment, having once bragged that Milton & Rose Friedman’s PBS series Free to Choosehas changed my life,” and that “Being free to choose for me means being free to make your own decisions, free to live your own life, pursue your own goals…without the government breathing down on your neck or standing on your shoes.”  Now that he’s governor, “being free to choose” presumably means being free to choose for you.

This new expansion of state power would be less frightening if it delivered more affordable or higher-quality health care.  But as Mike Tanner demonstrates in two papers on the idea (here and here), it will do neither of those things. 

Unfortunately, there has been too little debate within the limited-government camp over this idea.  This is in part because Heritage Foundation scholars have repeatedly declined to debate Cato scholars or other free-market critics of their proposal.

Until we’re able to have that fuller debate, here’s a helpful algorithm for judging this and other health care proposals:

  1. Does it limit government power?
  2. If not, move on to the next proposal.

Capitalism Saves

The Sunday New York Times has a great article — the first of a series on aging — titled “So Big and Healthy Nowadays That Grandpa Wouldn’t Even Know You.” Reporter Gina Kolata begins with this 19th-century biography:

Valentin Keller enlisted in an all-German unit of the Union Army in Hamilton, Ohio, in 1862. He was 26, a small, slender man, 5 feet 4 inches tall, who had just become a naturalized citizen. He listed his occupation as tailor.

A year later, Keller was honorably discharged, sick and broken. He had a lung ailment and was so crippled from arthritis in his hips that he could barely walk.

His pension record tells of his suffering. “His rheumatism is so that he is unable to walk without the aid of crutches and then only with great pain,” it says. His lungs and his joints never got better, and Keller never worked again.

He died at age 41 of “dropsy,” which probably meant that he had congestive heart failure, a condition not associated with his time in the Army. His 39-year-old wife, Otilia, died a month before him of what her death certificate said was “exhaustion.”

But his modern-day descendant, living in the same town of Hamilton, is healthy and going strong at 45. Kolata interviews doctors, economists, and gerontologists to find out why Americans are taller, heavier, healthier, and living longer. Describing the research of Nobel laureate Robert W. Fogel and his colleagues on Union Army veterans, she notes:

They discovered that almost everyone of the Civil War generation was plagued by life-sapping illnesses, suffering for decades. And these were not some unusual subset of American men — 65 percent of the male population ages 18 to 25 signed up to serve in the Union Army. “They presumably thought they were fit enough to serve,” Dr. Fogel said….

People would work until they died or were so disabled that they could not continue, Dr. Fogel said. “In 1890, nearly everyone died on the job, and if they lived long enough not to die on the job, the average age of retirement was 85,” he said. Now the average age is 62.

Much of this research has surprised scholars:

Life expectancy, for example, has been a real surprise, says Eileen M. Crimmins, a professor of gerontology and demographic research at the University of Southern California. “When I came of age as a professional, 25 years ago, basically the idea was three score years and 10 is what you get,” Dr. Crimmins said. Life span was “this rock, and you can’t touch it.”

“But,” she added, “then we started noticing that in fact mortality is plummeting.”

So why? Why has this epochal change — what Fogel calls “a form of evolution that is unique not only to humankind, but unique among the 7,000 or so generations of humans who have ever inhabited the earth” — happened? Kolata discusses the benefits of better nutrition, cheaper food, vaccines, and antibiotics. But still:

“That’s the million-dollar question,” said David M. Cutler, a health economist at Harvard. “Maybe it’s the trillion-dollar question. And there is not a received answer that everybody agrees with.”

Kolata is a science reporter, so she’s looking for a scientific answer, and she’s found several that contribute to our health and longevity. But she’s missed the forest. What is it that started changing in the United States and northern Europe in the past few centuries? (Fogel’s book on the general trend is The Escape from Hunger and Premature Death, 1700-2100: Europe, America, and the Third World.) Technology, yes. Nutrition and antibiotics and a better understanding of diet and exercise, absolutely. But what caused those things to appear after, as Fogel says, 7,000 generations?

Capitalism.

The introduction of the institutions of economic freedom in the Netherlands, Great Britain, the United States, and then the rest of the world beginning around 1700 caused what historian Steven Davies calls a “wealth explosion.” A great part of the unprecedented wealth creation went into sanitation and more abundant food and later into the research necessary to produce vaccines and antibiotics. Those institutions include secure private property, the rule of law, open markets, and economic freedom generally — or what Adam Smith called “peace, easy taxes, and a tolerable administration of justice.”

Capitalism has made the West rich and thus healthier and longer-lived. It could do the same for Africa, Asia, and the Arab world.

Kolata overlooked this point. Her article never mentions capitalism, freedom, or even wealth as an answer to the trillion-dollar question. But it’s still a great report on just how much better off we are. For more data on such trends, check out It’s Getting Better All the Time: 100 Greatest Trends of the Last 100 Years by Stephen Moore and Julian L. Simon.

Want Electronic Medical Records? Fix the Incentives

Suppose you are traveling, and needed to visit a doctor, who says he’d like to do an MRI. You had one done just two weeks ago at home, but your personal doc would have to snail mail the image to the new doc. The new doc needs to have a look inside you, but another MRI would be expensive.

Now think: in what kind of health care system are you more likely to get electronic medical records, where doctors can send MRI results to each other instantly:

  • A health care system where you are on the hook for the cost of the second, unnecessary MRI, or
  • A system where someone else (Medicare, your employer, etc.) is going to pay for it?

Thanks to government subsidies and the federal tax code, Americans are less sensitive to the price of medical care than even Canadians, whose government is supposed to pay for everything. As a result, most providers still keep patients’ medical records on paper, essentially because the government lets them get away with it. Some providers have started using electronic medical records, but those systems are in their infancy and are unable to talk to each other. That means lots of wasteful spending, plus treatment delays and medical errors.

When Katrina hit Louisiana, thousands (millions?) of medical records were destroyed. But when the World Trade Center went down in a fiery blaze, there was no hue and cry about the loss of financial records, because those were secured, electronically, in various sites. Why the asymmetry? My guess is that the financial services industry has customers who demand value, including responsiveness and security, because they bear the cost. Health care providers that do have price-sensitive customers, such as services like MinuteClinic and TelaDoc, do offer electronic medical records. But most of the health care industry does not have price-sensitive customers, and we have Congress to thank for that.

So when House Republicans plan to vote this week on legislation that would spend your tax dollars to encourage the creation of electronic medical records, it seems like a classic case of one fouled-up government intervention begetting another. Congress has spent the last 60 years doing little in health policy but insulating patients from the costs of paper medical records. But don’t worry, because now they’re going to throw $40 million of the taxpayers’ money at health information technologies (HIT) that create interoperable medical records.

In a further demonstration that Congress is wasting its time (isn’t there a war on?), this week Microsoft announced plans to start producing interoperable electronic medical records. Maybe the fact that the private sector is trying to muster to the task – in spite of Congress’ past meddling – will persuade Congress not to compound its past mistakes. Perhaps Congress will instead look at ways to restore the incentives that encourage providers to offer such cost-saving innovations. One can always hope.

FristBlog’s Rx: Focus on the Donut

Senate Majority Leader Bill Frist recently launched a health policy blog. The latest post (by “Sailor”) complains that people are focusing on Medicare Part D’s donut hole rather than the tasty donut itself:

The most amazing criticism is that there is a donut hole. It is amazing that those who argue this is a defect in part D fail to understand there used to never be any donut at all – and they just continue to focus on the hole rather than the enormous benefit (donut) that never previously existed for seniors.

I’m not sure that criticism of the ‘donut hole’ is all that amazing. As Cato adjunct scholar David Hyman explains in an upcoming book (Medicare Meets Mephistopheles), Democrats have made their careers by using Medicare to pass out donuts. What did Frist, Inc., expect Democrats would do once Republicans got in on the donut racket? Quit? Or up the ante?

Is this why Dr. Frist got into politics? To hand out donuts?

Hillary’s Health Care Initiative Gets off to a Bad Start

Pop quiz.  Finish the following sentence:

No factor does more to hold back America’s economic growth and keep American workers from earning as much as they deserve than _________________.

A. the soaring cost of health care [16.5 percent of GDP]

B. the soaring cost of government [31.4 percent of GDP]

If you understand the “greater than/less than” thing, you picked B.  But if you are Sen. Hillary Rodham Clinton, you picked A.  In fact, that is how Senator Clinton completed the first sentence of the “Affordable Health Care” section of her “American Dream Initiative,” released yesterday. 

Just one sentence into her vision for health care, and I am already disappointed.

Healthy Interstate Commerce

The judge who threw out Maryland’s Wal-Mart law (which would have required large employers to dedicate at least 8 percent of its Maryland employee compensation to health care benefits) apparently did so on interstate commerce grounds:

In yesterday’s decision, Judge J. Frederick Motz of Federal District Court ruled that the Maryland law, which was overwhelmingly passed by the Democrat-controlled state legislature in January, was pre-empted by the federal Employee Retirement Income Security Act, or Erisa.

The act sets out a national standard for company benefit plans, replacing what would otherwise be a patchwork of state regulations.

The law “violates Erisa’s fundamental purpose of permitting multistate employers to maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration,” he wrote in the decision.

Maybe that same judge should throw out state health insurance mandates. They have the effect of making it impossible for private health insurance companies to engage in interstate commerce. Once upon a time, the right to engage in interstate commerce free of state regulation was something in the Constitution — it did not merely depend on Erisa.