Wednesday, October 30, 2013

Thoughts on health reform

None of these thoughts are new from me, but recent events brings them to the forefront.

It's always seemed to me health reform should have the goal of lowering costs, expanding coverage, and leveraging competition (both public and private). In practice, expanding coverage seems to dominate the other two for the administration. This is a short-term view. In the long-term lowering costs is supposed to come too. It may, but we'll have to see.

It seems to me the heart of all this is the mandates - not necessarily the individual mandate, but the coverage mandates.

A much more balanced solution would have been to:

1. Mandate a minimum of catastrophic coverage. This is a lot of what we care about - going bankrupt for medical circumstances outside of your control. Mandate no denials on the basis of pre-existing conditions, but provide a public catastrophic option.

2. Subsidize low income families for any type of insurance (not just catastrophic), end tax breaks for employer provided plans.

3. Subsidize all these things that are currently mandated. If you think certain coverage is a good thing, subsidize those private plans.

4. Have a public option, or perhaps what's equivalent, just let people buy into Medicaid (with their subsidies) at some actuarially sound rate (i.e. - don't let public options kill the private market through subsidies that aren't available in the private market).

5. Allow considerable state variation of terms and experimentation above this coverage floor.

6. Ultimately, deal with fee for service payment systems. This is almost certainly the bedrock problem with cost issues in the U.S. as far as I can tell.

The rollout record seems to be mixed for Obamacare, which isn't surprising to me because I've always thought the law was mixed. But where problems are raised (aside from silly accusations that Obama somehow lied about keeping coverage) it's usually around the coverage mandates and what they're doing to private plans.

I can see why coverage mandates are desirable, but what's the argument for that rather than minimal mandates plus subsidies? This isn't typically how we do social safety nets in this country, so why are we doing it this way with health reform?


  1. Between your thoughts on the VA governor race, your post on the minimum wage, and now this, if you want to be able to keep insisting that you are not a libertarian, I think you are going to have to do a post defending Malthus, Marx, Kalecki, or drone strikes, immediately.

    1. Writing one right now on how Krugman is the preeminent Smithian economist of our day.

      Will that do it?

      The weird thing is I feel like I've been getting a lot of flack from libertarians lately despite my shared sense that I'm on a libertarian posting binge.

      They feel threatened by the competition, I guess ;-)

  2. I would consider this more of a compromise plan than a libertarian plan. It looks pretty economically sound to me. You left out dealing with the AMA. I would add allowing hospitals to buy major equipment without first gaining permission from state review boards. It's time to free technology from the artificial constraints. Allowing medical service providers to provide free service if they wish is another change I would like to see. It seems like forcing people into the system is more important to the ACA supporters than getting people low cost solutions.

  3. I'm curious as to why you don't think Obama lied about people being able to keep their current health plan. Was that not what he said? And didn't he know otherwise? And aren't a lot of people, including many of his supporters, surprised about losing their plan?

  4. “It always seemed to me health reform should have the goal of lowering costs and expanding coverage.”

    Wasn’t that an oxymoron in the first place? Very wishful thinking by certain people? Not to say a blatant lie? Populism in its purest form?

    How would people want to achieve that anyway? By a thing called “leveraging competition“, I assume? What does this mean in reality? The most common theory I hear goes like this:
    Concentrated purchasing power is keeping costs low. If you’re a physician or a hospital, you have to accept the rates.

    Those speeches come from same politicians that demand minimum wages to “help” low-skilled workers and want big raises for teachers so that the education system gets “better”.

    So in other words: What’s supposed to be bad for low-skilled workers and teachers is a good thing for nurses and physicians?

    I want to see the politician that says to a teacher: Well from now you have to deal with 40 instead of 30 students but don’t worry as a compensation we cut down your payment. And then he turns to the crowd and says: “And by doing this your children get a better education, believe me.” And the crowd goes: “Yeah!”

    I admire this politician. He is really good at this job (if you define politics as populism only).


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