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POLICY: Shock, horror–I almost agree with John Goodman

John Goodman, the president of the right-wing pressure group NCPA from which he and his wife draw down nearly $600,000 a year, has a piece in the Wall St Journal called, Perverse Incentives in Health Care. The shocking thing is that I mostly agree with him about the perversity of incentives in health care. He is though wrong to blame third-party payments for everything and more importantly wrong to assume that private third-party payment imitates government third-party payment. In fact the reverse is true. Medicare is modeled after the typical Blue Cross major medical plan of the 1960s, which is why it is so damn hard to reform today. And it’s not third party payment, it’s the way we organize third party payment that’s the problem.

But after reading Goodman’s piece I have no idea what his overall solution is. He even spends some of the article slagging off HSAs, which is pretty rich given that he and his organization pushed them on an unsuspecting nation, mostly in the pay of Dan Rooney and the other scumbags at Golden Rule. His problem with HSAs is that they are connected to third party insurance policies, which then mandate their own rules on what is covered and what isn’t. I’ve been telling anybody who will listen that that’s the problem with high deductible plans for a long time. Well done Goodman on catching up.

Goodman does have one solution. People should only have conditions and diseases that can be cured by one-time procedures that are relatively cheap and can be paid off using a credit card in a finite amount of time. It’s probably a shocking revelation to Goodman and his cohorts in the free marketeer camp, but most health care is required by a small minority of people who are very sick, and they can’t afford to pay for their care with the loose change they find in their couch cushions. That’s why we have third party payment in the first place. So perhaps it makes some sense to figure out how to reform that. Of course Goodman has no answers, which is not something that can be said for either Alain Enthoven or the single-payer crowd.

Actually I guess Goodman does have an answer–just make sure your country’s only illness is relatively mild myopia, because he thinks Lasik is the cure for everything (even if the actual research shows that there’s lots of lies told about that too!).

And then there’s a guy I’ve never heard of at Yahoo Finance called Charles Wheelan writing a very sensible piece about how we fail to rationally ration health care in the US. Why isn’t he writing in the pustilent sore licking section of the NY Times, or perhaps more appropriately, shouldn’t he get his shot in the WSJ opinion page?

CODA: This post is a reminder of why you should never use a web form for anything. I had written the whole thing, got distracted by something else, thought I’d saved it, and when I left the form I discovered that I had set a time for it to publish but not actually told it to publish. So of course it had all vanised. I usually write my post in a third-party client editor called Blogjet.  I’m now trying to quickly redo what I did before using voice dictation, but of course Dragon NaturallySpeaking is giving me a really hard time– it’s really not quite ready for prime time either.

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Matthew HoltgjuddTom LeithBarry Carol Recent comment authors
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Tom Leith
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Tom Leith

> consensus is hard, & gets harder the more > variables are permitted. > health insurance came into being to principally > to serve institutional – not individual, or, > if you prefer, “consumer”, interests. Well, OK I see what you’re saying. Many interests were served by early attempts at insurance, and many interests are being served by it even today. If health insurance had grown up differently, maybe a different set of interests would be served, or the same set of interests would be differently served, but it is the multiplicity of interests involved that make a thoroughgoing “reform”… Read more »

gjudd
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gjudd

Tom, I have no argument whatsoever with your assertion (although I’m not sure that health insurance as a financial product was exactly a raging success out of the gate; probably ‘successful’ along the lines of HDHPs – slow & uneven, until ‘discovered’ by employers in group product form).
The salient element of my post is that health insurance came into being to principally to serve institutional – not individual, or, if you prefer, “consumer”, interests.
If you believe this has scant bearing on the prospects for success of any “reform” efforts that may be mounted, our beliefs on this matter diverge substantively.

Tom Leith
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Tom Leith

> Keeping hospitals solvent was the genesis > of health insurance in the US So, that’s why it was sold the way it was, but this does not say why it was bought. And whose interests were being served in the transaction isn’t an either/or question. Hospitals traded available capacity they had for steady cash flow they didn’t have by promising to make some capacity available for no extra charge to people when they needed it. Its almost like a commodity futures trade, except the commodity is a service. Some volunteer fire departments in rural areas work the same way,… Read more »

gjudd
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gjudd

Matthew wrote: Health insurance was created because patients couldn’t afford hospital bills, and as it was created by hospitals, ti looks like it does today (no denying that). It wasn’t even a matter of affordability, but of forecast-ability. Hospitals – even 1920s -era hospitals – have fixed expenses. Fixed weekly & monthly expenses. Patients, lamentably, aren’t so predictable. They come in swarms one month, and are sparse the next. Hospitals needed more regular cash. Fixed monthly infusions via premiums paid by health plan policyholders is a great way to smooth revenues. We agree that some form of social insurance is… Read more »

Matthew Holt
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gjudd–yes you are right, but I fear it’s sort of a technicality. Health insurance was created because patients couldn’t afford hospital bills, and as it was created by hospitals, ti looks like it does today (no denying that).
BUT the need for third party payment is due to the uneven cost distribution and necessity of getting access to care (i.e. it’s not like Lasik). So we can FIX 3rd party payment/social insurance…we don’t have to abandon it.

gjudd
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gjudd

Tom Leith wrote: “I think he’s arguing in favor of keeping Medicare Advantage around in the hope that “managed care done right” can produce the 25% savings that Mayo evidently has.” You nailed it, Tom – I’m a bit surprised Matthew didn’t put Goodman’s & Krugman’s pieces together, & parse both the 12% math and the “real” subject of each piece. elsewhere in his post Matthew opines that “It’s probably a shocking revelation to Goodman and his cohorts in the free marketeer camp, but most health care is required by a small minority of people who are very sick, and… Read more »

Tom Leith
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Tom Leith

> But after reading Goodman’s piece I > have no idea what his overall solution is. He seems to be thinking out-loud. He complains (evidently) that Medicare does not pay for electronic record-keeping, but then turns around and says that buyers should not instruct sellers on the topic of efficient production. The telephone consultation thing should be fixed IMHO, but I note that face-to-face contact reduces the possibility of fraud. But there is a cost to reducing the possibility of fraud. We suffer terribly from distrust. Reading between the lines, I think he’s arguing in favor of keeping Medicare Advantage… Read more »

Barry Carol
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Barry Carol

I agree that the Goodman piece missed the mark, but I thought the Wheelan article about rationing that you linked to was right on target. I have not yet seen any good analyses that compare practice patterns and the definition of good, sound medical practice among the major industrialized countries with respect to the following high cost case categories: 1. Long term custodial care in nursing homes. How much difference is there in the amount of physical therapy and prescription drugs these patients receive? 2. Advanced Alzheimer’s and dementia patients. How do practice patterns differ with respect to surgical interventions… Read more »