The Open Mind II: Riposte

Ensuring Healthcare or Insuring against the Loss of Health?

I’m not a pundit, but I play one on my blog, and, it must be said, for a good deal less money than the television variety, though I could pretend to the same priceless knowledge in all fields. Let me teach Peter Orszag a thing or two about healthcare financing. Allow me to analyze the flaws in the numbers of the Congressional Budget Office. Watch me put the spank on David Gratzer.

I think not.

There an army of people (two, in fact) more qualified than I to analyze a national economy’s money flow, and that of several nationwide industries’, in order to argue for this adjustment in the tax code or that in eligibility, producing x amount of cost benefit or y amount of health system apocalypse. Some of them do it for an interested party, some for government and think tanks, some from arm chairs. Some of the cushion dwellers may actually know a thing or two. I wouldn’t bet against it. I’ve got a cushion of my own. Pick your favorites and believe them, because that is all that most people can do. It’s a representative democracy for a host of reasons, and that’s one of them.

A policy vision will appeal and make sense to you or not. Elements of plans will seem reasonable or ridiculous. Take the idea of taxing “Cadillac” plans at the insurer level, to encourage employer-consumers to price shop for more cost-effective plans. Do not trust your tax preparation to proponents of this idea. Through my employer, I happen to be a beneficiary of just such a luxury vehicle. Or I was. My employer and my union, with the voted endorsement of the membership, have very recently agreed to end our self-sustaining plan in order to participate in a plan representing a far larger pool of educators. The writing – and, if nothing else, educators can read – was on the wall. The costs were unsustainable. The change will produce substantial annual savings to be utilized elsewhere. Our benefits, though not insignificantly diminished, are still far better than most. Now we are in a Buick Regal. One doesn’t need to be Paul Krugman to see that the tax on the insurers would produce higher premiums and/or reduced benefits to the insured – and on what planetary basis do proponents of this tax believe that businesses are not already seeking to lower their burdensome health insurance costs, by price and benefit shopping, as did my employer, as well as my union?

However, I prefer to play a different role. I like to examine how we argue about matters. I like to look at fundamental assumptions. After all, the self-acknowledged non-experts need a basis upon which to place their trust, with the understanding that almost no one deserves it, but somebody has got to get it.

To begin, what’s this about “Obamacare”? As a student once said to me a long time ago, “Why you gotta take it there? Why’s it gotta be all that?” With all due consideration to mi amigo en el discussion, this strikes as a bit of reflexive, partisan demonization. Many elements in society have been seeking healthcare reform for a very long time. The failed effort at it was a centerpiece of the Clinton administration. Many names – that of Kennedy, for instance – are far more associated with the history and the policy initiatives of healthcare reform. Perhaps the greatest criticism leveled against Obama from those on his own end of the political spectrum has been his disinclination clearly to commit himself to a fixed set of policy reforms. So why Obamacare?

One doesn’t need to have been glued to any variety of LCD over the past near ten months to have observed the intent of various forces on the right to embody in Obama a full range of conscious, unconscious, and hysterical fears. Some of this effort has been politics as usual, some, perniciously, has not, and not all of the efforts are related to each other. But personalizing the current, multiple plans produced by the two houses of congress via the usual sausage assembly of conflicting and even undermining political interests as Obamacare does nothing to further or enlighten debate, and serves only to prejudice the mind and disable objective consideration. Favor the longstanding liberal drive for reform or not, it is not embodied in Barak Obama, it does not emanate from him, it is not expressive of his special influence, however one perceives it. It is the expressed desire of many tens of millions of Americans. Obama is not the fearsome leader of this movement. He is a follower chosen to play a temporary leadership role. But Obamacare does manage to conjure for a primed audience a dark and frightening agenda.

One of the too rarely considered distinctions in the current debate – how words do matter – is that between health insurance reform and healthcare reform. Now let’s be clear that whatever bill passes – and it seems nearly certain that something will pass – it is likely to truly please no one. It won’t be any of the models that genuine proponents of reform really want, and it will contain a variety of components that those who have always actually opposed reform, and who sought to water it down and to protect the interests of the insurance industry, will complain are, in fact, in toto, destructive to the system. That said, SW cites John F. Opie correctly remarking that risk and coverage are the two fundamentals of insurer’s business model. “Tamper with either of these,” says Opie, “and you destroy the business model of insurers.”

Oh, dear. Wouldn’t want to do that.

One needn’t be a socialist, and can even believe mightily in the creative and innovative engine of private enterprise, and still pause to consider the essential nature of the enterprise to insure. Insurance is gambling dressed in civil finery. Actuarial tables are card counting. Unlike gambling, insuring can perform a useful social function (if one wants to discount the social usefulness, in personal pleasure, of non-addictive gambling), but there is no reason to accept without consideration the notion that because a thing can be insured, it should be insured (anymore than the notion that it is a social good that because something can be securitized – like a pool of subprime mortgages – it should be securitized, and then, further, that security insured against loss). I’ll bet a buck against your house your spouse croaks by the end of the hour. Oh, no, I meant I’ll insure him. I’ll offer you the value of a house, say two hundred thou, if he does, and you make a premium payment of a buck an hour.

SW writes, “Our insurance system hides the true cost of insurance and has engendered the belief that medical care is, or should be, essentially free.  A variant is the shibboleth that ‘healthcare is a right not a privilege.’” I agree. The insurance system also hides, though its longevity and ubiquity, the question for many people of whether it is intrinsic to the concept and practice of healthcare that people be insured for it at all. In small, sparsely and dispersedly populated, technologically less advanced, or poor societies, or in combinations thereof, people’s medical fates are perforce an individual risk. Those economically raised above the norm can attempt to manage that risk more successfully than do others, health insurance being one form of risk management. Overcome all of those obstacles to group interest and cooperation, as has the United States and most other wealthy nations, and one has the opportunity to substitute for the short, nasty, and brutish reality of the only empirically demonstrable right – to meet one’s end – the, not entitlement, but enlightenment of a joint effort to protect life as long as possible against natural or accidental close. It is fundamental to the notion of the nation-state that it is organized for the mutual protection of its members against aggressive threat to life, both external, through a military, and internal, through policing agencies. It is commonly agreed that these functions are properly authorized, if not fully a function of, some level of government.

There is no reason why a society should not consider the appropriateness of conceiving healthcare – protection against those natural and accidental threats to life – in a similar manner. Having achieved a sufficient level of affluence, and overcome those natural obstacles to joint effort, a society can contemplate the cost of such an endeavor and the required distribution of resources to various essential sectors – research, equipment manufacture, pharmaceutical, delivery, and so on. But it is in the very conception itself that it exclude no one, and one is hard pressed, having conceived healthcare outside the constrictions of prevailing practice and assumption, to discover any essential or even useful role for insurance. Insurance company marketing costs and profits develop no component of care and add no value to it. Once the decision is made that the mutual benefit of healthcare will be assumed as a joint effort, developed through policy in any number of possible formulations, those who can crunch the numbers to determine the available and future dollars available need not consider their flow through insurance companies or the useless percentage remaining with them.

That’s a conception. Reality will not remotely match it, no to start, maybe not ever – not because the concept is inherently unrealizable, but because of the forces arrayed against it. That is in the nature of the political process. Our founders thought the checks and balances of not only government branches, but of contending forces was productive of stability. Maybe so. Demonstrably not always productive of coherent policy. Among the strengths of a well-run business is the capacity, in management structure, to see a business plan, wholly envisioned, through to its coherent realization. Democracy, imperfectly and democratically, offers little such opportunity. The political reality is that opponents of healthcare reform would never allow such a coherent vision to be enacted unmolested. Proponents must pass what they can achieve, and build on it. Waiting fifteen years again for another bite at the healthful apple is not an acceptable option. Historical studies have shown that almost all nation’s adopting some form of universal health system have done so not by any sweeping reconception and institution of a new system from the ground up, but by adapting change to existing structures. That seems bound to be the course in the United States.

Shrink says, “There are reasons people from around the world come to America for care that they cannot receive at home.” Indeed, we have the some of the best, and most expensive, healthcare in the world. If one can afford it, one may come for it. The advantages of affluence have never been in question. But no one comes to the United States for the healthcare system. If SW does not think the healthcare system is discriminatory, it is, it seems clear from his argument, because he doesn’t think variance in access is discriminatory. Most Americans disagree. Everyone knows, too, that the emergency room for non-emergency care is neither cost-effective nor productive of long term health.

The variance in access is not just demonstrable in the nature of the care sought and delivered, but in the care that isn’t. When I worked in support of universal healthcare in Minnesota in the early nineteen nineties, I heard countless stories from parents who purchased no insurance in order to pay the rent, and sometimes none for their children either, for which they felt great guilt. No care there but for emergency rooms, and sometimes – who knows to what detrimental end – not. Regular readers of the sad red earth know that several weeks ago I suffered a severe blow to the head in a biking accident very far from home (accounting, no doubt, for an array of recent dsfunctions.) Because of my excellent health insurance, I didn’t hesitate to go to an emergency room, where I was given a CT scan. All, thankfully, was well, though my skull hurt for over a week, and that was with a helmet. I received just two days ago a copy of the bill to my insurance company for the ER visit – over $4400. Under other circumstances, unemployed or low paid and uninsured, I don’t go to the ER. I can’t afford it. I take my chances because I think I must, and I suffer the hematoma and die.

One doesn’t get the protection of the military or the police based upon an ability to pay. One’s life is protected as part of the social contract, without exclusions. So it can be through a different conception of healthcare. Supply and demand are fundamental to markets. But markets are neither the sum of human life nor the structure of reality. They’re not Kant’s noumenon.

SW says “Obamacare treats the healthcare pie as a zero sum system.” Well, we know it is five different congressional plans to which Shrink refers, not Obama anything. But then he writes,


1) Affordable

2) High Quality

3) Universal

Pick two of the three…

That formulation is the whole zero sum pie right there.

14 thoughts on “The Open Mind II: Riposte

  1. MaxedoutMama, I documented that healthcare already costs the US 17.6% of GDP. As a nation, that is what we are paying now.

    Most of these costs are hidden and yes, it would be politically difficult to move from a system in which these costs are hidden to a system in which these costs are manifest. Both conservatives and liberals of good faith might well agree that transparency in costs would be a good start to cost containment. But we won’t move in that direction because we don’t have the kind of partisan cooperation around rationalizing health care that would make a difficult transition like that politically possible.

    But I know if you gave me 17.6% of GDP I could wring out a huge amount of waste, cover everyone and provide better healthcare overall than the system we have now by moving to a single payer system.

    And yes, Neil I recognize increasing HSAs as a good idea in support of cost containment.

  2. It is interesting to examine your fundamental assumptions regarding healthcare as compared to national defense and crime protection.
    We all know that all modern countries make national defense a government job. But why? Wouldn’t it be smarter to privatize it and count on free market efficiency to supply us with better defense?
    The empirical answer to this is no. State-run armies are with us precisely because they were oh-so-effective against bands of private citizens throughout the history. Why are they effective, then in contrast to to say government run toilet paper factories?
    There are many superficial differences that might seem important at the first glance but are not really a factor. This comment doesn’t have space to list and refute them so I’ll go directly to the important ones.
    First defence is a commons. If my neighbour is protected from aerial attack so am I. This creates a free rider problem that can only be effectively mitigated through government intervention.
    Second with defense (and offense) until very recent times bigger meant better. It is anyone’s guess whether toilet paper from a big factory will be better or more regularly supplied than from a small one. 100 tanks, however, will almost certainly beat 5. Sure, there were and are generals that managed to supply counter-examples but they are rare exceptions. In most battles throughout the history more won from less. Creating a state-wide army monopoly allows creating the biggest army and so provide best defensive (and offensive) capabilities.
    Third, despite what liberals might think, might made, makes and will continue to make right. If I have an army that effectively protects me I have nothing to fear and can turn my attention to making other obey my laws. A government is by definition the guy with most might and so it could not and cannot tolerate any competition in that department.
    Finally armies are usually “too big to fail”. Free market relies on failures to weed out out lame competitors and reward good ones. A failure of the private defense provider is usually not an option (sounds familiar isn’t it?)
    With all that in mind all societies throughout the history had eventually to invent large state-run armies as all other options turned out to be unworkable.
    But as always in life there is a price. Note what we have to give up to have these armies. Their employees had to be made slaves. They must obey orders and usually cannot decide to leave if they don’t like the employer. (This is true even in volunteer armies, not to mention consript ones). They are always over the budget. They are always uprepared for defense. They provide bare minimum defense services but never care about making their customers happy (examine every conflict and see how much suffering there was for civilians on the defending side compared to what ideally could have been accomplished). And so on, and so on.
    All of these are the price that we pay for the necessety of having governement supplied defense.
    Now let’s look at healthcare.
    It is not a commons (except in some situations like vaccination – we’ll get to it later). If you are healthy this doesn’t make me so. More healthcare workers doesn’t necessarily mean better but there probably is some correlation. One group of citizens cannot turn healthcare into a weapon against others (sci-fi scenarios aside). Finally, failure of some healthcare providers while painfull doesn’t mean the end of the society.
    All of this strongly argues that healthcare can and should be supplied by the free market rather than government. You wcan of course go the government route but without making doctors slaves so they can’t run away. Then you should get used to bare minimum services and the whole thing being even more expensive than it is now.
    I am very certain of this because I had the fortune of spending roughly equal (at this point) parts of my life under a communist, then socialist and finally american healthcare system. Despite what Michael Moore tells you and statistians (i.e. worse than liars) at various UN agencies calculate the healthcare over there is worse than here right now. You will have lines. You will have bad doctors in much higher proprtion than today. You will have government bureaucrats tell you what you can and cannot be cured from. Most damningly for you you will have the same inequality in treatment as exists today. Only instead of money what will buy you good treatment will connections and, failing that, bribes. The only bright spot will be things like vaccinations. More people will get them and they will be organized much better.
    I have no illusion that starry eyed liberals like you will be convinced by anything people like me say. You will push and shove and eventually get your wish. When it happens and when you start complaining it will be too late to change anything. The only country where people used to run away from your dream societies will be gone.

  3. If I might, I’d like to provide a constructive idea to the conversation.

    My favorite ideas are almost certainly too radically libertarian to be politically feasible, but there are some things that I suspect would be very popular with the public (not necessarily with the political class) and do a great deal of good.

    MOM’s suggestions that I quoted are pretty close. The simplest thing would be to expand the Health Savings Account program to allow greater yearly tax-advantaged individual contributions to the HSA account. (Right now there’s no way to cover the yearly deductible with your contributions.) On top of that, convert Medicare and Medicaid into HSA high-deductible plans, but provide a subsidized quarterly contribution to the HSA accounts from the federal general revenues. Medicaid can probably be expanded somewhat, and converted into a simple subsidy paid into individual HSA accounts. Eliminate the Medicare payroll tax (which is a drag on employment) and fund it out of the income tax, which will have to be raised on the middle class.

    The key with the HSA is that the individual must be in comelete control of spending decisions up to the deductible of their insurance policy (which might be $5K to $10K per individual).

    In one fell swoop, this provides the individual incentives to improve lifestyle. It provides individuals the incentive to control chronic health care spending. It provides individuals the power and responsibility to live as they choose, while retaining a safety net. Most importantly, that safety net does NOT interfere with their personal power and responsibility.

    The right gets increased freedom and responsibility, the left gets an increased safety net and higher taxes. Everybody gets improved health care outcomes. Sounds like a winner.

  4. AJA,

    I didn’t mean to be confusing, I will try to clarify that statement.

    Copithorne conflated two statistics–health care spending per capita and overall health outcomes, then compared the U.S. to some European countries with more centrally managed health care systems. As Maxed Out Mama and Naomi have highlighted, the difference between the way we in the U.S. pay for our health care is probably the LEAST of the differences between the U.S., UK, Germany, and Canada, not to mention France.

    In studies that control for lifestyle differences, the U.S. ranks equal to or better than most European countries.

    In studies of survival rates in cases of critical care (the “really get sick” situation) such as some types of cancer, U.S. outcomes are head and shoulders above other countries with more communal health care systems. Unfortunately, these are the sorts of capital-intensive interventions that are likely to be limited by any health care spending bureaucracy.

    In other words, it is not self-evident that a European-style health care system would actually change anything for the better when applied to the U.S.. I’ve seen no evidence that putting a bureaucracy in charge of some portion of our health-care decisions will improve the lifestyle choices that affect health, and there’s good reason to believe that the technological resources which make our critical-care outcomes so impressive will suffer.

    As far as I can tell, from a pragmatic point of view the health care reform currently on offer will not improve the things we do badly, and will degrade the things we do well. And it will bankrupt the country in the process. How is this an improvement?

  5. (If I even dare breathe)


    The last point you just made encourages me to remind you that “If you take out accidental deaths due to car accidents, and you take out gun deaths — because we like our guns in the United States and there are a lot more gun deaths in the United States — you take out those two things, you adjust those, and we actually better in terms of survival rates.” ENSIGN – September 29, 2009 Senate Finance Committee markup of health care legislation….

  6. Jay – I do not expect you to answer all this stuff, but I do thank you for providing the platform.

    However, may I humbly beg an answer to my question as to whether you would be wiling to accept a Medicare payroll tax of between 17.5% to 20% for the sake of establishing a true single payer system? I realize there would be caveats in your mind either way – you’d want to know more about the proposal before signing on, as would I.

    But I would really like to know whether that is acceptable at all to you. So far my surveys on this point have not provided any support for the idea that the US population is willing to accept a public health care system. I asked on DU a number of times, and most people rejected it.

  7. Copithorne – your question about the recent immigrants was extremely rational.

    No, I am not writing out of prejudice. The most significant waves of recent immigration to the US have come from countries that vastly underspend on medical care (compared to the US). That means that the cohorts coming to the US have much higher rates of preventable disease and infectious disease than individuals born in the US. For example, one recent survey of a food processing plant in the SE turned up test results showing that over 70% of the workers had evidence of TB infection.

    We have imported and or allowed waves of immigrants with preventable and treatable diseases, many of whom are working in very low-wage jobs without any medical benefits. The emergency room stopgap does help them if they need emergency treatment, but it does not deliver anything in the form of what they really need, which is to be “caught up” with immunizations and treatments for parasites and other chronic diseases. Many of those are infectious.

    The public health system in the US developed during the last wave of such immigration, and it needs to be shored up.

    If one looked at the problem purely from the aspect of bringing these people up to speed healthwise, the obvious answer would be Medicare/Medicaid for all funded by a payroll tax. This would both reduce some immigration (casual which would become non-economic) and allocate expenses better to the employers, but it would also provide for far more efficient and effective treatment for these people.

    Third world diseases like dengue and TB are making a comeback in the US in areas with high rates of immigration from poor countries. The fact that many of these people don’t even have legal status makes the situation far worse.

    I am surely not going to criticize either Jay or SW for not discussing the public health component of our overall health care system, but Congress should be dealing with this issue. Saying that we won’t cover illegals is ridiculous. If you want efficient health care managed for lowest costs, you have to deal with infectious disease FIRST. And if the largest vector of that disease in your population comes immigrants with a high proportion of illegality, you must design your health care system to address their needs.

    The reason why the proportion of immigrants from poor countries to a developed society matters is that health care spending isn’t a zero sum game. People born in this country have very low rates of parasites and many other preventable diseases because of all the investments we have made in the past in our health care system. It’s not an accident, and it is an outcome of spending money efficiently in the past. To let our current overall health status decline is going to cost us a great deal more money in the future.

    See, for example the CDC on TB:
    and the real contribution from immigration:

    Because we have gaps in primary care, we spend more in public health. This is indeed a hidden cost – we have ramped up spending in the last few decades, but we are not making much progress or are sliding backwards in states with high immigration. In the process we have created prison epidemics and epidemics among poorer people.

    TB rates started to rise in the US coincident from the latest surge in immigration in the 1980s, and we have ramped up spending very significantly since, but not nearly enough. There is probably no feasible way to control such epidemics except to have a good solid primary care system in place for immigrants.

    My mouth dropped open when I read the stuff about illegals not being eligible. You can’t have a health care system that discriminates among the population like that if it results in a surge of infectious disease. Infections in populations do not discriminate, therefore treatment had better not!!

    The extraordinarily disparate impact of H1N1 in populations with high rates of TB has just been highlighted. Even mild/non-infectious cases can abruptly shift to fulminating when a carrier comes down with a hefty case of flu. Not only does this make the flu far more dangerous and expensive to treat, it creates a public health danger. No one wants to sit on a subway or a bus next to someone coughing and sneezing from the flu, but when that sufferer is also expelling mycobacteria, your future is considerably more hazardous.

    TB is just one example, (consider as another example hepatitis):
    but it does serve to highlight several issues of this debate in society in general. First, health care spending is not zero sum. There are certain levels of spending which will cut overall medical costs. This is not debatable. Nor is it debatable that the US has segments with highly treatable conditions who are underserved.

    I agree with Jay that the distinction between methods of allocating money for care versus providing levels of care is important. This entire debate is dysfunctional because it is treating risks and outcomes as unitary (per person) whereas in epidemiology, population risks are anything but unitary.

    To control population risks, access to primary care and concentration on points of risk is essential. Therefore an Obamacare plan is doomed to fail. Without shifting more resources into primary care, and without ensuring that payment rates for primary care are robust enough to ensure that people can really see a doctor and get adequate screenings for their risks, the whole thing becomes an exercise in futility which may well raise health care costs in total.

    The MA plan has sharply reduced primary care access, and worst yet, it has reduced it the most for the population most at risk. Not a good strategy for the US.

    Copithorne, I do not think you understand the impressive achievements of the US system, regardless of all that needs to be fixed. Germany has a much lower rate of non-German borne residents than the US, and a much much lower number of recent immigrants. Yet the German TB rate is higher than the US rate. France has a very good health care system, yet it has a much, much higher TB rate than the US. It also has a high immigrant population proportion, although not as high as the US.

    The US actually ranks very high in health statistics in the developed world, especially when you take into account over 12% of our population having been born outside the US.

    Trying to compare health systems between countries without integrating immigration data and the source of that data is ridiculous. It also leads to misallocation of health care spending.

  8. copithorne,

    Recent immigrants, on average, have greater health problems than natural-born U.S. citizens because of a materially-poor childhood. It’s also possible that there is some interaction between the culture they bring with them and American culture that leads to poorer-than-average health. Universal healthcare will not change these facts. To say so is not immigrant-bashing, nor is it complaining, it’s just pointing out that you’re trying to use a flyswatter to screw in a lightbulb–the two issues don’t have much to do with each other.

    You cite as “fact” that the U.S. has poorer health outcomes than other countries, but there is no evidence that socialized medicine has anything to do with it. On most measures, if you really get sick it’s best to do so in the U.S. Overall outcomes are much more influenced by culture than by technology.

    The “skull-numbing complexity” of U.S. health insurance is entirely a result of the tax advantages and government regulations that accrue to health insurance. We aren’t in charge of our own health care because we aren’t allowed to take the tax write-off unless it first goes through employer-based insurance. That, and Medicare reimbursement rates that are too low, are the roots of the problems in our health care system.

    You probably are not aware of this, but Maxed Out Mama has, in fact, proposed some solutions that would probably improve health care delivery in the U.S. a great deal. She did so, actually, in the comments to SW’s initial healthcare post:

    “If you really want to know, the most economically efficient system that would produce both the best medical delivery system and the lowest medical costs a decade from now is to raise Medicare payroll tax, increase copayments and premiums, especially for non-life-threatening conditions, sharply increase Medicare and Medicaid reimbursement schedules and peg them to private insurance payments in a region, institute real market reforms for private insurance, including a huge expansion of the HSA system, and split the price negotiating feature from private insurance coverage.

    That is the only reform that would produce reform and control costs without producing a depression.”

    She’s not just complaining.

    1. Far too much in all of these thoughtful comments to respond to without writing another, kind of scattershot post, but one reader did comment on the perhaps not really all that hidden philosophical differences between SW and me that underlie our arguments on healthcare. The politics of this issue, as in many, but more than in most because of the enormous complexity of the fiscal analysis and projection, are that most people will align themselves according to personal circumstance and experience, underlying political beliefs, and in response to the marketing of positions by the active players (hence Obamacare). For every official and apparent expert on the numbers arguing one way, there are counterparts arguing otherwise.

      However, I’m perplexed by Neil’s comment in response to Copithorne: ” You cite as ‘fact’ that the U.S. has poorer health outcomes than other countries, but there is no evidence that socialized medicine has anything to do with it. On most measures, if you really get sick it’s best to do so in the U.S. Overall outcomes are much more influenced by culture than by technology.”

      First, “really get sick” and “overall outcomes” are not defined here, so their apparent contrast and juxtaposition is unclear in effect. Generally speaking, overall outcomes should be the summum bonum of healthcare, and the bottom line in evaluation, even if, specifically, the best bypass surgery might be available somewhere else. I don’t know what long-term studies have been done specifically focusing on variant aspects of care between the U.S. and universal systems demonstrating a clinically supportable cause and effect relationship between those variant aspects and outcomes, but the U.S. has a long cultural, political, business, and philosophical tradition of pragmatism: nose around at length among the Organization for Economic Co-Operation and Development statistical reports (Health Consumer Powerhouse is a good site for only EU comparisons) where varied comparisons are made among the members, and note the glaring deficiencies of the U.S. in life expectancy, infant mortality, obesity (cultural, indeed – an aspect of a health system). The U.S. not only ranks low, but often below the mean, above, sometimes only nations like Russia and China or former Eastern Bloc countries such as the Czech Republic or former Third World countries such as Brazil.

  9. I don’t understand your measurements, Maxed Out Mama. In 2009, healthcare is going to cost 17.6% of GDP in the US. In the UK, Germany, Canada it costs between 8 and 11% of GDP and they achieve better outcomes and report greater satisfaction with their health care systems.

    I don’t understand why having a lot of “recent immigrants” (as if they were the only poor) could have any bearing on that. Perhaps if you are comforted by having your costs hidden then there is some benefit there for you.

    There is going to be a good chunk of people, such as Shrinkwrapped, who perceive the current system as working. They do not see the need to change it, do not know how to change it and have no constructive ideas for how to change it. The only contribution they have will be to complain about the negative consequences of any effort to change.

    The organization of health care in America is profoundly irrational and wasteful. The skull numbing complexity of competitive private insurance creates staggering non productive administrative costs. There is no country on earth which would choose the American health care system. The current course cannot be sustained.

    There are those who will want to take their best shot at fixing these problems and those who are more comfortable in the role of complaining. It is not easy to move someone from an orientation of complaining to an orientation of problem solving but there is still time if anyone is inspired to move themselves.

  10. Jay, you say you want to examine fundamental assumptions, but some of your own seem to be terribly flawed.

    First, most insurance is not gambling. It is a means of saving which allows individuals to save less by spreading risks across a group than those individuals would have to save if they had to save enough to deal with just their own likely risks. As such, it is economically efficient. When insurance programs become a method of providing access to care that most of the insured can pay for without insurance, insurance becomes economically inefficient and wasteful. Because insurance is not at all a gamble but an actuarially determined savings program, it serves a function. Currently we do not save (provide adequate resources) for any of our federal public programs.

    You state that insurance can be used as a method of managing risk for those who are wealthy in poor societies. Actually, that is not true. When you are wealthy in a poor society without any mechanism of funding medical care for the poorer majority, the impact of the price-demand function is such that YOU WILL HAVE ACCESS TO WHATEVER MEDICAL CARE EXISTS REGARDLESS. The problem often is that you could pay for care which does not exist, which is why the Saudis keep showing up at hospitals in Europe and the Americas. There is never medical insurance in societies with a small middle class. The wealthy do not need it, the poor cannot afford it. The only group that benefits from health insurance (without welfare) is a middle class which can save for medical care but cannot save enough for all the medical care they might need individually without spreading the risk across a group.

    Widespread insurance programs and/or subsidization of high-end medical care for the poor do work for the wealthy, but only because they increase the amount and variety of services available. But widespread insurance or even an ethic requiring provision of services will always increase medical costs for persons with significantly higher incomes, because no matter the method of paying for the care, a significant amount of the cost is shifted to those who are able to pay – whether it is taxation, private insurance combined with welfare, a private/public mix or an ethic requiring the provision of free care by professionals and institutions.

    Further, because it is such a high burden, the majority of the cost is shifted to the middle class. The more uniform the standard of care, the more burden is shifted to the middle class, and the higher the overall spending level per capita. You appear not to grasp this, but in fact the standard of care provided to poorer people in the US is on average much higher than in countries with “universal” care. The young, the injured and the relatively healthy receive generally excellent services under these systems, but the old, disabled and the chronically ill are extremely shortchanged in comparison to the US.

    That is because there is no such thing as universal care. The wealthy can always exit. The middle class can often exit, and usually do if their circumstances become pressing enough. The poorer people live with whatever is generally available. The standard of “universal” care in each society evolves to match the resources devoted, and there is a breaking point at which the middle class simply cannot afford to pay for care for everyone.

    There are a number of other awful economic errors in your post, but just the two above show that insurance and medical care systems are not a zero-sum game. There is some X range of funding which will generate more medical resources and cheaper overall access because the cost per service is related to the number of accesses/fixed cost. There is another X level of funding which will generate superb medical resources but a growing pressure on the middle class. That is where we now are, and the reason is the massive cost-shifting onto the private sector from Medicare/Medicaid.

    German insurance rates are currently set at 15.75% of payroll (cut as a stimulus measure on a temporary basis to 14.75% of payroll), which is not very different from what we would require to institute Medicare across the board. However, to do that, individuals now on Medicare would have to accept a lesser standard of care, and so would people on Medicaid, and so would people now on private insurance.. Because of the disproportionate payments coming from the 50% of society covered by private insurance, our standard of care has evolved to meet their high demands as well as the high demands of those getting a free ride (Medicare and Medicaid). When you have 40% of the population paying 80% of the costs for the entire population, a very high incentive exists for the rest of the population to demand good medical care.

    But German medical standards include not treating a number of conditions we treat, especially terminal or severe chronic disease. Just as public plans in say, Oregon, have totally different standards of care (and much lower) than those pertaining to most privately insured persons, or NHS standards of care.

    You also seem to have completely missed the point of SW’s writings on this topic. The US has created a bizarre mixture in which the bulk of medical care provided is paid for by others, PRECISELY BECAUSE OUR GOVERNMENT MEDICAL INSURANCE PROGRAMS DO NOT INCLUDE ADEQUATE FUNDING.

    So if we switch to a public single-payer option (which is not used by the majority of western countries which have universal care – most use insurance funds) under our current system, we won’t have access to care at all. That is his concern. If we jack up taxation rates to fund it, the general level of care will absolutely have to drop. The way this will be accomplished will be by cutting care provided to the most vulnerable, which is not exactly a progressive option.

    Your point about the taxation of high-end plans is good and economically sound. Both employers and employees already have a strong incentive to cut costs, and the steady shifting in the private sector towards higher deductibles, etc, is proof of it. There is nothing such a tax can effect except injustice upon smaller groups with disproportionate risks and thus higher premiums.

    As to why Obamacare is all about insurance and avoids the issue of public insurance like the plague, it’s because the average college professor would pay very much more for his medical insurance under such a system than he or she does now. The upper middle class now votes disproportionately Dem, and it is a demographic group the Dem leadership does not want to lose. Under such a plan, a person earning 100K would be paying from 17.5K to 20K a year for his or her coverage, whereas that Walmart worker would be paying at most 4K.

    So since you favor single payer, are you willing to pay 17.5% to 20% of your salary for it? If your answer is no, you are not really in favor of single payer. The rich cannot pay for it, the companies cannot pay for it. The only group that has the money to pay for it is the upper middle class. Mind you, on top of that payroll tax you would also be covering 20% copays.

    The reason it would cost more than in Germany or France is that we have such a high percentage of recent immigrants working low-pay jobs.

  11. “Healthcare:

    1) Affordable

    2) High Quality

    3) Universal

    That formulation is the whole zero sum pie right there.”

    I must respectfully disagree. Your retort is clever, but certainly we can agree that it would be possible to have a health care market that is affordable and high-quality, with ever-increasing technology leading to coninually-decreasing cost, if we give up on equal-access “Universal” health care?

    Let’s leave aside for the moment the question of whether equality is an overriding good in its own right. Can we at least agree that a (relatively) free market for health care would lead to increasing availability for the poorest, much as a (relatively) free market in food production has led to the first society in history where the poor are obese?

    When you argue for universality rather than letting market forces increase the supply, you are implicitly saying that it is better that we all make do with less, rather than let anyone have more. People will die from this. Almost certainly more people than will be saved by universality.

    Wouldn’t it be better to help the hindmost, rather than tear down the foremost?

  12. Without delving into the details of either your or his posts, or either ripostes, I feel I must address what I see as the bigger issue: You have not resolved the underlying, fundamental differences between the two of you.

    It becomes clear (to me) with your riposte here what one of these differences is: You believe that every individual is absolutely entitled to full health care – that should something degrade the health of a citizen, every feasible option must be pursued to restore it.

    ShrinkWrapped, near as I can tell, would not argue that everyone should be allowed health care – but he stops short at making others pay. His argument seems to be that while everyone should be able to exhaust every option available to them to restore their health, it is a step too far to demand that others pay to make these options available to them.

    This is but an example for the current topic: My larger point is that the two of you have differences of belief far more fundamental than what is being discussed here. Until and unless you not only identify, but resolve these differences, you will make no progress in discussing these more specific topics. All you are doing is putting ice packs on a feverish forehead, without attacking the infection.

  13. An excellent, thought provoking post.

    First, why “Obamacare?” Well, everything’s gotta have a name, otherwise conversations about it take way too long as we specify “that bill proposed by Senator Baucus, with this set of amendments and without that set of amendments, in the version it had on such and such a date…” Major ideas typically get attached to them the name of one of their most famous proponents, even if that person was not the most important in their inception. (Think of the Monroe Doctrine– surely President Monroe was not the first nor the most enthusiastic supporter of the idea that Europe should leave off meddling in the Western Hemisphere, but his name got attached to it anyway since he was president at the time and it was his administration that pushed it.) It would properly be “Obamacare” if President Obama had written it and presented it to Congress for debate; but surely it’s not out of the realm of imagination that his name would get attached to a bill that he promoted even before it was written, much less one that has not been fully and transparently available to the American public so that it can be given the name of those actually proposing it.

    Second, I really do feel for the plight of the uninsured, having spent some time in that category myself. But I think you are off-base when you present health care options as a choice between the using the emergency room as a free clinic and dying of a hematoma. Even the uninsured can see a doctor for preventative care anytime they want, and you cannot be turned away from an emergency room. Paying for it, that’s another story, but the care itself is not unavailable. The ER will let you go without paying, you know. If you can’t pay, there are payment plans, charity care, and you can even collect donations from your family and friends. If you have none of those, there is Medicaid. The application process isn’t that bad (I’ve done it), and once you’re in, you can find a doctor and get the care you need.

    Since we already have these things in place, here’s what I think would make a better health care plan: making the options available to poorer people cheaper. Cash prices for doctors are sky-high because doctors have to compensate for low reimbursements by Medicaid, Medicare, and insurance. Reducing these payments further, which is one way the current plans are supposed to reduce costs, only makes the problem worse for those who can’t afford health insurance, and only increases costs for those who can afford it (or for the government who’s paying for it). Health insurance costs can be reduced further by going over to health savings accounts (possibly combined with catastrophic health care plans which are more like actual insurance).

    As you describe, insurance is indeed like gambling, and as in gambling the house always wins over the long term. However, the goal of insurance is the same as the goal of gambling: to bring more players to the table. People will participate more in their health care when they feel that the costs are controllable. Hopefully we can all agree that bringing more players to the health care table is a good thing.

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