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Daily Archives: October 8, 2009

Health Reform Is A Republican Issue?

Louisiana Governor Bobby Jindal wrote an op-ed that appeared in Monday’s Washington Post wherein he presents the “conservative case for [health] reform.”

Here are his 10 ideas to reform health care and my response to them:

1. Voluntary purchasing pools: Give individuals and small businesses the opportunities that large businesses and the government have to seek lower insurance costs.

Purchasing pools are a good idea–that’s the entire purpose of the “Exchange” that all of the major Democratic health reform bills would create. As for making them voluntary, I’ll explain why that’s a bad idea, and it has to do with Jindal’s idea # 4.

2. Portability: As people change jobs or move across state lines, they change insurance plans. By allowing consumers to “own” their policies, insurers would have incentive to make more investments in prevention and in managing chronic conditions.

I like how this sounds in theory, but here’s the problem I foresee: If insurance follows the person–even when they move across state lines, that seems to suggest that the insurance market and its corresponding regulations will no longer be handled state-by-state. That’s a problem, because if you can get your insurance from any state, there is sure to be a “race-to-the-bottom.” Some small state that wants to attract businesses to locate there (think Delaware) will enact softer regulations than other states, leading to a less expensive, but far inferior product. This is a weird version of cherry-picking in my opinion.

3. Lawsuit reform: It makes no sense to ignore one of the biggest cost drivers in the system — the cost of defensive medicine, largely driven by lawsuits. Worse, many doctors have stopped performing high-risk procedures for fear of liability.

Everyone repeat after me: Malpractice reform is a worthy goal, but defensive medicine and lawsuits are NOT the biggest cost drivers in the system, and fixing them will not fix all of our problems.

4. Require coverage of preexisting conditions: Insurance should not be least accessible when it is needed most. Companies should be incentivized to focus on delivering high-quality effective care, not to avoid covering the sick.

This is very important and we need to do this. However, if we do this, we cannot have voluntary participation in the insurance pool as idea #1 suggests. The reason is simple. If you don’t have a way for insurers to exclude people with pre-existing conditions, and you don’t require everyone (i.e., the healthy) to buy insurance, you will end up with terrible adverse selection that runs counter to the way insurance was intended to operate. All of the healthy folks will be out of the pool and all of the sick will be pooled together. Insurance will become horribly expensive (even worse than it is now.)

5. Transparency and payment reform: Consumers have more information when choosing a car or restaurant than when selecting a health-care provider. Provider quality and cost should be plainly available to consumers, and payment systems should be based on outcomes, not volume. Today’s system results in wide variations in treatment instead of the consistent application of best practices. We must reward efficiency and quality.

Again, this is a noble idea, just like tort reform. The problem is that health care doesn’t work like other goods and services for which there is a market. Using this information to improve provider quality is a good idea. Expecting consumers to start making different–and perhaps more importantly, correct–health care purchasing decisions is not.

6. Electronic medical records: The current system of paper records threatens patient privacy and leads to bad outcomes and higher costs.

A good idea and one that all the Democratic bills would implement.

7. Tax-free health savings accounts: HSAs have helped reduce costs for employers and consumers. Some businesses have seen their costs decrease by double-digit percentages. But current regulations discourage individuals and small businesses from utilizing HSAs.

This doesn’t work. See idea #5.

8. Reward healthy lifestyle choices: Providing premium rebates and other incentives to people who make healthy choices or participate in management of their chronic diseases has been shown to reduce costs and improve health.

Nothing wrong with this–except that these cost savings are misleading. If people live longer, healthier lives, the nation’s health care costs actually increase.

9. Cover young adults: A large portion of the uninsured are people who cannot afford coverage after they have “aged out” of their parents’ policies. Permitting young people to stay on their parents’ plans longer would reduce the number of uninsured and keep healthy people in insurance risk pools — helping to lower premiums for everyone.

Great idea, but why stop at young adults? Are they the only remaining group of “deserving” uninsured?

10. Refundable tax credits (for the uninsured and those who would benefit from greater flexibility of coverage): Redirecting some of the billions already spent on the uninsured will help make non-emergency care outside the emergency room affordable for millions and will provide choices of coverage through the private market rather than forcing people into a government-run system. We should trust American families to make choices for themselves while we ensure they have access to quality, affordable health care.

I have an idea. It’s called the public option and the exchange, and we’ll give low income families subsidies to purchase coverage from their choice of public and private options. Jindal is essentially endorsing the House bill.

Out of these 10 ideas, there are only 1 or 2 points that are uniquely Republican–HSAs and voluntary coverage. Everything else is already part of a health reform bill in Congress drafted by Democrats. It’s kind of surprising until you think back to last month when the right started to frame itself as the party that wanted to preserve and protect Medicare.

 
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Posted by on October 8, 2009 in Uncategorized

 

In Health Care, Sometimes Less Is More

I cite heavily here from Ceci Connolly’s excellent piece in the Washington Post that takes a look at just how much waste there is in the U.S. health care system, and argues that rationing–done right–would actually result in a redistribution of resources that would be a win-win for everyone.

How can this be? Surely, if we take a finite amount of resources and redirect from some in order that others might benefit, that will involve losers and winners, right? Not exactly. You see, the reason why this would work out well is that the country generally has two groups of people: those who get less care than they need and those who get more care than they need. If you balance those groups out, it should be possible to give everyone the care they need. Notice that I said need and not want.

While overtreatment is obviously not a good idea from an efficiency standpoint, the folks being overtreated shouldn’t be too quick to defend their right to hold on to all that medical care either, because many studies have shown that overtreatment poses its own risks to health and life. Just think of it like this: Every medical intervention comes with some risk of adverse outcome, no matter how slight. Thus, for every intervention received over and above what is necessary, the risk of an adverse outcome grows in a cumulative fashion. Soon, enough slight risks have been pooled together that something bad happening becomes a very distinct possibility.

Connolly’s article cites a finding from the New England Healthcare Institute that determined that “as much as $850 Billion spent on medical care each year ‘can be eliminated without reducing the quality of care.'” It’d be bad enough if we just took all that money, put it in a pile, and set it afire, but like I said, it’s not that it’s just harmlessly wasteful. We’re putting ourselves at increased risk through our unquenchable desire for more and more care.

Of course, none of this is to preclude those with the means to pay for it themselves from getting whatever care they desire. This is a discussion about how to spend money that’s been pooled–whether through taxation and public spending or insurance premiums and claims. As the American Enterprise Institute’s Joseph Antos puts it “If they want to spend their money on [unnecessary care], that’s fine. If they want to spend our money on [unnecessary care], we ought to think about it.”

Emory Medical School’s Dr. Arthur Kellerman sums it up: “In the United States today, we give you all the care you can afford, whether or not you need it, as opposed to all the care you need, whether or not you can afford it.” How right he is.

 
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Posted by on October 8, 2009 in Uncategorized

 
 
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