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February 24, 2010

Comments

Seems appropriate to link this oldie but goodie.

I think we'll get a health bill passed, and I think people will like it. The Republicans certainly can't repeal it even if they took Congress, and having promised to do so, the failure to do so - probably the failure to even try, given the certainty of a veto - would have the same discouraging effects on the frenzied base that Democratic failures to deliver tend to have.

I think by 2012 we'll be looking at a very different set of conventional wisdom in regards to Republican strategy, Obama, and the health bill. In the thick of it, that's hard to see.

None of that applies if they fail to pass it. If they fail altogether, the Democrats deserve to lose, will lose this year, and will lose again in 2012. That'll be a disaster, but they will have brought it upon themselves. Maybe they'll learn something?

I suppose the business about the Anthem rate hike is one of many reasons I'd be a lousy politician.

Without reference to specific numbers, Anthem's general explanation really doesn't sound unreasonable to me. Given a poor economy there will be a tendency for people to drop health insurance, and the healthier you are the more likely you are to drop it. Hence the insured pool gets sicker and rates rise. It's a classic death spiral.

It's also a great argument for reform. Here is a perfect illustration of problems with our system, and how the market fails. No need to paint the company as a villain, just a business reacting to market forces.

Rather than villifying Anthem, I'd use them to make my case. And that wouldn't work at all, I guess.

Jacob,

If they fail altogether, the Democrats deserve to lose, will lose this year, and will lose again in 2012. That'll be a disaster, but they will have brought it upon themselves.

The trouble is, they will have brought it on us too.

I don't know if I like the idea of supplying rope to the Republican Party of Lynching.

At the healthcare summit tomorrow, maybe we'll have President Obama step to the podium with McConnell, Boehner, and Cantor concealed underneath gripping a rope attached to a bucket of pig's blood over the stage and after the rope is pulled and the bucket contents spilled over the President, and as the Republicans point and laugh like a bunch of catty teenaged girls.....

..... the President will finally summon his full powers and go all "Carrie" on them, slamming and locking the doors to the venue, unfurling the firehoses, and engulfing the joint in flames .....

... days later, Joe Lieberman will lay flowers at the site and as he he bends to place them, Obama's hand will emerge from the ground and grab Lieberman's wrist.

At least the C-Span audience will finally have a reason to shriek and leap from their seats.

Thullen wins the thread.

Thullen always wins the thread.

John, do you have a blog of your own? If not, you should.

Anthem's general explanation really doesn't sound unreasonable to me.

Nor to me. I think they're doing exactly what they were created to do.

I don't even think the CEO's compensation, which with stock options was apparently around $2M last year, is necessarily excessive. The company made $4.7B last year.

The problem is that relying on organizations like Anthem to make sure that health insurance is accessible for individuals isn't working.

They're not bad people. Or, at least, there's nothing in their actions to indicate that they are bad people. The folks who are deciding to raise premiums are doing what they are legally obligated to do. They are running the numbers and offering a service at a price that will let them maintain their profitability.

What that *does not do* is make health insurance accessible to folks who need it at a cost they can afford.

Russell,

The problem is that relying on organizations like Anthem to make sure that health insurance is accessible for individuals isn't working.

Exactly right. And that's the point that I would like to see stressed, instead of "Aren't they terrible people because they raised rates 39%?"

Not only is it more accurate, it starts to drive home the message that gee, maybe the market doesn't solve every known problem.

But as I said, I'm no politician, and it may be that my preferred message just doesn't work, politically.

@ efgoldman,

I've been saying Thullen needs a blog for years.

If the meeting is a trap, then is shows the main problem of the Obama Administration: setting up others as scapegoats for the inevitable failures is more important that the actual policy.

The Republicans should not go along for no other reason that they will be blame for all the failures if they are bipartisan in any way.

The Democrats should be willing to pass new programs without a single Republican vote for admit that the programs are not worth passing.

I've been saying Thullen needs a blog for years.

Oh, no. That would be like giving Picasso a house-painting gig.

Thumbs up to what Bernard and Russell are saying: don't hate the playa, hate the game. People & corporations (who, as we all know, are "people" too) respond to incentives. The incentives wrt health insurance are wacky, and this is the inevitable result.

It is an excellent illustration of the need for reform - no demonization necessary.

no demonization necessary.

What country do you think this is?

What country do you think this is?

It's the country of torturists, racists, misogynists, abortionists and socialists, of course.

and how the market fails.

Can it fail if there is no market? Here in California the sec state lists close to 50 companies offering individual plans, but a closer look seems to show that most offer only medicare supplement and long term care plans, not "regular" health care plans (e.g. Mutual of Omaha). In reality it looks like I can choose from Blue Shield, Anthem, Aetna, Celtic, Cigna, HealthNet and Kaiser. Maybe there are some smaller ones out there.

Seven players doesn't make a free market, IMHO.

As the duly appointed union representative of Racists, Misogynists, Abortionists, and Socialists Local 541, I take great offense at you lumping tourists in with our membership.

Oh, sorry. Everyone knows that tourists are teh wurst.

It appears I made a mistake. You wrote torturists not tourists.

The Torturers union is separate from ours. I believe they're represented by the National Association of Torturers, Cobblers, Coopers, and Dog-Sweater Designers.

The incentives wrt health insurance are wacky, and this is the inevitable result.

Just to clarify, it's my opinion that corporations and the folks who run them quite often deserve demonization. I just don't think Anthem raising their rates is an example of that.

Recission as a cost-cutting exercise qualifies, IMO, as pure anti-social evil behavior. Take someone's premium payments for months or years, then go over their history with a fine-toothed comb when they make a claim so that you can deny payment.

I call that fraud, and the principals of the companies involved should first make the insureds whole, then they should go to jail.

I'd also point out that the conclusion I draw from the Anthem situation is that some things are too important to leave to the vagaries and dynamics of the free market. Health insurance should be one of them.

Anthem in this case is not, IMVHO, evil. But they should either be willing to accept significantly more regulation than they currently do, or that particular line of business should be taken out of the private sector altogether.

People are dying, suffering from preventable illnesses, going bankrupt, and losing their homes because they can't afford the cost of their medical care and/or medical insurance.

IMO that takes things out of the realm of the free market and into the realm of public policy.

The Anthems of the world aren't getting it done. Nothing against them personally, it's just not what they're designed to do.

Change the rules of the game, or get them out of the game altogether.

"torturists, racists, misogynists, abortionists and socialists"

or torturists, racists, abortionists, misogynists and socialists

TRAMS

Certainly not three letters but a nice acronym nonetheless

bc,

Can it fail if there is no market?

Yes, absolutely.

One possible consequence of market failure due to information problems is simply the disappearance of the market.

There may be a mutually beneficial transaction you and I can make. But if you fear that I have a big informational advantage, so the transaction may not be beneficial to you, you won't make the deal.

This sort of thing bedevils insurance.

Seven players doesn't make a free market, IMHO.

Unfortunately, there is a rock-solid, bipartisan consensus that the health insurance industry must remain exempt from antitrust laws. Who this is supposed to benefit -- aside from, obviously, the companies in question and the legislators whose campaigns they underwrite -- is anyone's guess. It sure as hell ain't us.

Bernard:

I don't disagree. My play on words was too obtuse. I don't think you were necessarily calling this a MARKET FAILURE(tm) in the sense that it is an indictment against a free market approach, but just a failure of this market as it exists today (free or not). Right?

I get a bit annoyed when reform is justified by pointing to a failure in a market that is not really free. I'd like to see an approach that opens up the market. If that doesn't work, I'm all ears.

And few approaches (much less Obama's) take into account human nature. I didn't see anything in the summary that tries to cut costs like an HSA does (e.g. incentive to not spend your deductible in an HSA; unused deposits roll over and essentially become an IRA). I just can't get worked up over approaches that offer great coverage with no responsibility to the covered coupled with a claim it will cut costs. No way.

Just to clarify, it's my opinion that corporations and the folks who run them quite often deserve demonization. I just don't think Anthem raising their rates is an example of that.

Agreed. Neither of us addressed recession - this was about the rate increase. Charging more premium when you expect to pay out more in losses is fine by me. Hey, I work for a property casualty insurance carrier. Stuff like this reminds me of battles over rate increases for homeowners insurance in, say, Florida (due to Hurricane risk). People complain about it, but what's the company supposed to do, lose money? People just LOVE it when an insurance company doesn't charge enough premiums and then goes belly-up after a major storm. That's, like, totally sweet.

Recission is another matter. In principle, there is a time & place for recission. When someone deliberately lies about something important to the claim, it may be warranted. But it's fairly clear that this is NOT how it's being used in health insurance. It's being used as a sneaky way to avoid paying claims that are clearly supposed to be covered, and that is... well, yeah, kinda evil.

bc,

I get a bit annoyed when reform is justified by pointing to a failure in a market that is not really free. I'd like to see an approach that opens up the market. If that doesn't work, I'm all ears.

OK, but there are reasons the health insurance market is not a free market in the sense you are talking about, and a big part of that has to do with the nature of insurance.

IOW, the market is the way it is because of the realities of health insurance, not just because some bureaucrats decided to jump in and mess it up.

You have information problems. You have the fact that the risk associated with a policy holder can change dramatically. You have the fact that the risk does change, predictably and rather steeply, over time. You have the fact that we are unwilling, as indeed we should be, to refuse care in many situations where the patient is uninsured and may not be able to pay. You have the fact that there may be a lag of many years between the time you pay your premium and the time you need a benefit, so financial soundness is crucial.

I can elaborate on these things, and will if you like, but I'm rushed right now. But to start, note that these are not features of markets that conform to textbook models of successful and effective competitive markets.

IOW, the market is the way it is because of the realities of health insurance, not just because some bureaucrats decided to jump in and mess it up.

I can't think of a single federal regulatory regime that didn't arise as a result of somebody's bad behavior.

Regulations exist because some folks are bad actors, and the consequences of just letting "the market" sort that out are somewhere between unacceptably bad and catastrophic.

We don't rely on the free market to supply national defense or basic public safety. We don't rely on it to provide potable water. We generally don't rely on unregulated markets to pick up the trash, or deliver electric power to our homes.

We take this approach with all of these things because it's *more important that they be provided to everyone at some basic level than that they be provided in the most efficient manner possible*.

Markets are great at making things happen in the most efficient way possible. They have no particular interest per se in insuring that those things be available broadly, or consistently, or at all for that matter.

The whole debate about health care reform just depresses the hell out of me. Every other country that can remotely be considered a peer of the US does a better job of delivering basic health care to its people, and they do it for much, much, much less money than we do.

Those are simple, plain facts.

But we're going to spend another fifty years putzing around with this crap, because we have somehow convinced ourselves that having basic human services provided either directly or under the sponsorship of our own government is an offense to our sacred liberty.

Trust me when I say that there is something truly liberating about not having to worry about whether you can afford to go see the doctor when you're sick, or when your kids are sick, or about whether there's a place for a parent to go when they get old and demented and you can't care for them anymore, or whether you can get a simple medication that will let you function on a day to day basis.

I don't give a crap about Anthem. If they need to raise their rates to keep making money, that's what they are going to do. It's what they have to do, they don't really have a choice.

We, by which I mean the people who live in this country, have a choice. We can take simple, basic steps to make sure that none of us *freaking die* because we don't the money to pay for care or insurance, or we can cover our own @ss as best we can and let all of the other guys cover theirs.

And whatever choice we make is going to determine what kind of place this country becomes.

I can tell you that the country I live in now is not the country I grew up in, and it makes me freaking sad every single day.

Bernard:

Yes, but even with all that a market can function freely and competitively within the required framework. I'm not arguing for "free" in the sense that there is no regulation. I accept some regulation in the industry.

You can affect the framework by requiring coverage of children to 26, portability, etc. By "framework" I mean government regulation of what a health insurance policy looks like.

You can also try to make the market as free as possible by increasing the number of available vendors, improving information flow to consumers, maximizing flexibility and innovation in coverage, etc. within the framework.

I don't see as much discussion on the latter. I'd like to see more. And I'd also like to see more thought going to incentives to get the care you need but not go to the doc for every sniffle. Personal responsibility. BTW, I've maxed my HSA every single year and still haven't been able to roll some over, but I'm trying.

I'd also like to see more thought going to incentives to get the care you need but not go to the doc for every sniffle.

Seriously bc, who does that? I'm not trying to be argumentative, I just don't see that all that many people run off the doctor when they don't need to.

It's not that much fun.

I have no problem with your other suggestions.

Whatever works. What we have now doesn't work.

Also, as an aside:

There is no HSA offered where I work. They offer an FSA.

To participate, I need to commit at the beginning of the calendar year to contribute a fixed amount into my FSA account per pay period.

Whatever I don't spend by the end of the year, I lose.

Incentive-wise, I could probably imagine a dumber idea, but I'd have to work at it.

Eh, Russell, in my experience there are indeed (too) many people that run to the doctor with trivialities and not all of them are hypochonders in the clinical sense (I have hypochondric tendencies myself but try to avoid bothering a doctor if not strictly necessary nonetheless). And I consider the US to be worse in that regard than Germany (at least as far as consumption of antibiotics goes and is valid as an indicator).
For a lot of people their GP is also an important social factor because (s)he is someone whose job it is to care and who has (at least appear to) take them seriously. And an oprdered test or a filled prescription is the seal under the deal.
On the other hands specialists have to amortize their often extremly expensive equipment (partially balanced by pooling though).

"Whatever I don't spend by the end of the year, I lose.

Incentive-wise, I could probably imagine a dumber idea, but I'd have to work at it."

Yeah, FSA's are sucky, whoever came up with them was an idiot. HSA's make a lot of sense, though. So, of course, the health care reform bill being debated now screws them up.

Meanwhile, the USA Patriot Act renewal sails throught the House, 315-97. Weird.

Oh. Thomas has got its wires crossed.

House passed HR 3961, which is listed under Roll Call as:

H.R.3961 Title: An Act to extend expiring provisions of the USA PATRIOT Improvement and Reauthorization Act of 2005 and Intelligence Reform and Terrorism Prevention Act of 2004 until February 28, 2011.

Click on the text of the legislation, and you get a bill that says something like this:

In the Senate of the United States,

February 24, 2010.
Resolved, That the bill from the House of Representatives (H.R. 3961) entitled `An Act to amend title XVIII of the Social Security Act to reform the Medicare SGR payment system for physicians and to reinstitute and update the Pay-As-You-Go requirement of budget neutrality on new tax and mandatory spending legislation, enforced by the threat of annual, automatic sequestration.', do pass with the following

AMENDMENTS:

Weird, again.

Seriously bc, who does that?

With respect, Russell, I assume that you have not worked for the government or an employer with a $10 co-pay. Happens all the time. And it's not just for GP sniffles visits. I only worked for the government for one year (law clerk) and saw it first hand. People discussed it openly. I had a friend that worked for the local clinic (quite a big clinic) and she told me about how drastic the traffic drop off was when there was a change in the co-pay for a large employer (memory tells me it was the state or county and I think it went from $10 to $25). That small difference in out of pocket caused people to behave differently and I'm reasonably sure nobody died because of it.

That's why a model like Singapore's might work here. HSA's on steroids. Personal choice and accountability. Still taking care of the poor. Sure, there are critics in Singapore, but they all seem to be wanting to tinker with the system rather than propose a 1,000 pages of crud.

Actually, I have a $10 co-pay. And I've never worked for the government but I've worked for companies that did a lot of work for the government.

And, I haven't really seen a lot of folks running to the doctor unless they actually aren't feeling well. Which is when they should go to the doctor.

Most folks I know have too damned much to do to spend time sitting in a doctor's office for anything other than good reason.

Maybe we just travel in different circles.

I'm sure that the difference between a $10 and a $25 co-pay is enough to keep some folks from going. The result might be that folks who are inclined to go the doctor as some weird form of recreation, or as a way to shirk work, or whatever, find another way to spend their entertainment dollar. Or the result might be that someone who might have gone when they had (frex) a minor but persistent cough end up going anyway, later on, when they have pneumonia.

Etc etc etc.

It might be a way to weed out frivolous doctor visits, or it might be a disincentive for people to get treatment for things in their early, less serious stages, when treatment is simpler and less expensive.

I can't tell you which is more likely, or more common. It probably depends on lots of other factors.

Your anecdota, and therefore your guess, are as good as mine.

I can tell you that both no doubt happen.

I can also tell that the less money you have, the more likely it is that a difference of $15 is going to get you to put off going to the doctor.

And I can also tell you that if you have a $25 co-pay for a GP office visit, you're doing a hell of a lot better than a lot of other folks. Maybe most.

I appreciate that it's wasteful to bug doctors every time you have a headache. I'm less convinced that people going to the doctor when they really don't need treatment is a major cost driver for health care in the US.

I could be wrong. That's just my intuition about it, based on my own experience. It would be an interesting thing to find out.

Regarding HSAs, they sound fine to me. I have my preferences about what a good health care regime would look like, but I'm really not that attached to them.

Whatever works is fine with me. If HSAs get it done, let's do that.

15% of the people in this country -- about 45 million people -- have no health insurance at all. 45,000 people a year die because of lack of access to health care. People go bankrupt and lose their homes because of the cost of necessary health care.

That sucks, and it's stupid and unnecessary.

I would like the conversation to change from preserving the sacred right of health insurers, drug manufacturers, and care providers to make as much f**king money as they can find a way to make, or on preserving the sancitity of god-damn free market, and focus on making a basic and reasonable level of health care accessible to a fair approximation of every human being in this country.

That's what the conversation should be about.

That small difference in out of pocket caused people to behave differently and I'm reasonably sure nobody died because of it.

Going from $10 to $25 isn't really a small difference on a percentage basis. What do you think would happen to the demand for other goods and services if their costs jumped 150% overnight?

I've no doubt that people behaved differently. The real question is how much differently. And there's no way to be reasonably (or at all) sure in the long run who did or did not (or will or will not) die or get needlessly sicker because of that behavioral change.

One of the arguments I've heard against mandatory, universal coverage is that you'd be forcing young, healthy people to pay for insurance, which they otherwise wouldn't pay for, to lower the overall risk of the insured pool, allowing old, sick people to pay lower premiums. The negative result being that these young, healthy people would start going to the doctor's office simply to "get their money's worth," needlessly driving up overall health-care expenditures on unnecessary care. People who make that argument must have been very strange people at twenty-five, or they have warped memories.

I don't know whether or not people run to the doctor all the time because they have insurance.

I do know that people in countries with various forms of national insurance (i.e. the rest of the advanced industrialized world, at least) have the same incentives (see Hartmut, supra) as well-insured folks in the US. So to the extent these incentives cause health care costs to be higher than they should be, they do nothing to explain why costs in the US are so much higher than elsewhere.

I think Boehner should be tested for DUI (debating under influence). And I do not just mean lobbyists. The guy looks (and partially talks) as if there was a constant influx of certain chemicals.

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