What Paul Krugman Doesn’t Know About Health Reform
Writers sometimes worry if a day will come when they have nothing more to say. As long as Paul Krugman is around, I will never have that worry.
Boston University professor Lawrence Kotlikoff has suggested that Krugman return his Nobel Prize. I hope he doesn’t. As long as someone with Krugman’s professional status gets his facts wrong in column after column, and does so in an arrogant and pompous manner, attacking the integrity and hurling insults at all who disagree with him…well, there will always be a market for a writer who is able to show that the scourge of sensible people everywhere has written one more erroneous editorial.
Krugman may not always be wrong. On some economic issues he may actually be right. But when it comes to health care, he almost never misses. He is wrong 100% of the time.
So wrong,
For so long.
In last week’s New York Times column Krugman pronounced ObamaCare a success before it has even been tried. Why? Because the premiums to be charged in California’s health insurance exchange are apparently lower than what the experts thought they would be:
Well, the California bids are in — that is, insurers have submitted the prices at which they are willing to offer coverage on the state’s newly created ObamaCare exchange. And the prices, it turns out, are surprisingly low. A handful of healthy people may find themselves paying more for coverage, but it looks as if ObamaCare’s first year in California is going to be an overwhelmingly positive experience.
I did a quick check and discovered that if a 25 year old in Los Angeles chooses the least expensive plan offered on the California health instance exchange, the premium will be $142 a month. Yet the cheapest plan offered on eHealth today is only $92 a month.
Aah…let’s see…Everybody thought health insurance premiums would be 100% higher. In fact, they are only 60% higher…Hooray…Break out the champagne! (BTW, Avik Roy concludes that the new premiums will be effectively double what people are now paying.)
I’ll come back to these price comparisons in a minute. For the moment, I would ask: what kind of an economist would celebrate an expected price decline without asking what happened to quantity or quality? This is an Econ 101 mistake.
As it turns out, the health insurance to be sold in the California exchange excludes some of the best hospitals and the best doctors. Also, the fees paid to providers will not be the same as commercial insurance are paying. They will be somewhere between the commercial rates and Medicare rates. This means that people with exchange-acquired insurance will be less desirable to providers from a financial point of view than people in orthodox plans. As the Los Angeles Times explains:
People who want UCLA Medical Center and its doctors in their health plan network next year, for instance, may have only one choice in California’s exchange: Anthem Blue Cross. Another major insurer in the state-run market, Blue Shield of California, said its exchange customers will be restricted to 36% of its regular physician network statewide.
And Cedars-Sinai Medical Center, one of Southern California’s most prestigious and expensive hospitals, said it’s not included in any exchange plans at the moment.
Krugman points to the experience of health reform in Massachusetts in predicting how wonderful health reform is going to be:
Massachusetts has had essentially this system since 2006; as a result, nearly all residents have health insurance, and the program remains very popular. So we know that ObamaCare — or, as some of us call it, ObamaRomneyCare — can work.
But what has really happened in the Bay State? Insurance sold in the Massachusetts exchange pays doctors and hospitals only about 10% more than what Medicaid pays. And for reasons that are not entirely clear, doctors are less willing to see the newly insured (with exchange subsidies) than Medicaid patients.
The Massachusetts reformers believed that once everyone was insured, patients would go to the doctor’s office for primary care rather than to the hospital emergency room. But in expanding the demand for care, they (just like ObamaCare) did nothing about supply. The newly insured can’t go to doctors’ offices for their primary care if there aren’t any more doctors’ offices.
Here is what is happening on the ground. Traffic to hospital emergency rooms in Massachusetts is higher today than before health reform. Traffic to community health centers is almost one-third higher than it was before reform. Yet, the time it takes to get care is growing. The wait to see a new doctor in Boston today is two months ― the longest wait in the entire country.
On balance, the only thing that seems to have changed in Massachusetts is that patients are waiting longer. They are going to the same places to get care that they went to before. They are getting the same care from the same providers. In the process, more money is being moved around. A lot more money.
Let’s return to the subject of California premiums. Krugman links to a Jonathan Cohn New Republic column claiming that premiums on the newly created health insurance exchange will actually be lower that they are today. Yet this assertion is based on comparing premiums in today’s small group market with expected individual premiums on the health insurance exchanges. That’s not the right comparison. Small group premiums are significantly higher than individual premiums in most states. The relevant comparison is today’s individual insurance premiums versus the individual premiums in the exchange. Exchange premiums are going to be higher.
With health reform, California premiums will be higher than they are today, but the sticker shock will not be as severe as in other states. The reason: California already has unisex rate requirements. As a result the age differential for males (60 year old versus 20 year old) is already close to the 3 to 1 band required by ObamaCare. In states without unisex regulation, the age differential would be 6 to 1.
Still, middle class families in California should brace themselves. The surprises in ObamaCare are going to be just as arbitrary and unfair on the West Coast as they will be in the rest of the country.
P.S. The folks at InsureBlog have discovered more Krugman errors.
I wonder how many people will be seriously hurt because they are unable to receive timely care? It is a frustrating state of affairs, being able to provide for your own life, but unable to do so.
Has there ever been someone so decorated in their field, yet so reviled by their peers as Krugman?
Well said Dewaine
Great article!
Krugman’s problem is that he puts political ideology above facts. He completely lacks common sense, and is not very smart. I’d be surprised if his IQ exceeded 125. He certainly does not act like it.
Krugman has morphed significantly. He had a talent to explain things in easy-to-understand ways to a general audience. He also is likely in the top 1% of intelligence; his reading comprehension, on the other hand, is significantly lower.
That said, I don’t understand how people miss the obvious. The true price of health care is not the monthly insurance premium, nor the co-pay, nor the deductible. The true price includes this, as well as the time cost.
In other instances, the price will reflect queue times. It doesn’t in the health care market. If, as anticipated, the supply side does not increase 1-for-1 with the demand side, either the quality decreases (spend less time with your doctor) or the time costs increase (wait more to spend the same time with your doctor).
Both mean that the price we see is intrinsically different from the price we have seen.
You’re almost right…in reality I think patients will end up spending more time waiting to spend LESS time with their doctor.
Krugman probably thinks healthcare policy is something he is knowlegable on.
“thinks” being the operative word
I think Krugman says what he does to sell papers, not to be academically correct. Like the poster said previously, he puts politics above facts.
@Richard, the cost of “insurance” should have nothing to do with the cost of healthcare any more than the cost of car insurance has anything to do with body work, or the cost of house insurance has anything to do with the cost of renovation.
The sooner this becomes reality, the sooner people will get off of this false notion that you need “healthcare” to get “medical care”. It’s ludicrous!
Big insurance companies want you to think that Medical Care is unaffordable, because they want you to believe that you need to purchase their products. It really is that simple.
I don’t disagree to a point.
But it’s the price most readily observable to consumers, given the lack of price transparency on the providers side (again, not because they are colluding, because of the lack of a market mechanism). Except for a few certain circumstances (in your handle, Medi-Bid, for instance).
It would obviously change as the system morphs (or becomes more market-oriented), but it’s what we have to deal with, for a large segment of the population.
And, fortunately or unfortunately, how health insurance is set up is not insurance like we typically associate with renter’s insurance or car insurance.
@Ralph Weber “Big insurance companies want you to think that Medical Care is unaffordable, because they want you to believe that you need to purchase their products. It really is that simple.”
I wonder – do you have medical insurance? If so why?
@John Fembup,
Yes, I have a policy with a $10,000 deductible, and I have $500,000 of Critical Illness insurance. I have both because catastropic care could be expensive, but I have never made a claim ever. I have always paid cash for everything and have never “used” my insurance.
I do believe in insurance for unpredictable incidents, but not for routine care.
Perhaps I could have worded my statement differently:
Catastrophic care is expensive, and unless you are Bill Gates, you shoudl probably have insurance to protect yourself, but insurance companies want you to believe that ALL care is expensive without buying their products.
The fact is that PPO “Discounts” are misleading and actually inflate the cost of care.
@Ralph Weber “I have always paid cash for everything and have never “used” my insurance.”
Then you are a fortunate man. Yet what you say is not exactly true, is it?
You have bought a policy that protects you from risk above a threshold of $10,000 per year – but not from routine care. I think you’ve made a smart buy.
However, you don’t seem to recognize that you are using your insurance.
Insurance is risk protection. In exchange for a premium, your policy provides you risk protection. In other words, you are using what you are paying for.
Whether you ever file a claim is beside the point. The point is, your policy will pay out if you do have a big expense. That is, you are protected against a contingent event. That’s the risk protection you’re using.
If you should be unfortunate to have a big claim, your protection is obvious. The protection may not be so obvious when you don’t have a claim. Nevertheless you are still protected – even when it’s not obvious. And either way, you are “using” your insurance.
“insurance companies want you to believe that ALL care is expensive without buying their products.”
Well Ralph aside from money, who knows what insurance companies want? But I say medical care is expensive even if you DO buy their products.
The expense is not simply a matter of charges per unit of services. Expense also arises from the frequency and kinds of services. So how much do routine services cost?
You can get a rough idea by getting a price for two separate policies. One, like yours, with a $10,000 deductible. Another with “comprehensive” coverage and say, a $500 deductible. The price difference will tell you whether the routine care is expensive. You’ll find that it is – not necessarily because unit charges are high for routine care (although I think that’s part of it) but mostly because the overall amount of services people consume, and which the insurance company must pay for, is high.
Even if you are a low user, the insurance company must charge a premium that covers the cost for everyone. That’s one reason why a policy with the highest deductible you can bear is a smart buy.
John,
I do not “use” it. I gain piece of mind knowing it is there if I need it. Unfortunately unlike home and auto insurance too many people use insurance to protect from both systematic as well as unsystematic risk, which is one factor which increases the cost. And the PPOs are another factor which increases the cost.
The difference in cost between a $500 deductible policy and a $10,000 deductible policy will only tell you what effect adverse selection has, not what the cost of routine care is.
“I do not “use” it. I gain piece of mind knowing it is there if I need it.”
And that’s exactly how you use risk protection. To protect you from risk. Risk is a contingent adverse event that may or may not happen but you are protected all the same. Protection is exactly how insurance is used. Get it? Maybe not.
Your point about adverse selection also supports what I’ve said already. Adverse selection is costly. It transforms “routine care” in the specific to expensive in the aggregate.
John,
You are over thinking this and trying to pull apart words, rather than to understand what I am saying. This is not a productive use of my time. Actually when I said it is not, it depends on what “is” is.
“You are over thinking this and trying to pull apart words, rather than to understand what I am saying. ”
Really? I admit it’s hard for me to figure out what you – or anyone – is saying if I’m not supposed to read the actual words.
Fact remains, you are “using” insurance whether you submit claims, or not. Most people don’t like to face that fact – why should you be different?
Anyway, keep thinking about this. It may just click with you someday.
I wish you well Ralph.
You are wasting my time and showing your lack of understanding at the same time.
When you put your liberal ideology in front of reason, you only convince yourself of whatever it is you think you know.
“You are wasting my time and showing your lack of understanding at the same time.”
Wow. One of us is having a bad day.
But NB: it is you who choose to “waste you time” here. If you would open your mind a bit, perhaps the time would not be wasted.
I still wish you well.
john,
Great try, but you’re talking to chimps here. Goodman can’t even invest in a decent combover, and his retinue of sycophants are too busy congratulating themselves on being in the dumb-dumb club to follow your clarifications.
And for Goodman to admiringly cite “facts” on premiums provided by Avik Roy – possibly the planet’s least clueful human on US health policy!! – Well, that’s just the dissembling cherry on the prevarication sundae
As A Californian, and as one who has worked with physicians and health care policy for nearly forty years, I would remind John of yet another fact: California doctors today earn less than doctors anywhere else in the country. So the reduced reimbursements from the exchange will leave doctors no place to “cost shift,” meaning they will earn even less.
Yet the cost of living in much of California rivals New York City. The cost of housing is insane.
Our legislators are scratching their heads wondering why we have a doctor shortage. Their solution–Who needs doctors? Let’s use less trained professionals!
Does anybody know a good economist? The folks in Sacramento could really use a refresher.
Cheers,
Charlie Bond
Great song pairing. A painful apology. Hard to imagine Krugman ever doing the same.
As Paul Krugman said last week in the Munk Debate (on taxing the rich), there are enough straw men here to be a fire hazard. Krugman certainly understands the issues. Selective distortion reflects on the observer, not the observed.
Progressive view:
This article is the hoot and holler phase of lambasting. When dire predictions of outlandish Obamacare exchange premiums don’t come to fruition, the ’embarrassed’ attack the messengers. Krugman was simply reiterating actual numbers put out by California Regulators. The Numbers look very good [http://www.newrepublic.com/article/113289/obamacare-california-no-sticker-shock-here#].
Of course, narrowing age/premium groups will always increase for those at the cheap end of the spectrum … but decrease premiums for those at the top end. This was Krugman’s “Handful.” I didn’t see any savings examples in this article. Obstructionists are on the loosing end of a positive Obama achievement. Stop making excuses.
@Al, if you study why the CA exchange premiums were not as high as predicted you will find out why…they are not comparing apples to apples. They are using EPO networks, they are comparing individual to small group, and a few other factors play into the comparison
I don’t know a whole lot about health care either, but it doesn’t take a PhD to empirically observe the broken system we’re under and how it isn’t getting any better.
People discuss health reform as though there is one correct answer and one correct perspective. Although I believe there is an optimal answer, from an optimal perspective, I also realize other opinions differ. Some (e.g. Dr. Don above) would (presumably) prefer a Medicare for All system funded through progressive taxation. Under such a system, nobody would feel the sting of out-of-pocket payments and the wealthy disproportionately bear the cost of our health care system, while moderate-income folks would be exempted. Others (that would be me) believe there is sufficient evidence to encourage greater consumer involvement.
Part of the difference in opinion is based on differing ideas about social justice and ethics. For instance, is it ethical for Bill Gates to purchase more life-sustaining care than a moderate-income family? Personally, it doesn’t bother me but others worry about this. Is there anything wrong with a moderate-income family making trade-offs that Bill Gates would not make? I believe this is inevitable and should be encourages since preferences vary. Another unanswered philosophical question: is society better off by artificially boosting demand for new drugs and medical procedures by overreliance on third-party payment? I rarely hear policy wonks talk about it – if they’ve even thought of it, but the vast array of technology we enjoy today is partly due to the availability of funding. Services people could never afford; or would never afford, are routine now because insurers and Medicare reimburse for them once developed. The state of medical technology is far higher today due to employer-sponsored health coverage – and Medicare. But is this a good thing? Maybe not. If we’re spending a larger proportion of our GDP on medical care than we would under a mandatory HSA-system, then society is mostly worst off.
My comment definitely should have been in reply to Buster.. whoops.
Normatively speaking? Most people agree with you, but they don’t vote in a way consistent with their ethical beliefs.
Tacit agreement of fee incidence would be very different if people understood what was happening around them, Krugman of all people should understand that.
Excellent observations, as usual. Although the narrowing of networks in this context appears punitive, it is an effective and common cost-control tool that has been used by the insurance industry and large employers for years. It is simply an evolution of the “network” concept itself, take to the next level.
A note: “Premiums” are not what people will pay. I’m a bit disappointed that you choose to misuse this word in this way, given your grasp of the subject and attention to detail. “Expected Contribution” is the correct term, a statutory amount determined by income.
The actual “premium” for an identical policy will be the same in and out of the MarketPlace. Based on income and other factors, some people may qualify for a tax credit and find their estimated monthly cash “contribution” to be lower, hence the politically motivated sales pitches touting how “affordable” the policies will be. What is still not widely discussed is that this tax credit operates just like your W-4 withholding: It’s an estimate that will be reconciled when you do your taxes, and many people will be quite unhappy when they get the final bill each year. (Marginal tax rates run in to the 100’s of % points–an incredibly perverse incentive).
Sorry for the long details, but I think the point is important. “Premiums” are the cost of a policy which is paid to an insurance company. “Contributions” are what are paid by an employee due to employer subsidy, or by a MarketPlace insured due to a government subsidy.
Considering Krugman’s prize was for Information Asymmetry — you would think aggregate cost shift on both sides would be important to note, not just premium increases for consumers.
I’m sure that blogs are not Krugman’s best area. Maybe he should stick to peer reviewed journals.
Maybe an easier article would’ve been “What Paul Krugman DOES Know About Health Reform” and just leave it blank. Would’ve saved time and effort while still presenting the facts.
John:
You ask: “what kind of an economist would celebrate an expected price decline without asking what happened to quantity or quality? This is an Econ 101 mistake.”
I think that is a good question.
And it pops to mind when you write:
“I did a quick check and discovered that if a 25 year old in Los Angeles chooses the least expensive plan offered on the California health instance exchange, the premium will be $142 a month. Yet the cheapest plan offered on eHealth today is only $92 a month.”
Do these two premiums cover the same benefit package? Access to the same network of providers? Reflect the same health status of the individuals?
I think a good health economist would ask these questions, don’t you agree?
Uwe
Uwe,
The more expensive exchange premium offers access to fewer providers, as detailed in the paragraphs directly below the first paragraph you’ve quoted:
“As it turns out, the health insurance to be sold in the California exchange excludes some of the best hospitals and the best doctors. Also, the fees paid to providers will not be the same as commercial insurance are paying. They will be somewhere between the commercial rates and Medicare rates. This means that people with exchange-acquired insurance will be less desirable to providers from a financial point of view than people in orthodox plans.”
Tom,
Interestingly enough, you may not be able ot get treatment at Cedars-Sinai through the exchange, but you will be able to get treatment at Cedars through MediBid.com
@Uwe,
No they do not cover the same providers. The $142 plan for next year has a far smaller EPO network
But in fairness, MAY provide better protection. (We don’t really know since that part’s still a big dark secret).
So much of this hyperbole would be eliminated if we were given a real policy with a real premium. But that wouldn’t serve either politics or press, would it? Hmmmm.
Tks. But how do we know that? Is that information publicly available somewhere or do I just take your word for it?
And is the benefit package the same?
And would would be the premium for a less than perfectly healthy applicant?
A good economist would ask all of these questions. I hope you agree that this is reasonable.
Finally, John and others who lament the increase in premiums for healthy young people never mention that premiums are apt to go down, relative to the status quo for less healthy people, and that those who were denied coverage altogether in that market before, they now can get health insurance.
A good economist would want to have the full picture here. I hope you agree with that as well.
So the real issue here is transparency? The fact that we don’t have real prices for any facet of health care? Isn’t that Krugman’s forte?
Political polarization shouldn’t matter. Seems that we’re all arguing and none of us have the facts. eHealthInsurance is correct in that it operates solely as an exchange. However, if private exchanges are posting inaccurate rates — that reflects poorly on both eHealthInsurance as well as the insurers. Bureaucracy being the beacon of transparency that it is.. I can hardly see this getting any better.
Some of the most intelligent healthcare economists in the world and you all seem content to play without a full deck.
Makes a lowly constituent a bit concerned.
@Uwe: I agree with you on that–an objective analysis would definitely want to know. Unfortunately, there are have been few truly objective observations made of this law and all that surrounds it. To answer your direct questions as best possible:
—Very few people have working knowledge of what any particular policy will look like (benefits, that is) in any particular state (because they’ll be different). The 60-70-80-90% of “actuarial value” is totally meaningless to nearly everyone. What we need is a policy form that shows exactly what the policy covers and what it excludes. Then comparisons can be made.
—Real premium costs (not contributions–premiums) fall into this same black hole: Few know, fewer yet will talk. Isolated examples are drifting out & we’ll know more soon, but again they vary greatly from state-to-state so direct comparisons are difficult.
—Medical conditions will no longer affect premiums or contributions, so this one we can answer: A person’s cost when perfectly healthy will be the same as if they were gravely ill.
—In relative terms, modified community rating will increase costs for young, healthy and male while reducing costs for older, sicker and female. Again, existing state rating rules will obfuscate the real effect of any particular person’s combination of these attributes, but the general statement stands.
Of course all of these aspects are then further confused by income, domicile, employment, personal investments, a state’s Medicaid rules, the byzantine mess of waivers granted to various groups or companies, the swiss cheese effect creating by differences of grandfathering, small group, large group, fully insured, self-funded, individual, and a host of other variables. And unintended collateral effects will most certainly outweigh the actual effects in many people’s lives. Then throw in the political and economic opinions and further complications multiply exponentially.
But any good economist would know that too! 🙂
While I haven’t looked at the Los Angeles example, I have done some research on the subject. Under the PPACA exchange plan one of the lowest prices for a 40 year old in San Francisco is $373 per month. This plan has a $6400 out of pocket maximum and co-pays for office visits and prescription drugs do not count against the OOPM. Currently a HSA qualified plan from Anthem for a 40 year old in San Francisco is $190 per month. That plan has a true OOPM of $6000, however, office visits and prescriptions are subject to a high deductible. Viewed from an economic perspective, the $2196 annual savings in premium would pay for a lot of office visits and prescriptions. So, in a major claim situation the exchange policy costs $10,876 in a year and the HSA plan costs $8280. In a year with just a preventative care visit the HSA plan is far superior. Now, the HSA plan is on an accept/reject underwriting basis, so people with health conditions either receive a surcharge of 0-100% or decline. There are no waivers allowed in Ca., and if the policy is issued, no pre-ex exclusion. Overall, the guaranteed issue and no pre-ex exclusion is the exchanges sole advantage. Placed against that is the restricted provided list for exchange plans (Blue Shield has said that the provider list for exchange plans is only 36% of the providers for regular Blue Shield plans). From a purely economic viewpoint, the PPACA is not a success. It doubles cost ($190 per month to $373 per month), reduces access and helps very few. California had a plan for those who could not find regular health insurance coverage, the Major Risk Medical Insurance Plan, so very few were uninsured in Ca except by choice.
I have to admit that I am pleasantly surprised that the exchange was not a disaster. It is not the great success presented by those who back it. It adds complexity, lack of access, higher expenses and all this for very little gain, since Ca already had a mechanism to provide for those who were uninsurable in the regular market, and those who were insurable but had health issues were paying no more than they will under the exchange plan. I am interested in what you think about this, am I incorrect from and economic point of view?
Uwe:
Two reasons that premiums will be higher than current prices: 1) the law forbids pricing according to health status, and 2) By charging more, insurers bring in people whose premium is subsidized, thus limiting their financial risk. It is as close to a Ponzi scheme as insurance can get. Insurers have no business incentive to keep premiums low.
Don’t you think that economists would have thought this through when Obamacare was just a figment of some politician’s imagination?
Even as you advocate for this law, realize that it has the seeds of its own destruction in it. Never mind the machinations of the IRS with personal medical information and the ability to tax just about anything, including group premiums that are not in Obamacare.
I am the product of a Public Health/Hospital Administration degree and 4 decades of consulting with over 100 hospitals and health systems and I take two services that send articles and blogs on this topic every day, and observe the process used by providers to prepare for Obamacare, so I believe I am closer to the reality of this law than economists who do not know healthcare. And that category includes both Krugman and yourself.
John–be unrelenting on this topic….
Wanda J. Jones, MPH, President
New Century Healthcare Institute
San Francisco
Deat Wanda:
Far be it from me to claim that i know health care, health economics or anything else better or as well as you do.
If i suggested otherwise, my apologies.
Uwe
Don–There is still more to learn, to achieve a realistic assessment of the state of healthcare and the character of the PPACA.
WJJ
Wanda,
To say that Professor Reinhardt is an economist who does not know health care… Well, as an ardent at-large student of his for a couple of decades, I feel fully qualified to assign you a grade for your observation: F
Don
Uwe Reinhardt is conducting himself as a gentleman. Don should take note. I would like to point out that a problem I perceive is the disconnect between academic study and real world fact. Academics study as something was, acquiring information, making sense of it, then publishing their findings in peer reviewed journals. This can take years and by the time the findings are published the information has changed because real world pressures have forced things into different paths. I think is was this way with the PPACA, which addressed problems that were already being worked on and solutions being applied. Instead of specific fixes general principles should have been laid out. Too late now, but I think that anyone who looks at this overall health reform will have to acknowledge the good intentions of all involved. I believe that those good intentions on the part of the supporters of the PPACA have misled them into something that is not sustainable, but that is an error of judgement, not a moral flaw. I hope that we can keep the discussion cordial.
Dee,
Thank you for pointing out that my comment was less than gentlemanly. I agree, and I regret it. I especially wish to apologize to John Goodman for entering such a comment on his blog (and I’m being very sincere, John).
It was very sophomoric of me to assign a letter grade to a comment attacking the credibility one of the nation’s most highly regarded economists. For that, I apologize. I should have kept Wanda’s grade confidential, instead of posting it on John’s blog.
Don
Dee:
I think that even the most ardent supporters of the Affordable Care Act (PPACA is actually only a part of the ACA, albeit a large part) will or should agree that the legislation has flaws that need to be fixed sooner or later.
The markups for the legislation were preceded by a monumental policy brief entitled A CALL TO ACTIONH HEALTH Reform 2009 http://www.healthlawyers.org/Members/PracticeGroups/TaskForces/HRE/Alerts/Pages/CalltoAction.aspx, penned by Dr. Liz Fowler and her staff of the Senate Finance Committee. I view it as a model of policy analysis. The authors lay out all of the problems in US health care of which people have been complaining, adduce a huge range of relevant literature and then present policy options.
The actual blueprint for the law – the general framework you ask for Dee – was the Massachusetts health reform, commonly known as RomneyCare, which had been put in place with the joint advice of the Urban Institute and the Heritage Foundation… Stuart Altman, David Cutler and David Blumenthal, all of Massachusetts, were heavily involved in both RomneyCare and ObamaCare. Their though was that a blueprint praised (then) by a Republican Governor and, indeed, leaning heavily toward designs offered by Republicans in 1993 (Senator Chafee’s bill) might be passed on a bi-partisan basis. It is here, of course, where academics went wrong, not really understanding the new politics in the US which puts party above country. So we ended up with a Republican governor running against his own blueprint for health care.
Because this bill never went to conference, many of the silly wrinkles put into it at the behest of lobbyists during mark-up.
Furthermore, there also is regulatory overreach in the bill.
But I like the features calling for greater transparency on prices and quality. We have already seen what the Datapalooza (I attended it yesterday and CMS’ decision to publish the charges of hospitals have done. The mystery to me is why the Bush administration, a market devotee, never made any effort at creating greater price and quality transparency in health care.
There is much to criticize in any legislation, given the convoluted way we craft and pass laws. It is easier when lawmakers don’t finance the benefits they promise (as with the Medicare Modernization Act of 2003), but even then it is complex.
The fact is that this country has left the growing number of uninsured to fend for themselves in the jungle that has been the individual and small group market. This was the first attempt to do so.
It is easy to entertain yourselves with endless hit and run attacks on Obama – like insurgents. Some of them are truly entertaining, as when Obama gets attacked for cutting $400 billion off the future growth of Medicare spending, to howling protest from the right, only to see Paul Ryan to keep those very same cuts in his budget, to complete silence from the right. As I tell my students, that is hilarious.
I would find it more helpful if I saw anyone on this blog show their cards on their social ethic on health care. The easiest way to do this would be to list per-capita family incomes in ranges of $10,000 or $20,000 and then tell us what in the writer’s view should be the percentage of that income the family ought to be expected to spend on health care from its own resources, assuming they all got the same health care employees of the NCPA get and expect to get.
Such a showing of hands could include the statement “I don’t really care what health care low-income people get. Let them get what they can afford with their own money and no more.” At least it would be an honest statement.
Finally, simply to accuse people with whom one disagrees ideologically or factually of not understanding health economics or health care is an arrogant cheap shot. In the heat of the battle we all have done it from time to time, I guess, but that makes it no less a cheap shot.
Uwe: I am glad that you raise what is the single most important usually ignored issue in all healthcare reform. The morality of the system of healthcare delivery. I do feel that we have not had an honest debate in this country on this aspect. I see that problem as this: simply put, there has to be rationing of healthcare. It can be through lack of access to financing or lack of access to providers or some other way, but there must be some form of rationing to control costs. Morally, how do we as a nation decide who, for example, gets access to the finest hospitals? Not everyone can go to Cedar Sinai in Los Angeles, so does not having them on any exchange provider really constitute a valid objection to the exchange? We were rationing by using insurance that was somewhat unavailable and was very expensive, now it appears we will ration by restricting access. After all, here in Ca we will add 8 million to the insurance rolls without adding a single provider, and will make most of those who do get insurance use a restricted provider list. There will be long waits for care. Is that what we as a country want? Should we have some form of lottery to decide who gets access to more expensive treatment? It should be debated and your point is well taken as to how much healthcare a low income person should get. What is our social responsibility. What you call the social ethic must be considered and we as a nation need to make some clear decisions as to what we can live with as a nation.
I will show my cards, as you ask. I believe that the PPACA was and is a mistake. I hope it is not.
As to saying that some in the debate are ignorant of health economics or health care realities, well I am certain that is the case. Please remember that half of any group is below average. When I hear someone in CA defending the ACA as stopping health insurance companies from cancelling policies for claims, which has been illegal in Ca since 1992, I have to believe that, on that point, they are not up to date. Policies were rescinded due to false statements on applications, but that is different from cancellation. When I hear that the exchanges will bring rates down by increasing competition I ask how, the Medical Loss Ratio doesn’t leave any room to lower rates. There are a great number of people who are speaking out and many of them are ignorant of some aspects. That is not bad, we are all ignorant about some things. I daily surprise myself as I discover new things I did not know, even in regards to healthcare. My point was not to belittle those who disagree with me, it was to point out that there are too many on both sides of the debate who are not fully trying to understand the issues and who are not willing to change their stand in the light of that investigation. That bothers and concerns me, and that is what I was referring to. You are absolutely correct, too many now put party above country and even reasoned thought. And that is on both sides.
But, at least these folks will have helath insurance when they never had it before. My taxes won’t be going to pay for folks who don’t have ANY insurance.
@Scott: After 22 years of working in health insurance, I do not believe the majority of people want health insurance. What they do want is someone else to pay their bills for them.
Where do you think the tax dollars will come from that pay for the expanded Medicaid, the Premium Tax Credits, the Cost-Sharing Subsidy and the 126 new agencies created to manage all this?
Scott,
Dee and Brian are both right. Your taxes arent paying for that now, but after 1/1 your taxes will be paying for a lot of people who have insurance
Scott, your taxes will be going to subsidize the people who have been going without health insurance and who now buy on the exchange. The only difference is that now you will be paying for very high priced health insurance on everyone, not just for claims as they happen.
Scott,
Now your taxes will be going to buy very expensive health insurance for everyone who was going without, not just to pay claims as they happen. Guess which will be more expensive.
Great Debate. It seems obvious that Krugman continues to selectively pick out items to manipulate his conclusions. As a provider I see that the initial offering by the exchanges will be low priced – still not as low as private – with marginal reimbursement rate. This will keep most providers in the game and will increase the sign up rate – this may be Krugman’s goal. Once these are in grained the price will go up and the reimbursement will go down. The spiral will then begin. Do we as providers give up the volume and take the exchange insurance or forgo that and only take private insurance. The better physicians and other healthcare providers will give up the exchanges and only take private further restricting access to people that the ACA was supposed to help. They will have long wait times and poorer quality care and we will be going to the 2 tier system spoke about by Dr. Goodman. My thought has been since the ACA was conceived was that HHS would then bundle Medicare with the exchanges and give us providers an ultimatum – Take the exchanges or give up Medicare. This will then cause Medicare clients to loose a lot of what they would get under todays system as well as what they would get under a more free market premium voucher system. I can tell you now that providers are very worried about how this thing is rolling out and we are moving toward taking control due to the fear we have. If that happens then whatever the goal of the ACA was will be lost. It is time to move to a more market driven system that will help consumers of all economic status as well as keep the quality of care the best there is.
Hmm. You would think that a good economist like John would note that Boston’s wait times were the longest in the country before they had their reform.
Steve