Wednesday, August 5, 2009

Facebookin' Health Care

NEW YORK, New York -- This might be a lame use of a blog.

This post follows from a facebook conversation about health care reform in the US, and I'd like to offer my thoughts below. This is entirely because facebook limits comments on links, etc., to a paragraph or so, and there no longer seems to be any way to create content on facebook by uploading a note from scratch, as opposed to pasting in a blog link. Hence, my use/abuse of the blog to continue an argument that would've remained on facebook, if Mark Zuckerberg didn't suck.

At any rate, the article that spurred the back-and-forth was this WSJ article about Democratic lobbying groups attacking party members who were "out of line" in criticizing the Party Leadership's (still not elucidated) stance.

I had commented on the article as follows:
Still unclear on why it's supposed to be wrong for businesses to want to make a
profit. I really don't know what worldview the majority of Democratic
congresspeople are supporting -- trashing an industry simply because it is

There seems to be a need for some healthcare reform (or so I'm
told...), but allowing the motivation for it to be the fact that certain
companies are profitable is inane, vengeful, and economically backward.

A friend of mine responded:
Once again you have posted a link to an article along with a comment that
is almost unrelated. The article is about political infighting among democrats,
not the overall economic philosophy of the democratic party. Are you hoping no
one will bother to read the article, and we'll all just assume it substantiates
your point?

I'm sure that privately run fire departments would also be quite
profitable, if not for the public option... Not all things should be left to the
private sector.

Your "or so I'm told" bullshit suggests that you don't personally know
anyone who has suffered under our current health care system. I'm glad you and
your family have been so fortunate, but open your eyes. It is not working....

I am sick of you guys posting this shit. (Yes, G-Man, I'm talking to you
too.) So please answer the following question: What is the republican
health-care platform, other than opposing the democrats? No change to the status

My reply is this:

Guys, I'm glad you commented -- some debate is obviously a good thing when Congress and the administration want to radically alter something that affects our financial and physical well-being to the degree that healthcare does.

Firstly, though, I think your criticism was pretty off-base: the comment I made is in no way unrelated to that article. The article is about lobbying groups publicly attacking Democrats who have qualms about undertaking radical changes to 1/6+ of the economy without slowing the process down for debate. The POV of the attacks is that "profiting" is somehow wrong. To my mind, that is a dangerous, populist route to take.

In any economy, in any sector, you need to turn a profit to stay in business and, ergo, to employ people. People need jobs, but those jobs will only exist when an industry is profitable. Yet in a recession, when people feel financially hit, demagogues can appeal to populist anger at "rich bosses." As recent incidents in France (workers rigging bombs to factories) or China (workers beating executives to death) show, that populist rage can be an unpredictable, violent thing. Today far-left lobbying groups rail against "profiteering" in healthcare; but that same logic can apply to any other industry tomorrow: energy, agriculture, food processing, higher education, technology, finance. I find the line of attack these lobbies are taking to be fundamentally worrisome.

Moreover, let's look at the larger, overarching point of the article that you say I'm not addressing. The point is that lobbying groups are launching ad hominem attacks on politicians who don't want to go along with the government's plan. As I said, when you're talking about restructuring 18% of the economy, some debate is a good thing. The administration, however, wanted a bill to go through by early August -- after virtually no debate. Sure, Obama goes on YouTube and urges people to have "health care parties" where you can talk about how worried you are about health care; but there hasn't been any actual open debate in Congress or the administration about what changes would be best, either in an ideal world or in the current situation. Instead, as he has done elsewhere (the stimulus and energy legislation, e.g.), Obama puts out a few forceful advertisements or press conferences about how badly something needs to be done … and then he lets Nancy Pelosi worry about the details behind the closed doors of congressional committee rooms.

And those Democrats who have qualms about the closed manner in which the process has taken place are then vilified by lobbying groups that are apparently connected to the Democratic Party. Stifling debate is a dangerous, unhealthy thing to do in a democracy. That's especially true when a plurality of people are opposed to the initiatives that are coming together and feel that it will make their own health care worse.

As much as Obama portrays healthcare as a huge crisis, 80% of Americans are happy with their own coverage, and coverage rates have been more or less stable for about 20 years. There are problems, certainly -- most people feel that the system in general has problems even if they themselves are satisfied -- but people don't want a radical revamp. Doesn't that count for something? After all, isn't democracy about the will of the people? Can you force a new health system with a big government role on people, the constituents of the state, if most of them don't want it but because you think Congress and the president know better than people what's good for them?

But that sort of stifling is what those ads aim to do. Incidentally, by attacking people who post articles critical of this process, you are also stifling any attempts by people to create discourse.

Why is discourse important? It helps to know what the government is trying to pull when it comes to any policy. But in this case, there are some good ideas out there, and then there are some less-good ideas, many of which are arguably in the main congressional plans. A quick look at the only state to have introduced health care reform of the sort that seems likely to be pushed by Congress -- Massachusetts -- isn't much of a success story. Fewer uninsured have been covered than thought (though coverage rates are pretty good there), but more importantly costs have soared, the system is in debt, and growth-killing taxes are being introduced despite promises of no new taxes for the middle class to fund the program (sound familiar?). And that's in a state of 5 million people that is one of the wealthiest, healthiest, least-obese states in the country.

So what needs to be done? What else is out there? I don't know what the Republicans' plan is, to answer your question. They don't seem to have one, and it's a pretty big disappointment when the opposition is either irrelevant, has no idea what to say, or goes along with the ruling party. It was annoying when Democrats went along with Bush initiatives that were ill thought-out, and it's annoying now when the Republicans appear to have little to add. One-party rule is always a bad thing.

More proactively, there are probably three areas to look at here: quality, coverage and cost. As for quality, the quality of care in this country is pretty good. Granted, we pay 80% more as a % of GDP than France and Japan and don't have markedly better outcomes. But outcomes are still better than, e.g., in the UK. So quality is good, but, importantly, we don't get enough value.

That brings us to cost. Theoretically, rising costs aren't in and of themselves a problem. As an economy grows more sophisticated, people don't need to spend all their money on nondurables like food or clothing. That they spend more to advance technologies that let people live longer, healthier lives is a given. But cost is an issue when it becomes prohibitive -- or when health care is run by the government and those costs eat into other government expenditures or raise the public debt. So if you want to have real problems with cost, giving government greater responsibility for health care costs is a pretty good way of making cost a real problem -- which is what you have when that responibility eats into other spending, or worsens the debt load.

As for prohibitive costs, they play into coverage. People get hit hardest financially when they aren't insured or their insurer gives them poor coverage. Making sure more people are covered, and that that coverage is good, is important.

But the biggest driver of rising costs is the same factor that results in the US having outcomes no better than France while paying twice as much compared to GDP: Waste. The system is full of waste, with doctors ordering far more expensive tests and ineffective treatments than is needed. The reason behind that is that reimbursement for hospitals and doctors is based on the costs they run up, not on the quality of their outcomes. As a doctor or hospital, you get paid more by insurers or the government when you order more expensive tests, whether or not they're needed. The incentives are totally backward.

That's the biggest factor driving cost increases. It's a problem, but there are hospitals and health care systems that have tackled it: the Mayo Clinic in Minnesota, California's Kaiser Permanente system, the Cleveland Clinic. What they all do is pay doctors yearly salaries rather than commissions based on the costs they rack up, and have outcome-based systems of cooperation among different doctors to coordinate treatment and make sure unnecessary tests aren't given.

Revamping the system in that mold -- putting in place a system (Medicare incentives, e.g.) that moves reimbursement to a salary model and coordinates care to achieve better, more efficient outcomes -- would be the best step in the right direction. But the plans being hashed out by Congress don't do that. And prominent Democrats bucking the government's plans get steamrolled when they might have something good to say.

That change of incentives is agreed upon by academic health-policy experts, yet it has no place in the main plans. Other policies have achieved mainstream acceptance among health-policy experts (including Obama advisor David Cutler, whose book "Your Money or Your Life" goes over these issues really well; maybe if Obama came up with his own plan instead of leaving it to Congress, we'd see more of Cutler's good ideas…) include separating insurance from employment. Employers today get tax breaks for offering health insurance. That leads to an incentive structure where they can offer really, really expensive plans -- and write it off as taxes. The result is to push up costs and have more waste in the system -- all funded by the US government's tax system, and none of it reformed under Congress' proposals. Neither Democrats, influenced by unions that have the most generous and wasteful benefits, nor Republicans, influenced by the insurance companies that can benefit from this policy, want to touch this one, although every health-policy expert sees it as Public Enemy No. 1. You stop offering those tax incentives, and you can move away from employer-based coverage. Not only does that mean that US employers don't have to shoulder insurance burdens (making them more competitive globally), but it means people don't get screwed when they lose their job. That step toward portable insurance is key, although insurance under the competing congressional plans would only be portable if it's controlled by the government, while employers will continue to have the same bad set of incentives vis-a-vis private insurance.

Another reform: Individual mandates. This is a bit more controversial, but a large number of uninsured are younger, healthy people who can afford insurance but choose not to purchase it, preferring instead to have more spending cash. The result is that if you are, say, unemployed or a young adult and not yet working, it's expensive to buy insurance. That's because you aren't part of a group buying pool, and also because so many other young, healthy people don't buy insurance. The upshot being that insurance costs go up when it's only older or less-healthy people buying the insurance. When younger people with lower medical costs buy it, they bring costs down for everyone. Putting in place tax penalties for people who don't buy insurance could create individual mandates that bring down costs for all. Lots of Republicans are reasonably opposed to this as a violation of personal liberty, but it may not be the worst of ideas.

There are various other ideas, some supported by Democrats (more government spending on EMRs and other technology; a health "exchange" where people can go to get good, clear info on what plan would be cheapest/best for them), others by Republicans (tort reform; allowing insurers to operate across state lines, breaking up the local monopolies that exist). Then there are interesting ideas that both, or no, parties support: non-profit health cooperatives; prohibiting insurers to exclude based on pre-existing conditions; tying outcomes to value so that, e.g., people can use any clinic with their insurance but using more costly and less-efficient ones costs you more out of pocket; and, importantly, action to break up the local monopolies that insurance companies have become.

Look, at the end of the day, US health care is among the best in the world. I know it's not New York hipster-cool to say that (maybe Conor Oberst will be pissed at me), but it's true. There are big problems, but on the bright side there is a broadening consensus among health-policy experts about how to take care of them. Unfortunately, Congress' plans don't really take them into account. Instead, they try to ape European-style plans. Doing that doesn't mean we'll get European-style outcomes, and it may mean that, despite European-style taxes, outcomes here are affected negatively. Medicare, after all, is a politicized, wasteful mess (they still haven't figured out where funding for Part D is coming from...) and hardly the path you want to follow. The number of hospitals is about half of what it was in the 1970s. That's because hospital profits have been getting squeezed both by insurers and by Medicare for decades. The result is that there are fewer hospitals, pushing costs up and making care less accessible. If you have a government-run plan that artificially pushes down costs, unless you put hospitals under government control (that may work, but it's not exactly part of the plan now), they'll take more margin hits and more of them will go out of business … pushing costs up further at the existing, less-accessible ones.

Atul Gawande wrote an interesting article a few months ago about how different health care systems came about. It's pretty interesting, but he recommends the US stick to what it knows and improve that, expanding coverage, cutting costs and improving quality. As he notes, that would be done by embracing reforms like those above, rather than having a government insurance plan that doesn't cut costs or restructure the way doctors are paid; that retains a backward employer-based system necessitated by WWII-era worker shortages; that politicizes health decisions (meaning any cost cuts will be political death and that therefore costs will keep on rising); and that creates more debt and eats into other government expenses. Yeah, it's fashionable to focus on how the Republicans, who are pretty irrelevant here, have no plan, or about how ridiculous and hickish Max Baucus or Ron Wyden sounds. But it's just stupid to try to silence Baucus' or Wyden's voices when what they want is an examination of the largely closed way a handful of powerful congresspeople have cobbled together a populist but iffy plan.