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Our Recent Essays Behind the Front Page
Tuesday, October 11. 2011
There is no perfect solution to what varying interest groups or segments of public opinion desire as reforms to US healthcare. Now that we’ve gone down the path of ObamaCare and RomneyCare, that is more evident. The question, then, is what course is more promising? The answer is less government intervention in healthcare than preceded ObamaCare or RomneyCare.
There are three core problems with either ObamaCare or RomneyCare. Each by itself raise conflicts with facts, law, and public desires. Together, they are a witches brew. Both ObamaCare and RomneyCare are based on wrong premises of government intervention and result in worsening the future of healthcare in the US.
ObamaCare and RomneyCare are premised on extending more medical care to the uninsured even beyond need or personal responsibility or affordability. They are premised on reducing or moderating our national costs of healthcare even though they fail to do so and in many ways increase costs. They are premised on the imposition of added government regulation and intervention into individual choice and circumstances even though neither science, management, competence, politics nor majority public support is up to the task nor expected to be.
But one has to go deeper than that to find the roots of the false premises of ObamaCare and RomneyCare. The roots are in government healthcare programs themselves like Medicare and Medicaid. Regardless of any good intentions or needs, they set the course of government being the solution.
Regardless of promises or embedment they have expanded beyond initial promises or need. Regardless of the good they do they have done more harm to healthcare by distorting its economics and its public perception. Regardless of cost they have increased costs to those outside these programs. Regardless of their public acceptance they have become unaffordable.
It is painful to abandon ObamaCare or RomneyCare. It is less painful to change course entirely.
From decades and certifications in health insurance I am highly critical of health insurers, and moreso as they have become more self-servingly enmeshed in government healthcare programs. That said, private insurers are more responsive to change, improvements, competition, and tailoring coverages to individual needs than any government program is capable. Further, individuals – including the poor or uneducated – are more able to discern their own needs than any government bureaucrat. Further, groups advocating types of health insurance coverage beyond the core would have to compete with more transparent facts and costs instead of canoodling with and paying off politicians.
Congressman Paul Ryan has proposed the reform of Medicare that would reverberate throughout US healthcare. It is estimated by the CBO to “totally reverse the course of recent fiscal history by lowering federal health care spending from 8% of GDP today to just 5% by 2050. If we remain on the current course, the spending would jump to 14% in that time frame.”
For a good summary, see here. As Fortune says,
The Obama re-election administration has lambasted Ryan with Democrat MediScare (even though Ryan's program would reduce government subsidies for the wealthy!) Mitt Romney tries to explain that ObamaCare exceeds RomneyCare’s ailments instead of admitting original sin. The other major Republican candidates, in this as in other areas, have not put forth anything but slogans. Perhaps that’s about all we can expect from an election season.
To avoid facing the battle during the elections, I suppose that Ryan will not be the V-P nominee. (Even though "70% Favor Individual Choice Over Government Standards for Health Insurance," there doesn't appear sufficient courage or faith in the voters for leading candidates to take the risk.) However, after 2012, we must either turn to Paul Ryan or continue our present muddle that resolves little and increases faults. I don’t know whether Ryan would be most effective in Congressional leadership or as Secretary of Health and Human Services. Whichever will depend on the size of the Republican majority and the intelligence and guts of the next president and Congress.
Romney's Healthcare Reform A Band Aid On A Hemorrhage
During last night’s Republican debate, all agreed on repealing ObamaCare. But only Romney mentioned that we need something to replace it and mentioned he has that plan. So, I looked at Romney’s campaign website about healthcare. To be quick out of t
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Beautifully written; spare and lucid.
I will be passing it on.
Extending health care to people who might not like paying for it is a noble ideal, but we forget two lessons of the history of our species in pursuit of it.
Some people act contrary to their own interests, perhaps even often. These people don't work, don't save and don't care for themselves or their relations. Building a social ethic that citizens should do these things obviously doesn't mean that they will, mandate or no mandate, social contract or no social contract. Moreover, even if it were possible to change people by fiat, to imagine that paying for the ideal by reducing competition to zero, rather than extending competition to the nth degree, is economically stupid, even illiterate.
Romney and Obama both are guilty of falling for this latter obvious stupidity in chasing after the chimeric ideal of healing the sick, which is why I despair that Daniels, Ryan or Christie are not running. These leaders are all people who have articulated strong objections to ObamaCare, Medicare and entitlements generally, while our candidates have not and perhaps, in Romney's pathetic case, cannot. I am hoping that whatever weak person we have in the White House a strong Congressional group will craft this message. Of course, the history of our Republic is rather short on Congresses of this sort, but I have no othe hope.
One of the advantages of getting old is that you begin to see how much your genetic endowment affects your health. Many seniors, like myself, discover to our surprise that we rarely get sick--just like our parents and other close relatives rarely get sick. So it makes sense for such people to choose a high deductible.
Letting people make their own decisions about their health care coverage, as Ryan proposes, makes much more sense and will save money, as pointed out in this article, over the long haul. Government plans do not take advantage of what Marxists themselves call "human capital," that is, people's own knowledge of themselves. Maybe conservatives should bring forth an argument based on human capital in order to buttress the standard conservative arguments against Obamacare.
The state of Hawaii has had a "universal" healthcare law in place for 4 decades now. It has succeeded in extending healthcare to the vast majority of its citizens, not so well in containing costs, but it has the virtue of being private (employer funded) rather than government run and funded. There is a bit of competition among healthcare providers, which is crucial to restraining rising costs, but due to Hawaii's geographical isolation and small population not nearly as much as there would be in more populous states on the mainland.
It is fair to say that the large majority of Hawaii's citizens are satisfied with the current system of care (if not the rising costs), yet conversations about healthcare on the national scene (including numerous postings like BK's) NEVER mention the "Hawaii solution" as a possible alternative to government run and funded programs for the rest of the country. This is all the more surprising because Obama as a child and his grandparents were once part of that healthcare system. Hawaii's healthcare law could be the model example for other states to follow. The options available to the entire nation are not just ObamaCare, RomneyCare, or nothing. People on the mainland US just need to stop being so parochial and to look farther west to consider other possible approaches.
I should also have noted that Hawaii's healthcare law was given a (nearly) total permanent waiver from the provisions of ObamaCare, which was buried deeply within the law that was passed by Congress. I am not entirely certain of the details, but apparently the Hawaii legislature has been assured by the state's Congressional delegation that the state healthcare law can remain in place and will be immune from all (?) of the national healthcare law.
Rather than cite numerous reports, I suggest all look at this summary of the failings of Hawaii's government-dictated healthcare. http://sweetness-light.com/archive/lessons-from-hawaiis-health-care-system
Perhaps the biggest flaw in the current health care system is that nobody knows what anything costs until you get the notice from your insurance company. Patients have no idea whether they really need the tests ordered.
The Medicare Drug benefit has come in costing far less than expected because of the "donut hole" policy, which offers a powerful incentive to use generics whenever possible and try to keep expenses down. People respond to incentives, as the work of the new Nobel laureats proves. Democrats, of course, think the "donut hole" is unfair and have eliminated it in ObamaCare, meaning that costs will skyrocket.
Consumer-directed healthcare controls costs according to new study:
I have seen this time and time again and, now, it appears to be critical to Ryan's plan. Healthcare should be purchased like any other commodity with the consumer making choices based on return-on-investment (cost); i.e. biggest bang for the buck.
BTW, Ryan needs to stay in his position as head of the House Budget Committee for now since he is the only one with a clear vision of cost cutting and controlling our runaway government. He can go for president or whatever later. He's a young'un.
Bruce, I read the article you linked and, looking at each item, I find nothing there that reflects poorly on the Hawaii law. Most of what may appear to an outsider to be criticism of the law seems unrelated to the law itself.
Some of it has to do with the difficult economics of serving a small multi-island population, in some cases isolated communities of just a few thousand people (e.g., Molokai island, which has only around 5000 inhabitants). And the fact that some folks pretended to be "poor" so they could get "free" coverage from an additional insurance program offered by the state (one not even related to the healthcare law itself) is not, to my mind, a criticism of the original Hawaii law, but an acknowledgement that too many Americans have larceny in their hearts: if the government offers people a "free" service that is paid for by someone else, they will try to take advantage of it. (As the article went on to state, the same "free" coverage offered by the state could be purchased privately by parents for just $50-60 a month.)
The major downside to the Hawaii law, which was not explicitly mentioned in the article you linked, is that if a worker loses his job, he loses his medical insurance coverage. If he is married, however, his spouse may be able to provide family health coverage through his/her employer. Yes, some businesses can try to cut costs by hiring only part-time workers, but that is not a sensible option for many businesses. In fact, in a heavily unionized state like Hawaii it's not even in the cards for some businesses, e.g., the major tourist and travel (hotel) industry. It's also the case that a number of the unions themselves offer healthcare insurance plans that union members can sign up for.
Cooper: We'll just have to disagree.
Let me give you an example: A large multistate client of mine working through a giant national insurer was not allowed by Hawaii to offer the same top-quality benefits as in other states, even including all Hawaii mandates. Instead almost all insureds are steered into Blue Cross, acting as a government monopoly. Same-size-must-fit-all government program.
Further, costs are loaded onto employers, leading many to not hire or hire part-timers.
A largely service economy, servicing the state.
One important point: It is constitutional for a state to implement a "Romney care". It is not constitutional for the federal government.
Yes, we will have to disagree because your anecdote has, as far as I can see, nothing to do with the effectiveness of the Hawaii state healthcare law. And HMSA (which I believe must act on behalf of Blue Cross since Blue Cross is not listed as a healthcare insurance provider in Hawaii) is not a government monopoly or even the equivalent of a monopoly, nor is everyone in the state "steered" toward HMSA. That is a simplistic overstatement of the situation.
As I wrote earlier, some companies might try to avoid the cost of paying part of the employee healthcare premiums for healthcare by hiring only part-time workers, but neither you nor the article you linked to provide numbers that demonstrate this is widely done and that it affects a substantial number of workers. So far, all you have done is make an unsubstantiated accusation, which may or may not be a valid basis on which to criticize Hawaii's healthcare law.
As the article you cited points out, at the time it was written 96% of Hawaii's citizens were insured for healthcare. Hawaii always ranks high when states are graded on quality of life, longevity, and the health of its citizens. Hawaii's healthcare law has played a role in achieving that status, and other states might wish to follow suit. Nonetheless, IMO it is not a job that the Constitution of our country assigned to the Federal government, for which reason I am opposed to ObamaCare.
I think the only way to control health care costs is to eliminate insurance coverage for routine care. People should pay for it directly and carry insurance for the unlikely, catastrophic event.
As one commenter pointed out above, no one who has insurance knows what any medical care costs until told by the insurer. If you add in Medicare, it's even worse. GPs are paid practically nothing and they rebel by refusing to take Medicare patients.
In addition, we need to take responsibility for maintaining our own health. So many chronic diseases are of our own doing - there should be incentives (like good driver discounts) for maintaining one's health built into the premiums for catastrophic care.
The system is broken and needs a complete overhaul. I like the Ryan approach. As a current Medicare recipient, I would add to his proposal that current recipients have the option to abandon Medicare and join a voucher style program.
Cooper, thanks for the reply, and it raises some important points. I've never heard anyone who has lived in Hawaii complain about the quality of care there. And, in urbam areas access is adequate. However, in rural areas of Hawaii (as in many rural areas of the continental US) there is a shortage of doctors due to inadequate insurance reimbursements. The third leg of the stool of healthcare is costs. That is where Hawaii's model has failed. It places an undue burden on employers. Hawaii's exemption from ERISA (the only state with an exemption) has frozen the emplyer-employee cost-sharing at 1.5% of an employee's earnings from that employer. As premiums have increased, and Hawaii's legislature added mandates, the burden has fallen on employers. I wanted to avoid a long list of citations but here's a study from 1979-2005, mostly better economic times than presently. (http://ideas.repec.org/p/iza/izadps/dp4152.html)
"As expected, the coverage gap is larger for workers who tend to have low rates of coverage in the voluntary market (primarily those with lower skills). We also find that relative wages fell in Hawaii over time, but the estimates are statistically insignificant. By contrast, a parallel analysis of workers employed fewer than 20 hours per week indicates that the law significantly increased employers' reliance on such workers in order to reduce the burden of the mandate." In short, the pass-through from employers has been upon poorer workers and to restrict many workers to part-time status. Trends since have increased that.
Other matters, such as the nature of the market there and the costs are addressed here (http://www.nationalreview.com/critical-condition/47685/hawaiis-compulsory-health-care-system-no-model/sam-slom) by the former economist for the Bank of Hawaii and Hawaii legislator. He sums up: "Hawaii has the mandatory Prepaid Health Care Act, with its high costs, little choice, and lack of flexibility." Read it all. He concludes, "Should the nation follow Hawaii? For sunshine, shave ice, and the Aloha Spirit — but not government health mandates."
Hawaii's system is only legal due to a unique federal exemption from ERISA in 1974. ObamaCare may be, at least in parts, unconstitutional at the federal level, as you say. Hawaii's system, additionally, is only legal due to its exemption from federal ERISA which, in part, protects states' consumers from excessive state interventions in medical care.
Coop: I forgot to add the citation for the shortage of doctors in Hawaii: http://ideas.repec.org/p/iza/izadps/dp4152.html
"The ability to find a doctor "is dangerously limited due to Hawaii's lack of medical tort reform and low insurance reimbursements," Rasmussen said. "In fact, access to health care in Hawaii is in a state of crisis." (Rasmussen is Hawaii Medical Association president)