Coyote Blog

Previously, I used 1970s gas price lines as an example of a situation where the government, as Uwe Reinhardt puts it, "reduce[d] rationing on the basis of price and ability to pay."

Here is another example:  The Pruitt Igoe housing project in St. Louis, which was abused so badly by its occupants it had to be torn down less than 20 years after it was built.

I will remind you of my earlier comparison of universal health care to public housing:

Lyndon Johnson wants to embark on a futile attempt to try to provide public housing to the poor?  Our taxes go up, a lot of really bad housing is built, but at least my housing did not get any worse.  Ditto food programs "” the poor might get some moldy cheese from a warehouse, but my food did not get worse.  Ditto welfare.  Ditto social security, unemployment insurance,and work programs.

But health care is different.  The author above is probably correct that some crappy level of terribly run state health care will probably be an improvement for some of the poor.  But what is different about many of the health care proposals on the table is that everyone, not just the poor, will get this same crappy level of treatment.  It would be like a public housing program where everyone's house is torn down and every single person must move into public housing. That is universal state-run health care. Ten percent of America gets pulled up, 90% of America gets pulled down, possibly way down.

It is not at all surprising that an Ivy League University professor does not recognize a difference between rationing by individual choice based on price signals and rationing based on government mandate.  What is surprising to me is that I remember this particular professor, Uwe Reinhardt, as the only person who would ever take the free market side of campus debates.  Kind of depressing.  I guess he must have seemed free market just by contrast, or else he has evolved a bit.  Is it ironic to anyone else that radicalism of the 1960s, which purported to be based on individualism and freedom, has led to campuses where it is normal not to even consider individual liberty as part of a public policy equation?  It just reinforced my sense that no one really wants to get rid of "the man," they just want to be "the man" themselves.

In particular he writes:

As I read it, the main thrust of the health care reforms espoused by President Obama and his allies in Congress is first of all to reduce rationing on the basis of price and ability to pay in our health system

We actually have plenty of examples of the government ending rationing by price and ability to pay.  Gas price controls in the 1970s are one very good example.  Anyone remember the result?

Or more recently in China, where gas prices were controlled well below world market levels:

We substituted gas rationing by willingness to pay the posted price with gas price rationing by ability to waste four hours of one's day sitting in lines. (I had never thought of this before, but there must be some interesting economic implications of preferentially routing fuel to those least likely to have a full-time job).

Perhaps worse, Reinhardt equates criticism of the current health care system ( and particularly its productivity) with support for socialization of the system.  Really?  There are perfectly valid free market reasons to criticize health care, where any number of government policy decisions over the years have disrupted the efficacy of price signals and created terrible incentives.

More here from Doug Bandow of Cato

Postscript: Farther left?  Further left?  Sorry, I try, but your scribe is an engineer at heart and sometimes struggles with the native tongue.  When I was in fourth grade, I remember doing a battery of achievement tests, and getting 99+ percentile scores on every test but spelling, where I got something like a 25th percentile.   I think this score put me down mostly with kids for whom English is a second language  (or maybe even worse, with Russian kids for whom ours is a second alphabet).  Only technology in the form of spell-checkers has bailed me out of my personal handicap.

From Walter Olson, on the House health care bill:

Contacts on Capitol Hill inform me that Republicans yesterday managed to block a remarkable provision that had been slipped into the House leadership's 794-page health care bill just before it went to a House Ways & Means markup session. If their description of the provision is accurate "” and my initial reading of the language gives me no reason to think it isn't "” it sounds as if they managed to (for the moment) hold off one of the more audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while.

For some time now the federal government has been intensifying its pursuit of what are sometimes known as "Medicare liens" against third party defendants (more)....

The newly added language in the Thursday morning version of the health bill (for those following along, it's Section 1620 on pp. 713-721) would greatly expand the scope of these suits against third parties, while doing something entirely new: allow freelance lawyers to file them on behalf of the government "” without asking permission "” and collect rich bounties if they manage thereby to extract money from the defendants. Lawyers will recognize this as a qui tam procedure, of the sort that has led to a growing body of litigation filed by freelance bounty-hunters against universities, defense contractors and others alleged to have overcharged the government.

It gets worse. Language on p. 714 of the bill would permit the lawyers to file at least some sorts of Medicare recovery actions based on "any relevant evidence, including but not limited to relevant statistical or epidemiological evidence, or by other similarly reliable means". This reads very much as if an attempt is being made to lay the groundwork for claims against new classes of defendants who might not be proved liable in an individual case but are responsible in a "statistical" sense. The best known such controversies are over whether suppliers of products such as alcohol, calorie-laden foods, or guns should be compelled to pay compensation for society-wide patterns of illness or injury.

He has a lot more detail.  Ask anyone in a public contact business in California how similar laws for ADA violations have worked out.  Just one more horrible, failed law from California that has driven the state into the ground now being emulated at the national level.

From the House health care bill:

"There shall be no administrative or judicial review of a payment rate or methodology established under this section or any other section."

Normally, if I were to contemplate resorting to bribery to change someone's decision, I would have to face two hurdles.  First, of course, I would face legal consequences because in many contexts., bribery is illegal.  Second, I would have to consider the cost -- is the price being demanded worth it.  After all, it makes little sense to spend a million dollars to bribe someone to make a decision worth a hundred thousand dollars to me.

But, unfortunately, neither of these problems exist when Congressional leadership seeks to bribe recalcitrant lawmakers to vote their way.  Bribery in this context is not illegal, its just "horsetrading."   And the cost is meaningless, because folks like Nancy Pelosi do not bear the cost of the bribe, taxpayers do.

It is totally clear to me that Obama and Pelosi will spend any amount of money to pass their key legislative initiatives.  In the case of Waxman-Markey, the marginal price per vote turned out to be about $3.5 billion.  But they didn't even blink at paying this.  That is why I fear that some horrible form of health care "reform" may actually pass.  If it does, the marginal cost per vote may be higher, but I don't think our leaders care.

Apparently in the future I will have two health plan choices -- my current plan or the government plan.  And the only reason I will be able to keep my current plan is that is will be grandfathered in.  A few years ago I switched plans, to get one with a better price and mix of benefits for my family.  I will never be allowed to do this again under the new health care bill:

It didn't take long to run into an "uh-oh" moment when reading the House's "health care for all Americans" bill. Right there on Page 16 is a provision making individual private medical insurance illegal.

When we first saw the paragraph Tuesday, just after the 1,018-page document was released, we thought we surely must be misreading it. So we sought help from the House Ways and Means Committee.

It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of "Protecting The Choice To Keep Current Coverage," the "Limitation On New Enrollment" section of the bill clearly states:

"Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day" of the year the legislation becomes law.

So we can all keep our coverage, just as promised "” with, of course, exceptions: Those who currently have private individual coverage won't be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers....

Wow, even for this cynical libertarian, this is a new low of technically complying with a promise while in substance completely violating the spirit of that promise.

By the way, how long will my current insurer even be able to offer me my plan given that it cannot generate any new business  (I use Assurant, who specializes in individual policies for self-employed people like myself).

This is a great example of what I have been saying all along - regulation always helps large companies more than small.   Everything in this legislation is tailor-made to help large companies who already have health plans and pound small companies and the self-employed.  This is in part because the large companies have the lobbying muscle to get themselves a seat at the table as the bill is crafted.   But it is more than just neglect, it is an outright attack.  Large companies most fear competition from smaller, lower cost competitors.  Anything to make the life of small business more expensive and difficult helps cement the big guys market position.

Update: Here is a scary thought -- what will it do to entrepeneurship in this country when a decision to leave a large company and go into business for oneself bascially means giving up private health insurance and going on Medicare?

Update #2: For readers, as well as a place for me to find it in the future, here is a link to all 1000+ pages of the bill.  Enjoy.

Several new drugs have reversed my mom's macular degeneration, and are such a wonder that she is even willing to tolerate frequent injections into her eyeball, a concept that gives the rest of our family the willies.  Forget about it in England, though, where National Institute for Health and Clinical Excellence (NICE), which Obama wants to emulate in the US, does not allow these drugs:

3. In 2007, NICE restricted access to two drugs for macular degeneration, a cause of blindness. The drug Macugen was blocked outright. The other, Lucentis, was limited to a particular category of individuals with the disease, restricting it to about one in five sufferers. Even then, the drug was only approved for use in one eye, meaning those lucky enough to get it would still go blind in the other.

And by the way, is NICE an Orwellian name or what?

Postscript: Fortunately, we are unlikely to have a system that bans Americans from spending their own money on things the plan will not buy  (a bit of socialist egalitarianism that is practiced in a number of European countries).  Not for lack of trying by many Democrats, however.

From Kevin Drum today on health care:

But here's the tidbit that caught my eye:

A fascinating series of pilot programs, including for prostate cancer, has shown that when patients have clinical information about treatments, they often choose a less invasive one. Some come to see that the risks and side effects of more invasive care are not worth the small "” or nonexistent "” benefits. "We want the thing that makes us better," says Dr. Peter B. Bach, a pulmonary specialist at Memorial Sloan-Kettering Cancer Center, "not the thing that is niftier."

When I read about healthcare, pretty much the only thing I hear is that everyone wants infinite amounts of it.  And they always want the latest and greatest stuff.

Not me.  My motto is, "That healthcare is best that cares the least."  Or something like that.  Basically, I prefer to get the minimum reasonable amount of healthcare possible, and I have a strong preference for the simplest, oldest, best-known treatments.  I'm not exactly a fanatic about this, but generally speaking I think that most new treatments turn out not to be nearly as effective as we think, and the more time you spend around hospitals the better your chances of catastrophe.

Wow, that's amazing!  Its almost as if we shouldn't have one bureaucracy in Washington making health care decisions for everyone!  In fact, there are several things in here that tend to challenge leftish assumptions:

1. Contrary to leftish assumptions, individuals do seem to be grown up enough to make health care tradeoffs for themselves
2. Individuals seem to want to make different cost-benefit-treatment trade offs from each other, belying the notion there is some universal optimum that bureaucrats in Washington are capable of achieving
3. Allowing individuals to actually shop and make price-benefit decisions in health care might actually reduce costs and improve satisfaction (though absolutely no one in DC seems to be proposing a plan along these lines)

Unfortunately, Drum seems to take none of these lessons from his own post.  Here is the conclusion he draws:

But maybe the difference is just information: I read an awful lot about this stuff, and it's convinced me that there dangers to overtreatment just as there are dangers to undertreatment.  Leonhardt's "fascinating series of pilot programs" suggests that with better information, more people might agree.

Creepily, he seems to conclude from all this that if we can just "educate" the public more, they will be more likely to accept the one-size-fits-all treatment constraints to be implemented by Washington.

PS: I am generally with Drum on doing the absolute minimum for run of the mill health problems I encounter.  If I have a cold, for example, I don't start dosing myself with every over the counter drug I can find.  And our family tries very hard not to use antibiotics unless the condition is really serious.

But my sense is that my attitude will change a lot if the "C" word ever comes into play.  Cancers are much more solveable early than late, and my tendency would be to hit the crap out of it early with  as much of the arsenal as I could.  I don't know what Drum's personal medical history is, but my sense is that it is unwise to extrapolate linearly one's treatment preferences from colds to cancer.

Most all the world pays a marginal cost for drugs, medical devices, and procedures that does not come close to repaying the development effort that went into those products.  Further, most of the world has regimented medical systems that have very strong immune systems against any sort of innovation.

As a result, almost all medical innovation occurs and is paid for in the United States, with the rest of the world acting as a free rider.  Sure, some Swiss or Japanese firms still develop a few drugs, but most of those efforts are still justified by profits in the US market.

To this end, Megan McArdle had my favorite quote of the day:

we're still driving quite a bit of product innovation.  Our messy, organic, wasteful, unfair, irrational system allows experimentation, and they [Europeans] cherry pick the best results.  If we stopped doing this, their system would stop looking so good.

This is not to mention that the US tends to act as the capacity of last resort for desperate people in other countries who either can no longer tolerate the wait for a procedure or are not allowed by their country to have a certain procedure or drug.

Bruce McQuain has a really good post debunking the meme that Medicare overhead costs are lower than those of private insurers.  You should read the whole post, but the short answer is:

• Medicare participants are older and less healthy than those insured privately, so the denominator for their overhead ratio is much higher
• Comparing overhead costs per plan participant, Medicare costs are higher than private
• The comparison is apples and oranges, because private firms pay account differently than does the government
• Lower Medicare overhead has tradeoffs, as it lets fraud through which is not counted as a cost

I can't add to Bruce's post, except to say that as someone in the business of trying to privatize government functions, we see the apples and oranges problem all the time.  I am constantly having cost discussions with government bodies, and they frequently leave out most of the following when they compute their costs:

• Insurance  (e.g. liability, property).  They say the government is self-insured, but the government does not charge its divisions any cost for this implicit guarantee.  I have to pay real money for it.
• State / local taxes.  Private companies have to collect and pay many state and local sales, excise, and property taxes that the feds do not pay.
• Pensions / retirement benefits.  The government grants fat pensions and retirement medical benefits to its employees but does not accrue or put any funds away in the present to pay for these.  Private companies do  (and in fact would go to jail for not doing so).
• Capital spending and rent.  This varies by entity, but most government bodies do not see full depreciation of the capital assets they are using in their budgets.  Ditto for the value of the space they are occupying - they often get valuable space rent and/or depreciation free.
• Services from other government divisions.  Sometimes transfer prices are charged, and sometimes they are even close to market rates, but most times they are not

I have suspected that this was coming, but I guess I have just buried my head in the sand, knowing that I would be taking a complete screwing and not wishing to contemplate it.

Sens. Edward Kennedy, D-Mass., and Chris Dodd, D-Conn., say their plan would preserve employer-sponsored insurance coverage and create an affordable public option for those who need it....

The bill includes a "pay or play" provision that would require employers to provide adequate coverage for their workers or subsidize a system that will.

"Pay or play" would require companies to pay the government $750 per full-time worker per year ($375 for part-timers) if they don't offer health coverage, or if they offer "qualified" coverage but pay less than 60% of workers' premiums. Small businesses that employ fewer than 25 workers would be exempt.   (Via Q&O)

I run a recreation business with about 500 part-time, seasonal employees.  Most of them work for the equivilent of about 1/4 of a year, or about 500 hours.  Almost all are over 70, and already on Medicare and Social Security, so we have no health plan  (no way to get a reasonable plan anyway for a bunch of 70 year olds).

Adding up the numbers, this turns into $187,500 bill I would have to pay to the government for not providing health care to people who already mostly have health care.  I will pay 1/2 the full time rate despite my employees working far less than 1/2 of the year.

One thing you can be sure of -- this may be the final death of my current human resources model.  We typically hire more people, working fewer than 40 hours, because retired folks don't generally want to (or can't) work a full week.   That's been OK, because 4 people working 10 hours a week has always cost me the same as 1 person working 40 hours.   But if I am getting charged $375 per worker whether she/he works 1 hour or 1000, you can bet I am going to hire fewer workers for longer hours.  There are probably a myriad of other implicaitons for my business model,  I just have not yet thought it through.

The disconnect between the person purchasing and paying for the service and the person receiving the service.  This causes the most friction that piss people off (either against their insurance company or the government for not paying for something or limiting their flexibility).  But is also tends to drive costs up, as people who are ultimately driving most of the health care choices have zero interest in how much it costs.  Via John Stossel (and the Goldwater Institute)

I wrote more on this issue here.

It is often said that one of the "problems" with American health care is that we spend far more on health care as a percent of GDP than other nations.  But why is this necessarily a problem?

The US is the wealthiest nation on Earth, top to bottom.  At every level of society, except perhaps for a few recent immigrants, people in this country are wealthier than their peers in a similar income quintile in another country, even Europe.  So it is not surprising that basic needs, like food and housing, might represent a smaller percentage of GDP here than in other nations.  Despite all the efforts of McDonalds and the Country Buffet to change things, there is only so much food we can consume, only so much living space we need, only so many cars we can drive at one time.

As these basics fall as a percentage of our income, something must gain.  It could be savings, but it could also be other spending where incremental outlays return percieved incremental benefits.  And so, why not health care?  What could possibly be more important than extension of our lives and/or the improvement of the quality of our living?  If we as a nation choose to spend our extra wealth on such things, is this really a bug, or a feature?

Update: Yes, I know, the problem is that we aren't really always able to make this decision as individuals optimizing our own tradeoffs.  We are too often forced to accept someone else's tradeoff.  Unfortunately, this problem is only going to get worse under any plan Congress is currently considering.  Someone else who is not you and doesn't even know you will decide how much a procedure is worth for you.

The largest government medical insurance program, Medicare, is threatening to nearly bankrupt the federal government with its rising costs that no one in 30 years has figured out how to manage, short of attempts at price controls (controls which are driving doctors out of the business).  Treat with extreme skepticism mystery double-secret methodologies that the Obama administration promises will cut costs 30% when no such savings have ever been achieved in Medicare.

The largest government run medical care organization, the VA, apparently provides awful service and is rife with fraud and errors due to poor accountability.

So, despite 89% of Americans reporting themselves satisfied with their medical care (one of the highest approval ratings for ... anything I have seen out of a poll) we are going to replace our current system with one run by the government.

Outstanding.

Postscript: You will often get quoted enormous numbers (often as high as 47 million) for the uninsured.  This seems to be the driving force behind the felt need for health care change.  But when someone quotes this number to you, ask for the number excluding a) college students; b) people who make over $50,000 a year who could presumably pay for their own coverage; c) illegal immigrants;  d) people transitioning between jobs and e) people already eligible for Medicare/Medicaid but don't bother to sign up until they are actually sick.  You will get a number a LOT lower, closer to 10-15 million.

If we need to do something more to help 10 million or so poor people, then lets help 10 million or so poor people.  Let's not screw up what exists for the other 290 million or so people in this country.  As I wrote before

But health care is different.  The author above is probably correct that some crappy level of terribly run state health care will probably be an improvement for some of the poor.  But what is different about many of the health care proposals on the table is that everyone, not just the poor will get this same crappy level of treatment.  It would be like a public housing program where everyone's house is torn down and every single person must move into public housing. That is universal state-run health care. Ten percent of America gets pulled up, 90% of America gets pulled down, possibly way down.

Health care reform by hatchet, axe, and saw*.

Update: From Doug Ross

The Kaiser Family Foundation, a liberal non-profit frequently quoted by the media, puts the number of uninsured Americans who do not qualify for current government programs and make less than $50,000 a year between 13.9 million and 8.2 million. That is a much smaller figure than the media report and is also subject to "the 45% rule", wherein that percentage will transition to new jobs within a four-month time-frame.

This is from Tori Barnett on John Stossel's blog (Stossel being yet another member of the powerful Princeton Tower Club libertarian blogging set):

As we approach ABC's Wednesday White House Health Care town meeting, I'm thinking more about how health insurance"”private or government run"”destroys the individual's incentive to shop around. People spending their own money and dealing directly with doctors is the only thing that honors individuals' different preferences and controls costs.  How can we hold costs down at all if the market isn't allowed to work?

But few people are talking about that.

The pundits write about the popularity of Medicare.  Of course it's popular.  People love getting free stuff.  But Medicare is on an unsustainable path. It is more than 30 trillion dollars in the red!

As I wrote previously:

Take purchasing a car.  When I need a new car, who determines what car I end up with?   Why, I do.  And who pays for the car and shops around for a price that makes sense in the context of the perceived value of the car?  Why, I do again.  The person who uses the car, the person who chooses the type and quality of the car, and the person who pays for the car are all the same person.

This clever procurement model of integrating the payer, the shopper, and the user all into a single individual is one we use for, well, just about every product and service we buy.  Milk, Internet service, DVD's, house painting, airline tickets "” all the same model.

OK, lets consider a model that does not work this way.  Let's say someone just rear-ended your car and, miracle of miracles, they actually have a good, solid insurance policy that owes you for your car repairs.  In this case, you will be consuming the repair services, and have the incentive to find the absolute best, cost-no-object body shop you can find to do the best, most fabulous job fixing your car, because someone else (ie the insurance company) is paying.  The insurance company has a different incentive.  They want to get off with as small a loss as possible, to protect their profitability as well as keeping prices low for future policy-holders.  They are going to want you car fixed cheap, particularly since you are probably not even their customer.  They are going to try to deliver the minimum.

No surprisingly, people tend to get ticked off in these situations, as they grind against the opposing incentives of the insurance company.  It's one reason that the insurance field is highly regulated (because nowadays people complain to their Congressman whenever they get irritated).  It's also a measure of how ineffective regulation is in really managing this friction, since despite zillions of government rules people still get pissed off.  The reason is that there is simply no good solution.   Both parties want a solution at the extreme end of a cost-value scale, neither have much of an incentive to compromise, and neither will be happy with a solution in the middle of these extreme incentives, and no amount of government fiddling with the tradeoff point is going to change this.

OK, but in this example, at the end of the day, it is just a car, and probably this is a once-in-a-lifetime event.  What if we replace "car" with "baby daughter" or "grandmother" or "your life?"  Now, as Bill Murray says, the kidding around is pretty much over.  It is a recipe for an incendiary disaster.  Which is exactly what we have in health care.

If we take these three roles - user, service quality specifyer, and payer/price shopper - there are very few places in medicine today where these three roles are united.  Further, despite the fact that the vast majority of the problems in US health care are demonstrably from this role separation, none of the plans currently being considered by Obama or Congress unify these three parties.

With my high deductible medical policy, I am actually one of the few middle/upper class folks who actually shops for health care.  And I can tell I am in the minority by the reaction I get from doctors and medical services companies, that look at me like I am from Mars when I ask for detailed pricing, or when I order less than the full and complete battery of potential tests and services based on my own judgment and price/value trade offs.  Folks in the medical profession are used to people saying "whatever, the insurance company is paying for it."

The post went on to show data for medical care expenses NOT generally covered by insurance, so that they are paid out of pocket.  Not surprisingly, these expenses are the only part of health care seeing actual real price drops:

We all know the problem with oil companies:  They restrict supply to drive up prices to earn profit margins that are nearly a third of those earned by Microsoft while simultaneously keeping prices too low and promoting addiction to oil which produces a lot of CO2 and they never want to reinvest their profits in exploring for new oil so the government needs to restrict drilling in every major prospective US region so the oil companies will be stopped from greedily drilling everywhere and destroying the environment.

Barack Obama seems to be bringing this damned-if-you-do-damned-if-you-don't criticism to the medical industry, and particularly doctors.

On the one hand, he told doctors at the AMA convention yesterday that he was not a fan of tort reform and felt that limits on malpractice cases was a disservice to those who were truly injured.

On the other hand he made this case:

Not long ago, doctors' decisions were rarely questioned. Now they are being blamed for a big part of the wasteful spending in the nation's $2.5 trillion health care system. Studies have shown that as much as 30 cents of the U.S. health care dollar may be going for tests and procedures that are of little or no value to patients.

The Obama administration has cited such findings as evidence that the system is broken. Since doctors are the ones responsible for ordering tests and procedures, health care costs cannot be brought under control unless they change their decision-making habits.

On the third hand, doctors aren't spending enough to address preventable errors:

President Obama himself in his speech cited the "100,000 deaths a year" figure as if it's reliable and well established, as did yesterday's New York Times. And of course it's a figure eagerly spread by the Litigation Lobby. But as Zachary F. Meisel and Jesse M. Pines note in Slate, it's a really, really, really soft number:

...one of the biggest headlines of all was the 1999 Institute of Medicine report To Err Is Human, which announced that up to 98,000 preventable deaths occur each year in U.S. hospitals. Since then, health care improvement organizations such as Leapfrog Group have invested copious resources in reducing preventable errors. But a key issue has been overlooked in this movement: The original estimate -- the 98,000 deaths -- may have been way off. In fact, some of the researchers who conducted the original studies used in the IOM report re-evaluated their data in 2002 and reported that had they used a different calculation method, the number of estimated deaths would have been less than 10 percent of the original. Oops.

Greg Mankiw writes about a Paul Krugman article on "the public option," a plan in Congress to provide a federal health insurance plan to compete with private plans and "keep them honest"**

It seems to me that [Krugman] leaves out the answer to the key question: Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what's the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company. The fundamental viability of the enterprise does not depend on whether the employees are called "nonprofit administrators" or "civil servants."  (via Q&O)

But I think we already know the answer to this question.   If Obama and the Democratic Congress is willing to pour a hundred billion dollars or more down the Chrysler and GM rat holes, they certainly are going to pony up far more to support a program so near and dear to their heart for so many years.

There is simply not some magic, easy to access pool of savings in health care available to government managers that will reduce costs 30% or pay for increases in benefits.  If there were, Medicare should have already captured them.

** This is always hilarious to see, as if health insurers make some kind of inordinate profits.  As shown before, the typical after-tax profit at health care companies and insurers is something like 3-4% of revenues.

Virginia Postrel has what seems to be a perfectly reasonable suggestion:

Think about this for a moment. Medicare is a huge, single-payer, government-run program. It ought to provide the perfect environment for experimentation. If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what "better management" looks like applied to Medicare before we roll it out to the rest of the country.

This is not a completely cynical suggestion. Medicare is, for instance, a logical place to start to design better electronic records systems and the incentives to use them. But you do have to wonder why a report that claims that Medicare is wasting 30 percent of its spending thinks it's making a case for making the rest of the health care system more like Medicare.

Of course, I think both Obama and Congress know that either 1) such savings are impossible and/or 2) such savings would require steps painful enough to have millions of users squealing.

Via Maggies Farm, Dr. Melissa Clouthier:

y biggest concern with Government Run health care is that the government will run it and run you. That is, your life will be controlled from cradle to grave. You will eat a certain way"¦or else. You will do certain things"¦or else. And the government will have every motivation to force you down a path.

Ultimately, this is a civil liberties issue. Some people say that not having health care for all is shameful in such a wealthy country. Shameful is the notion of a bureaucrat deciding whether you live or die based on the metrics of a chart. That's shameful. And that would be our future. It is a future I don't want to see.

Just look at the big government, totalitarian groups that are for this mess. It should give you an idea of what you'd have to look forward to in the future.

Yep.  It is still amazing to me that the National Organization for Women, who have built 80% of their history on "Keep the government out of my body" is a huge supporter of national health care.

TJIC described the problem well:

The art of socializing everything under the sun, in four steps:

1. For no reason at all, have the taxpayers deal with situation X.
2. Declare that people who create situation X are imposing a negative externality on others.
3. Tax and spend even more on cleaning up mess X, and make it illegal to create situation X, or put high taxes on X.
4. Create winners and losers. Winners (those collecting tax dollars to clean up mess X) donate to politicians to keep the gravy flowing. Losers (those paying taxes and getting penalized) donate to politicians to lighten the yoke.

One example of application of this approach:

Old school:

1. Some people overeat and get fat. Some of these people have heart attacks. No problem.

New school:

1. Decide that taxpayers will pay for socialized health care.
2. Declare that people who overeat are enemies of the state.
3. Tax affordable, healthy-in-moderation food that does not appeal to NPR listeners.
4. Collect the campaign donations.

I have written a zillion times that government licensing programs tend to be incumbent protection from competition for the licensees, rather than any real benefit to consumers.  This is particularly true in health care.

Why does a person need to go to school and residency for a decade to put three stitches in a kid's cut?  Why do I have to go to a full dentist's office to get my teeth cleaned?  Why does someone have to go to school for years to tell me my contact lens strength needs to be incremented by another 0.5, when I already knew that and could have just ordered them myself?  The reason is licensing, and it both increases prices by limiting the number of providers and by forcing me to see someone who is often wildly overqualified to handle my problem.

My sense is that this over-licensing for routine functions in medicine is the second largest contributor to costs (the first is the elimination of price-shopping by  making the payor for the services different from the person who receives the services).  But don't expect the government, long in thrall to the AMA, to do anything about this in any health care "reform":

bills and amendments died during the Texas legislative session that would have allowed advanced practice nurses to diagnose and to prescribe for common, minor illness and injures without doctor supervision.

You can blame Texas doctors.

Despite better protections from malpractice lawsuits and lower malpractice premiums, Texas has a doctor shortage. Nevertheless, the Texas Medical Association took every step to ensure physicians will have a tight rein on the activities of well-trained nurses.

The barrier against nurses will continue to keep low-fee retail health clinics, such as those operated by Walgreen and CVS drug store chains, from expanding in Texas. The state law requiring doctor supervision adds too much cost to the clinics.

Texas has only about 85 of the 1,200 retail health clinics in the nation. San Antonio does not have a single one. The clinics are popular wherever they exist because nurse practitioners can treat common ailments and minor injuries with little waiting time and fees that average about $60, much less than emergency rooms. The clinics operate evenings and weekends and accept insurance plans.

The clinics would represent real health care reform, especially in Texas. Most of the state, 179 counties out of 254, is classified as medically underserved. Among them are 45 metropolitan counties, including Bexar.  (hat tip:  Carpe Diem)

Postscript: But Coyote, how can you possibly be against licensing of doctors?  You wouldn't want just anyone doing open heart surgery on you, would you?

No, I wouldn't, but while AMA licensing is overkill for putting in stitches, it falls short of what I would want for heart surgery, or oncology, or major plastic surgery.  I would not just accept any licensed doctor to do these things - I would do research and get referrals.  I would enforce a higher standard.  And this is why broad licensing is so un-helpful.  It is overkill for certain procedures, but falls short for others.  I guess their may be a Goldilocks application for current licensing (maybe for my GP?) but that is almost an accident.

I don't oppose third party certifications per se.  I think that in a free society, many groups, such as the AMA (or consumers reports, or the UL, or whoever) could act as certification or review bodies for different medical practices.  And I would very likely as a consumer find such an organization I trust and insist the providers I used for certain procedures be minimally approved by this group.

Via Jacob Sullum:

Today President Obama appointed Thomas Frieden, New York City's crusading health commissioner, as head of the Centers for Disease Control and Prevention. Frieden, an infectious disease specialist who is known mainly as an enthusiastic advocate of New York's strict smoking ban, heavy cigarette taxes, trans fat ban, and mandatory calorie counts on restaurant menu boards, embodies the CDC's shift from illnesses caused by microbes to illnesses caused by lifestyle choices.

Explanation of the health care Trojan Horse here.  More articles here.

I have warned for years about government health care being a Trojan horse for government micro-management of personal behaviors.  If government is paying the health care bills, then anything individual action or choice that can conceivably be linked to health are open to regulation.  The latest episode:

Note in particular their emphasis on "health-related excise taxes." Those discussions are happening in Congress and the administration, too. It's really looking like tobacco, alcohol, and sugared sodas are likely to get a bit more expensive after health reform. Polling around these policies is proving them more popular than most wonks expected, and they have the secondary benefit of being dual-purpose: They raise money and make Americans healthier.

The fascism of good intentions is on its way.

OK, I am an engineer-geek but I think the video below, of a ship leaving the Houston Ship Channel at night, taken with time lapse photography, is really cool.  If your eyes are sharp, you can catch the San Jacinto monument on the right (which Texans went out of their way to make taller than the Washington Monument) and the refinery where I once worked on the left, just before the third bridge (the only suspension bridge).  Via Tom Kirkendall.

I had the sound off when I watched it.  I can do without the techno-jazz soundtrack, but ymmv.  I will confess parts of it look like a scene from Blade Runner.

Apparently, the Obama administration is worried about the shortage of GP physicians.  Personally, I think anything we do within the present framework, or more onerous government interventionist approaches likely to be proposed by Obama, will fail at reversing this problem.  If plumbers were not allowed to contract directly for price and scope of service with individual homeowners they serve, and were forced instead to fill out 23 yards of paperwork just to get paid rates that were set by government bureaucrats, subject to thousands of pages of regulations any one of which could cause his payment request to get rejected, we would have a shortage of plumbers too.

However, since no one in Washington currently seems to be in the mood topromote commercial relationships in medicine that mirror how we contract for every other product and service, I guess we can nibble at the edges of the problem.  David Bernstein suggests:

I have yet to see in any of these articles one simple reform proposed: abolish the requirement of an undergraduate degree before attending medical school, and turn medical school into a five or six-year post-high school program instead. This would eliminate two or three years of debt, and, perhaps even more important, the opportunity costs of two or three years of college. Right now, an aspiring physician must go to college for four years (and take many classes that have nothing to do with his future career), then medical school for four years, and then typically do a poorly paid internship and then residency for another five years. By the time this aspiring physician goes into practice, he will be at least thirty-one years old, and have eight years of student loan debt.

I have a better solution.  Why do we have a one-size-fits-every-corner-of-the-medical-field education and licensing at all?  Why do I need to pay for someone with 8 years of college and five years of residency to put three stitches in my kids' cut?  Or to write a Viagra scrip?  In dentistry, why do oral hygienists all seem to be in dentists' offices?  Why do I need to pay the overhead of a dentist to get my teeth cleaned?

We shouldn't really be surprised, I guess, about this licensing approach -- when the government turns over the licensing board to the incumbents of the industry being licensed, they have every incentive to choke off supply and to kill any initiative that might create low-cost competition for themselves.

So the licensing system that is all or nothing -- you are either a full-fledged medical doctor that can handle anything, or someone who is allowed to handle nothing.  This is reinforced by the payment system we have, where people do not bear the marginal cost of the services they consume.  So, since every office visit costs them the same (zero or a fixed copay), they might as well ask for the most experienced and over-educated guy they can find -- it's not costing them any extra.

Well, this is true for most people.  I have a high-deductible health insurance policy, and we often consider the price of different alternatives. Here is an example.  I am a healthy person, but still go in for a physical each year.  Nothing complicated happens in these visits.  Surely there could be some kind of less-trained traige MD who could conduct such screenings, passing folks on to the full-fledged doctors if anything unusual pops up.  If you told me that I could be seen by such a person for $100 or a full MD for $300, I would certainly consider it, particularly since the triage guy's schedule probably runs smoother as he doesn't get bogged down with the unexpected -- he just passes those folks on.

From Mickey Kaus:

Democratic blogger Ezra Klein appears to be positioning Dem health care reforms as a way to cut costs, on the grounds that a reformed system will be able to make "hard choices" and "rational" coverage decisions, by which Klein seems to mean "not providing" treatments that are unproven or too expensive--when "a person's life, or health, is not worth the price." Matthew Yglesias' recent post seems to be saying the same thing, though clarity isn't its strong suit. (He must have left it on Journolist.)

...

The "rational," cost-cutting, "hard-choices" pitch isn't just awful marketing--I don't even think it's accurate. Put it this way: I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life.  But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me.

He comes oh-so-close to getting it right, but then falls short.

Klein is right that the pressure will be to ration care -- we already see such rationing being seriously considered in Massachusetts (the model of choice for Democrats) under the weight of massive expenditures.

But Kaus is correct that if some high-powered and well-funded interest group gets behind a certain procedure, cost-effective or not, the government overlords of the program will likely approve it.   As a result, for example, no potential treatment for breast cancer will ever be denied given the proven strength of women's groups lobbying for breast cancer treatment (already, breast cancer research is hugely over-funded vs. other diseases given its mortality, due in large part to this powerful lobbying).

But it is not one dynamic or the other.  Both will exist.  There will be huge pressures to cut back somewhere, as costs skyrocket.  And there will be huge pressure from certain interest groups to fund treatment for certain diseases in unlimited amounts.  The result will not be, as Kaus posits,  that everything will be funded more than it is today -- the result will be that certain procedures and conditions with strong lobbying and political muscle will get funded more, with the difference being made up from cutting funding for conditions and procedures without a well-organized lobby.

Access to care will no longer be determined by money, but by political pull.  (Yeah, I know, it's Ayn Rand's world and we all just live in it).