Coyote Blog

The best answer, of course, as to why single-payer is bad is that the single-payer will not be me, and therefore will not make trade offs about my health, money, time, etc. in the same way I would.  One of the many problems with polling on issues like this is that someone asks a question like "Are you satisfied with your health care" and when XX% of people say "no", the person using the poll goes on to postulate that the people are dissatisfied for Y reason.  But people may be dissatisfied for many reasons.  For example, I know that many people's main source of dissatisfaction is that their current insurance company was callous in rejecting them for so-and-so procedure.  But do they really think the government is going to be less callous?

Unfortunately, this best answer does not seem to be getting anywhere, so I will offer another answer.  Single payer health care will almost certainly lead over time to single provider health care.  What is my evidence?  Well, that is what happened in K-12 education.  And note the very very strong opposition to migrating education from single-provider to single-payer by the exact same people who are the intellectual driving force for some kind of massive new federal intervention in health care.  Kevin Drum and Matthew Yglesias both argue that single payer is inherently unfair.  So get ready, Walter Reed and the Post Office may soon be teaming up to provide your medical care. 

Michael Cannon had this funny reaction to the downward revision, by the Census Beaureu, of the estimated number of Americans without health insurance:

It is important that we not over-react to these numbers. The worst
thing we could do would be to stop panicking about the uninsured. A lot of interest groups have spent a lot of money and misused a lot of data to convince the public that this mostly healthy bunch of people
are America's #1 health care problem. If we were to go off-message now,
then Barack, Hillary, Mitt, Arnold, and all the other Chicken Littles
we've created . . . well, they might get horribly confused. Thank you
for your continued support.

I would add to this:  "And never, ever let anyone question the assumption that 'being uninsured' is the same as 'being without medical care' and never allow anyone to ask whether all of those uninsured are uninsured against their will, rather than by personal choice".

Yesterday, I posited that current proposals for government health care are worse than other welfare programs, because they not only will cost a ton of money, but they will also, unlike say government housing, make my personal health care worse.

I only had to wait one day for an example (actually, I didn't have to wait at all, since I could just mine Europe and Canada for examples).

Massachusetts has now set the minimum level of insurance required to
comply with the state's individual mandate. Not only will every
resident of the state be required to have insurance by July of this
year, but by January of 2009, no one in the state will be allowed to
have insurance with more than a $2,000 deductible or total out of
pocket costs of more than $5,000. In addition, every policy in the
state will be required to cover prescription drugs, a move that could
add 5-15 percent to the cost of insurance plans.

After a lot of study, my family chose a high deductible health plan combined with a medical IRA (they actually call them something else, but I can't remember the abbreviation).  We had a low deductible plan, but ran the numbers, and found we would save tons with a higher deductible plan, particularly if we dumped the savings into the IRA.  We set the deductible at the level of economic pain we thought we could bear in a bad year.  Even if we had a medical disaster once every three years, we would still be ahead with the lower premiums and the IRA-style tax savings.  And if we don't have a disaster that frequently (we never have had even one in our lives) then we will build up some nice savings for retirement.

Of course, this makes too much sense to be legal.  It actually involves individual choice and stuff, and god forbid we be allowed to exercise that.  For our own good, of course.

I was sitting here today, and was trying to discern why the government-run health care issue made me more nervous than other government welfare programs.  I get ticked off, for example, about the horrendous rates of return (think negative interest rates) paid out by Social Security on what are nominally our retirement account premiums.  But I don't get nervous.  Why?

I think because unlike other welfare proposals that [just] cost us a ridiculous amount of money, the current plans for providing universal health care imply that my personal health care and health care options will get much worse.  When government provided housing, my housing did not get worse.  When government provided a ripoff retirement plan, my personal non-government retirement savings did not take a hit.  In all these cases, we paid out tons of money to provide some terrible base-level services for the poor and the true-government-believers in the middle class, but my options did not get worse.

However, in the case of health care, most proposals on the table will very likely result not only in much higher taxes, but also in my personal health care options getting worse.  The government will not want to provide multiple levels of service, and can't afford anything beyond "crappy", so as a result we will all end up with crappy service (Insert Rush song "trees" here).  A lot of crap is written about how great all these other socialized medicine services are, but thousands of people travel from other countries to have medical procedures in the states, and about zero travel the other way.  More on the topic of closing coverage gaps at the price of making your own personal care worse here.  More on why these gaps are not as large as advertised here.

Update:  Quick proof -- My chosen health plan is now illegal in Massachussetts

I am always floored by the number of progressives who embrace all kinds of wacky non-scientific health theories.  These are the same folks who criticize creationists as being anti-scientific.  I am not a creationist, but I might be able to embrace it faster than I could, say, the insanity that is homeopathic medicine**. 

Unfortunately, these are the same folks who will likely make up the backbone of the socialized medicine bureaucracy when and if the US finally decides to hand health care over to a consortium of the Post Office and Walther Reed.  So here is a preview of what we will get:

Tom and Donna (not their real names) are professional
shamen. They teach classes in shamanism at a "foundation", where you
can learn "soul retrieval healing", help the dead "continue their
journey into the Hereafter", and investigate "the Fairy Kingdom". These
soul retrievers and Fairy Kingdom investigators also work for the NHS "”
where, according to Tom's foundation profile, they "use complementary
therapies to help those with mental health difficulties". Shaman
therapies are not the only unorthodox treatments for which the NHS will
gladly pay.

Taxpayers are also subsidising Emotional
Freedom Technique (EFT) "therapy", in which, according to one NHS
trust, "subtle energies" are reordered via "tapping with the fingertips
to stimulate certain meridian energy points while the client is "˜tuned
in' to the problem". "¦If EFT doesn't do the job, an NHS foot massage
might help. Reflexologists believe that each part of the foot maps to a
different organ, and that massaging a particular point can treat that
organ. Medical doctors think it's absurd. "¦Most depressing of all for
the rational taxpayer is the NHS Directory for Alternative and
Complementary Medicine, which aims to promote "dowsers", "flower
therapists" and "crystal healers". We've just learnt that some
hospitals are removing every third light bulb to save money, and that
nurses are being paid half the minimum wage "” or being asked to work
for nothing "” at others. That's how bad the financial crisis has
become. Meanwhile, the National Health Service is employing shaman
fairy enthusiasts as psychological counsellors, enthusiastically
providing treatments invented by "an ordained minister and a personal
performance coach" who thinks tapping your body can cure diabetes,
promoting dowsers and crystal healers and spending vast amounts on
therapies that can't be scientifically supported.

Just as with the Walther Reed mess, the left wants to write off this stuff as just bad management, as an exception.  But unfortunately, this is the rule for government management.  It always goes bad.  Mismatched incentives + lack of individual choice + strong unionized bureaucracy most concerned with its own job security + impossibly complex information flows = mess.  Always.  I get very tired of the excuse, as I wrote here, that "if only we were in charge, everything would work great." 

Throughout these years, libertarians like myself argued that there
were at least three problems with all of this technocratic statism:

• You don't have the right to make decisions for other people.
  Period.  No matter how high-minded and idealistic you want to portray
  it, at the end of the day you are proposing to use force to coerce
  another man into doing your will.  You may stop them from using force
  or fraud against others, but an adult may make decisions for
  themselves, even if they are bad.  I am reminded of a great line from
  the HBO show Deadwood, "Can you let me go to hell the way I want to?"

• You can't make better decisions for other people, even if you
  are smarter, because every person has different wants, needs, values,
  etc., and thus make trade-offs differently.  Tedy Bruschi of the
  Patriots is willing to take post-stroke risks by playing pro football again I would never take, but that doesn't mean its a incorrect decision for him.

• Technocratic idealists ALWAYS lose control of the game.  It may
  feel good at first when the trains start running on time, but the
  technocrats are soon swept away by the thugs, and the patina of
  idealism is swept away, and only fascism is left.  Interestingly, the
  technocrats always cry "our only mistake was letting those other guys
  take control".  No, the mistake was accepting the right to use force on
  another man.  Everything after that was inevitable.

Everyone has had a turn running the place (except libertarians, I might observe) and everyone has screwed things up.

** I am amazed I have not posted a rant on homeopathic medicine, but searching through my archives, I don't find anything.  If you don't know, here is the fast answer why homeopathy is silly.  Advocates of homeopathy argue that they can make certain substances more effective by diluting them, and the more they dilute them, the more effective they are.  Go to one of their web sites, and you will see dilution rations that translate into having less than one molecule of the active ingredient in a mass of water the volume of all the world's oceans.  Advocates argue that even though the molecules are gone, some sort of resonance remains.  Uhh, right.

Kevin Drum, six months ago:

THE BEST CARE ANYWHERE....Thanks to innovations introduced
during Bill Clinton's administration, VA healthcare is now among the
nation's best. It's cheaper than either private healthcare or Medicare,
the quality is top notch, and it operates according to strict
performance standards. Sounds like a great model, doesn't it?

That quality government management and incentives system will do it every time.

Folks on the left are already gearing up to blame the current Walter Reed mess on the current administration, thus scoring points off Bush (fine with me) while not having to question the inherently poor quality of government-managed health care systems.

A CBS poll says about 2/3 of Americans think the government should provide health care for all.  Many in the poll think the government would suck at it (about half said the government would do a worse job, and less than a third think it would do a better job). 

Given how important health care is to people, I find it hard to reconcile these two opinions.  If I had to guess, most people who say they are for government health care implicitly imagine a two-tier system, where they would still get the good care they have today, but poor people who people imagine are without care today (actually they tend to be without insurance, not without care) would get a suckier second tier of health care run by the government.

But I don't think this is a realistic view of what they will get with universal health care.  No government-run universal health care system is ever going to be politically stable with two tiers.  You are going to have to end up with a system that some poor people get better care but the rich and middle class end up with a worse system.  That is the reality of every government run health care system in the world.

I would love to see the answer to this poll question:

"Would you support a system of government-run universal health care that guaranteed health care access for all Americans, but would result in you personally getting inferior care than you get today in terms of longer wait times, more limited doctor choices, and with a higher probabilities of the government denying you certain procedures or medicines you have access to today."

Steven Pearlstein has a column on the American health care system based on a recent study by the McKinsey Global Institute.  As Mr. Pearlstein reads it, the problem with the American medical system is all about the profit - it's all about the doctor profit stacked on the drug profit stacked on the insurance profit.  If the government would just take over and get rid of all that profit, the system would run smoothly and be much cheaper.  I am flabbergasted that anyone at Cato would remark on such an article with approval.

First, while I worked at McKinsey & Co, I never worked for the global institute.  However, though I have not yet read the study, it would be unusual to the point of uniqueness if their recommendation for the industry was more government control and less profit motive, but I guess it is possible.  More likely, Mr. Pearlstein is reading the study through his own progressive lens.  Anyway, let me deal with a few parts of the article:

Even after adjusting for wealth, population mix and higher levels of
some diseases, McKinsey calculated that we spend $477 billion a year
more on health care than would be expected if the United States fit the
spending pattern of 13 other advanced countries. That staggering waste
of money works out to 3.6 percent of the nation's entire economic
output, or $1,645 per person, every year.

I will agree that for a variety of reasons, there is a lot of waste in the medical system.  We will get to "why" in a minute.  However, note that the author is taking a leap from "we spend more per capita than Europeans" to "staggering waste."  The US spends more per capita on a lot of things than the Europeans, in large part because we are wealthier (by a lot, and more every day).  One man's waste is another man's preference.  However, I would agree that health care is unique, in that it is the one industry where the decision maker(s) on whether to purchase a service is not the same person who is paying the bills.  I think we will find, though, that I and Mr. Pearlstein differ on who the person should be who should do both simultaneously (I say each person for himself, he says Nancy Pelosi and George Bush for everyone).

But let's get into all that money-grubbing.  Mr. Pearlstein reads the study as saying the problem is all that profit.  Because we have layers of profit in the distribution channel, our health care costs more than it does in Europe, where you have the efficiency [sic!] of government management.  Before we get into detail, I would observe that this fails a pretty basic smell test right off:  Nearly every single product and service we Americans buy, all of which are rife with layers of nasty profits in the supply chain, are cheaper than their counterpart services and products in Europe.  If this layering of profit without government management is a problem, why is it only a problem in health care but not a problem in thousands of other industries.  But anyway, to details:

Let's start with one the American Medical Association hopes no one
will notice, which is that American doctors make a lot more money than
doctors elsewhere -- roughly twice as much. The average incomes of
$274,000 for specialists and $173,000 for general practitioners are,
respectively, 6.6 and 4.2 times those of the average patient. The rate
in the other countries is 4 and 3.2.

According to McKinsey, the
difference works out to $58 billion a year. What drives it is not how
much doctors charge per procedure, but how many procedures they perform
and how many patients they see -- a volume of business 60 percent
higher here than elsewhere.

Ooh, those greedy doctors.  They are the problem!  But read carefully, especially the last sentence.  He makes clear doctors in the US are not making more because they charge more, they make more because they see more patients --- ie, they work harder than their European counterparts.  Where have I heard this before?  Again, in every other industry you can name, the fact that our workers work harder than their European counterparts is a good thing, leading to lower costs and higher productivity.  So why is it suddenly bad in medicine?  For this I would instead draw the conclusion that their are perhaps too many procedures (an expected outcome of the screwy incentives in the system) and thus too many doctors.  Doctors, whom Mr. Pearlstein paints as enemy number one in the health care system, are actually its greatest asset, being 60% more productive than their European counterparts, certainly something to build on.

Don't be distracted by arguments that American doctors need to make
more because they have to pay $20 billion a year in malpractice
insurance premiums forced on them by a hostile legal system, or an
equal amount for all the paperwork required by our private insurance
system. The $58 billion in what the study defines as excess physician
income is calculated after those expenses are paid.

Walter Olson, are you listening?  Since Walter is not here, I will say it for him.  Malpractice insurance premiums themselves are only a part of the cost of runaway malpractice.  Defensive medicine, including the overuse of tests, is another big cost.  Malpractice is one big reason doctors prescribe so many more tests and procedures than their European peers.

Proponents of a government-run "single-payer" system will certainly
home in on the $84 billion a year that McKinsey found that Americans
spend to administer the private sector portion of its health system --
a cost that national health plans largely avoid. But as long as
Americans continue to reject a government-run health system, a private
system will require something close to the $30 billion a year in
after-tax profits earned by health insurance companies. What may not be
necessary, McKinsey suggests, is the $32 billion that the industry
spends each year on marketing and figuring out the premium for each
individual or group customer in each state. Insurance-market reform
could eliminate much of that expense.

What freaking planet does this guy live on?  Does he really think administrative costs are going to go down in a single payer system?  That's insane.  I am willing to believe that the number of procedures will go way down, as Congress starts to ration care in favor of building bridges for their constituents  (a savings likely offset as America's world-leading doctor productivity discussed above takes a nosedive).  Does he really think that administrative costs will go down?  Most administrative costs today are for satisfying government paperwork requirements - how is having the government run everything going to reduce these?   I would argue exactly the opposite -- that eliminating government from the equation would reduce private administrative costs substantially.

I won't bore you with any more, but he doesn't miss the chance to blame health care costs on drug and hospital company profits as well.  Just for entertainment value, I urge the reader to look up a few P&L's of some of these companies.  The profit as a percent of sales for Humana is 2.3% of sales.  So if you wiped out all that egregious profit at Humana, you would save all its customers a whopping 2.3% (before, of course, the incentives problems take over and costs bloat for the lack of a profit incentive to manage them). Insurer CIGNA's profit is a bit under 10%.   Merck's profit is a more comfortable 19% of sales, which means that by cutting their profit to zero we could get nearly a 20% discount on drugs.  Of course, new drug development would cease, but the AARP doesn't care about drugs that won't be on the market after their current constituency is dead.

Isn't it more reasonable, as I am sure the McKinsey study actually concludes, that the problem is not in companies making profits or doctors working hard, it is in having a health care system, built the way it is through distortive tax law, that gives neither patient nor doctor any reason to consider costs when deciding on care?  Can you imagine such a screwed up system in any other industry?  How inefficient would retail be in the US, for example, if we all had a "shopping policy" that paid for all our purchases.  Would you give a crap about the price of anything?  Would you hesitate one second buying something you may not need but is covered by your "policy"?

Mr. Pearlstein sortof agrees, but its hard to find this incentives point in the middle of all his blame-it-on-the-profits progressive rhetoric.  Here is our one hint that Mr. Pearlstein understands that the true problem is this mismatch between payer and decision-maker.  Unfortunately (emphasis added) he has a really destructive perspective on the issue:

What we have here is pretty good circumstantial evidence of
Pearlstein's First Law of Health Economics, which holds that if you pay
doctors on the basis of how many procedures they do, and you leave it
to doctors and their insured patients to decide how much health care
they get, consumption of health services will rise to whatever level is
necessary for doctors to earn as much as the lawyers who sue them.

Mr. medico-fascist Pearlstein thinks the big system problem is leaving it to you, the patient, to decide what health care you get.  The solution for him is to have the person spending the money, preferably the US Congress, decide how much health care you get.  I think a much saner solution, and the only one consistent with a free society, is to get back to a system where the same person who gets the care, pays for the care.  If its a good enough system for 9,999 things we purchase each year, its good enough for health care too.

Can you imagine any other product or service you buy for which you would have to sign this release, which was part of my health insurance application (emphasis added):

You understand and agree that you are applying for individual health
insurance for you (and your family).  You further understand that this
application for health insurance will be fully medically underwritten
and that coverage is not guaranteed. You are personally paying the
entire premium for this health insurance coverage.  Your employer is
not contributing in any way to the payment of premium, either directly
or indirectly.

Do you agree with these statements?

You mean my company is not paying for my new Taurus?

Via Hit and Run:

As part of their 100 hours, the House plans to pass legislation that
would enable the federal government to negotiate Medicare Part D drug
prices.

My experience is that when the government "negotiates" prices via their standard procurement processes, they end up paying higher prices than a private firm might (see "$6000 hammer").  I am not a very experienced political observer who understands all the insider-speak, so maybe someone out there can tell me.  In this context, does "negotiate" actually mean "use the government's fiat power to demand that prices be set at whatever hell level they want?"

If it is the latter, then does anyone really believe that with populist political pressures, prices are going to be set anywhere near high enough to continue to justify intense drug R&D?  Already most of the world pays just above marginal cost for drugs, such that we in America pay for most all the drug R&D that occurs  (a form of charity we never get credit for).  If the US government "negotiates" US drug prices down to marginal cost, who will be funding the new life extension therapies I will be needing in about 20 years?

Update: One clarification based on the comments.  There is nothing wrong per se with American drug companies selling pharmaceuticals outside the US near marginal cost.  Profit is where you find it.  However, the issue is that US politicians tend to use these international drug prices as a benchmark, as in "US customers should get the same low price foreigners are getting."  The result is all the drug re-importation battles we have from time to time.  (By the way, its funny that politicians who support drug re-importation to reduce the US drug price differential vs. other countries never seem to apply the same solution to the entirely parallel situation of other countries having much lower labor costs than ours -- in fact in these cases they actively resist labor re-importation, which we also call immigration or outsourcing.)

A second point I want to make is that we cannot say for certain whether US customers are getting a good value or a bad value at current drug prices, though both supporters and opponents of the current health care system try to draw conclusions about the "fairness" of drug prices.  This is an odd situation to be in.  In other situations when people challenge the "fairness" of pricing, say gasoline prices, we libertarians can always retort "Well, buyers and suppliers both agreed to the transaction at X price, so X price was fair for both."   

But we can't do this with drug prices.  The reason we can't determine whether individuals are getting a good value is that, as I wrote at length in this post, our health care system is not structured in a way where individuals make cost-benefit tradeoffs for themselves.  Our employer's insurance company, via their coverage policies, or the US Government, via its rule-making and tort law, make these trade-offs for us.  Some drugs you might never pay for yourself, but you take because your insurance company pays for them.  Some drugs (e.g. Vioxx) you might dearly love to take, but the American litigation mess effectively precludes your access to it.  My suspicion is that, given the value I put on my life, prices for many US drugs are still a bargain for me, but who knows what trade-offs other people would make in a free society?  At the end of the day, we don't know what the real market price for pharmaceuticals is.  All we can say with confidence is that whatever price the government "negotiates," it will most likely be wrong.

Michael Cannon at Cato has an analysis of who will be paying for California's health care free lunch.  If the answer is "not-Californians" and if there is no such thing as a free lunch, guess who?  (Hint: Check mirror).

Perhaps the central touchstone of the women's movement has been the ownership and decision-making for one's own body, starting of course with the freedom to choose an abortion, but extending into a number of other health and sex-related issues. 

What amazes me, though, is how quickly all this is chucked out the window when it comes to having the government take over health care.  Because many of the exact same people who have campaigned for the primacy of a person's decision-making for their own body are also strong supporters of government funded universal health care.  And I can't think of anything less compatible with individual decision-making for one's own body than having the government run health care. 

The demands for universal health care general come from two complaints:

1. Health care is too expensive and is more than I can afford
2. Health care quality is low.  In this category, by far the most common complaint is that "my insurance won't pay for X procedure that I want, or Y level of care, etc."

Neither is a surprising complaint, given how our health care system is currently set up, and both are highly related to one another.  The key problem in the US health care system is that, unlike just about any other product or service you and I purchase, the typical individual is not presented with a cost-quality tradeoff.   Since most of us have a fixed price insurance plan, we couldn't care less how much anything costs, and in fact, like an all-you-can-eat buffet, our incentive is to use as much as possible. 

This puts the insurance companies in the odd position of having to make cost-quality tradeoffs for us, via their coverage and treatment rules.  But when they try to cut costs by narrowing or limiting certain treatments, consumers tend to get the government involved to remove these limitations.  They either do this though legislation (many states now have onerous requirements on what procedures insurance companies must pay for in that state) or through litigation (the threat of lawsuits pushing doctors into expensive defensive medicine, asking that every conceivable test be conducted).  In other words, people take their dissatisfaction with #2 above to the government, who acts, pushing up costs and making problem #1 worse.

Until we find ourselves in a Strossian post-scarcity world, someone is going to have to make this cost-quality tradeoff for our health care.  Even if it is never discussed, this is the most important design factor in any health care system.  There are only three choices:

• Individuals make these choices for themselves, paying for their health care and making their own decisions about whether certain procedures are "worth it".  - OR -
• Insurance companies make these choices for us.  (I am not sure this is even a choice any more, as government micro-management seems to be pushing this de facto into the next choice). - OR -
• The government makes these choices for everyone

So, folks that are pushing for government-funded universal health care are in fact saying "I want the government to take over decision-making for my body."  Yuk!  Where are the feminists when we need them?

Beyond just ceding to the government decisions such as whether its really worth it for dad to get his new hip joint, there is another chilling factor, which I have written about a number of times.  Government health care will act as a Trojan Horse for nanny fascism.  Because, you see, if the government is paying to fix your body, then you can't be trusted to do whatever you want with your body.  By paying for your health care, the government has acquired an ownership interest in your body.  You want that Wendy's cheeseburger?  Sorry, but the government can't allow that if it is paying for your health care.  Likewise, it is not going to allow your kid to play dodge ball at all or to play soccer without a helmet -- can't afford to fix all those broken bones.   And no swing sets or monkey bars either!

Already, when its only affects us as individuals, the government is poking its nose into micro-managing our lives.  Just think what will happen when the government has a financial incentive, in the form of health care costs, to do so!  Eek! In fact, it is already happening:

People who are grossly overweight, who smoke heavily
or drink excessively could be denied surgery or drugs following a
decision by a Government agency yesterday.  The National Institute for Health and Clinical Excellence (Nice) which
advises on the clinical and cost effectiveness of treatments for the
NHS, said that in some cases the "self-inflicted" nature of an illness
should be taken into account.

Or here in the US:

New York City is at the forefront of this new public health movement. In
January, city health officials began
requiring
that medical testing labs report the results of blood sugar tests for all
the city's diabetics directly to the health department. This is first time
that any government has begun tracking people who have a chronic disease.
The New York City Department of Health will analyze the data to identify
those patients who are not adequately controlling their diabetes. They will
then receive letters or phone calls urging them to be more vigilant about
their medications, have more frequent checkups, or change their diet....

So what could be wrong with merely monitoring and reminding people to take
better care of themselves?  New York City Health Commissioner Thomas Friedan
has made it clear that it won't necessarily end there. If nagging is not
sufficient to reduce the health consequences of the disease, other steps
will be taken. Friedan
argues
that "modifications of the physical environment to promote physical
activity, or of the food environment to address obesity, are essential for
chronic disease prevention and control." Friedan envisions regulations for
chronic disease control including "local requirements on food pricing,
advertising, content, and labeling; regulations to facilitate physical
activity, including point-of-service reminders at elevators and safe,
accessible stairwells; tobacco and alcohol taxation and advertising and
sales restrictions; and regulations to ensure a minimal level of clinical
preventive services."

Read that last paragraph.  That's just the starting point for where the government will go when it starts paying for all our health care.

Postscript:   This is a very hard topic to discuss with people, because they are so ingrained with the way the market is set up today.  When I started working for myself, I told my wife that we needed a high-deductible medical plan, to protect us from a health disaster, but we would just self-pay for dental costs.  "What?"  She said.  "You can't pay for your own dental - you need insurance.  We can't go without insurance.  That's all you hear on TV, the problem of not having insurance.  We'll be one of those people!"  I patiently explained that it was almost impossible for us to face a dental problem that would bankrupt us, and that for any conceivable level of dental care, it was cheaper to just pay the bills than get dental insurance.  Eventually, she relented.

We have been paying our own dental bills for years now, and have saved thousands vs. the quotes I got for insurance.  The other day we had an issue that perfectly highlights why 3rd party payer systems cause problems.  My wife chipped a tooth.  She was presented with two choices:  To file it down for nominal cost, or to do a major repair which would cost $500.  She asked me my advice on which to do, and I said "its your mouth.  You know what else we might use $500.  You make the tradeoff."  I am not even sure what decision she made.  It is simply impossible to make this kind of decision for someone else.  Everyone will make it differently.  A government-payer system would only have two options:  1)  don't allow anyone to get the expensive fix or 2)  force taxpayers to pay for everyone to get the expensive fix.  Both solutions are wrong.  Such is the problem with all single-payer systems.

For the lack of a better term, I will call large, old-line union dominated companies "Big Rust Belt."  These are companies that tend to have strong unions and that have compensation packages most new companies eschew (e.g. defined benefit rather than defined contribution pensions).  These companies tend to be experienced rent-seekers, and usually are beneficiaries of protectionist practices.  I generally lump the big 3 auto makers (and much of their supply chain) and integrated steel manufacturers in this description.  Other industries, like traditional airlines (e.g. United but not Southwest) also fit in this description.

Already over the past several years, Big Rust Belt has been getting bailouts of their defined-benefit pension plans.  Going forward, Big Rust Belt is looking for the government to bail them out of their health care obligations as well.  Big Rust Belt began offering health benefits as part of their compensation packages in WWII, when government wage freezes made it difficult to compete for labor, and offering health benefits was a way to evade the wage laws.  Health benefits grew in popularity at a time when it seemed reasonable that your employer might still be alive and employing you forty years from now, and because Congress and the IRS made these plans tax-preferred over cash compensation.  Short-sited corporate executives began offering retirement health care in labor negotiations as a way to reduce cash wage increases, on the theory that cash wages hurt the bottom line now while retiree benefits hit the bottom line, well, on someone else's watch.

Now these health benefits are an albatross around these corporations' collective necks.  Not only are they bankrupting them, but smaller companies who were not so dumb as to make these promises to their employees are out-competing them. 

So Big Rust Belt wants at least three things:

• It wants the government to force its smaller competitors to have to offer the same health insurance it was dumb enough to promise.
• It wants the government to take on a portion of its medical obligations, particularly for retirees
• It wants to government to by law limit the procedures it has to pay for (i.e. ration care), something they have been unable to do in their union negotiations.

And, surprise surprise, given that Big Rust Belt is even better at rent-seeking than it is in running its core businesses, state and federal governments look ready to deliver on all of these.  Each of these is a feature of the governator's new plan, and all are features of various Hillarycare models discussed by Democrats in Congress.  So no one should be surprised when GM CEO Robert Lutz says:

he expects the new Democratic-controlled Congress will be more understanding on health care issues

"More understanding" means "more ready to bail Lutz and GM out of there business problems."  And remember that for Big Rust Belt, universal health care does not mean "great, now everyone can have health care";  it means "great, now we don't have to bother competing with any companies who are smarter about how they have compensated their employees."

Update:  More Big Rust Belt rent-seeking here.

It seems of late that obesity is the new sky-is-falling health care issue I see in papers all the time.  One of the easiest ways to create a "trend" is to steadily change the standards**, which is in fact what has been happening with obesity in the US.  Every year or two, government officials or whoever does this stuff expand the range of weights that constitute "obese".  By doing this, even if the average weights are not changing (and I don't know if they are or are not) you can create a trend in increasing obesity just from changing the standards.  In fact, I argued here:

By the way, I am willing to make a bet with anyone that no where near
40% of our healthcare charges in Arizona are due to obesity.  I am
positive some advocate made up this number, or created it using some
ridiculously broad assumptions, and it has now been swallowed by the
credulous and scientifically-illiterate press. 

Sandy Szwarc who runs the new Junkfood Science blog, writes of a similar effect in hospital statistics.

The HCUP report
is not actually reporting hospital stays of obese people. It is a tally
of the numbers of times "obesity" was checked off on the billing codes
on the hospital records. These codes are currently known as ICD-9
codes, taken from the International Classification of Diseases, Ninth Revision.
This is an enormous, complicated and continually changing system which
gives a number to every disease and medical procedure, and currently
has about 12,000 codes. The medical literature is filled with
documentations of their inaccuracies in reflecting actual patient
disease rates. But over recent years, healthcare providers are being
increasingly educated on using these codes in order to receive
reimbursements ... including coding for obesity. The weight loss and
bariatric industry has been especially intense in marketing the usage of the obesity code, in particular.     

Not surprisingly, more providers are.    

So that 112% increase in hospitalizations for "obesity"since 1996 actually reflects increased usage of
the coding, but whether or not it means there are actually more obese
patients is arguable. But with the heightened stringency and
surveillance by third party payers in compelling providers to
accurately note ICD-9 codes in order to receive reimbursements, the
current figures are certainly more complete than in past years.

She concludes by questioning whether there really is an epidemic of hospital admissions for obesity.  Remember that this is important because it is this obesity epidemic that is used as justification for nanny-state interventions like the NY trans-fat bans as well as potential tobacco-clone litigations against fast food companies. 

This report is being
presented as proof that ""˜obesity' has become a major public health
problem." That was even its opening sentence. But the media's failure
to give us the full story is demonstrated in the most significant fact
in the report: 94.3% of all hospitalizations made no mention of obesity!    

Fat people are not flooding into hospitals with health problems more than anyone else.   

"Obesity" is the primary diagnosis in only 0.4% of all hospitalizations and
virtually all of those (95%) were for bariatric surgery! Not the result
of fat people succumbing to life-threatening health problems, but a
profit-making elective surgery targeting them.

My sense is that the obesity issue is the next phase of what I call the health care trojan horse (and here and here).  This is the practice of using government funded health care expenditures as an excuse to micro-regulate our eating and other personal practices.  As I said then:

When health care is paid for by public funds, politicians only need to
argue that some behavior affects health, and therefore increases the
state's health care costs, to justify regulating the crap out of that
behavior.  Already, states have essentially nationalized the cigarette
industry based on this argument.

** As an aside, a fantastic example of this game is in the movie "An Inconvenient Truth."  The filmmakers try to make the argument that global warming is making weather more volatile.  As "proof", they show the number of reported tornadoes in the US rising dramatically since the 1950's.  But here is the rub:  In the 1950's, we had no good way of detecting smaller class 1 and 2 tornadoes that we now detect using Doppler radar and the like.  This means that we do not necessarily experience more tornadoes, we just can detect more.  In fact, if you look only at larger class 3-5 tornadoes that we could detect through the whole period, the tornado frequency has NOT gone up.  I leave it to the reader to decide if the filmmakers are terrible at interpreting scientific data, or if they are disingenuous.  Neither reflects well on the rest of the film.

Frequent readers will now that I have long warned of government-funded health care acting as a Trojan horse for micro-management of our personal lives, the logic being that if our lifestyles or behaviors make us less healthy, then the government that funds medical care may claim an interest in regulating those behaviors.  I often post examples of this phenomena, the most recent of which is here.

This installment comes via Reason, and looks at the NYC Health Commissioner Thomas Friedan's new fascism to prevent diabetes program.  I am not sure I even need to comment on the following for you to get the picture:

New York City is at the forefront of this new public health movement. In
January, city health officials began
requiring
that medical testing labs report the results of blood sugar tests for all
the city's diabetics directly to the health department. This is first time
that any government has begun tracking people who have a chronic disease.
The New York City Department of Health will analyze the data to identify
those patients who are not adequately controlling their diabetes. They will
then receive letters or phone calls urging them to be more vigilant about
their medications, have more frequent checkups, or change their diet....

So what could be wrong with merely monitoring and reminding people to take
better care of themselves?  New York City Health Commissioner Thomas Friedan
has made it clear that it won't necessarily end there. If nagging is not
sufficient to reduce the health consequences of the disease, other steps
will be taken. Friedan
argues
that "modifications of the physical environment to promote physical
activity, or of the food environment to address obesity, are essential for
chronic disease prevention and control." Friedan envisions regulations for
chronic disease control including "local requirements on food pricing,
advertising, content, and labeling; regulations to facilitate physical
activity, including point-of-service reminders at elevators and safe,
accessible stairwells; tobacco and alcohol taxation and advertising and
sales restrictions; and regulations to ensure a minimal level of clinical
preventive services."

The NYC health department starred in a previous post for their brave attack on restaurants that give patrons too much for their money.