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July 08, 2009

Comments

There's one piece of persistent dishonesty in the debate over health care that I would like to see vanish once and for all. It concerns the word 'rationing'.

I'll be sure to suggest that to the djinn as soon as I find the magic lamp.

So the idea behind all the shouting of "rationing" is that when the public plan comes in, (a) it'll be so big and so popular that it'll drive out (or at least seriously reduce the availability of) private insurers, which will (b) reduce the amount of competition in the health insurance market, which in turn will mean that (c) treatments not covered by the public plan will become harder to get. Is that the argument -- the threat of (effective) government monopoly on health insurance?

But what's the specific negative consequence of this to individuals, even if (for the sake of argument) it turns out to be true? Under the present regime, if you develop (or discover you have) a condition that's not covered by your existing health insurance, what do you do? You presumably can't shop around other insurers to find someone who will cover it, since it's a pre-existing condition, so the only option is to pay for treatment yourself, or go without treatment, right? Now how is this any different from being under the public plan with a condition that it doesn't cover? Again you can't shop around, again you either buy treatment or go without.

So the same scenario seems to be possible under both regimes. The only arguments against the public plan on these grounds that I can think of involve the issues of (i) whether this will happen more often in the presence of a public plan that it presently does, and (ii) what power patients in this position have to get their insurer (public or private) to shift. It's not obvious to me that either of these aspects would be worse in the presence of a public plan, but if opponents want to put up an argument, it would be interesting to see.

Finally, all this has to be seen against a background of an increased baseline level of insurance: all parties (presumably) agree that under a public plan, more people will be covered for more things. So even if there were more "shut-out scenarios" like that described above, it would likely still be the case that the overall level of health-care provision would increase, which is a trade-off a lot of people would be willing to take.

Thanks for this Hilzoy. One issue you raise which does not get discussed much is the cost of managing chronic health problems.

Therapy, living assistance and other health enhancements for people with Parkinsons, Alzheimers, and brain injury are often uninsured. Costs for this are bound to increase as our population ages.

These problems have a cost not just for the person who suffers from the disease but also to families and caregivers. I'm no expert but it seems that there are pretty significant cost/benefit arguments for better support.

My employer health plan is *already* disappearing, without any competition from the government. Our deductible went from $750 to $3000 this year, and there's still talk that the company can't afford it.

I was self-employed for over 25 years, and much of that time I was unable to afford health insurance. Even a routine physical, with all the attendant blood tests, was beyond my budget. I simply don't understand the people who are resisting change to the present system. Who are they? Where are they sourcing their health insurance? How are they paying for health care?

During one period without insurance, I injured my knee. Fortunately no surgery was required and I bargained with a good doctor for a fee of $1800, including x-rays, cast and follow-up visits. That worked out pretty well, but it was also not an emergency situation. I wonder what they would have billed the insurance company if I'd had one.

If I thought we could go back to a purely competitive market, in which consumers for non-emergency services could shop around for treatment, I might support that. But is that even possible anymore? Would doctors be willing to do this? And an injured knee is one thing, but what about more serious conditions, like cancer or heart problems? Would consumers be able to judge whether their care was adequate?

So even if there were more "shut-out scenarios" like that described above, it would likely still be the case that the overall level of health-care provision would increase, which is a trade-off a lot of people would be willing to take.

I'm not sure that they would be prepared to make the trade-off. I think because healthcare is so important, there is a particular tendency for people to be very self/family centred about it. For example, they would not regard a healthcare policy as positive if it increased the risk to them/their relative of dying by 1%, even if it decreased the risk to twenty other people of dying by 10%. Many people want their own mother's life to be prolonged by expensive drugs, but do not care fundamentally about someone else's mother. That's the attitude that Charlotte Allen's article is appealling to: it doesn't matter if the icefloe is overcrowded as long as it's not your family there.

I don't know how you overcome that view. Historically, the main drivers in the UK for concern about public health and/or universal healthcare have been contagious diseases and war. If the poor are prone to have diseases that the rich might catch, you need to do something about it. Similarly, if the ruling class haven't got enough healthy working class men to fight (as before the Boer war) or they've been saved from Hitler by the working classes, there's more motivation to care about their health.

If the poor are prone to have diseases that the rich might catch, you need to do something about it. Similarly, if the ruling class haven't got enough healthy working class men to fight (as before the Boer war) or they've been saved from Hitler by the working classes, there's more motivation to care about their health.

I would think someone smarter than I could come up with analogous economic arguments in favor of public health insurance in the US.

The line of reasoning in the rationing argument exploits what seems to me to be a common weakness in many people's critical thinking skills - poor to non-existent alternatives analysis. I don't know how many work meetings I have been through involving lenghty discussions of the flaws in a given course of action, flaws that are well known and have already been taken into account, which are lesser than the flaws of every other available course of action. It drives me nuts.

"the Obama plan could hardly be worse than the situation we have right now."

One of the questions is still whether government insurance mimics the insurance provided for government employees today or does it mimic Medicare? The results in each case are different. The first replaces private insurance at an exorbitant cost. The second probably has the opposite effect, doing little except creating a government program, currently priced at a trillion dollars, to insure 47M people.

The plan proposed can't be worse than the status quo for 47M people. It can be for 250M.

I think we need to have a plan that provides very specific benefits for the currently uninsured to provide many of these things ("And "non-emergency care", here, includes managing their diabetes so that they don't end up having their leg amputated, getting the antipsychotics they need to be sane, and getting HIV medication or chemotherapy. In short, it includes a lot of things that are pretty important.")
It will be hard, ongoing work but it should create a minimum level of care that every person can count on. While impacting the process around the other 250M as little as possible.

"all parties (presumably) agree that under a public plan, more people will be covered for more things."
This statement is not accurate; In fact, all parties agree that under a government plan more people will be covered for less things.

My opinion:
Rationing happens all the time, by the market, the government, etc. We are in fact talking about bread line type rationing.

In Canada the average wait time for a non-emergency MRI is 4-6 months. That includes any MRI for anyone not in critical care, defined as in the hospital. These delays do add risk of undiagnosed conditions that can be as fatal as the lack of access for the uninsured.

A fundamental problem with government provided insurance is how we share the cost. If we add 47M people to the insured without them sharing any of the cost, the most likely case, then the cost, or impact on services, escalates substantially. Since we have to eventually stop adding 1.7 trillion dollars a year to the deficit the most likely impact will be access to services.

The ethical question seems clear to me: Do we "substantially" lower the services that are affordable for the current insured base to create an overall insured base that has universal access to these more limited services or do we have a specifically defined baseline of support, higher than just emergency care, that is a safety net for the unemployed and uninsured?

This is the fundamental problem with American politics today. The right side of the political spectrum evaluates arguments based on their political correctness and their ability to generate talking points. Reality simply doesn't factor in.

This is why it's futile to argue with Jonah Goldberg, or to seek compromise with House Republicans.

Not a permanent condition, by any means, but it's where we are right now. No fun.

it doesn't matter if the icefloe is overcrowded as long as it's not your family there.

Well, the 'conservative' ideal would be likely the Raft of the Medusa (with the conservatives imagining themselves to sit in the longboats).

"I don't know how many work meetings I have been through involving lenghty discussions of the flaws in a given course of action, flaws that are well known and have already been taken into account, which are lesser than the flaws of every other available course of action. It drives me nuts."

It was a number of faculty meetings (at Pomona more than Hopkins) that were just like this that led me to come up with the idea of "cost analysis", in which you say: but this proposal has costs! What I haven't figured out, though, is why sometimes cost analysis is replaced by benefit analysis ("this proposal has benefits!") It's a mystery.

The ticket sales example misses the point; in this context it's no different than bread. The gasoline example is right on. The difference is that with gasoline rationing, you have the government making decisions about who's valuable and who isn't. That gives the government a moral authority that extends directly into personal behavior, which is the button healthcare obstructionists are trying to push.

The pacemaker example is an insidious one. The intent is to convey the idea that the government can decide that 99-year-olds are too old to bother wasting resources on, so kiss your precious gramma goodbye.

There may be medical reasons not to install a pacemaker based on other risks like age, but rationing standard care based on how many years one might have remaining is extremely unlikely to ever happen. This argument conflates standard procedures with exceptional ones, like liver transplants, where the resource being rationed really is finite and where a slightly different cost/benefit calculus comes into play.

Would a private insurance company cover a pace-maker for one's "otherwise tough-as-nails 99-year-old mother"? I don't think it's a slam-dunk that they would. It would be a _very_ high-risk surgery. And the insurer would almost certainly try to rescind coverage first.

Would a private insurance company cover a pace-maker for one's "otherwise tough-as-nails 99-year-old mother"? I don't think it's a slam-dunk that they would. It would be a _very_ high-risk surgery. And the insurer would almost certainly try to rescind coverage first.

Right now, insurance companies seem to try to get away with rescinding any coverage they can. In this hypothetical, I really doubt an insurance company could get away with arguing that they are denying coverage simply because the patient is too old to deserve it. But who knows?

"The pacemaker example is an insidious one. The intent is to convey the idea that the government can decide that 99-year-olds are too old to bother wasting resources on, so kiss your precious gramma goodbye."

Can't it?

On some level shouldn't it?

"I think we need to have a plan that provides very specific benefits for the currently uninsured to provide many of these things ("And "non-emergency care", here, includes managing their diabetes so that they don't end up having their leg amputated, getting the antipsychotics they need to be sane, and getting HIV medication or chemotherapy. In short, it includes a lot of things that are pretty important.")
It will be hard, ongoing work but it should create a minimum level of care that every person can count on. While impacting the process around the other 250M as little as possible."

Sounds great. I doubt anyone here could find much to object to here.

What does such a plan look like? How is it funded, and how does it work?

Seb, I've yet to see any proposal under which the government would prohibit people from purchasing supplemental insurance and also prohibit people from paying for medical services out of pocket. So no, the government CAN'T decide that some grandmothers will not get a pacemaker. The government can decide that some people won't get a pacemaker on the taxpayer's dime, but that's different from foreclosing the option of getting a pacemaker altogether.

"The government can decide that some people won't get a pacemaker on the taxpayer's dime, but that's different from foreclosing the option of getting a pacemaker altogether."

Thank you.

And I don't see even that being significantly different from a private insurer deciding that you don't get pacemaker on their shareholders' dime.

Which happens every day.

Anna Blume: I would never suggest that an insurance company would try to rescind coverage based on age. But what did 99-y.o. mom put on her application? Did she remember to mention that chest cold she had when she was a mere 65?

But the 99-y.o. mom seems like a ridiculous example for another reason. It's almost certain that her insurer isn't private. It's Medicare.

"The pacemaker example is an insidious one. The intent is to convey the idea that the government can decide that 99-year-olds are too old to bother wasting resources on, so kiss your precious gramma goodbye."

Can't it?

On some level shouldn't it?

^^^^ Pro-Life

And Phil? You don't think pro-choice means it is ok to strangle children at 5 right?

"And Phil? You don't think pro-choice means it is ok to strangle children at 5 right?"

No we have established that the age that it becomes illegal is birth date. Prior to that the mother and doctor can do it, however, anyone else doing it gets charged with murder.

Not saying I disagree with the law so please don't assume that, but pro-choice is a very narrowly defined set of parameters that allows two "actors" to end a childs life for a fixed period. Either the defined actors or the time frame could be altered by law in the future.

Could we please avoid making this thread about abortion? There's just no need for it to be. That will only add more heat than light while obfuscating the real issues.

Jeez Phil, couldn't you have taken a pass on needling Seb just this once? And Seb, couldn't you have tried to demonstrate more maturity than Phil just this once?

"Could we please avoid making this thread about abortion?"

Sorry Turbulence, you're right.

Sebastion,

Can't it?

On some level shouldn't it?

I can't tell if you're being sarcastic or reductionist?

A pacemaker for your otherwise tough-as-nails 99-year-old mother? Forget it, Mom, you die."

Well, let's hope so. What kind of reasonable system would pay for that? Crazy.

"In Canada the average wait time for a non-emergency MRI is 4-6 months." Okay, maybe they don't have enough MRIs in Canada. On the other hand, we have way too many here. I have heard that this is because doctors are afraid of getting sued because they didn't do "everything possible' including an MRI. I've had them when I really thought it was a waste of time and resources, and if this is why, the universal health plan needs to have some way to protect doctors against this kind of suit. This in itself would save a lot of money. I have excellent insurance, but sometimes I look at the summaries I receive from my company, and I am appalled at the "total cost". Quotes, because I have no idea how it relates to the actual cost. But I'm sure those are expensive machines to operate.

Oh, and did you know that some things your doctor might do during an examination are patented? And you will be charged extra to cover the royalties? Word.

Heh. And just for once, I get to be the mature pro-choicer going "tut tut" at Phil, Seb, and Marty.

Magistra's right - there was a window of opportunity to set up the NHS right after WWII, when the conservative opposition to the Labour government really didn't have a lot of moral high ground to argue that the working classes, who had suffered so much more from the war than the upper/middle classes, somehow didn't "deserve" the same level of health care. The evacuation of large numbers of working-class children from cities into middle-class families in the countryside is said to have opened a lot of ordinary conservative-ish people's minds to how bad things could be for working-class families even when there wasn't a war on. (Naturally it wasn't just the working-class children who were evacuated: but numerically, they would have been a large proportion of the children sent out from the at-risk cities to the safer villages.)

A lot of contemporary British writing during and just after WWII makes clear that there was a genuine popular feeling against the excesses and brutalities of capitalism - that wealthy families could escape danger in the Blitz so much more easily than poor families* - but nothing would have come of it without a Labour government. Both the popular will and the government's politics needed to be there for the NHS to happen. In the US you certainly have the popular will, but with a conservative administration and Congress, even if they're not barking-mad righties any more, the popular will isn't going to be carried out. The best you could hope for is a half-assed set-up-to-fail compromise like Obama's where the main objective is to protect the health insurance companies.

*Famous example: Many, many working-class people in London didn't live anywhere they could have an air-raid shelter - they didn't have a garden, they didn't live in a solidly-built house with a cellar. But they did live within handy walking distance of deep, deep tunnels under the city - the London Underground. And there they went - and the first reaction of the London Underground was to ban them, because these dirty unwashed people were cluttering up the platforms. (This is not acknowledged in the Underground's public history of the shelters, but it's recorded in contemporary accounts, including George Orwell's.)

The solution was very British: the people using the Underground bought penny tickets to the next station, and then they were legitimate passengers with a right to spend all night on the platform if they felt like it... But still: the first reaction of the company employees was to turn them away into the bombing raids. That's capitalism.

>> A pacemaker for your otherwise
>> tough-as-nails 99-year-old
>> mother? Forget it, Mom, you die."
>
> Well, let's hope so. What kind
> of reasonable system would pay
> for that?

Strictly speaking, every reasonable system is going to have weird cases somebody could pull out and mock. So, the reasonable systems that would pay for a pacemaker for a 99-year-old are the ones for which that example in isolation gives a slanted picture of how reasonable the system is. ^_^

I mean, I can imagine fictional health care systems which save money by *not* looking too hard at whether individuals are good candidates for a standard basket of medical procedures, which could include pacemakers; or which has a kind of contract with the people that no matter what you can at least get X, Y, and Z done, which happens again to include that. Or one where it's ultimately up to the doctor to vouch for the tough-as-nails component, and if the doctor thinks she's gonna make it to 107 with a pacemaker in, why is that worse than giving some 45-year-old a pacemaker when the doctor thinks they won't make it past 50?

None of these are, as far as I know, on the table; just noting that reasonability in the case of specific examples is slippery.

I don't see why an insurance system needs a financial calculus to determine whether a 99-year-old should get a pacemaker. If a medical assessment determines that said patient is a good risk for the procedure, then the patient is healthy enough to warrant it. And that holds for all accepted standard procedures.

There will always be expensive experimental treatments where participation will be based significantly on what each patient offers the study. But that's been going on for as long as I've been alive.

A true if unintended look at the conservative attitude toward healtcare (or any other benefits) for the proles can be found in this disgusting jeff jacoby piece:

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/07/05/a_deadly_organ_donor_system

Let's face it. We do ration healthcare. We ration it by denying it to the bottom 20% or so.

The 99 year old and the pacemaker is an odd invention for debate, effective as an extreme marker of where some slippery slope could theoretically lead. But, for the reasons mentioned above (options for supplemental insurance, or buying the pacemaker operation outright, would exist regardless of introduction of a robust public option), comes across as a non-starter for people arguing in good faith.

I find it incredibly difficult to write about this without getting angry. There are literally millions of people who would be thrilled to have the opportunity to see a doctor outside of an emergency room. Maybe to get a physical, maybe for a check up, maybe for prescriptions or refills, maybe for smoking cessation, maybe because of a cold, or even, god forbid because they have life-threatening illness. If you don't make enough money to afford your own insurance and your employer doesn't provide it, what are your options? Skip treatment, get treatment until you go broke, go bankrupt... maybe then you can get on medicaid. What am I missing?

Anyway, I'd rather leave the centenarian with a bad ticker out of the debate, and deal with the other 46,999,999 of us who, for whatever reason, can't afford a traditional doctor/patient relationship in America.

And not to take a potshot at Sebastian, but please let us know whether you currently have health insurance, and whether there has been a period in the last ten years where you have gone without health insurance for one year/ two years/ five years? Goes to prejudice, yer honor.

I don't read minds well, but I'd bet it's much easier to argue against a public option if you have health care already.


Sorry if I post this twice, my computer did something weird.

I agree with everything you said in this post, except for your implicit conclusions. Health care is currently rationed, as it must be. Health care is not unlimited in supply, but people want lots of it. Health care will always be rationed. The issue is whether the rationing will be efficient.

Health care should be rationed by price. Prices serve as a market-clearing mechanism, allocating a scarce good to those who want it the most. The attraction of high prices lead more people to enter the supply side. Over time, this should lead to a decrease in prices. Price's effectiveness as an allocative mechanism has been demonstrated over the past century.

Price has not been as effective for health care. This is due to 1) the signaling delay cause by intermediaries (insurance), 2) tax benefits given to employer sponsored care, and 3) mandatory coverage minimums. Health "insurance," unlike any other kind of insurance, covers everything. Consumers are insulated from the true cost of procedures, and consequently, consume more than they need. This leads to higher premiums. But, because a large chunk of premiums are paid for by the employer, half of this increase is invisible to the consumer. On top of this, innovation has increased the quantity of treatments available. So price insulation and innovation are pushing demand growth.

To follow hilzoy's nice analogy, it would be like if your car insurance covered every ding, scratch, broken belt, or minor problem with your car. If car insurance covered all of that, I know a lot of people who are crazy about their cars and would be in the shop every month getting dings or scratches fixed. This would in turn raise the price of car insurance. Some people would not want to pay for such broad coverage, so presumably, insurance companies would offer plans that would not cover every small problem.

Why would the government be better at controlling costs? Because they would have market power. They could push the price of some treatments or drugs below the market level. This will result in a lower supply in the future; price will not attract more suppliers. Instead of allowing the needs of the people to set prices and signal demand/supply for each medical good, the government will set prices. One can ration a good by limiting quantity or by placing a ceiling on price. Such as gasoline in the late 70s, when lines would form at 3 am at the gas station.

So when non-liberals complain about government rationing, we are not complaining that health care will be rationed per se. We are complaining that the government will set the appropriate level of supply by dictating prices to providers. So instead of determining quantity based on demand, quantity will be based on what some bureaucrat decides. By using market power to limit prices, government will destroy the incentive for more suppliers to enter the market.

Instead of having the government provide "insurance," I think it would be better to annually give individuals a set amount money for health care expenditures. Maybe $1000. Then, let individuals get their own insurance. I think that everyone should have access to basic health care. If you are sick, you should be able to get antibiotics. You should be able to get an annual physical. This would be equivalent to the free basic checkups some car companies give at 20k miles, 40k miles, etc.

Everyone cannot have a Ferrari. Rather than have the government decide how many Ferraris to produce, I think the private sector would be better at it.

Though I have no way of knowing this, but I would bet that most of the people who, because they think a public option would crowd out the private insurers, fear losing their private insurance have little idea of what is actually covered by their private insurance. They just seem to know, somehow, that their private insurance must be better than the yet-to-be-(if ever)-determined public option. (Frankly, I don't know a whole lot about what is or isn't covered under mine, but, then again, my family is healthy.) If I'm right, the devil you know is really just a(nother) devil you don't know. I'd love to see a poll on this that lets insured people give their opinion of a potential public option and asks them how much they know about their current coverage.

I should add that even if I did know what my insurance covered and thought it was inadequate, my only realistic options would be to find something like Aflac and pay to fill the void or go find another job.

I went without health insurance of any kind for 5 years. Thanks for asking.

I also support all sorts of measures which would extend health care to the currently uninsured, which you can find by looking through the archives. But they include such things as extending Medicaid to all unemployed people. Which, considering all the administrative advantages it is supposed to have strikes me as the rather obvious solution to how to deal with the problem of the uninsured.

"I don't read minds well, but I'd bet it's much easier to argue against a public option if you have health care already."

You really don't read minds well if you think I'm against a public option. I've been arguing for some sort of government extension of benefits to the uninsured for years.

"I went without health insurance of any kind for 5 years. Thanks for asking."

Legitimate or not, Sebastian -- and you are free to object that it is an illegitimate question, and suggest why -- the question you were asked was, in fact, "And not to take a potshot at Sebastian, but please let us know whether you currently have health insurance, and whether there has been a period in the last ten years where you have gone without health insurance"?

The question wasn't, for instance, "did you go without insurance when you were a young man, many years ago?"

"The issue is whether the rationing will be efficient."

In a nutshell, I disagree.

The issue is whether the rationing will make health care broadly available.

"Health "insurance," unlike any other kind of insurance, covers everything."

Hard to know what to say to this.

"Instead of having the government provide "insurance," I think it would be better to annually give individuals a set amount money for health care expenditures. Maybe $1000. "

Leaving aside the question of whether $1000 is a remotely adequate sum to cover one person's annual health care expenses, how is this plan any less disturbing to the market than a public health care plan?

"You really don't read minds well if you think I'm against a public option."

My apologies for misreading.

It is likely that Sebastian did without health insurance and maybe healthcare at some point in his life.

He's had troubles and privation, too.

I don't think he should be picked on.

That aside, and I'm kidding, I'm now bracing myself for a lengthy comment from Sebastian on the relative, low-cost ease of cooking one's own rice in a rice-cooker placed near one's bed and the curative powers of lentil broth for gout, gum disease, and lower bowel complaints, not to mention the use of the residual lentil paste as a poultice for low-grade burns.

Apples -- one a day -- keep the doctors at bay.

Just like a lack of health insurance.

People do not know what their health insurance covers because they do not buy it. They either take the sole option their employer gives them or choose from a few options offered by their employer. If people had to buy their own insurance, they would have a better idea of what is covered. They would also be able to evaluate what plan, coverage level, and price point worked for them.

I bet most homeowners have a pretty good idea about what their homeowners insurance covers. I bet most people shop around for car insurance and choose the basket of coverage that works for them (coverage for your car or just the other driver's, for medical expenses, deductible, etc.). The huge incentives given to employer sponsored health care prevent the market from functioning efficiently.

As a note, I have an individual policy with a $1000 deductible. I have never been without health insurance.

If you think your insurance is inadequate, you could always self-insure. Just save money instead of paying an additional premium to another company. If one plan is inadequate, you probably want coverage for sizeable expenses. That plan won't be cheap. You may be better off saving.

Health care should be rationed by price. Prices serve as a market-clearing mechanism, allocating a scarce good to those who want it the most.

Poor people want their cancer cured just as desperately as rich people: it's just they may not have the money to pay for treatments. If you were sick how much would you would be willing to pay to avoid dying next month? And would you be quite willing to die if you didn't have enough money? (Because after all, if you really wanted to live, you could unplug your wasting body from its drips and stagger out and rob a bank).

Consumers are insulated from the true cost of procedures, and consequently, consume more than they need.

How much of a problem is this, really? There are deductibles and copays. And going to the doctor isn't really that fun. And guess what, if my car insurance covered everything, I still wouldn't have time to put it in the shop if I didn't have to. Some people might, but how many?

Basic care should be broadly available. Ferraris should not. Doesn't matter if it is the government or the private sector providing.

According to my medical bills, $1000 is adequate for a physical and one additional appointment. I don't know if this is the case for everyone.

By providing for basic needs, the government is not setting prices by being a monopsonist. The problem with a government run plan is that it has too much market power and too little grasp on the appropriate allocation of resources.

Currently, prices in privately run health insurance are a bit off. But this is because the current employer-based insurance system reduces the effectiveness of prices as a feedback mechanism. Health "insurance" also is more than just insurance.

People do not know what their health insurance covers because they do not buy it.

Do you have any evidence to support this assertion?

They either take the sole option their employer gives them or choose from a few options offered by their employer. If people had to buy their own insurance, they would have a better idea of what is covered. They would also be able to evaluate what plan, coverage level, and price point worked for them.

The vast majority of people aren't well equipped to evaluate complex financial documents full of medical jargon. Most people are functionally innumerate and cannot compare two written descriptions of anything if those descriptions include more than than one number each.

I bet most homeowners have a pretty good idea about what their homeowners insurance covers. I bet most people shop around for car insurance and choose the basket of coverage that works for them (coverage for your car or just the other driver's, for medical expenses, deductible, etc.).

Your willingness to bet nothing does not persuade me. If you can point to some evidence for these assertions, that might be helpful, but merely stating them is not.

If you think your insurance is inadequate, you could always self-insure. Just save money instead of paying an additional premium to another company. If one plan is inadequate, you probably want coverage for sizeable expenses. That plan won't be cheap. You may be better off saving.

That would end up falling under finding another job.

magistra, if government pushes the price down, it reduces the incentive to provide future supply. A lower supply means fewer people can get the life saving treatment in the future. Sure, we don't see the people who lose out in the future like we can the person in the present. But that doesn't mean it is not happening. If a treatment cost $1 million, do you still think that every poor person should get it? A line has to be drawn somewhere.

Insulation from cost is a problem. Mostly because many treatments are very expensive. Prescription drugs can be $100s per week or month. One visit and you get the prescription. Not much hassle for the consumer. A lot of cost for all of us.

Consider the glaucoma test that you can get at the eye doctor. It costs extra. I never get it because I don't want to pay $50 or $80 or whatever it is. If insurance paid for it, I wouldn't hesitate to say yes.

If you think your insurance is inadequate, you could always self-insure.

This only works if you have no pre-existing conditions.

"People do not know what their health insurance covers because they do not buy it."

Seriously, you're losing some credibility.

I have no evidence for those two assertions. But why do you know what your car insurance covers? Because you have to buy it. Every day, people evaluate the features of products before buying. It is not outrageous to think that people would be able to compare two products.

Where is your evidence for the assertion that "the vast majority of people are not well equipped" to evaluate insurance? I will grant you that some cannot. But a vast majority? Plus, would the descriptions remain so complex if they were written for all people rather than just employers? We could also require summary sheets and let people sue for false advertising. The vast majority of people seem to know how to find a lawyer and sue.

In any event, it would be better to give people a set sum of money. Everyone can understand that. I have $1K to spend. I can spend it on getting my allergies checked or my itchy eyes or the clicking in elbow.

"...whether there has been a period in the last ten years where you have gone without health insurance?
The question wasn't, for instance, "did you go without insurance when you were a young man, many years ago?""

Lol, how old do you think I am? But for the record, I was without health insurance 7 years ago for a 5 year period. And I went through some medium level medical emergencies at that time so I'm not at all insensitive to the problems of being forced to the emergency room to do things.

Is that enough to establish my right to speak on the issue?

"But why do you know what your car insurance covers? Because you have to buy it."

No, this isn't true.

It appears that you'd like to argue that it is true because some model of market dynamics predicts that it should be true, but in fact it isn't true.

If you're paying attention enough to know what your car insurance covers, you are also highly likely to know what your health insurance covers.

The reason for this is not because you have to buy it, but because you have to *use* it.

In the real world, people generally know what their health insurance covers.

"Consider the glaucoma test that you can get at the doctor. It costs extra. I never get it because I don't want to pay $50 or $80 or whatever it is. If insurance paid for it, I wouldn't hesitate to say yes."

See, the current system for most of us has our incentives and disincentives passing each other like ships in the night.

If you have a family history of glaucoma or macular degeneration, get an annual glaucoma test, please.

Send me the bill in the form of much higher taxes to pay for a universal, single-payer, government-run (imagine, government bureaucrats deciding you need an annual glaucoma test, the tyrants) health insurance system.

I had an eye checkup last week to check on some weird symptoms and my doctor told me she wouldn't write down any conclusions just yet (I'm O.K. we just can't quite figure it out) because she wouldn't want to prejudice my search for health insurance if I lost my job (pre-existing conditions keep all of us sitting on the edge of the ice-flow awaiting the gentle push-off in the cold night; my job ends next year).

What a way to live, huh? I don't whether to push for a diagnosis (probably stress) or just get to the punchline and jab my eyes out with broaches like Oedipus.


Here is my dumb question:

If we create a public option that will be competitive in price and features to currently available private options, how does that make insurance available to the 47M folks who don't have it now?

Does the public option proposal *also* include a plan to make it available at no or reduced cost to those folks?

Sebastian has suggested extending Medicaid to those folks. Why not just do that?

In the real world, people generally know what their health insurance covers.

In my observation, healthy people with no kids don't know what their insurance covers, because they never use it. People with any sort of chronic condition, or children who need regular checkups and immunizations, have a pretty good idea of what's covered.

TomB, your arguments are contradictory. If it is bad that insulation from costs prevents market-based rationing that would keep prices down, why is it not good that the government uses its power as a volume purchaser to push prices down?

If I understand correctly, your answer is that choices made by the government will not reflect aggregate health needs as well as the market would. You are committing the classic economic fallacy of equating money and utility -- as noted upthread, poor people want a new kidney just as much as rich people do, and it is not obvious that they deserve it less or that society is better off if the rich person is prioritized. You're also assuming a reasonably efficient market in health care, which demonstrably would not exist (for many reasons, including: people do not have time to shop around for doctors when they are sick, most people lack the information and expertise to judge quality of care or priority of their own needs (is my allergy more important than my elbow, and how do I tell before I ask the doctor?), when you switch doctors you sacrifice a lot of particularized expertise about your specific case, many areas do not have enough population to support a competitive provider market, market entry costs are immense, and health problems are difficult to predict (as in, okay, I reasonably spent the $1,000 on the allergies, right before my elbow started clicking, now what do I do?)).

"TomB, your arguments are contradictory. If it is bad that insulation from costs prevents market-based rationing that would keep prices down, why is it not good that the government uses its power as a volume purchaser to push prices down?"

Not TomB, but my answer is that it would be fine if the government only used its power as a volume purchaser to push prices down. The problem is that once the government becomes the major purchaser, the political temptation to use other powers of the government to push prices down becomes very difficult to resist. This will tend to push prices below real costs which will degrade care and destroy innovation.

That is why I would tend to support an extension of Medicaid to the uninsured, but not tend to support a government muscle-in on the whole system.

There are two issues that both sides seem to want to conflate:

A) what to do with the uninsured so they get adequate care;

B) whether or not the government should have a much larger role in the health care of people who are currently insured.

Congressional Democrats seem to want to conflate the two so they can leverage A) to get what they want out of B).

Republicans seem to want to scare people with B) so they can avoid dealing with A).

I'd prefer to just deal with the pressing moral issue (A) and leave B) pretty much alone.

That is why I find the whole current debate really frustrating. It seems largely about B) when the moral case is much greater for A).

Russell,

What "uninsured" means is "not paying premiums". So, 47 million Americans are not paying in to the pot called "health care spending". I don't know how many of them fall into the category of being unable to afford the premiums that cherry-picking private health insurers charge to people with pre-existing conditions, and how many fall into the category of being young, irresponsible, and convinced they are immortal. The former might buy into a public plan, the latter might not. Frankly, I don't see how "universal coverage" can happen unless health insurance is made compulsory.

If we're talking about health insurance, I'm not quite sure what Medicaid has to do with it. If we're talking about health care, a tax-funded program to make sure people have the care they need is fine by me.

--TP

TomB: Consider the glaucoma test that you can get at the eye doctor. It costs extra. I never get it because I don't want to pay $50 or $80 or whatever it is. If insurance paid for it, I wouldn't hesitate to say yes.

Oh God. ...

Opticians aren't even fully tied into the NHS (you can not-qualify for free eye tests, and have to pay £10, though my shortsightedness is such that I've qualified for free eye tests most of my adult life) but it's S.O.P. for anyone at risk of glaucoma to have that test included in the regular annual check, at no additional cost. Which makes perfect economic sense in a socializea healthcare system, because it's going to cost the NHS so much less if the first sign of glaucoma is detected as early as possible ... to say nothing of my ability to contribute as a citizen if I can, you know, see.

"Health care should be rationed by price. Prices serve as a market-clearing mechanism, allocating a scarce good to those who want it the most. The attraction of high prices lead more people to enter the supply side. Over time, this should lead to a decrease in prices. Price's effectiveness as an allocative mechanism has been demonstrated over the past century."

And, to be sure, the more money you have, the more you deserve to have it.

"Just save money instead of paying an additional premium to another company."

Is it that poor people just don't exist in your universe, or is it that you think they deserve to be poor, or is it that you just think "the hell with them," or what?

There actually was a point to my "zinging" Sebastian re: "pro-life," in that he clearly isn't arguing -- at least, clearly to me -- from a consistent set of principles if he can simultaneously argue that abortions should be illegal at least after age A but also that life-saving treatments should be denied to people after age B.

Which is fine, a foolish consistency being the hobgoblin of small minds and all, but I hope he'll own up to it in future. But in any case, sorry for what was perceived by all as a derailment.

Hilzoy, there's a fallacy in your argument: the assumption that part of the objective is to keep poor sick people alive. Dr. Ayn rejects your prescription and recommends a course of Mortality Therapy, which will toughen these Moochers up.

I have no evidence for those two assertions.

Then I will ignore them since you have nothing useful to add to the conversation.

But why do you know what your car insurance covers? Because you have to buy it.

Repeating your deeply held beliefs does not make them evidence-based.

Every day, people evaluate the features of products before buying.

Every day, people evaluate the features of relatively simple products that are not complicated financial instruments. Comparing two brands of pasta sauce in the supermarket is not really equivalent to poring through the documentation for two health insurance plans.

Where is your evidence for the assertion that "the vast majority of people are not well equipped" to evaluate insurance?

If you look at the results from the National Adult Literacy Survey, you'll notice that only 21% of the adult population performed at quantitative literacy level 4 or above which, in my opinion, is the lowest level at which you'd have a shot at comparing insurance plans. Level 4 requires readers to perform two or more sequential operations or a single operation in which the quantities are found in different types of displays, or the operations must be inferred from semantic information given or drawn from prior knowledge.

Really though, I think many readers at level 4 wouldn't be able to make heads or tails of an insurance comparison. For example, a more difficult task [in level 4] requires the reader to select from two unit price labels to estimate the cost per ounce of creamy peanut butter. To perform this task successfully, readers may have to draw some information from prior knowledge. The kind of analysis we're talking about probably requires level 5 quantitative literacy, which only 4% of the adult population possess.

I will grant you that some cannot. But a vast majority?

Perhaps I'm misreading the NALS findings. Maybe you can explain why?

Plus, would the descriptions remain so complex if they were written for all people rather than just employers?

Well, mortgages are typically written for individuals rather than employers so I doubt that insurance contracts would be much simpler. You don't seem to understand my point though: any time you're asking the population to compare two different instruments characterized by blocks of text with numbers in them, half of the population automatically loses. If those numbers are not immediately comparable, make it more than half. The average American has tremendous difficulty thinking about numbers when those numbers are embedded in text.

We could also require summary sheets and let people sue for false advertising. The vast majority of people seem to know how to find a lawyer and sue.

Really? I thought that over 95% of patients who suffered malpractice did not sue. I don't think your assertion is well-founded in general.

kenb,
Nice to see you. I can understand your point, but what gets me is that in this post and comments, we have hip replacement, glaucoma, and being uninsured unmarried with no family, presumably under the age of 35 (or even younger) presented as arguments against. Yet, when pointed out that 1)hip replacement is often elective surgery 2)large scale screening for glaucoma potentially saves lots of money because it allows people to continue to be productive and pay taxes and 3)that being young, unmarried and single without health insurance is not like being middle aged with a family to support and being uninsured, those points never seem to be acknowledged (though perhaps not enough time has elapsed and I would love to be proven wrong).

While you are right that imputing bad faith to such arguments may be overly harsh, if the actual reality of those situations is not taken into account when the evidence is presented, it is really hard not to think that there's not something else going on.

Nobody is arguing that everybody should have a Ferrari. We are arguing that fewer people should be forced to walk, however.

Mr. Trilobite hits my point on the head: "choices made by the government will not reflect aggregate health needs as well as the market would." We do not allocate goods based on utility, we allocate them on willingness to pay. It is impossible to allocate using utility.

If government pushes costs down, this will result in lower supply in the future, meaning fewer people can get a treatment. The current market should be fixed by eliminating the benefits for employer sponsored plans. This will make some consumers more conscious about what their plans cover. It will also make plans more portable so you do not have to worry about your job.

I think that everyone should have access to basic care, but I draw the line as to where basic care ends lower than most you would (I suspect).

I have never posted on a blog with a political persuasion significantly different from mine. hilzoy's example just struck me. I enjoyed our conversation. I see some areas where some of my arguments need improvement.

TomB, that was a graceful exit, and hopefully not a permanent one. Kudos.

Just wanted to re-ask my dumb question from upthread:

How would providing a public health insurance offering, intended to be competitive with private plans, make insurance available to the 47M folks who don't have it now?

Would there *also* be some kind of assistance to help those folks *buy* that insurance?

Would it be offered at reduced or no cost to poor people?

Tony P took a swing at an answer but I confess I didn't completely follow it.

Sorry if I'm missing something here, if someone can point me to the missing puzzle pieces I'll be grateful.

Turbulence, may my wife forgive me, but I love you man. I'm saving those links and words because I frequently hear "But they should just be able to read it and understand it."

"Just wanted to re-ask my dumb question from upthread:

How would providing a public health insurance offering, intended to be competitive with private plans, make insurance available to the 47M folks who don't have it now?

Would there *also* be some kind of assistance to help those folks *buy* that insurance?

Would it be offered at reduced or no cost to poor people?"

Current plan would do this:

Their proposal would create “health exchanges” where people could comparison-shop for coverage among plans that met minimum standards set by a federal advisory committee. The exchanges would include a public plan.

Families and individuals with incomes up to 400 percent of the poverty level would be eligible for credits to help them purchase insurance in the proposal and a federal standard would be set to expand Medicaid, the federal insurance program, to those earning up to 133 percent of the poverty rate. Currently, Medicaid rates are set by states.

The House bill may contain cuts to Medicare of $500 billion to $550 billion, said a lobbyist familiar with negotiations.

From:

http://www.bloomberg.com/apps/news?pid=20601213&sid=a9oF6SdyZXxQ

Thanks Marty.

There is at least one gap in your knowledge of Medicare. A doctor who accepts assignment from Medicare is not permitted to charge more than the Medicare approved amount for a procedure or office visit. A doctor who does not accept assignment may only charge 15% more than the Medicare approved amount. It's against the law to do otherwise. Medicare approved payments are the lowest of the low. It is why many physicians are not accepting new Medicare patients. They lose money with every Medicare patient they treat. This is one of the reasons for absurdly high charging practices. They know they are only going to recover a fraction of their cost, so they pass the cost to non-insured or privately insured patients. Private plans also write contracts that dictate payments, but the fractional payments are generally higher than government plans like Medicare and Medicaid. If large numbers of employers drop their private plans because the premiums are too high and their employees flock to the public option we will see more and more medical clinics going out of business, longer wait times to see doctors and rationing by queue, as is the case in Canada. Unlike Canada, US citizens will not have another country to jump to for emergency treatment that is unavailable at home. The Obama public plan is betting that they will be able to save so much money by fostering medical homes, quality initiatives, best practices and the like that they can pay for the increased number of people in the covered pool. As a primary care doctor who lived through the managed care era of the 80s I can attest to the fact that those were precisely the ideas we tried in those days under different names. The result was a consumer rebellion, government mandated insurance coverage for unproven treatments that were politically convenient to support and in the end a failure to reduce utilization or cost.

If large numbers of employers drop their private plans because the premiums are too high and their employees flock to the public option we will see more and more medical clinics going out of business, longer wait times to see doctors and rationing by queue, as is the case in Canada.

Boilerplate propaganda, not backed up by either anedcdotal or systematic data.

Who are you, really?

TomB,
How does your analysis deal with the excellent outcomes of government-run healthcare systems in other countries? You suggest that there should be all manner of inefficiencies, yet many are delivering as-good-if-not-better healthcare at half of the cost.

Unlike Canada, US citizens will not have another country to jump to for emergency treatment that is unavailable at home.

I think that this is a myth; at least, I've never seen more than anecdotal evidence for it. And Im curious where the Europeans go for emergency treatment that is unavailable at home- or are they just dying in droves? The health statistics suggest otherwise.

"You suggest that there should be all manner of inefficiencies, yet many are delivering as-good-if-not-better healthcare at half of the cost."

And again, the flip side is that our government already spends more money per capita than Japan or the UK and about as much as Canada, but only manages to cover about 27% of the population with that. So whatever manner of inefficiencies seem to be very much lingering around Medicare and Medicaid when compared with universal systems in outher countries.

And again, the flip side is that our government already spends more money per capita than Japan or the UK and about as much as Canada, but only manages to cover about 27% of the population with that.

Seb, I know how important this point is to you, but it is not the Axis Upon Which All Other Healthcare Questions Turn :). I wasn't arguing that we could exactly implement such systems, just wondering how TomB reconciled the existence of such systems with his theories about inefficiencies and free markets.

TomB was indeed gracious, and I hope he returns.

Meanwhile, I will take advantage of his absence to take free hits at him :)

We do not allocate goods based on utility, we allocate them on willingness to pay. It is impossible to allocate using utility.

Highways.
Public libraries.
Rural electrification.
Aid to Families with Dependent Children.
Social Security Disability Insurance.
Veterans' Administration Health Care.
Any family budget.

Honestly, WTF? I have met free-market fanatics before, but this takes the cake.

Dr. Smith, this:
government mandated insurance coverage for unproven treatments that were politically convenient to support
would be a scarier prospect were it not for our free-market system's miserable record at weeding out placebo treatments, fad-of-the-month pharmaceuticals, and Machines That Go Ping.

On the point about using more health care than we "need" (whatever that means). The only reason I consume more medical service than I need is because my employer doesn't trust me to decide when I'm sick. (Rather - too sick to work). Since I'm too ill to work that day and will be at home anyway, the only variable is whether I get sick pay (less $60 to the doctor) or take it as time leave.

"Seb, I know how important this point is to you, but it is not the Axis Upon Which All Other Healthcare Questions Turn :)."

Not all other health care questions. Only the ones that have to do with healthcare in the United States. But if you want to raise government efficiencies from other countries, you have to realize that for various reasons which seem to be unexplored, our actual US government does not seem to have such efficiencies. And until you can explain what it is that can make up such an enormous gap between covering 27% of the population and covering 100% of the population for the same cost, pointing to other countries as illustrative isn't really illustrating.

"Unlike Canada, US citizens will not have another country to jump to for emergency treatment that is unavailable at home."

Unfortunately, the facts completely contradict this.

Dan Smith, M.D. (10:59 am) is not quite correct about the requirement that physicians accept low payments from Medicare. A physician has three options: (i) she can participate in the Medicare program, in which case she collects the Medicare rate from Medicare; (ii) she can choose not to participate (referred to as being “non-par”) but still bill Medicare, in which case she collects the non-par rate, which is not more than 115% of the Medicare rate; or (iii) she can “opt out” of Medicare, not bill Medicare at all, and collect directly from the patient whatever fee she and the patient agree on. But she can’t opt out of Medicare patient by patient—it’s all or nothing, for two years at a time, and she has to file the appropriate forms with Medicare (and make sure her patients know she has opted out). Most physicians don’t opt out of Medicare, presumably because even the disappointing Medicare rates are more than most Medicare-eligible patients could pay. And by the way, Medicare payments are not “the lowest of the low” as Dr. Smith says. That status is typically reserved for Medicaid payments. After all, there are fewer poor people than there are old people, they aren’t as organized or politically active, and it seems to bother our society less if many physicians refuse to treat them.

Sebastian: you have to realize that for various reasons which [I prefer to ignore], our actual US government does not seem to have such efficiencies.

The answers to your question were explored weeks ago. You just didn't like the answers.

How is it that the 99-year-old mom argument seems to be more effective in swaying people's attention than the idea that there are millions of people in the country who can't get basic health care? Is it the banality of non-emergency care vs. the Pacemaker crisis? Or is it the individual mom that is easy to relate to vs. the faceless mass of the uninsured (and it's always harder to sympathize with a crowd or a statistic than a person who might be your own mom ... or you). Is there a way to spin on the need for non-emergency care in a way that lets people relate to the individual and the possibility that it could happen to you, without pinging the dastardly meme in U.S. society that says people who don't have health care lack it through some fault of their own?

"The answers to your question were explored weeks ago. You just didn't like the answers."

Link the alleged answers or quit being a troll. Well actually I'd prefer both.

Link the alleged answers

Already did, on the other thread where you were trolling with your "27%!" thing. But here you are again. Now will you quit trying to derail serious health care discussions with your trollery?

That is my article. I'm aware of it. I don't see the answers that you believe are there. Comments are individually linkable or can be referenced by date and time. Thanks in advance.

NewsTrust (where I work) has just published a summary of the some of the best journalism on health care reform, and this post was one of the pieces discussed. Check it out, let us know your thoughts. If you think we've missed something we'd happily take any submissions!

There are at least three kinds of asymmetric information that make the market grossly imperfect:

1) The lemon problem: consumers don't know whether their chosen doctors are competent or not.

2) The third-party problem: consumers don't know what their insurance, much less their actual medical services really cost.

3) The crafty-insurer problem, which I suspect is the worst: insurers carefully abstain from saying whether any particular expense will be covered, and to what extent, until after it has been incurred. The usual method is to declare that the plan will cover 80% or 90% of "reasonable and customary expenses", which are typically far lower than actual prices, and unpredictably so.

With these three factors pulling every which way, the notion that a straightforward market-clearing price even exists is simply naive. The market for medical expenses is much more like the market for fine art.

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