Topic: Health Care & Welfare

Announcing the Anti-Universal Coverage Club

Inspired by National Review’s recent editorial and Andrew Sullivan’s embrace of same (as well as by Greg Mankiw), I have decided it would be fun and educational to keep tally of those who reject the idea that federal or state governments should strive to provide every American with health insurance.  Call it the Anti-Universal Coverage Club.

Here are the guiding principles of the Anti-Universal Coverage Club:

  1. Health policy should focus on making health care of ever-increasing quality available to an ever-increasing number of people.
  2. To achieve “universal coverage” would require either having the government provide health insurance to everyone or forcing everyone to buy it.  Government provision is undesirable, because government does a poor job of improving quality or efficiency.  Forcing people to get insurance would lead to a worse health-care system for everyone, because it would necessitate so much more government intervention.
  3. In a free country, people should have the right to refuse health insurance.
  4. If governments must subsidize those who cannot afford medical care, they should be free to experiment with different types of subsidies (cash, vouchers, insurance, public clinics & hospitals, uncompensated care payments, etc.) and tax exemptions, rather than be forced by a policy of “universal coverage” to subsidize people via “insurance.”

If you’d like to join the Anti-Universal Coverage Club, let me know by posting something to your own blog, or by emailing me mcannon [at] cato.org (here)

.  Feel free to forward items from other like-minded individuals.

I predict that neither the American Medical Association, nor the Federation of American Hospitals, nor America’s Health Insurance Plans will join the Anti-Universal Coverage Club.

Lazy Leftists

A certain segment of the political left is, shall we say, lazy in its critique of letting consumers control their health care dollars and decisions. 

For example, I recently wrote about my experience using my health savings account (HSA) to pay for medical care after I tore my anterior cruciate ligament.  When my orthopedist learned that I faced a high deductible, he helped me weed out unncessary expenses that would provide little benefit.  In particular, we skipped an X-ray because I didn’t hear or feel any bones break, and he agreed there (probably) would be no harm in doing so.  The only reason I shared that information about my injury, indeed the only reason we gave the X-ray a second thought, was because I had a financial incentive to do so: I was paying for the X-ray.

Big deal, says Ezra Klein:

That’s all for the good, when it’s all for the good. On the other hand, that’s just a hop, skip, and a jump away from “She had shortness of breath, but no radiating arm pain, so she decided to wait through the weekend because she couldn’t afford the ambulance ride. She died.”

Here’s why that’s lazy. 

Klein knows that when people face additional cost-sharing, some patients will forgo some medical care and some of those patients will end up less healthy.  But he also knows that when people have HSA-like coverage, on balance, people do not end up less healthy. 

That’s right: for every lady who loses her life because she didn’t call an ambulance, someone else’s life is saved because he or she kept the doctor away.  (Remember: guns don’t kill people, doctors do.)  So it’s no refutation of HSAs to note that some people who forgo care will suffer.

Klein’s critique is of course more nuanced than “HSAs…bad!”  After all, he himself supports cost-sharing – if done smartly, by people with expertise.  If cost-sharing is devised willy-nilly, he says, people get hurt.  For example:

A recent study looked into what happens if you increase cost sharing on pharmaceuticals in Medicare. In other words, what happens when the patients have what Cannon calls a “financial incentive to avoid unnecessary spending.” The answer? “[S]ubjects whose benefits were capped had higher rates of nonelective hospitalizations, visits to the emergency department, and death. In addition, subjects whose benefits were capped had lower pharmacy costs but higher hospital and emergency department costs, with no significant difference in total medical costs between the two groups.”

Here’s why that’s lazy. 

First – and I’m sorry that I have to repeat this – the best evidence available instructs that, regardless of what the cost-sharing looks like, cost-sharing does not lead to worse overall health outcomes.

Second, if greedy insurance companies can save money and lives by eliminating cost-sharing on certain medical expenses, they will do so.  (Why?  Because they’re greedy, and offering more health for less money gives them a competitive advantage.)  Of course, the literature is mixed on whether cost-sharing for pharmaceuticals increases or decreases overall medical spending.  But assuming that coverage for certain medical services will actually save money overall, who does Klein think will sooner identify and eliminate cost-sharing for those services: government or the market?  Before he answers, he should consider that the market brought prescription drug coverage to consumers, oh, 30 years before Medicare did.

Third – and this is the kicker – Klein’s preference for planning-by-experts is what produced the very style of cost-sharing that he derides.  The requirements for an HSA-qualified high-deductible health plan were devised by Congress, not the market.  The Medicare drug benefits in the study he cites (above) also were not designed by the market.  They were designed by Congress and employers.  And when Medicare finally brought drug coverage to all seniors, Klein still didn’t like the result.

Klein may object that it wasn’t his experts who wrote those laws, or even that he doesn’t want Congress meddling with what his experts decide.  But the loyal opposition’s experts will always be around.  And I don’t know how he plans to get around that whole Article I thing. 

If Klein wants experts to calibrate cost-sharing, he has to include the entire political process – including his ideological opponents (hellooo!) and every wretched lobbyist for the health care industry – in his model.  He has to argue that that process will calibrate cost-sharing better than greedy insurance companies who have to provide value to consumers who control their health care dollars. 

I look forward to him making that case.

Andrew Sullivan Joins the Anti-Universal Coverage Club

…in this post, where he also critiques Michael Moore’s SiCKO.  Sullivan writes:

[A]llowing individuals to own their own health insurance and carry it from job to job would be a more meaningful reform [than the Romney healthcare initiative] - and univeralism can be over-rated. On this, I’m in agreement with this National Review editorial.

Read the entire post.

Calling All Conservatives

The most important thing to happen to health care reform this year is not Michael Moore’s film SiCKO. It is an editorial in the July 9 issue of National Review.

National Review’s editors declared that conservatives and other free-market advocates should reject the goal of “universal coverage” that has seduced health care reformers left, right, and center. The editors write:

[T]o achieve universal coverage would require either having the government provide it to everyone or forcing everyone to buy it…

The health-care debate has centered on the uninsured. That so many people do not have health insurance is a consequence of foolish government policies…

Republicans should go in a different direction, proposing market reforms that make insurance more affordable and portable. If such reforms are implemented, more people will have insurance…

Some people, especially young and healthy people, may choose not to buy health insurance even when it is cheaper…Forcing them to get insurance would…lead to a worse health-care system for everyone because it would necessitate so much more government intervention. So what should the government do about the holdouts? Leave them alone. It’s a free country.

Libertarians and conservatives have fought a decades-old war over the direction the conservative movement should take on health care reform. One such skirmish will take place at a Cato Institute Capitol Hill briefing this Thursday on the Massachusetts health plan.

The editors of National Review have planted their flag on the side of less government and more freedom. Kudos to them. That should help conservatives coalesce around health care reforms that explicitly reduce the role of government, thereby enabling markets to make health care of ever-increasing quality available to an ever-increasing number of people.

Laissez-Faire Health Care: Hilariously Misguided?

Ezra Klein offers a theory to explain my prediction that he will die a libertarian.  I’m going to keep my reasons for that prediction close to my vest.  But I will say that his recent comment about “intellectual disagreements” is not among them.

A few observations in response to his most recent post:

  1. A libertarian health policy would not prescribe $30,000 health insurance deductibles, or any size deductible. But Klein knows that.
  2. A patient on a gurney has no bargaining power. I know that.  Klein knows that. He knows that I know that. He also knows that most treatment settings are non-emergent. But let’s see if this straw man is really so easily razed. I’m guessing we could also agree that the patient has more bargaining power later, once his situation is no longer emergent. And I think we could likewise agree that a good way to protect the most vulnerable gurney-jockey from being gouged would be to make sure all gurney-jockeys care about the cost of their treatment (whether at the point of service or when they purchase their coverage).
  3. Best Buy and Sony are inapt. Think GEICO. Like Humana, GEICO is for-profit. Like Humana, GEICO takes its customers’ money and every claim paid is a loss to the company. Those incentives are the same.  Yet we don’t have an auto repair crisis. In fact, GEICO boasts on the radio that it pays claims so quickly, it steals other insurers’ customers. Why the difference?
  4. The key question is what type of system best reduces vulnerability. Is it a laissez-faire system, where (a) individuals would control the money now controlled by government and employers and (b) competition would ensure that insurers and providers could profit only by reducing others’ vulnerability?  Or is it a system with greater government involvement, where the link between self-interest and reducing others’ vulnerability is more attenuated?

Recap of SiCKO Film Forum

This morning, Ezra Klein and Stuart Browning joined me for what I think was an entertaining and informative forum on health policy.  (Keep an eye on this page for the archived webcast.)  Thanks to both of them for participating.

Over at his blog, Klein offers his thoughts on the discussion:

What always strikes me at these panels, though, is how much agreement there really is. Michael Cannon and I would build very different systems, to be sure, but at base, we both believe the employer tie to be awful, and the insurers to suck, and the hospitals to be performing below expectations, and on, and on. The obstacles to reform are not intellectual disagreement or policy uncertainties – they’re interest groups trying to protect a system that benefits them.

To be clear, we have serious intellectual disagreements.  I am an obstacle to Klein’s preferred reforms; as he is to mine.

I don’t expect that to last, however.  I have sensed this for some time and now I’m ready to predict it: Ezra Klein will die a libertarian.  And it won’t be a deathbed conversion, either.  Right now, I think he would call himself a progressive, which is fine.  He could even keep that label: it better fits someone who’s committed to expanding liberty anyhow.