What’s Wrong with the Health Care Media?
How many times have you heard that 26-year-olds can be covered by their parent’s health insurance as a result of health reform? Quite a few times I suspect. How about the fact that seniors can get free checkups? Yes, that too.
How about the fact that health reform really isn’t paid for? That half the dollars needed to pay for it will require Medicare cuts so draconian that Congress is unlikely to ever let them take place? Hmm…You don’t remember reading about that? What about the fact that families at the same income level will get vastly different subsidies under the reform — differences that amount to $10,000 a year or more? Ahh…You didn’t read about that either?
Here’s the problem. The first two facts — the ones you hear about often — are trivial. The second two facts — the ones you never hear about — are deadly serious.
So what’s going on? In a nutshell, the mainstream media depends on health reporters for news about the Affordable Care Act (ObamaCare). But the health reporters aren’t functioning like real reporters these days. All too often they are uncritically passing along messages that appear in White House press releases. Or, they are allowing politicians and agents of the Obama administration to spin the effects of health reform without serious challenge.
No, I don’t believe you.
Let’s review the bidding. In general, 26-year-olds are the healthiest population group in our society. If you are really serious about health reform, they are the last people you should be talking about. [BTW, won’t 26-year-olds turn 27 a year hence and then be ineligible for their parent’s coverage? I haven’t heard a single commentator mention that fact.] As for free checkups for seniors, I believe that every study that has ever been done has shown that checkups for healthy people do not save money. This is just one of a whole slew of medical services we could jettison without any serious harm.
So why are we talking about these things? There isn’t any reason unless you are a politician running for office. I don’t even have to run a focus group to know that most people dislike or could care less about the great bulk of ObamaCare. But most people have children. A lot of them have grandchildren. Those children will someday reach the age of 26. What parent or grandparent doesn’t want their kids to get health insurance, especially if it sounds like the whole thing is a free lunch?
Ditto for the elderly. Even if they don’t take advantage of the offer, what senior is going to be opposed to the opportunity to get a free check up every year? And if the offer is combined with misleading rhetoric about how preventive medicine saves money, the checkup begins to sound like another free lunch.
Consider another benefit that’s turning out to be trivial. On the eve of the passage of the ACA, every single proponent focused on one issue and one issue only: pre-existing conditions. In fact, they talked about it so much you would have thought that it was the most serious domestic problem the country faced. Yet for the past two years, people denied health insurance because of a pre-existing condition have been able to buy insurance at the same rates that healthy people pay. About 62,000 have done so. For those 62,000 the ACA may be a godsend. But we don’t need to spend $1.8 trillion over the next ten years to solve the problems of 62,000 people. As with the other “benefits,” this one is relatively trivial in the grand scheme of things.
Let’s try one more question. How many times have you heard it said that while the public doesn’t like the Affordable Care Act, people like a lot of the provisions of the act? Really? What provisions? Oh, the trivial provisions. The cost of the 26-year-old provision is too miniscule to bother with. Let’s take the checkups. If every senior in America took advantage of this benefit (which they can’t because the act does not create any new doctors) the total cost would be less that 2% of the cost of health reform. The cost of insuring people with pre-existing conditions appears to be less than 1%!
Now let’s turn to a serious matter that never makes it into your morning newspaper. Look at the graphs below, taken directly from the Medicare Office of the Actuary’s memorandum in response to the 2012 Medicare Trustees report. In about two years, Medicare payments to doctors will fall below Medicaid rates and will fall further and further behind Medicaid with each passing year. Medicare payments to hospitals will basically match the Medicaid rate, indefinitely into the future. What will this mean? For one thing, seniors will be lined up behind the welfare mothers in the attempt to find doctors who will see them and institutions that will admit them. As Harvard health economist Joe Newhouse has explained, seniors will likely have to seek care at community health centers and safety net hospitals. As the Medicare Office of the Actuary has explained, in a few short years, hospitals will begin closing and senior citizens will have increasing difficulty obtaining access to care.
Here is something that has gone totally unreported: no one inside the beltway thinks this will ever happen. The political pressure will be too great. Congress will capitulate. That’s why both the Medicare Trustees and the Congressional Budget Office have put out “alternative estimates,” which is Washington’s way of saying that “the ACA scenario ain’t going to happen.” In fact (in a dramatic break with precedent), the Trustees have made the alternative estimate part of the official Trustees report. In both cases, the estimators are projecting a much higher level of Medicare spending — reflecting political reality.
But, there is another fiscal reality. If Congress caves and restores Medicare funding, that implies higher and higher levels of government debt. Since we cannot keep running up huge deficits forever, funding a brand new entitlement with deficit spending is also a political impossibility.
What about the arbitrary, unfair and sometimes regressive health insurance subsidies? They could force a complete restructuring of American business. Yet even the elite business media outlets have failed to notice. I’ll write more about that in the future.
Is the MSM reporting what’s in news releases from the White House somehow different than reporting what’s in news releases from what some are starting to call the thinktank-industrial-complex, which would include the NCPA?
Dear John,
Although I certainly agree with your perspective in this article, I need to note that my published analysis of 500 consecutive new patients (who considered themselves healthy and were largely sent in by their firms) in the program that I directed showed that one in 3 left with an actionable medical observation – from trivial to very serious. This does not mean that large-scale, annual visits are needed but only that a comprehensive, baseline set of data can be quite revealing. If folks only come in when they are ill, any notion of prevention is meaningless.
John:
You write “How about the fact that health reform really isn’t paid for? That half the dollars needed to pay for it will require Medicare cuts so draconian that Congress is unlikely to ever let them take place?”
Did you know that Congressman Paul Ryan (R-WI) had kept those Medicare cuts in his famous budget proposal which the House passed as its budget — the one containing the original Ryan plan for Medicare. Doug Elmendorf told me so himself, but it is well known in DC. Is that not ironic — cute, even?
You should always be careful NOT to present the projected cuts to physician prices as part of the ACA. You and I both know very well that these cuts are triggered by the SGR, which was put in place in the Balanced Budget Act of 1997 by a Republican House Ways and Means Committee. It was obeyed once (in 2002 I believe) but has generally been overriden by the Congress. Yet in making the actuary’s projections, by statute he must pretend as if the cuts were real — that is what “current law” means.
I speak with some authority here because I sat on the Medicare Advisory panel that advised the HHS Actuary on the trustee report.
Matters are different for the hospital updates. There the ACA does prescribe a 1.1% productivity reduction. They are digestible for a while (perhaps a decade) but not forever.
But finally one must wonder why private health insurance prices are so high. According to the International Federation of Health Plans, they are about twice as high as prices for the same thing in other countries.
Do we assume that these PHI prices are correct, and everyone else is wrong?
Another “must read,” Doctor John. I will link to this from my Old Jarhead blog and circulate to the surgeons in the association I manage.
Robert A. Hall
Author: The Coming Collapse of the American Republic
All royalties go to help wounded veterans
For a free PDF of my book, write tartanmarine(at)gmail.com
Excellent post.
As I recollect, the SGR fix was promised to the AMA in return for their support of the ACA. While not part of the ACA directly, in my opinion, anything used to get the act passed is part of the ACA.
People want to help the uninsured so badly that they are ignoring the fact that the PPACA does nothing to solve the real problems in our healthcare system.
I remember back when I returned to school to pursue a doctorate. I no longer had my generous employee health plan. I was 29 (admittedly too old to qualify for my parents’ health plan; especially since my father was on Medicare). I didn’t agonize about being uninsured — but I did check out the cost of a high deductible health plan. It was going to cost something like $68 per month (in 1992). I had enough savings to cover any non-catastrophic medical condition. I decided to forgo coverage due to the cost. I wasn’t poor. I probably spent several times the equivalent monthly premium on diving out with friends and entertainment each month.
Indeed, John, Art Laffer reports in Monday’s Wall Street Journal that even counting the Medicare cuts, CBO now shows that Obamacare will produce a $1 trillion dollar increase in the deficit over the first 10 years. That should be big news.
When Professor Reinhardt refers to “private health insurance prices” does he mean the insurance premium or the level of reimbursement to hospitals, doctors, etc. (Providers)? Are our levels of reimbursement to providers higher, lower or about the same as in the other countries he mentions? Insurance premiums are a function of several things, most importantly unit cost. If our suppliers of goods medical get more, insurance has to cost more.
As someone under the age of 26, I found your analysis of the triviality of 26-year-olds staying on their parent’s health insurance interesting. I have many friends in support of this, but for some reason they fail to realize that they won’t stay 26 forever, and will eventually have to leave their parent’s insurance. I will be very interested to see if those who support Obamacare now, simply because they are under 26 and will reap benefits, will still support Obamacare once they turn 27.
This is a very clear piece of work John.
Thanks!
Paul
Minor clarification: PPACA entitles dependents to stay on parents’ policy until they turn 26, so they are kicked off at age 26, not 27.
History lesson: insurance carriers for many years had the cutoff at age 18 or completion of HS. Then later offered an exception for the college-aged student (proof of enrollment was required). Then some states started mandated higher age allowances for “kids” to stay on their parents’ plans (a few states were already up to age 28). So, yes, this “benefit” of PPACA is trivial.
The truth is the vast majority of these young people would be better off to buy a private, portable policy. In many states premiums are available for under $60.
@John C. Goodman says: BTW, won’t 26-year-olds turn 27 a year hence and then be ineligible for their parent’s coverage? I haven’t heard a single commentator mention that fact.
@Alexis says: I have many friends in support of this, but for some reason they fail to realize that they won’t stay 26 forever, and will eventually have to leave their parent’s insurance.
HAHAHAHAHAHAHAHAHAHAHAHAHAHA.
While Obama may have claimed he could stop the oceans from rising (http://www.youtube.com/watch?v=u2pZSvq9bto), I don’t believe he ever claimed he could stop time.
Maybe the media thought the whole “people get older” thing went without saying… just maybe.
As usual John, you bring light to oft-ignored topics. I would disagree with the “triviality” label regarding the 26-year-old rule from two perspecitives:
Philosophically, this is teaching our young adults that they really don’t need to be responsible for themselves. They are old enough to vote, marry, buy cars and houses, bear children themselves, etc. They are grownups with their own lives to plan and we need to teach them to act like adults, not to be dependents forever. (Ultimately the goal of ACA anyway).
Actuarially, this group is the least-expensive demographic to insure and we need these adults in the pools bearing their own weight. Over time, the inclusion of them as part of a parent’s family unit DOES raise the average age in employee groups and denies the rating system the risk-dispersion that they provide. Additionally, it causes complete havoc in small employer participation rates, thereby creating artificially higher rates and sometimes unavailability of group plans because of the distorted participation and age-averaging aspects–admittedly collateral damage, but damage to the market nonetheless.
Professor Reinhardt: Individual insurance rates are higher in the US for numerous reasons, but notably several points stick out: First, US insurance policies are far removed from “insurance”. “Prepaid maintenance plans are better descriptors. If our car insurance paid for oil changes and tire rotations we’d find the same kind of pricing problems there, too. Second, mandated benefits force policies to pay for coverages unwanted and unneeded by significant percentages of purchasers. ACA will only exacerbate this problem. Most importantly, though, Americans expect different results than citizens of other countries. The US was founded on the rejection of British rules and we have consistently built on the mantra that no rules apply to us: If someone has an accident, then someone else MUST at fault. We expect–no demand–the best and latest technologies in healthcare; we expect it to be provided without question upon request, regardless of efficacy; and we expect someone else to pay for it. We don’t believe we should get sick or die and we are willing for someone else to pay unlimited sums in our often-futile attempts to achieve this unreachable goal. Only when we grow up as a society and accept the natural limitations of humanity can we begin to expect the financial “mirror” called health insurance to reflect a realistic cost. This is true advantage of the entire HSA concept: By their design these plans provide the information and incentives for people to become true consumers. The “copay” concept has smothered these principles for 40 years and we will pay the resulting damages for another generation before we free ourselves from the effects, even if we could completely jettison the concepts today.
Considering what Professor Reinhardt has said about the Ryan plan and accepting what he says as totally true doesn’t that mean that we should consider a change in Medicare to permit balanced billing by physicians?
In the past I think John Goodman has been open to the idea of balanced billing. I wonder if Professor Reinhardt agrees or disagrees and why.
“We expect–no demand–the best and latest technologies in healthcare; we expect it to be provided without question upon request, regardless of efficacy; and we expect someone else to pay for it.”
We could alleviate this problem by investing in better comparative-effectiveness research to study whether expensive new technologies are worth the cost. Unfortunately, these discussions lead to fallacious accusations of “death panels” which are completely unproductive. Not to mention, House Republicans voted to defund AHRQ and other institutions that do this type of valuable research.
If I am reading this correctly, once someone turns 26 (not 27), he/she cannot be included on a parents policy.
http://www.opm.gov/insure/health/aca/
A great post leading to a fine discussion. I offer my contribution:
First, although I went one year deeper into middle age this year, I decided not to waste either my or my doctor’s time on the now “free” annual check-up. I know perfectly well that my condition is exactly the same as it was last year. Personal evidence of the triviality of this mandate!
Second, I am unaware of any pre-Obamacare law that prevented a parent from subsidising his “children”‘s health insurance until they are 26, or 36, or 46, or 56,…. Indeed, one can make a gift of up to $13,000 in 2012 that is tax deductible. If both Mom and Dad make a gift, it can be up to $26,000 – far in excess of premiums in the individual market for almost all people in their 20s. So parents could even have used pre-tax dollars to subsidize their adult offsprings’ purchase of individual health insurance – rendering the post-Obamacare tax benefit of keeping them on their parents’ employer-based benefits trivial! (I’m ignoring payroll taxes, of course, which would have a surely very small marginal effect.)
Third, if carriers don’t charge employer-based premiums based on every child but after you’ve got one kid on the plan, they just charge a “family” premium, we can conclude that employed parents with 20-something “children” on their plans will pay the premium through relatively lower money income (wages) than those who don’t. This is what happened to women of child-bearing age after the maternity mandate was imposed. It’s harder to shift costs than most people think! Althogh, as Dr. Goodman explains, the effect would be pretty small.
Fourth, in San Francisco, we have a lot of young people on the streets. Nobody has proposed a law to solve this problem by mandating that parents provide a bedroom for their kids up to age 26. Or let them use the car. Or feed them. Once you’re 18, you’re on your own – except with respect to health insurance. Having read this section of the law pretty closely, it is not clear that this is the parents’ choice. I am waiting for the first lawsuit from a 20-something slacker, disowned by his parents, who demands to be put on their plan!
Fifth, to Devon Herrick’s experience of forgoing health insurance as a young man. He did take a risk. However, if the government allowed us to buy individual, guaranteed renewable, health insurance on the same tax basis as it does employer-based benefits, I’d bet he would have been more likely to buy the health insurance offered. However, because he reasonably expected that he would soon get employer-based benefits, he took a risk.
I suspect that it is the invisible hand of economics that leads the media to pander to people’s needs and desires by gleaning attention-getting ideas from the ACA and propagating them–ideas such as insurance benefits for 26-years old or free checkups for seniors. In doing so, the media gains readership, i.e., its own bread and butter. I assume that the same invisible hand then impels the short-term gain-seeking behavior of people in supporting those ideas.
But, then . . . as economic beings, people or the media cannot realistically be expected always to weigh their immediate benefits against bigger and yet out-of-sight burdens–which some scholars warn of and others discount. And, it is possible that common people—as opposed to experts, who are usually advantaged with broader perspective and deeper insight–might not disregard those benefits as trivial and easily and disinterestedly dismissible, even if they are for short time, as in the case of insurance benefits for 26 year olds. The fact that even experts are putting forth conflicting projections of the long-term impacts of the ACA might make it harder for non-experts to ponder upon impacts that are not immediately discernible.
To JW Henderson:
If an SGR fix was a promise in return for the AMA’s support of the ACA but the SGR was not fixed, so how then does it become part of the ACA?
Nothing in the ACA touches on the SGR.
I think you are stretching things quite ab it here.
David:
You write:
“When Professor Reinhardt refers to “private health insurance prices” does he mean the insurance premium or the level of reimbursement to hospitals, doctors, etc. (Providers)? Are our levels of reimbursement to providers higher, lower or about the same as in the other countries he mentions? Insurance premiums are a function of several things, most importantly unit cost. If our suppliers of goods medical get more, insurance has to cost more.”
The prices private insurers pay hospitals and doctors for particular procedures (e.g., appndectomies) are much higher in the uS than they are in other countries. See International Federation of Health Plans, Price Comparisons.You can Google it.
You should ask John what he has on the vertical axies of his two graphs (really those of the Trustee Report).
If “Doctor” Goodman would lay off the now-insinuating, now-apocalyptic rhetorical gingerbread (you know, the Palinesque references to “mainstream media” and “elites”,the breathless & fact-free “half the dollars needed to pay for it will require Medicare cuts so draconian…” bs, etc), he’d at least seem rational to the casual reader, rather than like just another dude with a funny-looking hairdo and a peculiar, cult-like, radical political agenda.
just a thought
Professor Reinhardt, first I am honored to have a personal response from you.
A quick look at the data you suggested leads me to comment that Medicare reimbursement in the US is higher, but not that much higher, than other developed countries. Were Medicare payments to drop to Medicaid levels as some predict will happen in the near future, we would be in the international hunt. What would this do to accessibility of physicians? Can you see US docs settling for these incomes? Of course I also see that more and more physicians are moving from solo practice to hospital employment; maybe efficiencies will lower fees.
To U. Reinhardt: “If an SGR fix was a promise in return for the AMA’s support of the ACA but the SGR was not fixed, so how then does it become part of the ACA?”
Sounding a trifle disingenuous since physicians are an integral part of healthcare and the ACA covers Medicare. In fact the ACA used Medicare Advantage funds to bring its costs down so there is really no excuse for not including the SGR fix in the ACA budget. If there is no fix then the ACA has no budget implications. If there is a fix that is part of the cost of the ACA.
Great Article. I have been thinking the same exact thing. Diversion is a great tactic. We have basically added an entitlement and have not even paid for it.
The other item is the tremendous infrastructure just to support PPACA is a complete waste and a duplication of services that can be done at the state level.
There is a lot of meat in your article but just to further one of your examples, not only is the press blindly reporting that seniors “get free checkups” because of PPACA but it is actually untrue. With the help of the Obama propagandists, the press equates the Annual Wellness Visit with a “checkup” (or what most people would call a physical). Even Obama supporters at AARP had to blow the whistle on that one (see http://www.aarp.org/health/health-care-reform/info-07-2011/free-medicare-wellness-exam.html
The other example I would add to your list of trivial PPACA claims hyped ad nauseum by the mainstream press is the “closing of the Part D donut hole.”
1. The donut hole actually doesn’t get closed. (See http://www.medicarecolorado.com/medicare-part-d-doughnut-hole-is-not-going-away/) There are unintended consequences sitting under the continued three tier structure of initial phase, hole and catastrophic level
2. The problem is trivial in the same sense that the pre-existing conditions problem is trivial (that is, it affects a very small percentage of the Medicare population both because the number of people who need over $3000 in drugs is relatively very small and even for those that do, they are not affected if they are low income, 22 states offer additional assistance for middle income seniors, and/or the Medicare beneficiary can buy a rider (see http://www.forbes.com/sites/aroy/2012/05/25/the-medicare-drug-donut-hole-is-a-much-smaller-problem-than-you-think/
3. The so-called closing of the donut hole is actually discounts by drug companies to the relatively few seniors in the hole who do not get disqualified by all the asterisks noted in point 2 above. These discounts were given based on a 2009 side deal with the Obama administration about which we still do not know all the details. But it appears new drugs are not covered and there are other similar gotchas. It was really not that much of a gesture by the drug companies because a good number of the expensiive brandname drugs are going or have gone generic already (so they were going to lose the revenue anyways and already had that factored in their revenue projections) (See http://www.nytimes.com/2012/06/09/us/politics/e-mails-reveal-extent-of-obamas-deal-with-industry-on-health-care.html?_r=3&ref=politics
(Note my links are to web sites that explain the subjects so common people can understand them but the information is presented fairly — without political bias — and anyone, if they are still afraid of such bias, can follow the links provided in the articles to the underlying government data if they have an insomnia problem.)
For the record, MedPAC has recommended moving away from the SGR. It wants to freeze reimbursement rates for primary care practitioners for 10 years. Rates for specialists will be cut for three years and then frozen.
For those of us with individually owned policies, it is easy to get a child his own policy as soon as he turns 18. No worries then about job lock, falling ill and becoming uninsurable, or being confined to a lousy network by something like the exchange plans they have in Massachusetts. Also, one often might even save a few bucks in premiums.
Uwe Reinhardt’s price comparisons are very striking. German and Swiss insurers might pay $550 for an MRI, while American insurers pay between $1,200 and $5,000. The ratios hold for almost everything.
Germany and Switzerland are high-wage and high-tech countries, so this is puzzling and it is important.
Let me suggest some of the causes:
1. American hospitals have been getting paid cost-plus on outpatient procedures,
even by Medicare until very recently. As Dr Goodman has pointed out, this is a recipe for health care inflation.
2. Americans force their doctors to take on huge debts for education. (now nurses as well. We then overpay them for the rest of their working lives.
Free medical schools would probably cost the US a few billion dollars, and then we could pay doctors $150,000 a year and not be cheating them. This little bit of socialism would save trillions of dollars over many years.
3. America’s high payments mean that close to 2,000 smaller hospitals can stay open even when they are less than half full, and that there are very few shortages of surgeons.
This has a cost to the nation but it also has a benefit. No one has to wait for most treatments if they have insurance. A Medicare patient or well-insured employee in America has the fastest access to heart and cancer of anywhere in the world.
If you told Americans that their insurance premiums could go down if we let all Stage IV cancer patients and all sufferers from congetive heart failure just die much sooner, this would be a horrific question and get nowhere.
I guess that the King Canute of health care will be anyone who can solve this quandary.
“Give me Liberty, or Give me Death!” – Patrick Henry
What a brilliant ruling by the United States Supreme Court on the affordable health care act (Obamacare). Stunningly brilliant in my humble opinion. I could not have ask for a better ruling on a potentially catastrophic healthcare act than We The People Of The United States received from our Supreme Court.
If the court had upheld the constitutionality of the individual mandate under the commerce clause it would have meant the catastrophic loss of the most precious thing we own. Our individual liberty. Thank you! Thank you! Thank you! Supreme Court.
There is no mandate to buy private for-profit health insurance. There is only a nominal tax on income eligible individuals who don’t have health insurance. This is a HUGE! difference. And I suspect that tax may be subject to constitutional challenge as it ripens.
This is a critically important distinction. Because under the commerce clause individuals would have been compelled to support the most costly, dangerous, unethical, morally repugnant, and defective type of health insurance you can have. For-profit health insurance, and the for-profit proxies called private non-profits and co-ops.
Equally impressive in the courts ruling was the majorities willingness to throw out the whole law if the court could not find a way to sever the individual mandate under the commerce clause from the rest of the act. Bravo! Supreme Court.
Thanks to the Supreme Court we now have an opportunity to fix our healthcare crisis the right way. Without the obscene delusion that Washington can get away with forcing Americans to buy a costly, dangerous and highly defective private product (for-profit health insurance).
During the passage of ACA/Obamacare some politicians said that the ACA was better than nothing. But the truth was that until the Supreme Court fixed it the ACA/Obamacare was worse than nothing at all. It would have meant the catastrophic loss of your precious liberty for the false promise and illusion of healthcare security under the deadly and costly for-profit healthcare system that dominates American healthcare.
As everyone knows now. The fix for our healthcare crisis is a single payer system (Medicare for all) like the rest of the developed world has. Or a robust Public Option choice available to everyone on day one that can quickly lead to a single payer system.
We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for-profit medical industrial complex that threatens the security and health of the entire world. The ACA/Obamacare will not fix that.
The for-profit medical industrial complex has already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.
To all of you who have fought so hard to do the kind and right thing for your fellow human beings at a time of our greatest needs I applaud you. Be proud of your-self.
God Bless You my fellow human beings. I’m proud to be one of you. You did good.
See you on the battle field.
Sincerely
jacksmith – WorkingClass 🙂
@ Eric:
Reprinting press releases is not “reporting.”
@ Dr. Sack:
Preventive medicine is not worthless, but as a rule it does not pay for itself.
@ Uwe Reinhardt
I did know that the Ryan budget calls for the same Medicare spending totals as the Obama budget. Ryan couldn’t abide the thought that Obama could be more fiscally responsible than the House Republicans. But the way the cuts have to be made under the ACA is to squeeze the providers. The Republicans at least left themselves better options.
@ Robert Hall, Paul Hogan & Mike Baum
Thanks for the kudos.
@ Beverly Gossage and Dennis Byron
Thanks for the corrections.
@ Brian
Thanks for the additional insight.
@ AI:
Let the market determine provider fees, rather than bureaucrats.
@ Eric again:
I’m afraid more research can never over come the damage that is caused by giving people pervese incentives.
@ John Graham:
Good insights.
@ Uwe again:
The verticle axis is a price index.
@ Civisisus:
I thought my hair was very fashionable.
@ Uwe, David and Bob:
I had hoped to avoid the issue of prices, because the whole discussion is misleading and I have written about that issue before. Yes, we do pay higher prices. But no, that doesn’t mean that our health care is more “costly.” We appear to use fewer real resources (doctors, nurses, hospital beds, etc.). So the real cost of US health care is not obviously higher than it is in other countries.
Oh, the games politicians play. We now know more about the falsehoods of CBO scoring of ACA.
http://gppf.org/article.asp?RT=&p=pub/HealthCare/120713hcgames.html
Please read this article as added fodder to Johns blog.
Why doesn’t someone address the problems openly, and get the word out? It would certainly help Romney in his campaign.
Dr. Bob Kramer
Bob Hertz writes,
“Free medical schools would probably cost the US a few billion dollars, and then we could pay doctors $150,000 a year and not be cheating them. This little bit of socialism would save trillions of dollars over many years.”
Bob, personally I don’t want anyone who makes $150,000 a year drilling into my brain. In fact, even with free medical school I doubt that many people with the capacity and skills to pursue the medical profession would be interested in dedicating their life to a profession with the same standing and pay grade as a federal bureaucrat. Methinks the idea of allowing the cream to rise to the top is always the better way, and certainly trumps “a little bit of socialism”.
Frank, A blog that reveals another opinion with regard to earnings of French physicians is at: http://santecarolina.blogspot.com/2009/11/how-much-money-do-french-doctors-make.html
It says: “I rummaged through a series of reports on French physician salaries and I found that it’s not so easy to assign an “average” income for physicians but there are some indications that they make a good deal more than the $52,000 annually that Dr. Bonnaud said he made in an interview with T.R. Reid. In January, 2009 the French Inspector General for Social Affairs issued a report on a study of “Remuneration of Hospital Based Physicians and Surgeons.” It was leaked into the press before final publication because the salaries were so high.: “The report lifts the veil on the remuneration of doctors” said toutemasante.com. That’s because it showed hospital based radiotherapists pulling in 686,913 euros in 2007. Surgeons were comparatively less paid but getting 198,766 euros (that’s $299,000 at today’s exchange rate) with internists getting, on average 111,705 euros.
Those numbers are for hospital based physicians and, as is the case in the United States, office based practitioners may make less. The French IG report did compare office based incomes for an earlier year listing the average income for general practitioners in 2005 at 69,521 euros ($104,281). That’s a bit more than the $50,000 that is often cited.”
I don’t know how correct any of the comparisons are. We have to recognize the difference in the number of hours worked, vacation time, costs of training, retirement income in France that is higher than social security in the US and the taxes that are removed from total income to provide that retirement, health benefits, liability concerns, etc.
I once looked all over the net and concluded that when everything was said and done that French doctors probably do as well as American physicians based upon all of these factors. This blog says Americans may be 1.5X greater, but doesn’t take into account the above factors. After doing this type of comparison one then has to compare how the income of French and American doctors compare to the average worker in their own countries.
To bring the discussion back to the topic of the post, let me bring up a zombie that won’t stay in the ground. How many times have we read in the media that Obamacare’s Health Benefits Exchanges will facilitate individuals’ comparison shopping for health insurance?
Peter Lee, Executive Director of the California Health Benefits Exchange, has been approvingly quoted in the California media for his stated desire that the CHBEX make choosing health insurance as “easy as choosing a book on Amazon”.
Can you imagine if Amazon was a state agency, governed by a board of five political appointees, like CHBEX is? You could probably order the boxed set of the collected works of Barack Obama or James Carville with some reasonable expectation of fulfilment. But I expect you’d have a pretty miserable experience otherwise.
I have told many reporters that the CHBEX will be more like having to buy your car, motorcycle, or auto insurance from the DMV – but that simile never makes the story.
The SGR fix was never part of the AMA’s endorsement of the ACA – the general consensus is they gave their endorsement to keep their codebook monopoly and then lied and said they spoke for physicians.
That said, the obvious place to fix the SGR was in the ACA, but the cost of doing so would have placed the bill above the 1 trillion dollar mark, so it was not included in the bill.
The problem is, the ACA is a meaningless several thousand piece of paper without an SGR fix, as the cuts, if implemented will cause doctors to leave Medicare, if not the profession by the thousands, leaving the newly insured with insurance but no care. Even worse, the egress of physicians from practice will cause problems with the employment of the 8 million people whose jobs depend on private practice and the $1.4 trillion dollars a year private practice generates for the economy.
Cutting medicare reimbursements, a not very generous program to begin with, by close to 30% will make the program pay at a similar scale to Medicaid, which very few practices can afford to take. Unless the government wants to “nationalize” practices and pay the overhead and give the doctors a salary, practices will have to deny care to our seniors and veterans and as a third of doctors are over 60 years old, I think a majority will just say “I am mad as hell and am not going to take it anymore” and follow through with retirement.
To summarize, the ACA, without an SGR fix was a total lie and doomed to failure. Just my not so humble opinion, but one shared by the medical community.
John and Superior Company.
This issue should be dipped in resin and filed in the National Archives. It illustrates the flimsiness of the reasoning that produced the ACA, not to mention how much it was based on slogans and “oughts.” Or passed via deceit.
Dr Reinhart is nothing if not consistent in his elevation of Europe against the US. He should refresh himself on the cost-shift cycle initiated by Medicare rules: that providers should bill the same charges as they do for private health plans. Trouble is, Medicare and Medicaid do not pay those charges, but DRG’s or fees that they set themselves, in essence. Providers who are thus underpaid (Medicare 83%’ Medicaid 67% or so, depending on who’s reporting), shift their uncovered costs over to non-governmental health plans, and set their general prices accordingly. Currently, analysts estimate that this cost-shift amounts to 30% of the billed charges. That’s one reason why our prices are so high. There are other ones, as well, much
having to do with very detailed regulation, along with greater intensity of care, that does produce better outcomes than any country in Europe.
To people who still think that we should give everything and everybody to Medicare, do you seriously think that Medicare is a well-run government program? Do you seriously think that additional taxes raised to cover new enrollees would not be siphoned off for some more urgent need? One unappreciated value of private health plans is that when they make a mistake, only a small portion of the public is harmed; when government makes a mistake, a huge share of the public is harmed. And, the government cannot seem to act to strengthen programs before bad trouble appears, or even after. We are in serious trouble with the deficit, and with China owning trillions of our debt. Anybody speak Greek?
It bothers me a lot that the ACA makes potential scoff-laws out of individuals and companies–for not doing something! Visions of IRS hell come to mind. And the IRS now says it is too busy to get ready for the ACA.
I truly hope that everyone who writes to John Goodman has a copy of the ACA map prepared by staff of the Republican members of Congress. It unfolds in a truly frightening way.
Talk about the press not doing their job–not only will we have too few primary care physicians, but we will lose inner city hospitals–just the ones that the poor need to have. I’d rather see budget support grants to them rather than this elaborate charade that assumes all eligible people have the basic ability to conquer the law’s rules and regs and not get scammed by instant ACO’s to which the incompetent people in HHS award breathtaking demonstration grants.
Listen to John Graham–he is competent, industrious and a new citizen who left Canada where he knew about the short-comings of a state health system. Why do people think we are talking of the same product when we discuss US/European prices?
We have to, as a professional point of pride and responsibiity, head off the debacle that will follow full implementation of the ACA. If anyone wants a list of why it is the worst healthcare law ever passed,send a note.
Wanda J. Jones, MPH
President
New Century Healthcare Institute
San Francisco
Add another pro-PPACA/anti-Republican media distortion to your list. The LA Times and others are hyping a CommonWealth Fund research report released the week of July 16. The report claims to “prove” that government-run “traditional Medicare” is better that private employer sponsored insurance and that government-run “tradtional Medicare” is better than private Medicare Part C.
In addition to all the definitional problems with the premise (private vs. government-run, a plurality of seniors depend on employer sponsored insurance, etc.), if you read the fine print in the Methodology of the Commonwealth Fund research paper you find that
— the data is two years old (Medicare Part C has grown 25% since then)
— Commonwealth Fund over surveyed for poverty and undersurveyed for age
— the Commonwealth Fund says there were not enough people in its research who take ONLY traditional Medicare (153) to break them out separately so it combined them with more than 700 seniors that take employers sponsored retiree insurance, private Medigap and Medicare Part C, but then implies that the whole survey is about seniors that take ONLY traditional Medicare; in general, the “happy seniors” Commonwealth Fund rhapsodizes about depend on exactly the same kind of insurance as the people under 65 who are “unhappy” with such insurance
— The research breaks out Medicare Part C Advantage subscribers for negaive analysis (vs. theoretically those that take traditional Medicare ONLY–but see point above) even though there are basically the same amount of Medicare Part C Advantage subscribers as traditional-Medicare-ONLY subscribers in the survey results (but CommonWealth Fund says there weren’t enough of Traditional Medicare ONLY subscribers to analyze?)
And the press is reporting this — among its many spins — as a reason Wyden/Ryan will not work
The other example I would add to your list of trivial PPACA claims hyped ad nauseum by the mainstream press is the “closing of the Part D donut hole.”
1. The donut hole actually doesn’t get closed. (See http://www.medicarecolorado.com/medicare-part-d-doughnut-hole-is-not-going-away/) There are unintended consequences sitting under the continued three tier structure of initial phase, hole and catastrophic level
2. The problem is trivial in the same sense that the pre-existing conditions problem is trivial (that is, it affects a very small percentage of the Medicare population both because the number of people who need over $3000 in drugs is relatively very small and even for those that do, they are not affected if they are low income, 22 states offer additional assistance for middle income seniors, and/or the Medicare beneficiary can buy a rider (see http://www.forbes.com/sites/aroy/2012/05/25/the-medicare-drug-donut-hole-is-a-much-smaller-problem-than-you-think/
3. The so-called closing of the donut hole is actually discounts by drug companies to the relatively few seniors in the hole who do not get disqualified by all the asterisks noted in point 2 above. These discounts were given based on a 2009 side deal with the Obama administration about which we still do not know all the details. But it appears new drugs are not covered and there are other similar gotchas. It was really not that much of a gesture by the drug companies because a good number of the expensiive brandname drugs are going or have gone generic already (so they were going to lose the revenue anyways and already had that factored in their revenue projections) (See http://www.nytimes.com/2012/06/09/us/politics/e-mails-reveal-extent-of-obamas-deal-with-industry-on-health-care.html?_r=3&ref=politics
(Note my links are to web sites that explain the subjects so common people can understand them but the information is presented fairly — without political bias — and anyone, if they are still afraid of such bias, can follow the links provided in the articles to the underlying government data if they have an insomnia problem.)
John: A lively response, a passionate and informed effort, and a credit to your Post.
This week, I received the July issue of “HEALTH AFFAIRS.” Amidst an extensive set of reports covering our nation’s commitment to a “generation free of HIV” in Africa, there was a report from the Office of the Actuary at CMS. Assuming that ACA will be fully implemented, they project our nation’s cost of healthcare will rise from 17.9% in 2011 to 19.6% in 2021 of the gross domestic product. Henry Aaron (economist at the Brookings Institute) has already estimated that in 10 years our national debt per citizen will be the same as it is for citizens in Greece this year. Personally, I like living in Nebraska in which the State government has no indebtedness, maintains a “rainy-day” fund of $300 million and has no plans to establish an exchange.
I still believe that true healthcare reform will be found in the Congressional Smith Lever Act of 1914 and the life-long studies of Elinor Ostrom. She was a Nobel Prize Winner in 2009 for economics and died just 2 months ago.
If you’re keeping a list about media deceit, watch for news reports about this research (see http://jama.jamanetwork.com/article.aspx?articleid=1273025 ) The media will claim seniors would have paid “$64 additional” per month under Wyden-Ryan than “traditional Medicare” in 2009. I think all of the Harvard numbers are totally meaningless as honest research (and explain why here — http://byrondennis.typepad.com/masshealthstats/) but the media will play up the $64 screwing of Gramma. Even were one to believe the totally meaningless numbers meant something, I’m pretty sure Gramma would have saved $32 a month under Wyden-Ryan, not paid $64 additional.
[The Harvard research is also totally bogus on many other levels. It misrepresents the Wyden-Ryan proposal, doesn’t seem to understand how the Part C benchmark/bid/rebate mechanism works today, even transposes Wyden’s and Ryan’s names, ignores Medigap and employee retiree insurance, etc.]
Either you place your trust in government to handle your health care and control everything for you or you trust the free enterprise capitalist system that empowers individuals to make choices offered by a competitive market place. Our country has flourished with the latter. This debate is NOT about health care, but rather about power and money, and the federal government wants the control. We need to increase the competition between all parties – insurance companies, health care providers, … to offer more choices for consumers, and we need to require portability so that the individual has control over their health insurance, no matter where they live. Consumer control, not government, not employers, not insurance companies. It is called FREEDOM!
The age 26 coverage includes “children” who can be married andliving in another state. The logical extention might be only for tax dependent children until age 26, which is what makes sense. Because of college costs many “children” must work part-time or co-op to pay for expensive schooling. At nearly every turn Obamacare is bad and drives up the cost of of insurance unnecessarily.
I am not a scholar nor an industry specialist. I am simply a retired Marine with a high school degree and some college education.
I read in Reinhardt’s comment of July 18, 2012 at 9:15 am where he states, then asks:
“But finally one must wonder why private health insurance prices are so high. According to the International Federation of Health Plans, they are about twice as high as prices for the same thing in other countries.
Do we assume that these PHI prices are correct, and everyone else is wrong?”
First of all I would ask why you present such a strawman as health insurance prices in other countries. Very few products command the same price worldwide. Gold, silver, and a few commodities are among them, but health insurance is not. The market under discussion is the US market, not others, therefore that comment is irrelevant.
Next, I would ask who is “we”? Is the nebulous “we” someone on the government payroll? Is the ephemeral “we” someone on an advisory board/panel established by the government, and therefore still on the government payroll? Is the ethereal “we” an industry group advising the government (where an argument could still be made that they are on the government payroll, if not directly so)? Or, more than likely, is the all important “we” the collective body of people in the US, all of whom are suppose to look out for each other?
I argue there is no we in shopping for health insurance. We, the public, are individuals. The smallest minority, an individual. I am not we, I am me.
My needs are not necessarily those of my neighbors, near or far. The price I pay for my health insurance should be based on an agreement between a PHI and myself in which I receive a product satisfactory to the needs I deem important at a price the PHI and I agree is satisfactory.
Although I may seek advice from beyond myself, that does not entitle those advisors to inject themselves into my affairs and I do not recognize the moral right of anyone else to be involved in my decision.
As to the current PHI prices Reinhardt speaks of, the PHI business is a very competitive one. Each insurer seeks to provide the best product they can at the lowest price they can so as to attract the greatest number of customers, thereby bringing in the greatest revenue. To do so otherwise would be to fall behind in competitiveness and court business failure.
For the “current PHI prices” to be wrong would be to assume that all the insurers are in collusion to fix prices at an artificially high level, but that can’t happen because it’s illegal, just as it is illegal to fix prices at an artificially low level. But if such a collusion was practiced, a sharp businessman would find an opening to undercut such practices by not participating in that collusion, thereby taking business from those involved, which would lead to a quick breakup of the colluders as they scrambled to again become competitive.
Pardon me, I should clarify one of my statments in that preceding paragraph. It is illegal to fix prices artificially high, or low, only if you are not the government. The government, by virtue of it’s monopoly of the use of force, is the only one who can establish and maintain a true monopoly of any sort.
To any who might read this, I realize it’s a late post, but I just today came across this excellent article and just had to have my say. If you get this far, I thank you for your patience.
Good day and good business to all of you.
Michael, you are right on. I agree with your thinking. However, having worked for insurers and consulted with most of the stakeholders in the health industrial complex, each has carved out a profitable niche in a disfunctional market. In free markets such disfunction would be corrected through new competition as revolutions alway occur from the outsiders. Unfortunately, the healthcare market is NOT and has not been a free market. Government pays for more than 50% of the healthcare provided in the country and the rules of business operations have been written by industry lawyers protecting their turf. The government has screwed it all up at the state and federal levels, but they then get to come in a SAVE us.
Ron, Thank you for your comment.
Yes, you’re right in that the government, with it’s interference in health care, has badly distorted the health care market. However, within the framework of that existing market I believe my statements still hold true.
With our mixed economy of fascism and capitalism business must still be competitive within the framework of existing laws and resulting regulations to survive. Would it be much better without all those? Absolutely!
I think that the fact that business’ of all kinds do as well as they do with all the interference shows either A: the imaginative innovative spirit of American businessmen, or B: the amount of pull they have with their government contacts. Those in A will survive so long as they’re competitive. Those in B will survive only so long as they’re acceptable to their contact, which often isn’t long.
Those of us that believe in less government interference know that that is what will release individuals to achieve, and as individuals achieve, life improves. To reach that goal what is truly needed in the USA, and in the rest of the world is more people holding a steadfast belief in a philosophy of rational individual capitalism. Without that we are lost.
The way of the Master, faith in God is fine, but if I do nothing but sit and wait for God to feed, clothe, and shelter me, I’ll be gone from this world in short order.
We have to do the footwork to acquire those things which are needed for continued life.