Sunday, January 23, 2011

Weekend Links

Because you really didn’t have anything better to do this weekend than read about health policy.

I’m late to the party, but you have to smile at Harvard economist Greg Mankiw’s take on the fiscal responsibility of Obamacare:
I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.

Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit. But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.
I’m sure there will come a point where we all get sick of Xtranormal, but it hasn’t happened yet, so check out this hilarious video entitled “Medical Loss Ratio Explained,” which explains the Obamacare debate better than I could with a year’s worth of blog posts:

One thing that the Left does well, but the Right does poorly, is talk about how real people are affected by health care policy. The Heritage Foundation has launched a series of videos to address this issue, and here is the latest (h/t InsureBlog):


  1. Anything out of Heritage is suspect.

    Medicare and Medicaid are indeed economic train wrecks. But that doctor claims overhead costs her $350/hr which equates to about $50,000 per MONTH. Hmmm...?

    Now right behind Medicare and Medicaid are the fee cram-downs being done by private insurers. (BTW, Avik, you support the Medicare "doc fix" cram downs that the video doc deplores right?)

    Anyway that's the dirty little secret of the current private insurance system. The British extended wait for non-acute service is already being replicated in the States because provider networks are shrinking from doctors bailing out in protest. Need to see a psychiatrist or Ob-Gyn? Come back in 2 months.

    The point is that to contain costs, someone is going to have to expect less or pay more of something (services or money). Nobody on either side is clear on where they think the haircuts should happen to regain long term feasibility.

  2. SteveM,

    The "Anything out of X is suspect" argument gets no play from me. Even though Kathleen Sebelius is consistently partisan, demagogic, and dishonest, I always take the time to analyze and assess the actual arguments she makes. If you don't like what Heritage is saying, tell me why, instead of dismissing an entire group of people as "dishonest."

    Also, to say "nobody on either side is clear" on where costs should be controlled is incorrect. Progressives believe that government-appointed experts, e.g. the new Medicare IPAB, should be empowered to restrict access to care. Conservatives believe that free individuals, paying for their own care, should decide what care they're willing to pay for.

  3. Avik, thanks for the reply. About Heritage, they rail against government health care yet fully endorse the obsolete and unaffordable American Empire Project. (If we can't save Detroit, how we gonna "save" Iraq and Afghanistan?)

    Beyond that, the doctor's claim of $50K per month for overhead was so obviously over the top, any rational person would have edited that out. Not Heritage though. They'd rather run a cheap point of dubious validity.

    We disagree about the nature of health care consumers. I believe that an ill consumer is not economically "rational". I.e., he can't shop around. Moreover, most consumers are not you or I. They are not going to drill down into the internet to make themselves fully informed. They count on their doctors to do that. But the docs leave out the economic consequences of treatment options contributing to the cost explosion.

    The reason the majority of people reject Obamacare is because they had employer paid coverage under the legacy regime. Obamacare is a genuine fiasco. But apart from the majority who are relatively fat and happy with their coverage, is a sizable and growing minority without adequate access to health care that the private market does not want to do business with.

    And from what I've seen of the Republican model, it would just force already ill people out of the insurance system, because even your 7 grand subsidy won't buy a policy when someone is consuming 500 dollars a month of (branded) pharmaceuticals. Having access to unaffordable policies is a perverse false choice for them.

    And Re: Sebilious. I'm sorry, she's a totally empty suit. Her arguments are meaningless because she (and Obama and his merry cabal of idiot savant elites) are mostly clueless about unintended consequences. You can try to counter her arguments but they are oblivious to the obvious.

    To close, what bugs me about the Republicans is tax cuts without spending cuts first. And Obamacare repeal without a specific plan to address the legacy shortfalls. I.e., pass a repeal amendment as part of a larger alternative reform bill that fully explains how each strata of society could feasibly receive health care apart from charity or the ER.

  4. You've hit on a key element of the debate: can consumers be rational? My view is they can be. Not every consumer needs to be "fully informed" in order to consume medical services.

    I may not know how an internal combustion engine works, but I feel perfectly competent to buy a car. I may not know how GSM technology works, but I feel perfectly competent to buy a cell phone. The market works because a small minority of the consumer base acts as the incremental buyer that businesses must respond to.

    Tax cuts without spending cuts: yes, this is a problem, and hopefully one that Republicans will get better about in their latest iteration.

    To your point about "7 grand subsidy won't buy a policy when someone is consuming 500 dollars a month of (branded) pharmaceuticals." For the most common conditions, there are plenty of good, cheap generic drugs available. Hypertension? Beta blockers. Hypercholesterolemia? Simvastatin. Diabetes? Metformin. Etc. etc. Our third-party payment system doesn't incentivize patients enough to make these cost-effective choices.

  5. if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.
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