In today’s Washington Post, Chris Cillizza predicts that Mitt Romney “will move to seize the high ground (from a policy perspective) on health care over the coming months and is likely to be Obama’s leading critic when Congress takes up the legislation in the fall.” For anyone who thinks this is good news, I refer you to my post from last week regarding the many failures of Governor Romney’s last foray into health care reform.

As we all know, the American health care system is less than perfect. An inefficient amalgam of government spending, federal tax incentives, employer-based insurance, and private providers, the U.S. system costs us more than it should for the services provided. Nevertheless, medicine in America remains far more directed by and for patients, in contrast to nationalized systems, which are usually organized by and for bureaucrats.

The results sometimes are horrific. Indeed, the best way to understand the consequences of Britain’s National Health Service is simply to read stories in British newspapers. Consider this one in the Daily Mail about the lack of adequate dental care:

Like so many young women, Amy King always took great pride in her appearance.

Standing in front of the mirror to check her make-up before a night out, the 21-year-old would always try a smile — friends told her they loved the way it lit up her face.

Eight weeks ago, all that changed. The student from Plymouth was admitted to hospital where, in a single operation, she had every tooth in her mouth removed.

Obviously, not all foreign systems do so little for their patients. France, Germany, and Switzerland all provide care differently, and in all of these nations people receive better treatment than in Britain. But no where is turning health care over to government the best way to ensure quality yet affordable medical care. Instead, control over health care should be placed back in the hands of those who have the most at stake: patients.

Three years ago yesterday, then-Governor Mitt Romney signed into law the most far reaching state health care reform plan to date. At the time, we warned that the plan, with its individual and employer mandates, new regulatory bureaucracy (the Connector), and middle-class subsidies would result in “a slow but steady spiral downward toward a government-run health care system.” Sadly, three years later, those predictions appear to be coming true.

• While the state has reduced the number of residents without health insurance, some 200,000 people remain uninsured. Moreover, the increase in the number of insured is primarily due to the state’s generous subsidies, not the celebrated individual mandate.
• Health care costs continue to rise much faster than the nationally. Since the program became law, total state health care spending has increased by 23 percent. Insurance premiums have been increasing by 10–12 percent per year, nearly double the national average.
• New regulation and bureaucracy is limiting consumer choice and adding to costs.
• Program costs have skyrocketed. Despite tax increases, the program faces huge deficits in the future. As a result, the state is considering caps on insurance premiums, cuts in reimbursements to providers, and even the possibility of a “global budget” on health care spending.
• A shortage of providers, combined with increased demand, is increasing waiting times to see a physician, especially primary care providers.

With the “Massachusetts model” being frequently cited as a blueprint for state or national health care reform, it is important to recognize that giving the government greater control over our health care system will have grave consequences for taxpayers, providers, and health care consumers. That is the lesson of the Massachusetts model.

I count both Ramesh Ponnuru and Ezra Klein as friends. (I’m so post-partisan.) Why, oh why must they force me to choose between them??

Ponnuru had an op-ed in yesterday’s New York Times where he reaffirmed his membership in the Anti-Universal Coverage Club. Klein responded in a way that’s sure to satisfy his base, but I think he left the reality-based community wanting. Are you ready for the fisk?

Klein suggests that if “80+ percent of Americans … think the system needs fundamental changes or a complete rebuild,” then 80+ percent of Americans must support universal coverage. Hmmm, bit of a stretch. In fact, I can recall one poll where nearly one-third of likely Democratic primary voters rejected universal coverage.

Klein suggests that giving consumers the freedom to avoid unwanted state health insurance regulations would mean that Arizonans wouldn’t get coverage for colorectal cancer screening, and that there would be no mammogram coverage in Idaho. Mmm, that’s good crazy. I refer my right honorable friend to the episode where The New Republic’s Jonathan Cohn made a similar claim about mandates for prostate and cervical cancer screening. I looked up the services covered by the plans made available to the Cohn family by the University of Michigan. It turned out that six out of the seven available plans cover both prostate and cervical cancer screening — even though Michigan requires insurers to cover neither. (I offered to wager Cohn a fancy dinner that his family has coverage for both, but I never heard back from him. Foolish, really, to let me know where he gets his insurance. Klein would never give me such an opening … or would he?) What Ponnuru proposes is to let Arizonans and Idahoans and everyone else choose what their health plan covers. Imagine that: people rationing medical care according to their preferences, rather than the preferences of employers, interest groups, bureaucrats, health policy wonks… Why Klein clings to such regulations despite zero evidence that they actually increase access to the targeted services is beyond me.

Klein criticizes Ponnuru for proposing to replace the current tax preference for job-based coverage with a tax credit available to everyone, much like John McCain proposed during his (latest) presidential campaign. Ponnuru cites a study estimating that tax credits would reduce the number of uninsured by 20 million. Klein counter-cites one study estimating that tax credits would have zero net effect on the number of uninsured, and a second study estimating that those who transition from job-based coverage to the “individual” or “non-group” market would pay an additional $2,000 per year for an identical policy. Klein’s criticisms sound persuasive — provided you know precious little about the topic. For one thing, the two studies Klein cites are actually the same study. Pity, really. Had Klein found a second study to support his position, perhaps it would not have been quite so flawed as the one he did find. Here’s what I wrote back in September about that study’s flaws:

Thomas Buchmueller et al. estimate that replacing the tax exclusion for employer-sponsored insurance (ESI) with Sen. John McCain’s proposed health insurance tax credit would have zero effect on the uninsured. Yet their estimates neither incorporate nor even acknowledge factors that would tend to increase coverage. First, workers who lose ESI would see their wages rise significantly as labor markets force employers to “cash out” those workers.

That effect would help all workers afford health insurance — but particularly older and sicker workers, because they would get cashed-out more.

Second, the authors estimate that non-group enrollment would double, yet they ignore that administrative costs would fall in a thicker non-group market.

So that $2,000 mark-up really wouldn’t be $2,000. Even if some mark-up remained, workers could reduce their premiums by purchasing less coverage. Not all that crazy a concept, considering that the tax treatment of job-based insurance encourages people to buy too much coverage.

Then there’s this effect, which would further reduce premiums for healthy workers:

Third, the authors acknowledge that employment-based insurance forces the healthy to subsidize the sick, yet they ignore that the non-group market would reduce premiums for a majority of workers by allowing them to avoid that hidden tax.

The study’s authors also ignored the premium-lowering effects of McCain’s proposal to allow people to avoid unwanted regulatory costs (e.g., mandated benefits):

Fourth, though the Congressional Budget Office estimates that state health insurance regulations increase premiums an average of 13 percent, the authors ignore that McCain’s proposal to let consumers shop nationwide for insurance would further reduce premiums by allowing consumers to avoid that hidden tax as well.

A few random clarifications. Klein fears living “in a space where insurers could still discriminate based on pre-existing conditions.” That’s Church-of-Universal-Coverage-speak for, “I want price controls on health insurance.” Government can outlaw the practice of charging higher premiums to the sick, but it cannot outlaw the reasons behind those higher premiums. So when government prohibits insurers from competing on price, insurers respond to those underlying reasons by competing to avoid the sick. Yes, yes, it’s that pious preference for price-controlled premiums that unleashes the beast of adverse selection — and prevents the market from developing innovative insurance products that help sick people pay those higher premiums. Klein fears a world “where millions of Americans will still lack access to health insurance,” because to the devout, access to insurance matters more than access to health care. Klein fears that when people move from ESI to the individual market, risk pools will get smaller and insurers will get stronger. Yet risk pools would get bigger, and insurers weaker relative to consumers. Klein believes we can “ensure that all Americans have health coverage, [and] that their coverage is comprehensive,” and that we can do all that without rationing “access to health services.” How? Just “bring down costs in the system.” Riiiight.

To cap things off, Klein claims that Ponnuru and I think the U.S. health care sector as it exists is “fine.” I really can’t blame him for arguing with straw men.

In the end, Klein’s case against Ponnuru boils down to the same absurdity I found in Buchmueller and colleagues’ case against McCain:

The McCain plan would eliminate forced subsidies: of the sick by the healthy (via ESI and community rating) and of particular providers by unwilling consumers (mandates for chiropractic coverage, etc.). Buchmueller et al. would have us believe that if we stop robbing Peter to pay Paul, not even Peter would benefit. A more balanced critique might have been more persuasive.

Klein spends a lot more time thinking about health policy than Ponnuru does. But you’d never know it.

My colleague, Michael Cannon, makes several good points about comparative effectiveness research (CER), both in his letter to USA Today and in his excellent paper on the subject. I strongly agree with him that we should not reflexively oppose CER—much of health care spending is wasteful or unnecessary, and it makes sense, therefore, to test and develop information on the effectiveness of various treatments and technology, giving consumers tools to evaluate the value of the care they receive. There is also a case for the use of CER in taxpayer-funded programs like Medicare and Medicaid. Taxpayers should not have to subsidize health care that has not proven effective, nor can Medicare and Medicaid pay for every possible treatment regardless of cost-effectiveness.

However, I am more skeptical in general about CER than he is for several reasons.

• First, “quality” and “value” are not unidimensional terms. In fact, such concepts are highly idiosyncratic with every individual having different ideas of what “quality” and “value” means to them, based on such things as a person’s pain tolerance, lifestyle, feeling about hospitalization, desire to return to work, and so forth. For example, a surgeon may tell you that the only way to ensure a cure for prostate cancer is a radical prostectomy. But that procedure’s side-effects can severely impact quality of life — so some people prefer a procedure with a lower survival rate, but fewer side effects. Who is better suited to determine which of those procedures represents “quality” and “value,” a government board or the person directly affected?
• Second, comparative effectiveness research too often has a tendency to gear its results toward the “average” patient. But many patients are outliers, whose response to any particular treatment, for either good or ill, can vary significantly from the average. This matters little when the research is simply informative. However, if the research becomes the basis for more prescriptive requirements, for example prohibiting reimbursements for some types of treatment, the impact on patient outliers could be severe.
• Third, comparative effectiveness research can create a time lag for the introduction of new technologies, drugs, and procedures. The FDA, for example, has already caused delays in introducing drugs that have resulted in unnecessary deaths. Depending on how the final program is structured, comparative effectiveness research could create another layer of bureaucracy and testing between the development of a new drug, for example, and its introduction into the health care system. One only has to look at the difficulty in expanding Medicaid drug formularies to see how this could become a problem.

The advocates of government-sponsored CER clearly intend for it to be used as a basis for rationing care, not just in government programs, but for private insurance as well.

Cannon points out that government-sponsored CER is likely to be corrupted under pressure from special interest lobbies and politicians. I couldn’t agree more. Government-sponsored CER, therefore, is liable to yield the worst of all possible worlds, not only rationing, but rationing that is based on special interest lobbying rather than science.

Health care, is of course, a finite good. Therefore, it will always be rationed in some fashion. But, it is far better if the rationing agent is the consumer himself, rather than the government or any other arbitrary agent. The private sector is already undertaking CER. To the degree that consumers, insurers, and providers make use of this information, that is a good thing. If consumers don’t like how an insurance company, for example, uses CER in determining its reimbursement policy, he or she can choose a different insurer.

Government-imposed fiat rationing allows for no such choice. Therefore, we should oppose any government involvement in CER, and any efforts by the government to use CER to restrict reimbursement, especially in private insurance plans.

I’ve got a letter to the editor in today’s The USA Today on comparative-effectiveness research:

Commentary writer Kevin Pho misrepresented my views on comparative-effectiveness research (CER), which is the analysis of which medical treatments work best (“Unbiased research for doctors is good medicine,” The Forum, March 26).

Pho wrote that “drug companies, medical device makers and think tanks such as the libertarian Cato Institute have expressed concerns that health care rationing and denial of certain treatments or drugs would follow” taxpayer-funded CER.

In the Cato Institute study linked to in the piece, I write that rationing is the intent behind such research, but I do not express concern that it will lead to rationing. Indeed, I express the opposite concern: that taxpayer-funded CER will not eliminate low-value services, just as it has failed to do so in the past.

Pho uses AARP executive Bill Novelli’s words to suggest that Cato, as well as drug and device makers, use “scare tactics” to oppose taxpayer-funded CER. Far from engaging in scare tactics, my paper makes precisely the same observations that Novelli does.

By contrasting Cato to CER “champion” Hillary Clinton, Pho also gives the false impression that libertarians support CER less than those who support taxpayer funding.

Yet two themes of my paper are that CER is crucial and that removing government obstacles to private production would provide a much more stable stream of research — and broader use of that research — than taxpayer funding would. I think that makes me the champion of CER, not Clinton.

At a minimum, it is misleading to suggest that libertarians oppose CER.

The New York Times reports that key congressional Democrats have agreed on the basic provisions for a health care reform bill. And while many details remain to be negotiated, the broad outline provides a dog’s breakfast of bad ideas that will lead to higher taxes, fewer choices, and poorer quality care.

Among the items that are expected to be included in the final bill:

• An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements. Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need. Get ready for the lobbying frenzy as every special interest group in Washington, both providers and disease constituencies, demand to be included.

• An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.

• A Government-Run Plan, competing with private insurance. Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance. In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage. That would mean a nearly 60 percent reduction in the number of Americans with private insurance. It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.

• Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.

• Government Playing Doctor. Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.” While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.

Given the problems facing our health care system-high costs, uneven quality, millions of Americans without health insurance–it seems that things couldn’t get any worse. But a bill based on these ideas, will almost certainly make things much, much worse.

Or maybe it’s all just a massive April Fool’s joke.