The Glories of a ‘Single Payer’ Health Care System

I recently attended a conference at Cambridge University, mainly involving Brits, none of whom had a good word to say about the National Health Service. What a change from times past, when so many British people thought it a matter of national pride to boast that “We have the finest health care system in the world.” (When I lived in the UK, I used to ask such people to what world they were referring, ‘cause it sure wasn’t this one.)

Lo and behold, the NHS just released data on “hidden waits,” the time spent waiting for diagnostic tests. As the BBC noted in its coverage:

The figures, for 15 of the most common diagnostic tests including scans, internal examinations and hearing tests, mean that for many patients the wait for diagnosis is as long as the wait for treatment.

If you’re going to get sick with anything serious, be sure to do it in the United States. Even with all the problems facing American medicine and the irrationalities of our financing system, at least you’re likely to find out how sick you are and start treatment before it’s too late.

Why Tax Credits Are Better than Vouchers

A recent post at the popular conservative blog RedState argues that government-funded school vouchers are a bad idea. It points out the merits of having people pay for their own children’s education and the problems that government funding introduces. Fair enough.

But what to do for the millions of families who cannot afford a good independent education for their kids?

The answer is a nonrefundable education tax credit system applied to state and local taxes. A complete education tax credit program has two parts: a credit for parents to use against their own expenses, and a credit for individuals and businesses that donate to private scholarship-granting organizations (SGOs). The first part helps middle-income families pay for their own children’s schooling, and the second part ensures that low-income families also have the resources they need to participate in the education marketplace.

Under this system, no one is compelled to fund anything to which they might object, and the direct financial responsibility of parents is maximized. The personal credits involve people spending their own money on themselves, and the donation credits allow taxpayers to choose the SGO that receives their donations. No government money is used, but universal access is assured.

I give an exhaustive treatment of the differences between tax credits and vouchers in a paper titled “Forging Consensus.” Two critiques of that paper, along with my responses, appear here.

It is possible to ensure universal access to the education marketplace without sacrificing the freedom that makes markets work.

Charged with Second-Degree Innovating

Here’s a clever idea:

They’ve been described as Minnesota’s Tupperware parties for wine tasters.

For the past two years, a consultant with the Traveling Vineyard, a Massachusetts company operating in nearly 30 states, would come to your home. Along with friends, you’d sample a pinot or chardonnay, and then fill out a form if you wanted to buy some.

And here’s how the regulators are going to kill it:

On Tuesday, state authorities raided a landmark Minneapolis liquor store, Surdyk’s, seizing about 40 cases of wine in an effort to shut down the Traveling Vineyard. Surdyk’s ships prepackaged and prepaid orders from the company to its customers.

The state alcohol enforcement division says the Traveling Vineyard can’t legally sell wine without a license.

[…]

Texas, Washington and Massachusetts will be taking some form of regulatory action against Geerlings & Wade, which owns the Traveling Vineyard, to change or stop how it does business in those states because it is violating licensing laws, according to a search warrant filed Tuesday.

Minnesota would be the first state to attempt to present a criminal case against the company. Misdemeanor and gross misdemeanor charges are expected to be filed by the Minneapolis city attorney’s office today, Kjelsberg said.

“We aren’t aware of any other business in the state that operates like the Traveling Vineyard,” she said. “They are taking sales away from legitimate retailers.”

[…]

“I hope this will be the end of the company, but that remains to be seen,” she said.

The alcohol industry deserves a heap of scorn for its position on these types of issues. I regularly get industry publications where an article defending “personal responsibility” runs next to an article defending the three-tiered wholesaler system because, the argument goes, alcohol is special and deserves that extra layer of regulation. Consumers can’t be trusted to buy direct from wholesalers, Internet proprietors, or companies like the Traveling Vineyard, alcohol executives say. It’s just too cheap! We’ll drink too much.

In truth, of course, the retailers just like the fact that most states have laws in place that protect them from competing business models. The three-tiered system is a racket that protects antiquated business models from wholesalers like Costco and Sam’s Club, and from innovators like Traveling Vineyard.

Hollywood’s Last Great Villain

It’s the businessman. From today’s Wall Street Journal:

Everybody knows that television plays a powerful role in shaping social attitudes. So it’s no surprise when groups of people who sense that they are being harmfully stereotyped in the medium lodge complaints. The “Frito bandito” is long gone as a result, and a show like “Amos ‘n’ Andy” would be unthinkable now. Even religion can get some respect if the yelps of outrage are loud enough: NBC’s “The Book of Daniel,” about a drug-addicted Episcopal minister with a pipeline to a hipster Jesus, was quickly canceled this year after protests that it was offensive to people of faith.

But there’s one group we never hear a peep from, even though its members may be the most routinely maligned of all. According to a study published last month by the Business & Media Institute, in the world of TV entertainment, “businessmen [are] a greater threat to society than terrorists, gangs or the mob.”

The study, titled “Bad Company,” looked at the top 12 TV dramas during May and November in 2005, ranging from crime shows like “CSI” to the goofy “Desperate Housewives.” Out of 39 episodes that featured business-related plots, the study found, 77% advanced a negative view of the world of commerce and its practitioners.

Emily Chamlee-Wright and the late Don Lavoie covered similar ground in chapter five of their terrific book Culture and Enterprise.

On a related note, Deirdre McCloskey defended the virtues [pdf] of the bourgeois in a recent issue of Cato Policy Report.

Topics:

Shameless

From the July 13 issue of The Hill

The U.S. Capitol Historical Society will hold a reception next week to honor a select group of lawmakers “for their hard work, service, time and the sacrifices made in upholding the office with which they were entrusted.”

One of the people slated to receive such accolades is former Rep. Randy “Duke” Cunningham (R-Calif.).

The disgraced ex-legislator, of course, can’t make the July 19 event or any other social gathering in the near future because he’s serving a prison term of eight-plus years for a bribery scandal you may have heard about….

Another honoree is former Rep. Tom DeLay (R-Texas)….

The co-hosts of the event will include members of leadership, including House Speaker Dennis Hastert (R-Ill.), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Bill Frist (R-Tenn.), and Senate Minority Leader Harry Reid (D-Nev.).

(Cross-posted from my one-line blog “To Be Governed … “)

Meanwhile…

Trade junkies will have already read countless articles about the all-but-certain failure of the Doha round of trade talks, so I won’t add to the pile. Nor will I spoil the fun of reading my op-ed in today’s Washington Times (note to the observant: the lede grew stale while the piece awaited publication) on the myriad reasons why failure is such a shame.

But there is more going on in trade circles than the Doha round. Here’s a digest of other developments, some good and some not so good:

  • Firstly, the United States is hoping to conclude a bilateral agreement with Russia on its entry into the WTO, hopefully in time for a great photo opportunity on the margins of the G8 summit in St. Petersburg this weekend. (My colleague Ian Vazquez argues that the summit could in fact yield little else of value.) Of all the countries awaiting WTO accession, Russia is by far the largest and its inclusion would bring 99% of world trade under the WTO’s auspices. Several U.S. business groups have publicly objected to, among other things, Russia’s treatment of intellectual property rights. But surely bringing Russia into the fold, and under the rules, of the WTO would improve the ability of members to ensure Russia’s trade policies are up to scratch.
  • This week in Seoul, the United States and South Korea held the second round of negotiations on a possible free trade agreement (and I use that term very cautiously). Unfortunately, the talks ended early after a dust-up over pharmaceuticals. Before then, the usual South Korean rent-a-crowd of protesters had come out in force against any agreement. One of the main sticking points is agricultural trade, particularly rice, which is highly protected in South Korea.
  • In what may be just a tactical move to scare other WTO negotiators, the EU this week raised the possibility of more preferential trade deals (link requires subscription), with or without a successful conclusion to the Doha round. That is worrisome news. The bigger the players that make these agreements, the larger the damage to the global trading system. Partly in reference to the difficulty of a deal with the United States, a Korean research center has suggested that it would be easier to make a bilateral deal with the EU than with the United States, presumably because such a deal would exclude a large number of agricultural products from liberalization. South Korea and the EU will find a lot of common ground when it comes to protecting agriculture, but an easy agreement does not necessarily a good agreement make.
  • And, on a related and somewhat cheerier note, the WTO members did manage to reach one deal this week as part of the Doha talks: they agreed on disciplines (mainly relating to transparency and early reporting) on preferential deals. Almost all WTO members are parties to one or more preferential deals, but the previous process of approving them has been so jammed that only one of those deals (out of almost 200) has been approved by the WTO. A bit of transparency in this area can only be a good thing, and should limit the damage that low quality, trade distorting preferential agreements can do. Of course, the approval of the new ‘transparency mechanism’ is only provisional and could all come unstuck should the final death knells ring for Doha. Plus ça change

Medicare Reform: Just Give Seniors the Cash

Matthew Holt at TheHealthCareBlog.com raises a good question about Medicare’s renewed effort to offer medical savings accounts to beneficiaries:

Those taxpayers who can do basic math might wonder why you’d want to to give healthy Medicare beneficiaries cash for health services that they’re not going to use, while taking that cash away from the pot that pays for the sick beneficiaries that do use said services. But we’ve asked that question so many times before and no one on the free market side dare answer it. And I guess you might say, why not give the taxpayers money straight to the “healthys” instead of laundering it through Medicare Advantage plans as we’re doing it now so that they can hand out free gym memberships to seniors and boost their executives’ stock holdings.

But given that risk adjustment is coming to Medicare Advantage, it may be that that gravy train is ending.

The Medicare MSA concept raises some interesting problems. Fortunately, Holt solves them — though I’m not sure he knows it.

A bit of background: The Medicare Advantage program currently pays private health insurers a flat amount for each senior those plans cover. As Holt notes, that encourages the plans to seek out the seniors whose medical bills will be less than that flat amount. Thus some plans “hand out free gym memberships to seniors” as a way to attract the healthy, profitable ones and avoid the unprofitable sick ones. That can end up costing taxpayers more than if those healthy seniors just stayed in traditional Medicare. 

But as Holt says, Medicare is working on adjusting those payments according to each beneficiary’s health risk. Instead of some flat amount per beneficiary, insurers would receive a payment from Medicare that better reflects each individual enrollee’s expected medical expenses. That way, health plans would have less reason to cater to the healthy or to avoid the sick. 

But once Medicare risk-adjusts those payments, why should the insurance companies get that money? As Holt postulates and Mike Tanner and I discuss in Healthy Competition, why not give it to the beneficiary? Confine it to health care uses, if you like. Healthy people would get smaller payments; sicker seniors would get larger ones. That would enable each to purchase health coverage (high-deductible or whatever) and still have some money left over for their out-of-pocket expenses. Seniors would get more control over their health care and coverage; they would make much smarter cost-benefit decisions than they do now; and Congress could limit the burden that Medicare imposes on taxpayers.

Is the point of the program to help insurers? Or providers? Or seniors? To whom do we want insurers and providers to be responsive?