Coyote Blog

Well, it turns out that the laws of supply and demand do indeed apply in the health care field.  Obamacare and before it Romneycare combine government subsidies of demand with cost controls mainly consisting of price caps on suppliers.  The results are exactly what any college student could predict after even one week of microeconomics 101:  shortages.

First, from the WSJ

A new survey released yesterday by the Massachusetts Medical Society reveals that fewer than half of the state's primary care practices are accepting new patients, down from 70% in 2007, before former Governor Mitt Romney's health-care plan came online. The average wait time for a routine checkup with an internist is 48 days. It takes 43 days to secure an appointment with a gastroenterologist for chronic heartburn, up from 36 last year, and 41 days to see an OB/GYN, up from 34 last year....

Massachusetts health regulators also estimate that emergency room visits jumped 9% between 2004 and 2008, in part due to the lack of routine access to providers. The Romney-Obama theory was that if everyone is insured by the government, costs would fall by squeezing out uncompensated care. Yet emergency medicine accounts for only 2% of all national health spending.

The emergency room data is fascinating, as crowded emergency rooms supposedly overwhelmed by the uninsured was such an important image in the campaign to pass Obamacare.  More on this from Q&O:

Hospital emergency rooms, the theory goes, get overcrowded because people without health insurance have no place else to go.

But that’s not the view of the doctors who staff those emergency departments.
The real problem, according to a new survey from the American College of Emergency Physicians,isn’t caused by people who don’t have insurance — it’s caused by people who do, but still can’t find a doctor to treat them.

A full 97 percent of ER doctors who responded to the ACEP survey said they treated patients "daily" who have Medicaid (the federal-state health plan for the low-income), but who can’t find a doctors who will accept their insurance…."The results are significant," said ACEP President Sandra Schneider in prepared comments. "They confirm what we are witnessing in Massachusetts — that visits to emergency rooms are going to increase across the country, despite the advent of health care reform, and that health insurance coverage does not guarantee access to medical care."

As I have been saying for a long time, the Obama health care nuts do not have any secret, magical idea or plan for cutting health care costs.  In fact, as I have written here and here, we should expect Federalization to exacerbate the bad information and incentives that make health care more expensive.  The only idea they have, in fact, is the only one that anyone ever has in government for this kind of thing -- price controls

Over the weekend, The Washington Postpublished a Q&A-style explainer on the Independent Payment Advisory Board—the panel of federal health care technocrats charged with keeping down spending growth on Medicare.

The details are complicated, but the gist is simple: If spending on Medicare is projected to grow beyond certain yearly targets, then it’s IPAB to the rescue: The 15-member panel appointed by the president has to come up with a package of cuts that will hold Medicare’s growth in check. If Congress want to override that package, it only has two options: Vote to pass a different but equally large package of cuts or kill the package entirely with a three-fifths supermajority in the Senate.

The Post lays out the basic framework above. But what it doesn’t explain in any detail is exactly how those cuts will be achieved. And that, of course, is where the difficulty begins: Here’s how The Wall Street Journal’s editorial board explained it last month: “Since the board is not allowed by law to restrict treatments, ask seniors to pay more, or raise taxes or the retirement age, it can mean only one thing: arbitrarily paying less for the services seniors receive, via fiat pricing.” Medicare already centrally sets the prices it pays for the services of doctors and hospitals. Given the board's limitations, the most likely cuts we’ll see from IPAB, then, will be arbitrary, quality-blind reductions in these payments (though hospitals will be exempt from cuts for the first couple years).

We know what happens next: Providers stop taking on new Medicare patients, or drop out of the system entirely. In Medicaid, which pays far lower rates than Medicare (which pays somewhat lower rates than private insurance), this is already common: As one emergency physician recently told The New York Times, “Having a Medicaid card in no way assures access to care.” If IPAB cuts Medicare provider payments down to the bone, it could end up transforming Medicare into a seniors’-version of Medicaid.

It looks like the simply awful 1099 provision from Obamacare will be repealed.

I have written a ton in the past on what I consider the fundamental problem in health care:  The taking of price-value tradeoffs out of the hands of consumers, first through encouragement of first-dollar employer plans and now through a Federal government takeover.  For example:

The computer keyboard I am typing on right now costs about $55 on Amazon.com.  Is that a fair price?

At some level, the answer must be “yes.”  Why?  Because I bought it – simple as that.  No one was compelling me to buy this particular model, so if I thought the price too high or the features too skimpy, I would have just passed on the purchase.  If I desperately wanted or needed a keyboard, I might have bought one of literally hundreds of others for sale at Amazon, priced from a low of $1.49 (used) to a high of $2400 (I kid you not).  After shopping through the various options, I chose my keyboard as the best match, for me, of price and features.

For decades, this seemingly prosaic act of individual “shopping” has been steadily eroded in health care with the growth of third party payers, particularly Medicare.   How much did you pay for you last doctor visit?  Your last x-ray?  Your last blood test?  Believe it or not, it is still possible to price-shop medical care — I do it myself, because I have a high deductible health insurance plan under which I pay all but the most bankrupting bills out of pocket.  As an example, three x-rays last month of my son’s ankle would have been billed to my insurance company at over $100, but I asked for their cash price and they pulled a separate book from a hidden place under the counter and quoted me $35.  I got a 70+% discount merely for caring about the price.

But my health plan, which includes this seemingly positive incentive to shop, will soon be illegal as high-deductible insurance plans, as well as medical savings accounts, are effectively banned.  Under Obamacare, virtually all individual payments for medical products and services will cease — the government and a few large, highly regulated insurers will pay for nearly every visit, drug, or procedure.  The government will be making price-value trade-offs for our care, and they will be doing it incredibly imperfectly, because by eliminating individual shopping they have cut off a, excuse the pun, priceless source of information.

And here:

If we are all forced to have the same, low deductible, first-dollar health plans, what incentive is one going to have to stay out of the health care system, even for something minor?  What is to stop you from going to the doctor every day because you are hypochondriacal, or you are lonely, or bored, or just because you want to save on buying your own subscription to Highlights Magazine?  The buffet will be open and everything will be essentially free – what’s to stop people from gorging themselves?

You might say that you are more responsible than that, and perhaps you are.  But think about this:  Twenty years ago we used to all complain about the 2 or 3 pieces of junk mail we might find a day in our mailbox.  That was when the each piece of mail cost real money to send.  Today, junk mail in the form of email is essentially free to send.  How many pieces of junk mail do you get today?  Even if you are not hitting the system up for free health care, you know someone else will be spamming the system, and eventually all of us as taxpayers will have to pay for it.

The only way to stop this behavior is for the government to create a department of “No” to head off this behavior — what Sarah Palin so famously called “Death Panels.”

Both Tyler Cowen and Megan McArdle discuss individual vs. the government in making price-value tradeoffs for health care in the context of Paul Ryan's proposal to voucherize Medicare.

McArdle:

Expect there to be a lot of angry back and forth over this in the next week or so.  But one thing to keep in mind is that this Medicare plan is not effectively very different from what the Democrats claim ObamaCare is going to do:  which is to say, cap the amount of money spent on providing health benefits to those who are not rich enough to opt out of the public system.  The Democrats want to do so by having a central committee of experts decide what our health dollars get spent on; the GOP wants to put those decisions into the hands of consumers.  But this is not an argument about who loves old, sick people more.  Both parties are promising to halt the rapid growth of government health care expenditures, which is definitionally going to fall hardest on old, sick people....

There are also the tradeoffs to consider.  It seems quite likely to me that vouchers are going to be better at controlling health care cost growth than a central committee.  Every committee decision that cuts off a potentially useful treatment (and I'm afraid it can't all be back surgery and hormone replacement therapy) will trigger a lobbying explosion from affected groups.  Each treatment is a decision with a small marginal cost to the taxpayer; it's in aggregate that they become expensive.  Which means that the congressional tendency is always going to be to override--and while there are supposed to be structural barriers against this in the bill, they aren't very strong . . . about like trying to quit smoking by hiding your cigarettes from yourself.

My column is up at Forbes, and is the fourth in a series on Obamacare.  An excerpt:

Its amazing to me how many ways supporters of government health care can find to rationalize the bad incentives of third-party payers systems.  Take, for example, the prevelance today of numerous, costly tests that appear to be unnecessary.  Obamacare supporters would say that this is the profit motive of doctors trying to get extra income, and therefore a free market failure.   I would point the finger at other causes (e.g. defensive medicine), but the motivation does not matter.   Let’s suppose the volume of tests is truly due to doctors looking for extra revenue, like an expensive restaurant that always is pushing their desserts.  In a free economy, most of us just say no to the expensive dessert.  But the medical field is like a big prix fixe menu — the dessert is already paid for, so sure, we will got ahead and take it whether we are hungry or not.

It should be no surprise that while US consumer prices have risen 53% since 1992, health care prices have risen at nearly double that rate, by 98%.  Recognize that this is not inevitable.  This inflation is not something unique to medical care — it is something unique to how we pay for medical care.

Contrast this inflation rate for health care with price increases in cosmetic surgery, which unlike other care is typically paid out of pocket and is not covered by third party payer systems.  Over the same period, prices for cosmetic surgery rose just 21%, half the general rate of inflation and just over one fifth the overall health care rate of inflation.

This is why I call free market health care the road not traveled.  There are many ways we could have helped the poor secure basic health coverage (e.g. through vouchers) without destroying the entire industry with third-party payer systems.  Part of the problem in the public discourse is that few people alive today can even remember a free market in health care, so its impossible for some even to imagine.

Update: Coincidently, Mark Perry has a post that addresses just the issue I do in my article, that is the positive effects of high-deductible health insurance and out of pocket health expenditures on pricing transparency and reduced costs.  The high deductible health plans at GM seem to be having a positive effect on the health care market.  A shame they will probably be illegal under Obamacare.  Of course, since GM is owned by the government, it can get any special rules that it wants, unlike the rest of us.  But that his how things work in the corporate state.

You often hear people say that one of the main reasons for health care inflation is the cost of all the new technology.  But can you name any other industries that compete in free markets where technology introductions have caused inflation rates to run at double the general rate of inflation?  In fact, don't we generally associate the introduction of technology with reduced costs and increased productivity?

Compare a McDonald's kitchen today with one thirty years ago -- there is a ton of technology in there.  Does anyone think that given the price-sensitive markets McDonald's competes in, this technology was introduced to increase prices?

Or look at medical fields like cosmetic surgery or laser eye surgery.  Both these fields have seen substantial introductions of new technology, but have seen inflation rates not only below the general health care inflation rate but below the CPI, meaning they have seen declining real prices for decades.

The difference is not technology, but the pricing and incentive system.  Cosmetic surgery and laser eye surgery are exceptions in the health care field -- they are generally paid out of pocket rather than by third parties (Overall, third party payers pay about 88% of all health care bills in the US).

The problem with health care is not technology -- the problem is that people don't shop for care with their own money.

Postscript:   Thinking some more after I wrote this, I can think of one other industry where introduction of technology has coincided with price inflation well above the CPI -- education.  It is interesting, but not surprising to me, that this is the other industry, along with health care, most dominated by third party payer systems and public subsidies of consumers.

For the last three weeks, I have been writing about the information, incentive, and rent-seeking issues that will doom Obamacare -- for example, how its impossible for a centralized board to set prices, and why a complete end to individual shopping will doom us to both rising prices and increasing frivolous demand.

I really didn't have to bother, though, because it is unnecessary to hypothesize -- we can just look at Massachusetts, which embarked on a proto-Obamacare several years ago.  John Calfee has a great column in the WSJ today.  Some excerpts

• On costs

Massachusetts reformers deferred cost control to the vague prospect of a "Round 2" of reform—much as congressional Democrats did a year ago when they passed ObamaCare. Meanwhile, economists John Cogan, Glenn Hubbard and Daniel Kessler reported in the Forum for Health Economics & Policy (2010) that insurance premiums for individuals (alone or in employer-sponsored group plans) increased 6% to 7% beyond what they would have without the reform. For small employers, the increases are about 14% beyond those in the rest of the nation. Four years after reform, Massachusetts still has the highest insurance premiums in the nation, and the gap is getting wider.

In 2010, insurance firms announced premium increases of 10% to 30% in the individual and small-group market. Gov. Patrick, on the verge of a tough re-election race, had the state insurance commissioner deny the higher rates.

• On frivolous demand

But the number of emergency room visits, which everyone expected to drop once people had to purchase insurance, is still going up. Surveys show roughly half the visits are unnecessary. Surveys also indicate that finding a primary care physician is becoming more difficult.

• On the end game of a centralized price-control regime

Last month Round 2 arrived. Gov. Patrick introduced a bill that will impose de facto price controls on everyone from solo primary care doctors to prestigious academic hospital systems. An 18-member board will decide how and how much providers should be paid, and the bill gives regulators the power to force private insurers to accept these fiats. Some 30 states experimented with such rate-setting in the 1970s and '80s. Except for Maryland, all of them—including Massachusetts—deregulated in the 1990s because costs rose even as quality and choice declined

• On politicization of decision-making

Insurance firms protested that they increased premiums because they had to deal with entrenched providers, especially hospitals, most notably the academic giants of Boston and Cambridge. Then the state prepared to introduce highly intrusive price controls over those providers—only to discover that this would provoke formidable political opposition while encountering myriad practical difficulties

To the last point, what happens to prices when providers know that a) consumers aren't shopping any more; b) consumers will take the service at any price, because they aren't paying; and c) insurance companies have to pay the bill, not matter how high, based on government rules.  Of course prices go up, because the entire price-discovery mechanism has been eliminated by government fiat.  Then the government has to step in with a doomed-to-failure price-setting plan.  In the end, those with political connections get the prices they want, and those who do not get throttled to make up the difference.

In my Forbes columns over the past few weeks, I have been writing about information and incentive problems with any sort of Obamacare type system.  One of the points I made last week was this:

One of the key selling points of Obamacare was that it would reduce cost, in large part through smart public-spirited people making optimized decisions from the top in Washington.  Ignoring the fact that no other agency that has promised such angels of public service has ever delivered them, we discussed in the last few weeks how this task is impossible.  But we should have known that already through our past experience with the political process.  Political decisions are made politically, not by optimizing some public good equation.    Does anyone believe that come election time, Congress won’t vote to add mandates to procedures to placate powerful groups in their base, irrespective of the future costs this would incur?

Need an example?

In 2007 breast cancer was the third leading source of cancer mortality in the US, but it was by far the largest recipient of government cancer research dollars, nearly double that spent on any other type of cancer.    In 2009, out of hundreds of medical procedures, only two procedureswere on the mandated must-carry list of all fifty states – mammography and breast reconstruction.  It is no accident that both of these are related to breast cancer.  With its links to women’s groups and potent advocacy organizations, breast cancer is a disease that has a particularly powerful political lobby.    Similarly, we should expect that, at the end of the day, pricing and coverage decisions under Obamacare will be made politically.  Not because anyone in this Administration is particularly bad or good, but because that is what always happens.

This post from Q&O is a tad old but gets at just this point with a real-life Obamacare example

The opening line in a New York Times piece caught my attention.  It is typical of how government, once it gets control of something, then begins to expand it (and make it more costly for everyone) as it sees fit.  Note the key falsehood in the sentence:

The Obama administration is examining whether the new health care law can be used to require insurance plans to offer contraceptives and other family planning services to women free of charge.

Yup, you caught it – nothing involved in such a change would be “free of charge”.   Instead others would be taxed or charged in order for women to not have to pay at the point of service.  That’s it.  Those who don’t have any need of contraception will subsidize those who do.  And the argument, of course, will be the “common good”.   The other argument will be that many women can’t afford “family planning services” or “contraception”.

But the assumption is the rest of you can afford to part with a little more of your hard earned cash in order to subsidize this effort (it is similar to other mandated care coverage you pay for but don’t need).  Oh, and while reading that sentence, make sure you understand that the administration claims it has not taken over health care in this country.

The next sentence is just as offensive:

Such a requirement could remove cost as a barrier to birth control, a longtime goal of advocates for women’s rights and experts on women’s health.

So now “women’s rights” include access to subsidies from others who have no necessity or desire to pay for those services?  What right does anyone have to the earnings of another simply because government declares that necessary?

It is another example of a profound misunderstanding of what constitutes a “right” and how it has been perverted over the years to become a claim on “free” stuff paid for by others.

Administration officials said they expected the list to include contraception and family planning because a large body of scientific evidence showed the effectiveness of those services. But the officials said they preferred to have the panel of independent experts make the initial recommendations so the public would see them as based on science, not politics.

Really?  This is all about politics.  The fact that the services may be “effective” is irrelevant to the political questions and objections raised above.  This is science being used to justify taking from some to give to others – nothing more.

The third installment of my series on Obamacare is now up at Forbes.  An excerpt:

In the health care field, the Holy Grail of rent-seeking is to get one’s medical device, drug, or procedure added to state health insurance mandates.  Before Obamacare, health care insurance regulation had been a state function, and each state had written laws mandating that all health insurance policies written in the state must cover certain services.   By getting one’s particular service added to such a mandate, the service essentially becomes “free” to consumers in that state  (of course it’s not free — everyone pays in the form of higher premiums, but the marginal price for the service goes to zero).

Imagine you have a procedure — let’s use laser elimination of birthmarks as an example.   This procedures requires a series of treatments using a fairly expensive piece of equipment to produce results that are of enormous value to a few people with extensive birthmarks, and of smaller value to many other people with smaller birthmarks.  Business growth in such a field is typically good at first as those who most value the procedure pay for it.  But it can be hard to grow outside of a relatively small niche, as most potential customers may consider it to be an expensive elective cosmetic procedure that, given other uses for their money, they can do without.  What can an aspiring dermatologic surgeon do?  Run to the government!

In 1997, the University of Indiana conducted a study of the laser treatment of these birthmarks.  I don’t know who funded the study, but tellingly the study findings did not really touch on the efficacy of the treatment or its risks.  The study surveyed a number of dermatologic surgeons.  What was its primary finding?  ”Based on current health care policy guidelines, laser treatment of port-wine stains should be regarded, and covered, as a medical necessity by all insurance providers.”  In other words, the sole purpose of this research was to convince legislators to add this procedure to their state’s  insurance mandates.   To date, this procedure has been added to the must-carry list in only two states, but in those two states doctors no longer have to convince price-sensitive patients that this elective procedure is worth the cost – after all, its free!

As you can imagine, the cost of these mandates are staggering for those of us who pay the premiums.  State governments are requiring us to pay higher insurance rates in order to cover procedures we might never consider.   Four states have mandated coverage for naturopaths;  three for athletic trainers; one for oriental medicine; eleven for hair prosthesis; four for massage therapists; and three for pastoral counselors.  The state with the most such mandates is Rhode Island, with 70, a state which not coincidently also has the third highest insurance premiums in the country.

On a quasi-related note, John Goodman has thoughts on "government failure" (an analog to market failure) as it applied to health care.  It is a point that cannot be made too often.  Merely pointing out supposed imperfect outcomes from private action does not immediately justify government action -- too often people take the default position that if an improved outcome can be imagined, the government can achieve it.  But does this ever happen?  In health care, the irony is that many of the supposed market failures we are "fixing" with Obamacare are in fact results of past ham-handed government action.

My new column, second in a series, is up at Forbes.  It is the second of a three-part series, and looks at incentives issues with Obamacare.  A few excerpts:

In the late 1960s, as part of the Great Society program, the US government constructed huge government housing complexes, with the goal of guaranteeing that everyone, no matter how poor, would have access to housing.  By the turn of the century, most of these complexes had succumbed to the wrecking ball  -- the era of large public housing complexes was over.

Why?  Well, there were a lot of reasons the program failed, but a big one was faulty incentives.  By getting free housing, recipients had no "skin in the game," no ownership, no financial participation in their housing.  As a result, many treated their taxpayer-funded abodes with contempt.  Why not?  They weren't paying for it.  And if the property was in good shape at the end of the lease, they didn't get any extra money.

I often compare Obamacare to the great failed public housing projects by warning folks that government health care is going to be much worse.    With the housing projects, we taxpayers paid large sums of money but only a few actually had to live in the horrible government apartments -- at least most of us were able to keep our own homes.  With Obamacare, it is going to cost us even more money, and we are all going to have to move, figuratively, into the projects.

If we are all forced to have the same, low deductible, first-dollar health plans, what incentive is one going to have to stay out of the health care system, even for something minor?

I also talk about the incentive for drug development

Look around the world today -- not one country with a government health care system pays drug reimbursement rates at a level that provides any incentive for new drug development.  In fact, almost all of the world's health care R&D is paid for by Americans.  What happens when politicians, trying to close an exploding health care spending hole in the Federal budget, do exactly what every other country in the world has done and use their power to drive drug prices down to marginal cost?

In fact, to be confident that there will continue to be health care innovation in the future at all, one has to believe that the US Government will act completely differenlty in running its government health care system than does every other government in the world, despite the fact it will have the incentives to behave identically to all of them.  Is this a bet you feel good about?

My new column is up at Forbes.com, and it is the first in a three-part series on Obamacare.

In order to protect the core of Obamacare, Congressional Democrats have recently begun to acquiesce to a few incremental changes to the legislation that fix some of the most egregious parts of the plan (e.g. the burdensome 1099 requirements).  The implicit message is that yes, the legislation was rushed and has some flaws, but these flaws can be fixed by targeted tweaks around the edges.

Today I will begin the first of a three-part series explaining several reasons why any health care law that relies on the fundamental assumptions of Obamacare is doomed to fail, even if crafted by the smartest people through the best process.  In this first installment, we will discuss information problems inherent in the law’s top-down approach.  In the second segment, we will cover incentives issues that will breed a myriad of unintended consequences.  In the final part, we will discuss the ever-powerful urge to rent-seeking among certain businesses that will likely turn Obamacare into the largest single corporate welfare program in the history of this country.

Supporters of Obamacare argued that it would reduce costs because decisions to fund or not fund certain procedures and drugs would be left to panels of experts (later derisively labelled "death panels").

I have argued many times that these panel's job is hopeless.  Solutions and products that may be right for one person may be a waste for another situation, and there is absolutely no way they have the information or the scope to make decisions with any kind of granularity.  One-size-fits-all solutions result.

But let's hold that thought for a minute.  Let's presume that these supposedly non-political boards will make near-perfect decisions.  Then what?  Those decisions become the law of the land?

Hah.  We have a parallel situation in the military, where DoD procurement supposedly acts as the disinterested expert, which Congress frequently ignores to pay off various constituencies.

If Congress is looking for New Year's resolutions, it could start by breaking the habit of funding programs the government doesn't want. A case in point is the attempt to throw another $450 million at the development of a second engine for the F-35 Joint Strike Fighter, a plan that Defense Secretary Robert Gates says the military doesn't need.

In what has become an annual ritual, Congress is weighing whether one of the largest weapons programs in history should support the development of F-35 engines by both General Electric and Pratt & Whitney. In 2001, GE's engine lost in the procurement competition to the one designed by Pratt & Whitney, as F-35 developers Lockheed Martin and Boeing preferred the latter version.

To hedge its technological risk, the Pentagon nonetheless sought financing for the GE engine as a backup through 2006 in case the Pratt & Whitney version fell short. That hasn't happened, and as budgets have tightened the Pentagon has understandably decided that it needs only one engine design. As Secretary Gates put it, "Only in Washington does a proposal where everybody wins get considered a competition, where everybody is guaranteed a piece of the action at the end."

The Pentagon's opposition hasn't stopped Congress, where the usual parochial suspects are still stumping for GE. And the White House appears to be bending.

Of course they are -- the GE CEO carried a lot of water for Obama on health care and energy policy, and will be expecting a pay back.  Someone has to be terribly naive to believe similar shenanigans won't take place with health care.

But we don't have to wait to test this hypothesis.  The fifty states all have must-carry rules in their states, which have a lot more to do with political pull than science - more here and here.

I have argued for a while that Obama is building a European-style corporate state, where a troika of powerful government officials, unions, and the largest corporations run the country for their own benefit.  As far as the economy is concerned, this means legislation that cements the position of large, powerful competitors against smaller competitors or future upstarts.  You can see this in Europe, where for decades the list of largest corporations seldom turns over, as they have entrenched themselves in government to protect their position  ().

Here is today's episode, from the Obamacare law:

Under the headline, "Construction Stops at Physician Hospitals," Politico reports today that "Physician Hospitals of America says that construction had to stop at 45 hospitals nationwide or they would not be able to bill Medicare for treatments." Stopping construction at doctor-owned hospitals might not seem like the best way to boost the economy or to promote greater access and choice in health care, but that exactly what Obamacare is doing.

Kenneth Artz of the Heartland Institute explains, "Section 6001 of the health care law effectively bans new physician-owned hospitals (POHs) from starting up, and it keeps existing ones from expanding." Politico adds, "Friday [New Year's Eve] marked the last day physician-owned hospitals could get Medicare certification covering their new or expanded hospitals, one of the latest provisions of the reform law to go into effect."

This little-noticed but particularly egregious aspect of Obamacare is, by all accounts, a concession to the powerful American Hospital Association (AHA), a supporter of Obamacare, which prefers to have its member hospitals operate without competition from hospitals owned by doctors.

Via the Guardian.  No commentary really necessary (via Q&O)

Cuba banned Michael Moore's 2007 documentary, Sicko, because it painted such a "mythically" favourable picture of Cuba's healthcare system that the authorities feared it could lead to a "popular backlash", according to US diplomats in Havana.

The revelation, contained in a confidential US embassy cable released by WikiLeaks , is surprising, given that the film attempted to discredit the US healthcare system by highlighting what it claimed was the excellence of the Cuban system.

But the memo reveals that when the film was shown to a group of Cuban doctors, some became so "disturbed at the blatant misrepresentation of healthcare in Cuba that they left the room".

Castro's government apparently went on to ban the film because, the leaked cable claims, it "knows the film is a myth and does not want to risk a popular backlash by showing to Cubans facilities that are clearly not available to the vast majority of them."

In continues:

The cable describes a visit made by the FSHP to the Hermanos Ameijeiras hospital in October 2007. Built in 1982, the newly renovated hospital was used in Michael Moore's film as evidence of the high-quality of healthcare available to all Cubans.

But according to the FSHP, the only way a Cuban can get access to the hospital is through a bribe or contacts inside the hospital administration. "Cubans are reportedly very resentful that the best hospital in Havana is 'off-limits' to them," the memo reveals.

According to the FSHP, a more "accurate" view of the healthcare experience of Cubans can be seen at the Calixto Garcia Hospital. "FSHP believes that if Michael Moore really wanted the 'same care as local Cubans', this is where he should have gone," the cable states.

A 2007 visit by the FSHP to this "dilapidated" hospital, built in the 1800s, was "reminiscent of a scene from some of the poorest countries in the world," the cable adds.

The memo points out that even the Cuban ruling elite leave Cuba when they need medical care. Fidel Castro, for example, brought in a Spanish doctor during his health crisis in 2006. The vice-minister of health, Abelardo Ramirez, went to France for gastric cancer surgery.

For years I have warned that government-funded health care will be used as a Trojan horse for a nearly infinite body of legislation under the pretext that X [where X = nearly every activity or individual choice] has implications for health care costs.  Here is the latest chapter of this ongoing saga:

New stand-alone fast food restaurants have been banned from setting up shop in South Los Angeles, due to rising health concerns by the city council.

This story also mixes in a good portion of corporate statism as well, as it represents pretty transparent protectionism of current competitors against new entrants:

Perry's new plan bans new so-called "stand alone" fast food restaurants opening within half a mile of existing restaurants.

So McDonald's, who is likely firmly entrenched in the area, is unaffected, but potential new entrants challenging McDonald's are out.

For even further points, one can see another powerful constituency at work.  I suppose commercial real estate developers complained about potential loss of tenants, so this was added:

Such stand-alone establishments are on their own property, but those same restaurants are OK if they're a part of a strip mall, according to the new rules.

Obviously the same food is much more nutritious if served in a leased building rather than on a piece of land the restaurant owns itself.

Read the whole thing, its a great example with a lot of fact-free pronouncements by politicians about market failures.  via Matt Welch

I have warned many times:

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.

So, don't be surprised to see a lot more of this:

"Too many lives are lost in motorcycle accidents," Christopher A. Hart, NTSB vice chairman, said in announcing that helmets had been added to the board's annual "most-wanted list" of safety improvements. "It's a public health issue."

It is a really weird mental block we have against paying out of pocket for medical bills, particularly since this is probably the most, not the least, important thing we can spend our money on.  Having a high-deductible health insurance plan has been a real eye-opener for me.  As in this post from Maggie's Farm, I too have found doctors will very often give a discount for cash.  My son has a great sports medicine guy (he plays 3 varsity sports so we seem to be at the doctor a lot for one injury or another) who gives us a $40 cash rate for a visit.  Further, when he needs X-rays, the radiology place downstairs usually does 2-3 films of the injured appendage du jour for around $35.  The X-ray place has a special cash price book they pull out when I show up.  I shudder to think what rate they charge insurance companies.  And t just think of the piles of infrastructure from my doctors office to the insurance company to Washington DC that would have had to come into play had I sought 3rd party payments for these bills.

And when it comes to the expensive things, it is amazing what price cuts you can find with just a little shopping.  Previously, I had spent less time in my whole life shopping medical care prices than I had price-shopping my last hard drive.  But when my son had to get a CT scan on his head (yes, another sports injury) we saved hundreds of dollars just calling a second place for a quote.  In fact, even mentioning that we were going to price shop the first quote got a few hundred dollars knocked off.  The lack of any rigor in health care pricing is just appalling, and will only get worse as government / single payer solutions crowd out approaches like mine under Obamacare.

My column this week at Forbes.com is on government health care and the incentives and pressure it creates to micro-manage individual behaviors and diet in order to (in theory) reduce government health care costs.

Ronald Bailey in Reason has the numbers. Note the data is for detected incidence rate.  Since detection continues to improve, the numbers likely understand the true drop in incidence rates.  Further, since people tend to live longer, and cancer rates are higher as we get older, there should be a demographic trend to higher rates, but in fact we see the opposite (I don't know if they do some kind of age correction, but it doesn't appear so).  This means, again, the improvement for, say, the average 50-year-old is understated.

This is what happens under state-run medicine, when your doctor becomes an agent of the government.

Currently pregnant women are asked if they smoke by midwives and GPs but the National Institute for health and Clinical Excellence (Nice) wants this to go further.

The organisation has recommended that all pregnant women should have their breath measured for carbon monoxide levels when they book in with a midwife.

This would establish which women smoke and provide an added incentive for them to quit, the guidance said.

I am sure all the women's organizations whose principled stand against abortion restrictions were based on protecting the privacy of one's body from the heavy hand of government will now rise up in protest.  Not.

As it turns out, and as I have written before, most women's groups seem to favor total intrusion of government into every facet of individual health care decision-making EXCEPT abortion.  The privacy and libertarian-sounding abortion arguments were really just slights of hand, rolled out to prevent government bans on one particular procedure, and then tucked away when the government proposes to control every other procedure.

Gwyneth Paltrow learns that human beings did not evolve in caves.

Gwyneth Paltrow learned that staying out of the sun could have health consequences when she was diagnosed with a severe Vitamin D deficiency.

Like many stars, the "Iron Man" actress insisted on staying out of the sun and covered up for summer trips, but then she learned her caution was costing her good health.

..."This led my western/eastern doctors in New York to test my Vitamin D levels, which turned out to be the lowest they had ever seen (not a good thing). I went on a prescription strength level of Vitamin D and was told to … spend a bit of time in the sun!

"I was curious if this was safe, having been told for years to stay away from its dangerous rays, not to mention a tad bit confused as we are all well schooled in the dangers of overexposure to the sun."

Next up -- an increase in anorexia from the obesity panic?

From the NY Times, I am having a hard time reconciling these statements from the same article:

First statement:

The law provides a partial exemption for certain health plans in existence on March 23, when Mr. Obama signed the legislation. Under this provision, known as a grandfather clause, plans can lose the exemption if they make significant changes in deductibles, co-payments or benefits.

About half of employer-sponsored health plans will see such changes by the end of 2013, the administration says in an economic analysis of the rules.

Second statement:

About 133 million Americans are in group health plans from employers with 100 or more employees, the administration said, and most "will not see major changes to their coverage as a result of this regulation."

My translation:  Yes, you will lose your current health plan despite Obama's promises, but he doesn't want you to realize this until 2013, conveniently just after the next presidential election.

One point I have been making for a long time on health care is that all the studies showing waste and unproductive spending in health care are irrelevant to government policy because at the end of the day, the Federal government does not know how to capture these savings.  The CBO says basically the same thing in a chart from a recent presentation.  The chart is titled "Reducing Growth in Federal Health Spending"

On the upside:

• There is considerable agreement that a substantial share of current spending on health care contributes little if anything to people's health.
• Providers and health analysts are making significant efforts to make the health system more efficient.

On the downside:

• It is not clear what specific policies the federal government can adopt to generate fundamental changes in the health system. That is, it is not clear what specific policies would translate the potentialfor significant cost savings into reality.
• Efforts to reduce costs increase the risk that people would not get some health care they need or would like to receive.

I am pretty confident from my experience with a high-deductible health care plan that the only way to start capturing savings is for individuals who recieve care to have the incentives and decision-making power to make cost-benefit tradeoffs in their own health care procurement.  This, however, is the absolute last thing this administration and Congress would ever allow, with the latest bill actually forcibly removing what small incentives that remained for individuals to make these tradeoffs.  All we are going to get are command and control care cuts  (based on the political power of the particular service or drug provider rather than medical efficacy) and price controls.

More at South Bend Seven

Further proof that the only cost control idea the Obama administration ever had was service cuts and price controls.

Health and Human Services is once again playing freelance actuary, demanding that the health insurers hold down increases in the premiums for their Medicare Advantage plans.  As far as the administration is concerned, this is a two-fer.  When people have to pay more for their insurance, they tend to ask what the hell good this gargantuan new health care bill is doing--not the question you want them asking as they head to the polls.  But in the case of Medicare Advantage, there's another benefit.  The health care reform bill mandated a substantial cut in payments to Medicare Advantage providers, which everyone expects will translate into cuts in the extra services that Medicare Advantage plans now provide.  If they make those cuts a year early, maybe the administration gets to claim that the cuts don't have anything to do with the new health care bill.

Of course, for the insurers, it's not such a good deal.  The administration doesn't seem to have offered any evidence that insurers are overcharging; basically, they're saying that they ought to underprice their product, even if that means losing money.  Which is what has happened in Massachusetts, where the state insurance regulator refused substantial rate increases, even though as far as I know they never found an actuary to sign off on their orders.  The insurers posted big losses shortly thereafter.

Back in January, I wrote about both ethanol and the stimulus bill, observing:

I have decided there is something that is very predictable about the media:  they usually are very sympathetic to legislation expanding government powers or spending when the legislation is being discussed in Congress.  Then, after the legislation is passed, and there is nothing that can be done to get rid of it, the media gets really insightful all of a sudden, running thoughtful pieces about the hidden problems and unintended consequences of the legislation

My emerging theorem about the media is that they want to be on the record as having predicted problems with legislation, but that for leftish legislation they personally support, they defer their most insightful analysis until after the law has passed.  That way, their favored legislation gets on the books, but they are also on the record as having spotted potential problems and can make the argument later that they were not rubes or useful idiots.

We are seeing this yet again, as the New York Times questions some obvious flaws with the Dartmouth health savings data (ht Insty)

Of course, the article misses the most obvious point -- while the Dartmouth data was certainly used to try to sell Obamacare, nothing in the actual legislation does anything to capture these supposed potential savings.  The $700 billion in waste number is more of a sort of happy thought that lets politicians sign the ridiculously expensive bill while pretending that some mythical savings are somehow available in the future through unidentified mechanisms to pay for the program.

I have not read the relevant text of the law, so this may be an exaggeration, but it sure would not surprise me:

Remember when Obama and congressional Democrats made a big show of dropping the public option government insurance program that was supposedly going to give private insurers competition and drive rates down? The truth is the public option is alive and well, residing in Section 1334, pages 97-100, of the new health care law. That section gives the U.S. Office of Personnel Management "” which presently manages the federal civil service "” new responsibilities: establishing and running two entirely new government health insurance programs to compete directly with private insurance companies in every state with coverage for people outside of government.Quoting the new law, former OPM director Donald Devine notes that it makes the OPM boss a health care czar, with power to set ""˜profit margin premiums and other such terms and conditions of coverage as are in the interest of enrollees in such plans.' That's open-ended. You can do anything." Dan Blair, another former OPM director, calls the new program "nothing but a placeholder for the public option." Indeed, the OPM head is also given the authority to "appoint as many employees" as needed to run the program, and to spend "such sums as may be necessary" to establish and administer it.