POLICY: Eric Novack responds

Here is a fundamental problem with the debate that Matthew is having with Amy Ridenour and David Hogberg: Matthew (and single payer advocates generally) focuses his attacks on the general ‘injustice’ that might exist in the healthcare system. In the face of such injustice, the theory goes, the government must step in to ‘even out’ the system (another way of saying that the ‘risk pool’ for unhappiness ought to be as big as possible—or, put another way, misery loves company).

“Free marketeers” (presumably an effort on Matthew’s part to turn those who believe that less government intervention actually is good for economies—for which the evidence is incontrovertible—into a pejorative) are generally no more happy with the current system than ‘healthcare-by-lobbyist’ activists (my own pejorative for bureaucrat run healthcare). However, people who believe in markets want to introduce free market reforms, recognizing that this process must be incremental.

Put another way—single-payer advocates speak in broad generalities of fairness and justice and risk pools—which sounds great to the public, but is short on actual policy implementation. Limited government advocates have, thus far, been focused on actual concrete steps to improve the system.

Which is easier to criticize? Of course you can attack an HSA more easily than an ‘everybody in/ nobody out’ risk pool.

To learn about the details of single-payer advocates, you actually need to read the legislation they are promoting. Here’s the basics: unelected bureaucrats are given complete control over budgets that
far exceed individual state spending (i.e. in Arizona, the single-payer plan would give a 9 member unelected group complete control over a budget ($30 billion) nearly 3 times the size of the entire state budget (about $11 billion)). It is not ‘socialized medicine’ because doctors and nurses and therapists and hospitals are not
employed or owned by the government—but government is the only legal purchaser of any services. Patients are explicitly banned from paying, with their own money, for any treatment, test or service, that has not been authorized by the faceless bureaucracy. In other words, it is Medicaid for all. Funding mechanisms for the single payer scheme are sketchy, at best (and given the recent failure in Illinois,the difficulties in Mass and Maine—single payer advocates need to keep it that way).

So, at the risk of putting my nose into Matthew’s post, let’s look at Matthew’s questions and Amy Ridenour’s responses:

“Why are you so happy to have a health care system that kills so many more people who have heart attacks, and amputates the feet of so many more diabetics?”

I don’t accept either of the two premises of the question.

I do not speak for Ms. Ridenour, but the premise of your question is that a single-payer, universal scheme in the USA would magically solve disparities in these statistics. Correct us if you disagree, Matthew.

“Ask the free marketeers to explain why they feel comfortable with a financing system that causes at least 25% of all the nation’s bankruptcies.”

Same answer as above.

At least, Matthew, you are not buying completely into the propaganda from PNHP authors Himmelstein and Woolhandler. A more complete critique of the failings of the original study are available from George Mason law professor Todd Zywicki, but the fundamental flaw is not the 50% number, but the fact that there is no ‘control group’. That is to say, the authors make no attempt to provide context as to other sources of debt, or the rates of households that have the conditions described in the paper, but DO NOT file for bankruptcy. Again, your premise is false and cannot be proven.

“Why [do free marketeers] espouse even greater cost sharing even though it’s been shown yet again this week that increased payment at the point of care reduces people’s likelihood of following their
doctor’s advice?

One argument for “letting” people control more of their own health care spending is that the people who earned the dollars have the highest moral right to decide how they are spent.

Here, single payer advocates like to have it both ways. On the one hand they speak of inability to get care, while simultaneously decrying that up to 50% of care is unnecessary. Which is it? Or is it both? And, again, how is it that an unelected bureaucracy, given complete authority over what care you can choose to purchase with your own money, do a better job of both MAKING people take the doctor’s advice, while simultaneously preventing the 50% of care they think is uneeded? Again, single payer advocates have no answer for this other than a ‘panel of experts’ that will be immune from criticism from individuals, but highly susceptible to the money and efforts of aggressive lobbyists.

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10 replies »

  1. It’s interesting to see Eric advocate against a massive government intervention in something that he believes that while, flawed, still largely works. Yet at the same time, he would impose “health courts” upon the patients. Innumerable “faceless bureacrats” will be necessary to administer those, and it will be ridiculously expensive. In advocating for them, he even says that they will help increase the amount of care patients recieve, yet he claims that much of the care, in the form of “defensive medicine”, is unnecessary.
    What is the distinction, I wonder?

  2. This post makes some great points regarding the “top-down” justifications coming from single payer advocates and the “bottom-up” solutions coming from the free-market camp. I think this highlights some principles in examining proposals coming from single payer and free market camps:
    1) Single payer proposals are only as good as their approach to regulating care and obtaining funding. Where principles may make for great rhetoric, funding and administrative approaches will determine their success. Historically, single payers have taken the approach of top-down management commoditizing and regulating many of the actions of providers. This in turn has created rationing of care as a means of meeting budgets (with the exception of Medicare). This is how state Medicaid programs work; they use caps on reimbursement to limit which providers will accept their payment…this limited pool of providers then limits the number of people and type of care state Medicaid patients receive.
    2) Free market proposals are not comprehensive. The creation of a market will create winners and losers. Naturally, those that will become losers will resist the creation of the market. One must then see where a new market can be created to address the loser’s needs. By nature, markets create a number of new companies that are born to address specific pain points. No one company will (or can) address all of them well…so one must naturally expect a somewhat messy solution that has multiple new players responding to new market conditions.
    3) Someone will have to pay. Free marketers and single payer approaches both require money and impact how care is delivered to patients. Both need to acknowledge that trade-offs will occur that will impact society in very different ways and that new means of transferring risk between the currently healthy and the current/future sick will need to emerge.

  3. > single-payer advocates speak in broad generalities
    > of fairness and justice
    And lassiez-faire liberals do likewise. The crux of the whole discussion is a conflict of vision concerning justice.
    > [single-payer advocates are] short on actual policy
    > implementation.
    I agree fully that in the face of great opposition single-payer policy implementation efforts have been largely ineffective. Thus far. But patient advocates and payers have been effective in getting lassiez-faire liberals on the provider side, the financing side, and the drug & device manufacturer side to make some very minor improvements in order to stave-off further attack. This counts for something, no?
    I know Dr. Novack isn’t a lassiez-faire liberal; no, he is a “Limited Government” advocate who admits a role for government in everyday commerce. And I understand his alarm at the Arizona plan, and at UK style plans where there is no freedom to contract privately for services. If “single payer” means “the government is the only purchaser” I share his concern. But that is not the only meaning of this very loose term.
    It seems to me the Enthoven/Dutch/German style model strikes the right sort of balance among goods: due limits on governmental reach, human solidarity, and liberty. We’re halfway to having such a thing right now — we simply drop the age discrimination built into Medicare HMOs, and throw out “competing” government programs.

  4. One problem I have with folks who espouse a “free market” for healthcare is that the customers in such a market don’t really have a choice about making a purchase.
    First, because if one is ill, one has only two choices when it comes to purchasing a healthcare “product;” getting it and surviving (or feeling better), or not getting it and having what measurement folks call an adverse outcome.
    Second, the idea that a “customer” could actually choose between doctors, or hospitals, or nursing homes with good comparison information is still disingenous; the data available to the public are rare at best, and generally non-existent. Physicians, hospitals, et al fight the public release of data on the quality of their care or the cost of same because of the very real risk of having their own individual (unfavorable) information posted to the Web…killing their business. The realities of the free market.
    So it isn’t really a free market; if I’ve got cancer, I can’t really say “gee, I just don’t need that chemo, think I’ll save my money and get something nicer next year,” like I might with a car. I need it, I must have it to survive, so I don’t have a free choice.
    And I don’t have information that tells me which doctor is cheaper, or which hospital charges less, because that information isn’t available–and the people who could provide are not eager to do so.
    “Free market” healthcare isn’t, and the rules that apply to the auto industry or retail or other business that thrive in an unregulated atmosphere simply do not apply here.

  5. I just want to add one last thing about the argument for a single payer at least universal healthcare. Aside from a moral argument for the right to healthcare, there is of course the economic argument. In the recent report issued by the CWFund on international comparisons of healthsystem performance, it study ranked the US dead last out of six industrialized nations (the UK, Germany, New Zealand, Australia, and Canada). Germany was ranked 1st. Most tellingly, the US spends 16% of GDP on healthcare or about a little over $6,000 per capita. Compare that to Germany’s a little over $3,000 per capita spending. Germany scores better in terms of quality outcomes and provides universal access while we spend twice as much to get the worst system. In terms of the value of each healthcare dollar we spend, we’re getting a really lousy product. That and we can’t even extend our lousy product to the 45 million left out of the system.
    We already have a market based system, with the exception of Medicare for seniors and Medicaid for the really poor. What has that market driven model given us in return for the amount of capital we invest in it? I want to know how more market driven healthcare is going to resolve that $3000 difference in what we spend per capita while giving us a system that is better than Germany’s?

  6. Eric. My piece is not saying that single insurance pools would solve all the ills of medical care inefficiency or inequity. Although they’d go further than our current non-system
    My point is simply that defenders of the current status quo are claiming that care is worse in other countries. Yet in many instances/disease states it’s clearly better. You and I are sensible chaps and we realize that the payment/financing system doesn’t cause all of these differences.
    But your colleagues on the free-marketeer/booty capitalist side of the house (as opposed to managed market types like me) HAVE been arguing loudly that care is worse in other countries, and therefore that we should keep the system we have (or at the least not move to something that looks like Canada, France, Japan, etc).
    But you cannot logically argue that position unless ALL care/outcomes here is superior to care/outcomes there. In fact very little care/outcomes here is superior and a substantial proportion is NOT.
    So by saying “what are you so happy to be having so many more people die of heart attacks and have their feet amputated” I’m just using the inverse of their illogical argument.
    To which no one has a response. Because I got ’em trapped in an illogical fantasy world.
    Hence you’re meandering off into an interesting irrelevant discussion of an Arizona bill that has no hope of ever passing.
    Finally a quick word on “free marketeers”. The “free marketeers” appear to think that there should be no rules at all in health insurance. That to me is more of a “booty capitalist” position (you’ll have to go read your Weber if you’re not following me). Every market needs rules & oversight to allow it to work efficiently, and people will continue to try to subvert them. The most successful of all (the WW equity, bond, futures and currency trading markets) have enormous amounts of rules, designed to help people make rational transparent transactions. And some ability to get after those who try to subvert them (Enron et al).
    So if I buy 100 stocks of IBM and so do you at the same time we know we are buying the same thing at the same price. All my proposals for managing health care insurance would do is create exactly that same rule structure, so that there was not price discrimination by suppliers.

  7. The is a definitive and fundamental difference between healthcare and other consumer goods such as cable tv, a cell phone, and restaurants, namely they are not necessary to your physical well being. You’re not going to die or suffer if you can’t watch tv.
    As for the providers that are forced to provide care through EMTALA regulations, yes they are very concerned about reimbursement, some of which is largely given through their tax-exemptions (the large majority of hospitals are non-profit). I think that providers and physicians are probably largely supportive of single payer or more likely universal healthcare since no provider is thrilled with providing services to people who can’t afford it. You must admit that the 45 million without insurance are not really a bunch of slackers. The overwhelming majority of families without insurance work, however, their employers don’t or can’t afford to offer insurance. The employer-based model of insurance is breaking and healthcare is too important to leave to the free market.
    Not everyone can be or deserves to be rich, but why can’t everyone have a right to access to healthcare (and I don’t mean through the ER which is much more expensive anyway). We have an expectation that we have certain rights such as speech, education, arms, a vote, but when it comes to healthcare, we try to treat it like a common commodity when in fact healthcare should be treated as something in a different category.
    I think that you are overusing the argument of a bunch of faceless bureaucrats rationing healthcare as some kind of monstrosity. We’ve got faceless bureaucrats running the FDA, IRS, agriculture, EPA, energy, etc. but we seem to trust them enough to regulate these vital services and at least there is some transparency to these agencies allowing us to regulate the regulators. So why not healthcare? Its better than our current hands off market system.

  8. James- in your last paragraph, you conveniently leave out the providers of healthcare, who are forced to provide urgent care with only the hope of any reimbursement.
    But the key questions are: ‘who’ should be in charge of the ‘rationing’ you believe is necessary? Who should make the everyday financial decisions for the ’45 million Americans who need to be protected from financial ruin’? Should those people be forced to not have cable tv? a cell phone? go out to eat?
    As I mentioned, the real ‘risk pool’ single payer advocates want to increase, is the pool of people dissatisfied with faceless, nameless bureaucrats running their healthcare, and running their lives.

  9. I think its rather unfair to lump Mass and Maine together. Admittedly, Maine is having some significant problems as pointed out by the recent NYTimes piece on it, namely, that Maine never issued an individual mandate and asked hospitals to voluntarily limit their margins and price increases to 3%. Voluntary sacrifice is never going to work. The health reform in Mass. is showing much more promising signs, which is a large reason many states, like CA, is looking to copy elements of the reform model.
    The entire aim of single payer is to create a more equitable (and this should be the key word) system of rationing healthcare instead of rationing healthcare by denying regular access to 45 million Americans and protection from financial ruin. Getting to Universal access is definitely a question and finding an adequate funding mechanism is going to take time, but at least some states are trying because who wants to end up like Texas with 25% uninsured?
    CDHPs are not the answer because who is being forced to pay all the first-dollar costs? Not the employers or the insurers, but the consumers, and they don’t solve the underlying issue of who is going to pay for healthcare when CDHP beneficiaries can’t pay their deductibles? (hint: its taxpayers and hospitals, although hospitals are jumping in on the CDHP bandwagon too for their employees, but at least they can force their employees to pay)