Yes, Congress is considering requiring Medicaid support for toupées.

Wash​ing​ton​Watch​.com has the details.

During his speech to Congress last night, President Obama declared that health care costs “causes a bankruptcy in America every thirty seconds.” His numbers are just a little bit off.

If what President Obama said were true, there would be approximately 1.05 million health care related bankruptcies in this country every year. However, in 2007 (the last full year for which there is data available, there were a total of only 815,000 non-business bankruptcies nationwide. Moreover, according to a study by Dr. Ning Zhu at UC-Davis, only 5 percent of bankruptcies are caused by medical bills. That suggests that in 2007 there were about 41,000 health care related bankruptcies. Too many, to be sure, but a far cry for 1.05 million.

Haven’t we learned from those weapons of mass destruction in Iraq that facts matter when a president says we absolutely have to do something now?

Many of my privacy-advocate friends were pleased by the restrictions on uses of health data for marketing that went into the giant “economic stimulus” bill. (Germaneness? Not many people even know what that means around here.)

It’s a sensitive area, no doubt, and health information should be handled carefully and discreetly, but direct marketing is one of the best ways to get information about new treatments to people with diabetes, arteriosclerosis, depression, and hundreds of other diseases and conditions.

Heaven forbid that new parents should be subjected to marketing like this:

Where can I sign up to have my health information made available for marketing?

I’ve got a commentary over at NPR about how the health care provisions in the “stimulus” package are bad investments. Here’s a taste:

We desperately need research on the effectiveness of medical treatments, and the law includes $1 billion for that. Yet experience suggests the benefits of taxpayer-funded research may be zero…

[T]he law’s $33 billion for electronic medical records also fails the cost-benefit test. The CBO estimates it would be cheaper just to do the second MRI…

The law includes $115 billion in health insurance subsidies. Economists have no clue whether that passes the cost-benefit test either…

The law will finance expanded COBRA benefits with a $65 billion hidden tax on other workers’ health insurance premiums. That hidden tax will actually reduce wages and job creation…

The good folks at NPR encourage you to post comments.

(FYI, Cato will host a forum on comparative-effectiveness research on Tuesday, March 3.)

The New York Times and others are reporting that Kansas Governor Kathleen Sebelius will be President Obama’s choice for HHS secretary. Obama’s first choice for secretary of HHS, former Sen. Tom Daschle, was an expert on health care reform; indeed, he had written a book on the topic, which laid out specific ideas, and provided fodder for opponents of Obama’s reform plans. Sebelius represents a very different approach. While she is a former state insurance commissioner and dealt with health programs as governor, she is associated with few specific proposals.

A preliminary look at her record suggests that she is a member of what my colleague Michael Cannon calls the Church of Universal Coverage, and has regularly pushed for the expansion of government programs such as Medicaid and SCHIP. She sought to have Kansas taxpayers cover all children up to the age of five, but her proposal was rejected by the legislature. She also has been sympathetic to the ideas of both an employer mandate (she imposed a mandate for companies receiving state contracts) and an individual mandate. As insurance commissioner she had a reputation for supporting increased regulation. Nothing surprising in this record at all.

An interesting question will be whether Sebelius will also inherit Daschle’s role as White House “health czar,” or whether that position will go to Daschle’s coauthor, Jeanne Lambrew, currently the “deputy czar.” If Sebelius doesn’t get the second post, expect health care reform to be driven out of the White House, while Sebelius, generally given high marks for bipartisanship, tries to corral moderate Republican votes.

When President Obama signed his massive spending bill into law yesterday, many of the provisions of the 1990s welfare reform were chipped away, says Cato Senior Fellow Michael D. Tanner in today’s Cato Daily Podcast. Parts of the new law actually offer states incentives to add people to their welfare rolls, Tanner says.

They didn’t repealed the ’96 act, but what they have done is chip away at the foundations and the very idea that you’re supposed to hold down your rolls rather than increase them, particularly when you take this into the context of all the other welfare spending.…There really is a surprising increase in the welfare state in this bill.

In a New York Post op-ed, Tanner expands on the welfare-friendly provisions of the stimulus plan:

This is radical change. States that succeed in getting people off welfare would lose the opportunity for increased federal funding. And states that make it easier to stay on welfare (by, say, raising the time limit from two years to five) would get rewarded with more taxpayer cash. The bill would even let states with rising welfare rolls still collect their “case-load reduction” bonuses.

In short, the measure will erode all the barriers to long-term welfare dependency that were at the heart of the 1996 reform.

In a paper released today by the Cato Institute, University of Chicago finance professor John Cochrane argues that yes we can have secure, long-term protection against the costs of expensive illnesses and give consumers complete freedom to choose any health plan they wish.

Cochrane’s paper, “Health-Status Insurance: How Markets Can Provide Health Security,” builds on his classic 1995 Journal of Political Economy article, which remains among the most innovative in health policy. Here’s the executive summary:

None of us has health insurance, really. If you develop a long-term condition such as heart disease or cancer, and if you then lose your job or are divorced, you can lose your health insurance. You now have a preexisting condition, and insurance will be enormously expensive—if it’s available at all.

Free markets can solve this problem, and provide life-long, portable health security, while enhancing consumer choice and competition. “Heath-status insurance” is the key. If you are diagnosed with a long-term, expensive condition, a health-status insurance policy will give you the resources to pay higher medical insurance premiums. Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses.

With health-status insurance, you can always obtain medical insurance, no matter how sick you get, with no change in out-of-pocket costs. With health-status insurance, medical insurers would be allowed to charge sick people more than healthy people, and to compete intensely for all customers. People would have complete freedom to change jobs, move, or change medical insurers. Rigorous competition would allow us to obtain better medical care at lower cost.

Most regulations and policy proposals aimed at improving long-term insurance —including those advanced in Barack Obama’s presidential campaign — limit competition and consumer choice by banning risk-based premiums, forcing insurers to take all comers, strengthening employer-based or other forced pooling mechanisms, or introducing national health insurance.

The individual health insurance market is already moving in the direction of health-status insurance. To let health-status insurance emerge fully, we must remove the legal and regulatory pressure to provide employer-based group insurance over individual insurance and remove regulations limiting risk-based pricing and competition among health insurers.

Read the complete paper here. Cochrane is the Myron S. Scholes Professor of Finance at the University of Chicago Booth School of Business and a Research Associate at the National Bureau of Economic Research. (You can see him commenting on the stimulus package in this Cato video.)