A Strange Way to Look at Health Economics
David Cutler has an editorial in The Wall Street Journal today, analyzing ten ways in which ObamaCare might affect future health care costs. I’ll start with the 800 pound gorilla: the effects of providing very generous insurance coverage to 30 million previously uninsured people.
The impact of just that one provision will…..hmmm…..I’m searching…..most likely swamp the effects of anything else…..but…..hmmm…..searching…..still searching…. Let’s try a global word search here…..nothing? ….. Try a different search engine…..hmmm….nothing again?
Hey folks, it’s not on the list! Insuring 30 million uninsured people will have such a trivial effect on health care spending, it doesn’t even make the top 10 items impacting costs? How about forcing everybody else to have more generous insurance than they now have? ….. Search…..search…..search…..search….. Hey! That’s not here either!
Isn’t Cutler supposed to be an economist??? And while we’re on that subject, wasn’t he the prime source of the claims by the then-Senator Barack Obama that his health plan would “bring down premiums by $2,500 for the typical family…by the end of my first term as President of the United States.” Yes, that’s the same Cutler.
Oops. They forgot to print that part.
Very funny. But also, a bit disgusting.
This is a joke. I think Cutler is risking his academic reputation by becoming a shill for Obama. Just as Gruber is doing.
Doesn’t Cutler teach at Harvard? Pity the poor students there.
I read the editorial. It is meant to appear to be a professor grading a student. In fact it is not a serious piece at all — as you so humorously point out.
Cutler’s wrote a good book a few years ago titled, “Your Money or Your Life.” The premise was that we spend a lot on health care and we get a lot in return. Maybe he is less concerned about the total lack of cost control in the reform proposal because he supports increased health care expenditure. The problem is: sooner or later, it will crowd out other areas of consumption. In the process, it will likely spur progressives to (again) demand a single-payer solution to rein in spending – leading to rationing.
My understanding is that the uninsured are entitled to health care just by showing up at a hospital emergency room. That’s the most expensive care imaginable for a number of reasons. First is the cost of treatment at an emergency room which is very expensive. Second, is that since they don’t have access to preventative care, you can’t show up at a doctor’s office for a free check up, when they show up at an emergency room they are sicker and thus require more expensive treatment. We all pay for that care in the form of higher insurance premiums. I can easily see that the cost of insuring those people would be less then the additional costs currently tacked on to all of our policies. It may not be intuitive, but a good economic case can be made supporting the idea that covering everyone will cost less.
artk,
The pressure’s you describe are an extremely small part of the cause of health care inflation. The primary enemy is the employer tax exclusion which has led the expectation that someone else will pay. Elimination of the tax exclusion, which would decouple health care from employment alongside a catastrophic health insurance program (I would even favor a universal program), would achieve the goals of cost reduction much better?
artk: I appreciate you comments at this site. They make people think and they make the site more interesting.
However, on this isuue you are way off base. The uninsured consume about half as much health care as the insured, after adjusting for everything.
The amount of free care the uninsured receive (paid for by everbody else) is between $1,000 and $1,500 per uninsured person per year. That’s way below the premiums for Obama Care — estimated at $14,000 to $15,000 for family coverage in 2016.
John: You performed an interesting slight of hand on the costs. You compared the 2016 insurance cost to the current uninsured free care costs. Given current trends, in 2016 both the cost of care for the uninsured will be considerably more then the 1,500 you quoted and the ranks of the uninsured will be a considerably greater percentage of the population. Once again, I still contend that a case can be made that covering the uninsured can lower insurance rates for the currently insured enough to cover the cost of the additional insured with money to spare, assuming the insurance companies pass on the savings to their customers.
artk: I have never seen that case made, and I know of no example world wide of it ever happening.
John and artk: There is no such case to be made.