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Sarah Palin’s limited health care record staunchly free market

Republican vice-presidential candidate Sarah Palin has very little on her health care
policy resume from her short time in office as Alaska’s Governor but what she does have fits right in with Senator McCain’s strategy to use the market more effectively in bringing down America’s health care costs and improving access to the system.Palin

Her health care efforts have focused on two things in Alaska:

  • Eliminating the 1970s era strategy of requiring providers to file Certificate of Need (CON) applications before being able to build more health care facilities.
  • Providing consumers with more information.

On the Certificate of Need issue she recently wrote in an op-ed in the Anchorage Daily News:

Health care: Do we have too much government or too little? Should we have regulated markets or open markets?

Those are the perennial questions.And that’s what makes the state’s proposal to repeal the current Certificate of Need (CON) program so contentious. Yes, there are solid arguments on both sides. But after much consideration, we believe that the program has not accomplished what it set out ultimately to do more than 30 years ago — lower costs for the consumer. It is time to end Alaska’s program in its present form. Doing so will not only reduce the cost of health care, it will also improve the access to health care, allow more competition and improve quality of care for patients.Certificate of Need programs were required in all states in the mid-1970s by federal mandate. The goal was to make sure that health care facilities matched community need and provided access and quality care, which in turn would help reduce health-care costs. The federal mandate was repealed in 1987 — 20 years ago! — along with its federal funding.The basic assumption in those days was that excess capacity, in the form of overbuilding, directly results in health-care price inflation. However, after more than 30 years of such programs, the National Conference of State Legislatures has found that there is no solid proof that the state-sponsored CON programs have actually controlled health-care costs. In fact, in 2004 the Federal Trade Commission and the Department of Justice both asserted that these programs actually contribute to rising prices because they inhibit competitive markets.Many opponents of CON programs have argued that health-care facility development should be left to the economics of each institution, in light of its own market analysis, rather than being subject to political influence…As I said recently in my State of the State Address to the Legislature, "Under our present Certificate of Need process, costs and needs don’t drive health-care choices — bureaucracy does. Our system is broken and expensive." Eliminating the CON program, with certain exceptions, will allow free-market competition and reduce onerous government regulation.

Governor Palin has also been calling for more price transparency, openness and competition as a solution for rising health care costs in Alaska.A task force set up by the Governor on health care issues in Alaska recently concluded that consumers needed more information to be able to compare costs.As a result, Palin introduced the Alaska Health Care Transparency Act to provide consumers with information on quality and cost which would be provided by a new government-run health care information office.Both of these relatively minor forays into health care policy could hardly be described as heavyweight attempts at health care reform. But both are consistent with the McCain market-based strategy to remake America’s health care system.I expect Governor Palin will have no trouble fitting right in with Senator McCain on the health care issue.See also Laszewski’s analysis of John McCain’s health plan and a Washington Post story about Palin’s health care record.

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30 replies »

  1. Barbara:
    In case you haven’t been following recent trends: medical care inflation runs consistently 200% to 300% above CPI, 46 million Americans are uninsured; the primary care infrastructure to ostensibly service the demand is crumbling in part based on the “private market choices” of physician specialty elections, Medicare can’t find enough “par” physicians, Medicaid is a disgrace from a provider payment POV, non community rated products cherry pick and push off the higher health risks to some other sucker.
    These are just several dependent variables downstream from decades of “managed” private market solutions. Fundamentally, they are nothing more than cost shifting charades.
    So please let us in on the promise of your more “efficient private market solution.”

  2. This whole debate about who should pay for health care completely misses the point of reducing costs. Do you really think that the government providing health care is going to get encourage the 42 year old obese man with high blood pressure to change his diet or exercise so that he doesn’t have to take a multiple hundred or thousand dollar medication? Or convince the parents of the 13 year old child who is obese to make any of the same changes so that he doesn’t develop type II diabetes and cause him to be on more expensive medication and be placed in a higher risk category for the rest of his/her life? This used to be called adult-onset diabetes! These are really the most pressing issues facing our healthcare system, that fact that so much of what we pay for is preventable! Any new system has to provide incentives for prevention! Child obesity is probably the single greatest health care problem of our time with the potential for muskuloskeletal, cardiovascular, endocrine, and pulmonary conditions that are largely preventable.

  3. I appreciate the reasoned discourse on this blog.
    Choice is fundamental to American healthcare and Obama’s plan recognizes that. It is a smart policy compromise on many levels.
    As to free market being the answer for healthcare, compare how the market has driven actions by the major corporate insurers of property: Pull out of high risk areas like the Gulf Coast and cancel fire insurance in areas of California. Applied to healthcare, aggregates groups of people would continue to be uninsured because rendering care for them is costly. We can not afford to rely on free market for healthcare. Literally, we can not afford it. Expensive emergency rooms will continue to be used for what would be inexpensive if treated in primary care. Death and disability rates will continue to be way too high due to lack of primary care. This costs the community, state, and nation, not just the single individual who lacks healthcare.

  4. Re: healthcare quality measures and the market. Yes, it would be great if healthcare could function as a market, but patients and policymakers will continue to ignore quality information for 2 major reasons. 1) ask anyone you know who sees a doctor (over the long term)- their most important reason is usually the bedside manner or other “qualitative” reasons. How do you put this into a hard quality measure? 2) even numerical quality information is impossible to understand, or difficult to access. The site quoted above (wheretofindcare) has 0 useful information about hospitals in my area (NYC), and the one hospital with a 94% quality score is in the process of being taken over by another city hospital because of poor management. Luckily, most doctors have good outcomes (e.g. the CT surgeon examples above) but as long as the doctor-patient relationship exists,I think it will be impossible for anyone (unless forced by a very difficult political stand) to mandate medical choices based on hard numbers alone. (I’m an MD for full disclosure)

  5. From Mother Jones: “But how is she at actually governing? Here’s Anchorage Daily News reporter Gregg Erickson:
    It is clear that she has not paid much attention to the nitty-gritty unglamorous work of government, of gaining consensus, and making difficult compromises. She seems to be of the view that politics should be all rather simple….The Republican chair of the Alaska State House Finance budget subcommittee on Heath and Medicaid says he can’t find anyone in Palin’s executive office who cares about helping bring that budget under control. He is furious with her about that.
    That would be Republican Mike Hawker, who confirms his opinion of Palin to the LA Times:
    “Her administration had the appearance of paying absolutely no attention to any of the rest of the unglamorous side of government,” said Hawker, “whether it be dealing with human services, public services, highways, all the routine aspects.”
    And Democrats agree! Here’s state senator Hollis French:
    French faulted Palin for not helping the Legislature pass a bill to raise the benefits threshhold for children and pregnant women from 175% of the poverty level to 200%. (Most states set them at 200% to 250%.) “She said she wanted to help us raise it,” French said, “but couldn’t be bothered to do anything in the closing days of the Legislature, when she could have helped it through.”
    So in addition to not having much curiosity or interest in political affairs outside of Alaska, she apparently doesn’t have much curiosity or interest in political affairs inside Alaska either.”
    source: http://www.motherjones.com/kevin-drum/2008/08/palins_governing_style.html#comments

  6. I think the private market runs more efficiently and it should be utilized whenever possible. Alaska has focused on providing more health care information to consumers – I assume this is in the form of building and maintaining a public website to display quality data. I wonder why a government body should spend tax dollars on such an effort when a private company could probably do much better, more efficiently and at a lower cost. I have yet to see a well-built, easy to use/understand government-run website. Many private websites like http://www.WhereToFindCare.com already exist and they do a great job.

  7. Peter writes:
    “Why when investors are concerned government intervention is OK, but when people can’t afford healthcare it’s the “private” market that will save us?”
    IMO, this is the threshold question in the debate, and should serve as a values based, or ideological screen from which one’s point of view can be filtered.
    Thanks for the clear recap!

  8. Well Barry, even with an array of tax strategies the present cost structure is unsustainable and that is where you and I really disagree. I don’t believe your mild “fixes” will do much to control costs and that as the fed finds it necessary to save investors bacon by taking over Freddy and Fanny, it will find it necessary to take control of healthcare as well. Why when investors are concerned government intervention is OK, but when people can’t afford healthcare it’s the “private” market that will save us? Again the right deals two hands, one for itself and one for everyone else.

  9. Peter,
    “You’re really talking about a flat tax system aren’t you?”
    Not exactly. I think integrating payroll and income taxes would make it clearer that the current tax structure is flatter than looking at the income tax in isolation would suggest. I prefer to think of it as a broader and more effective Alternative Minimum Tax. I also wouldn’t have any problem with a couple of additional brackets at the high end – say, 35% for incomes between the maximum wage to which the new health insurance payroll tax would apply and $100 or $150K above that an a 40% rate beyond that. Anything more, especially when you consider the state and local tax burden, especially in the high tax industrial states like NY, CA, NJ, IL, MA, etc., and you start to get adverse incentive effects that could hurt the economy, at least in my opinion. The fact is that there is very little agreement among economists as to just how high the tax burden needs to be before it hurts an economy’s ability to grow and creates perverse changes in individuals’ economic behavior. My personal view, as I think I’ve stated before, is that the total tax burden (combined federal, state and local) should not exceed 50% of gross income for anyone, no matter how wealthy. In other words, the government sector should not be the senior partner in anyone’s life. That said, I know there are lots of people who have a different view.

  10. Barry, looks like we’re both up early today.
    You’re really talking about a flat tax system aren’t you?

  11. Peter,
    You raise a fair point about the payroll tax not applying to income from capital gains, dividends, interest, rent and other non-wage income. This is actually a subject I’ve thought quite a bit about given my longstanding interest in tax policy. I think the solution is something called integration of the income tax and the payroll tax. It would work something like this.
    There would be a minimum federal tax rate of 30% that applied to all income, with the probable exception of interest from municipal bonds, above a standard exemption equal to the federal poverty level of income for the number of people in the household up to a maximum of four (currently about $21,000 per year). There could be higher tax rates, up to 40% or so at higher income thresholds. In calculating the tax liability, payroll taxes paid, including the employer’s share, would count dollar for dollar toward the federal income tax liability. The employer’s share would also count as income.
    If we passed a 15% health insurance payroll tax on top of the current 15.3% FICA tax, my approach would work as follows: A family of four with a gross income of $100K including the employer’s share of the payroll tax(es) would have an income tax liability of $79,000 x .30 or $23,700. If all income is from wages, since he already paid somewhat more that that in payroll taxes, he would owe no income taxes. The Earned Income Tax Credit would remain in place to offset at least some of the payroll tax for the working poor. For someone who earned the same $100K from sources other than wages, his gross income tax liability would also be $23,700, but there would be no payroll tax offset because he didn’t pay any.
    The bottom line is that people who earn wages below the ceiling to which the payroll tax applies would pay no income taxes. The income tax would be paid only by higher income people, and those who earn their income from capital gains and qualified dividends would pay at a 30% rate instead of the current 15%. I note that the capital gains tax rate was 28% after the 1986 Tax Reform Act was passed and qualified dividends were taxed as ordinary income until a few years ago. If additional revenue were needed, a modest Value Added Tax might be necessary as well which would have the virtue of capturing at least some revenue from participants in the underground economy who currently don’t pay any federal taxes.
    Everyone except illegal immigrants would be entitled to a voucher, though it would probably be easier if Medicare remained in place for the 65 and over population, at least in the short term.

  12. rbar,
    With respect to price and quality transparency, I think this is most needed for medical events that take place in hospitals, especially expensive surgeries. It would be helpful if we also had package pricing that covered a complete episode of care including the surgeon and anesthesiologist fees, the hospital stay, physical therapy, follow-up care for an appropriate period, etc. I remember seeing some months back some data regarding outcome rankings for 54 cardiothoracic surgeons in Boston who each performed a specified minimum number of procedures. Two stars represented the broad middle range, three stars meant outcomes meaningfully better than average and one star was below average. It turned out that 52 out of 54 surgeons were awarded two stars. Under these circumstances, assuming no material differences in outcomes caused by infection rates and other complications that happen in hospitals that the surgeon had nothing to do with, which hospital offered the best price for the complete episode of care would be of most interest. As for situations where outcomes are slightly worse but the price is much lower, that’s a judgment call that the patient and the doctor should make on a shared decision making basis.
    Standard price transparency tools would also be useful in areas like imaging and prescription drugs. Complicated treatments like organ transplants, heart surgery, cancer treatment, etc. should probably be steered toward Centers of Excellence. At the same time, measuring quality, risk adjusted or otherwise, is most difficult for primary care, though the UK has attempted it with a system that tracks performance on 146 separate metrics and gives doctors the opportunity to exclude patients from their panel for specified reasons including clear non-compliance. Of course, such an approach is not possible without interoperable electronic records to collect all the data.
    I’m glad we agree on defensive medicine. Since I assume you are a doctor, I hope the progressives who read this blog will take notice.
    Regarding end of life care, I agree that defensive medicine and often unrealistic expectations of patients and family members are probably the most important factors that drive these decisions. I also think that even when the patient doesn’t want a lot of heroics, if there is no living will or advance directive, middle age children who haven’t yet come to grips with their own mortality often want their loved one given aggressive treatment. This is why I think we need much more widespread use of living wills and advance directives so patients can put on the record what they want and don’t want in end of life situations. I do think there are a significant number of people in our country, especially those with strong pro life viewpoints, who would be inclined toward a “do everything” mentality even if they don’t articulate their religious beliefs in communicating their choices to medical professionals. I don’t think medical people in other countries engage in euthanasia. I do think, however, there are differences in the definition and implementation of what is considered good, sound medical practice. One long term positive trend in the U.S., I think, is increasing interest in hospice and palliative care among the elderly and their families.
    Finally, on a single payer approach and its impact on innovation, I was referring to the development of new drugs, devices and less expensive surgical procedures. If reimbursement rates are squeezed too much, there will likely be less innovation, though some of that such as “me too” drugs that are little or no better than existing drugs would probably be a good thing. We need both comparative effectiveness and cost effectiveness research so that we can just stop paying for treatments that are of little or no value or just far too expensive in a world of limited resources.

  13. Barry, I understand that the “rich” get pretty much what they want, and I don’t want to restrict them from be able to fly to some elite clinic overseas, but I don’t want them to use my tax money to subsidze air fare or their medical lifestyle through concierge medicine not available to the public at large.
    You state as well that healthcare using vouchers would be paid through payroll taxes (upper limit $200K). Those earning their income NOT through payroll, and hence paying no health tax, would they also receive a voucher? Because if that is your intention I see some large loopholes (intended?). This method would exclude retirees on pension, wealthy Americans eaning income from all sorts of financial vehicles that are not payroll, and those who undercut income taxes by dealing in cash. It seems you have limited the payment for the system to mostly working joes while excempting mostly upper income groups. Have you calculated how much revenue this will give us for healthcare?

  14. Barry,
    I am not in the free market camp as you know, but let me point out a few things:
    “I think healthcare can be made to work more like a normal market (but not completely) if both consumers, and more importantly, referring doctors had robust, user friendly information about the cost and quality of specialists and hospitals to which they refer patients.”
    I have yet to hear any specialist convincingly claiming that he/she knows how to measure quality given the fact that healthcare is so complex. Sure, you can take a few routine procedures and compare outcomes adjusted for patient age, comorbidity, severity of target conditions etc., but even this is already very complicated … and most hospitals, even small ones, actually do offer an extremely large array of medical services. And then, what do you measure: outcome for a certain procedure at hospital x? Or for Dr. Y. only? Or a composite of all services at hosp X? How about Dr. Z. who uses a different technique, but also has a different patient cohort?
    That is not to say that quality cannot and should not be measured at all, and never can be improved … but we well never get at “robust” data that patients can easily chosse “the best” (BTW, how about a hospital that has slightly more mortality and morbidity, but actually charges 25% less than the competitor?). And moreover, a lot of patients will choose to have surgery where the primary sends them/where the mother in law went and was happy/where the parking is convenient and the rooms are so nice etc.
    I agree with you on defensive medicine. This is, in my opinion, a factor for health cost inflation which is greatly underestmiated in progressive circles. Tort reform should be part of health care reform and is necessary to curb overtreatment.
    The notion of Europeans basically performing euthanisia by withholding care because they lack religion is offensive BS. In fact, a lot of people in the US (in and outside of the medical field) understand that aggressive treatment of moribund patients does not help anyone. Overtreatment in the US is, in my opinion, due to physicians who feel obliged to use every bullet (and fear of litigation does play a role here), due to unrealistic expectations of family members which rarely are religious in nature (“how could you suggest not doing everythings for grandma”) and due to regional practice variation, as established by the Darthmouth researchers.
    Lastly, what kind of “innovation” are you and others talking about? Medical innovation? Europe is not doing poorly in that respect, despite smaller ressources spent on medicine/health care. Or are you talking about innovation of service and organization? You may have a point there, the US has been avantgarde with regards to ambulatory surgery, decreased length of hospitalization etc. … but look where the US system delivers deficient service, and also consider that the Europeans get more efficient too; not so much because they copy the US’ innovations, but because they too have to adjust to growing medico-technical abilities and limited resources in the context of an aging population.

  15. I’m concerned that the depth of the solutions I’ve seen so far is not great. It’s time that we break the system down into it’s component parts (physicians, patients, insurers etc.), look at the relationships between each of the parts, and make necessary improvements at that level. As I look at things from my vantage point which is right in the thick of this mess, I see tremendous room for improvement at all levels. The problem is, we have not yet gotten the right people to the table to have the right discussions.

  16. Peter,
    I agree with your point about the privatization of gains and the socialization of losses. I’ve railed against that myself in other forums. I’m quite confident that if the government takes over Fannie Mae and Freddie Mac, existing shareholders will be wiped out or nearly so as they should be. Owners of preferred shares are also likely to absorb significant losses. Bondholders will be protected as the market always perceived that the government’s implicit guarantee would become explicit if it needed to.
    Regarding the vouchers to finance health insurance, we have a product (health insurance) that can be priced fairly precisely. If the payroll tax (employee and employer share combined) were, say, 15% up to $200K, that means the high earner would pay as much as $30K for a family policy that’s worth about $12K today or a single coverage policy that’s worth about $4K. The factory worker making $40K would only pay $6K for the same coverage or 1/5th as much. It would be up to politicians to make sure that the voucher is sufficient to purchase adequate coverage. If some people want to opt for a high deductible plan in exchange for a lower premium and put the difference into a Health Savings Account, that’s fine by me too.
    I think progressive income taxes that finance defense, environmental protection, law enforcement and other general government functions should and do hit high earners much harder. Indeed, a large percentage of the population pays no income tax at all while the working poor actually receive a credit via the EITC (Earned Income Tax Credit). Interestingly, from the middle class on up, the total tax burden (federal, state and local) including payroll taxes, income, sales, property taxes, etc. is surprisingly flat across the income spectrum. The wealthy pay a much higher percentage of their income in income taxes while the middle class pays a higher percentage of its income in payroll, property and sales taxes. When total taxes consume 33%-40% or more of income for most people in the U.S. (more in other countries), it’s virtually impossible to achieve meaningful progressivity on a total tax burden basis. Income taxes looked at in isolation is a different matter.
    The rich will always trade up no matter what the system, and I really don’t have a problem with it. For better or worse, we’re all in it together solidarity is just not part of our culture and probably never will be. Even in Canada, the wealthy and well connected always find ways to jump to the head of the line whether it’s through preferential treatment within the system or traveling to another country to receive care at their own expense. That’s just the way it is.

  17. Barry, it’s been a while since we heard from you. I think some clarification to my comments are needed.
    I don’t think government should determine what goods and services are offered in the marketplace, as in a central planning system, that would eliminate innovation. Certainly present tax policy though determines a lot of what and how is produced in agricultural and determines what projects are built with earmarks. Tax policy can also set national goal direction. But I see the same people extolling the virtues of free markets lobbying for government checks and favorable government laws. We are seeing that this blind acceptance of an unregulated free market is a bait and switch scheme, and not so free, and has been proven to show that oversight and regulations do protect taxpayers and purchasers of essential services. As we have heard this morning the federal government (your tax dollars)is about to take over Freddie Mac and Fanny Mae as a result of an unregulated and little oversighted financial market. We are also finding that the people who want free unregulated markets and the privatization of gains, also want socialization of losses. If free marketeers would, as I’ve said before, talk the talk but also walk the walk I guess I could be more supportive. But there are some services that are so vital to everyone that strict oversight along with rules and regulations are necessary. Businesses can look efficient when they get to pass on the social costs of their actions. Downloading costs is a favorite American past time.
    Healthcare is a prime example of what we don’t want the free market to manage by itself. It should be considered an essential service.
    I must comment on your private voucher tax proposal as well. I guess a voucher system might work (I’m not a supporter you know) but how big would the vouchers need to be and if you limited the voucher would that buy adequate insurance? As well limiting the tax to 200k but giving the same voucher gives those high income earners a better percentage of return on their vouchers. It also allows them to support non-public concierge medicine with taxpayer subsidies. Here in NC our auto sales tax is capped which results in less of a percentage of tax for wealthy people buying expensive cars. Why the cap, can’t they afford it? I also think vouchers would drive up the cost of healthcare insurance as wealthier people could then spend more on better policies which would reduce incentives to offer less expensive and affordable options. It would raise all insurance life boats while leaving Titanic steerage passengers on their own – again.

  18. Peter,
    I think rbar makes a good point about questioning what the alternative is to market failures and what to do about them. We clearly had excesses in the housing and mortgage markets recently, for example. But what’s the alternative? Soviet style government owned and shoddily built drab apartment blocks?
    I think healthcare can be made to work more like a normal market (but not completely) if both consumers, and more importantly, referring doctors had robust, user friendly information about the cost and quality of specialists and hospitals to which they refer patients. In Massachusetts, for example, Massachusetts General Hospital has a reputation for excellence and everyone wants them in their network. Since Partners Healthcare, which owns both MGH and Brigham and Women’s Hospital, has such a high market share in the Boston area, they can command higher reimbursement rates than nearby competing hospitals even when outcomes are no better. Suppose referring doctors were well aware of this and could share in the savings if they referred patients to other hospitals that could do the surgery or whatever just as capably for 10%-20% less. I think it could make a positive difference.
    I think you also overestimate the savings that might be possible if we went to a single payer system in light of cultural differences between the U.S., Canada and Western Europe that influence medical practice. For example, defensive medicine is pervasive here because of our jury based malpractice system and inclination to quickly sue if there is a bad outcome. A single payer system would not fix that unless the malpractice system were fundamentally overhauled which I think should be done no matter what in any case. Secondly, we are much more aggressive in the U.S. in treating the very old and those in end of life situations. Part of this relates to religion. Many people think that only God can decide when it is time for someone to die. In the meantime, we should do everything possible to keep the person alive. In Europe especially, a far smaller percentage of the population is affiliated with a church or synagogue and attends services regularly. A single payer system would not change that either.
    While a single payer system would result in some one time administrative savings, it would come at the cost of a drastic decline in innovation and the elimination of competition among insurers (except for supplemental policies). Moreover, when the ICD-10 hospital coding system comes in to replace the current ICD-9 system, it will have over 150,000 codes as compared to some 20,000 or so in the current system. Do you really think government can get all those prices right without creating shortages in some areas and surpluses in others just as Medicare already does by underpaying primary care and overpaying for cardiac and orthopedic surgeries?
    If we could get interoperable electronic records implemented, robust price and quality transparency tools available to both consumers and providers, malpractice reform, and a more sensible approach to end of life care, those would all be useful steps toward bending the medical cost growth curve back toward the growth rate in nominal dollar GDP. If, on top of that, we could achieve some advances in medical risk scoring at the individual level so that both insurers and providers could more accurately estimate the medical costs for the population they serve, it would be more viable to move from fee for service to capitation plus risk adjustment payments. Ending fee for service payment and embracing capitation with doctors paid on a salary and bonus basis could work just as well in a private insurance system or a public system.
    As for covering the uninsured, I think the long term answer here is a voucher system financed by a dedicated (and very transparent) tax along the lines of the Ezekiel Emanuel proposal, though I’m not a fan of the Value Added Tax for this purpose. I think a payroll tax on the first $200K of wages would be better.

  19. Gary, I viewed your website link and see you are a private physician, hence your viewpoint. Your #1 and #2 above is very revealing in that you negatively editorialize on #2 Universal Pay, and not on #1 Free Market. Your proposed solution does not address costs which is the largest factor affecting access in this country and will drown either a single-pay or free market system. As part of your univseral standard system would the government get to control price?

  20. ending an ineffective government policy after 30 years (CON has obviously had negligible impact on costs rising) — right wing!!
    ‘promoting transparency’ — right wing!!!

  21. At this point in time we cannot expect Governor Palin to be able to frame a comprehensive plan for US Health Care. There are many ‘pundits’, experts, policy makers who have worked on this for years who don’t have a solution, or cannot get enough people to agree to make the change.
    No one thinks out of the box…they continue to be glued to two concepts, 1. Free Market 2. Universal payor which minimizes and almost eliminates innovation other than fixing reimbursements, and limitng access..
    Rather than promoting either of these limited options, another thought should be…Universal Standards. The states and/or the federal government would set a standard for coverege, eligiblity, etc and the system would remain multifaceted and administered by insurors. Those who did not comply would lose their license to sell insurance.
    This would created competitionn in the area of quality and access, and innovate delivery of health care, without rationing.

  22. Governor Palin opines:
    “In fact, in 2004 the Federal Trade Commission and the Department of Justice both asserted that these programs actually contribute to rising prices because they inhibit competitive markets.”
    While perhaps anecdotally correct, where is the evidence that competition and the misnomer of the “free market” has actually restrained or even lowered prices or consumer costs?
    There is no such evidence. Barring the temporary premium declines of the mid nineties where health care inflation calmed a bit, the free market solutions (ALL COST SHIFTING GIMMICKS) have categorically failed as well. So where is the quid pro quo logic?
    Interesting side bar: most provider sponsored networks or joint ventures (PHOs, IPAs, private label health plans, etc) were actually biting the full risk bullet during the nineties, and the cost reduction “head fake”, only to be massacred as the inevitable uptrend resumed. I remember one global risk contract capped in Dallas at $97 PMPM for institutional, professional and pharmacy risk!

  23. I don’t want to discuss the airline example to death – it was your example, but I still think it’s a bad one. The major troubles for the airlines came with the 9/11 economic and aviatory (?) downturn and with the recent rise in fuel costs. All other bad things done by airlines that you mention appear not directly related to deregulation.
    You also do not seem to realize that I am in your camp (I would favor the Canadian system, or maybe “modified medicare” for all.) I just wanted to make the point that some of your arguments are not very accurate and/or helpful. And if there is one thing I learned as a European relocating to the US about a decade ago: there is a majority in the US worshipping the principle of the free market. I think that progressives should not blindly throw around examples of market failures as an argument of principle, but rather specifically point out where markets fail and why, and what should be done about it. This is definitely the case with healthcare since it is not a straightforward free market (and it cannot be made into one as conservatives want to believe), as I argued above. The mortgage crisis is another example of a deficit in market oversight as you pointed out. The waste of energy/fossile fuels over the last decade could have been easily buffered by higher energy taxes (which could have been compensated for elsewhere, e.g. with lower income taxes).
    Free markets are here to stay, but pick your good policy fight where you can make a difference and people will clearly benefit from policy and market regulation. Health care is maybe the biggest one.
    Re. CONs: there is no doubt that the current healthcare construction boom is diverting ressources that I think could be better used elsewhere. As long as you can made a copious profit with stents and hips, you will foster overcapacities in affluent areas and drain ressources from less affluent areas and less well compensated, but beneficial services such as geriatric and primary care. If you want to regulate the market effectively, just give primary care a financial boost and pay less for procedures (a little higher, but overall quite similar to history/physical/treatment plan). Why should a cardiologist be much less well compensated for seeing a complicated hospitalized patient, but highly rewarded for a brief angioplasty that can be done in less time?

  24. Who would argue with providing more information? CON may be debatable. Together they are a drop of the bucket and certainly don’t qualify as a solution to nor a particular understanding of the nation’s health care problems.

  25. rbar, the cheap fying was/is not without ramifications, someone had to pay and is still paying. I’ve lost count of the number of times airlines have declared bankruptcy with the associated lost wages and jobs as well as benefits (healthcare) and supplier receivables. The airlines also use bankruptcy court (taxes) to achieve their wanted outcomes in union negotiations. The behavior of consumers in wanting the lowest price and not considering the future costs (I’m guilty too) in service and availability will also apply to healthcare even when price is transparent. Consider the recent revelation in this blog about HDHPs and how patients are being denied service because they have not and cannot pay their deductibles. These people went for lowest price and now have to bare the result – too bad you say but the problem with that is they now again become dependent on the tax payer and other premium payers to get healthcare. If we at least treated the airlines as a utility then that would bring some stability to the market.
    I want to also expand on the costs involved in this latest mortgage crisis. Not only are there the taxpayer costs above but the unaccounted losses by foreclosed home buyers and communities having to deal with this situation, those are the hidden costs, not to mention the 1000s of pets that have to be surrendered and killed by shelters. Is Wall Street shedding a tear and being held accountable by Republicans?

  26. Peter, I do agree with most of what you write, but I think you could refine some of your arguments a little bit.
    The airline deregulation is a bad example to make your (our) case since it actually worked quite well – flying is very cheap and safe. Service is deteriorating, because most people want to fly at rock bottom prices.
    The Health care market/system is a completely different situation. First, the vast majority of patients (“consumers”) is not able to assess the quality of the product (a product which is BTW very hard to define). And then you have the third party payors that take away a lot of cost pressures from the consumer, which will undercut price competition. We also have a legal system and “consumer” attitudes that favor overtreatment.
    Re. price competition, I seriously wonder whether a no frills medical network would work, with doctors committed to resource conscientious EBM and patients signing waivers that they can’t sue if an independent out of state peer review process does not favor their case. This would curb prices a lot, with similar or maybe even better outcomes.

  27. Free market has not worked and can not work in the future. When people don’t have ideas, they suggest free market.
    This is healthcare…a fundamental need for survival of individuals and the country. So, don’t leave it to profit-driven healthplans to control the entire industry.
    Healthcare is like basic education. Imagine a scenario of profit-driven k-12 education; probably more than half the people would be illiterates today.
    If the Govt do not act swiftly to provide access to care asap, people would anyway end up in Medicaid….but when they do they will have chronic diseases which would be prohibitively expensive to treat. Don’t ever dream of ‘free market’, act today.

  28. My take on the CON failure is that it alone can not be depended open to control costs. While it may have tried to force a higher use, and hence lower distributed costs, it shows that the price increase push and empire building attitudes by hospital CEOs (both private and “non-profit”) and the price/profit/stock value strategies of docs and suppliers was no match for the policy. I also wonder how many CONs have been denied as opposed to approved, because I think it is very hard politically to deny CONs and tends to go against the private enterprize mind set of the approval boards. As an example of real government cost control that works, the Japanese government set the maximum amount it would pay for an MRI, which made the pay back on equipment very difficult. But because of this policy new MRIs were invented and designed that were a fraction of the cost of the ones used here in the U.S. So CONs without health budgets are useless.
    I also want to discuss this Republican/McCain/Palin myth that less government and unregulated markets will reduce costs and improve our lives. I ask where is the proof from over 20 years experience since Reagan promised results from this policy. Are American workers happy with open markets with Mexico and China? Has their lot improved because we have shipped thousands of well paid jobs overseas to a point where the financial sector (moving money) is now larger than the manufacturing sector (making products)? And look at the pressures on local and state governments to award huge tax incentives (your money) to attract and compete for business re-location to companies that don’t need the money. Also Since 1982 there have been about 12 massive government bailouts for unregulated markets. Here are some examples from “Bad Money” by Kevin Phillips:
    1984 – $4 billion rescue government package for Continental Illinois Bank aid.
    1987 – Massive liquidity provided by Fed along with rumors of clandestine involvement in futures market
    1989-1992 – $250 billion to bail out S&Ls
    1990-1992 – $4 billion for Citibank & Bank of New England to to arrange Saudi cash infusion for Citibank
    2008-? – The continuing $billions (real and potential)to bailout and rescue banks and Wall Street investment houses for the creation and sales of fraudulent (as in, there’s no true value in them) mortgage backed securities.
    Is this the personal responsibility McCain/Palin ascribes to?
    And how about the airline industry, one of Reagan’s first deregulations – how’s that working for everyone?
    As far as deregulating the health insurance industry, it largely seems to depend on eliminating mandates and purchasing across state lines. I’ve talked to Republicans who agree with this approach and say things like, “why should I have to pay for insurance coverage that pays for people having babies when I don’t plan to have any more chilren?”, well isn’t that typical of the skewed thinking that goes along with the Republican attitude of, “it’s all about me and not community”. Allowing people to opt out of the pool raises costs for all others in the pool. What would happen if we allowed people to opt out of education taxes because they no longer have chilren – would your school taxes go up or down? Even the MA plan was to bring more people into the larger pool.
    We’ve also dicussed here on this blog that competition does not lower health costs, and even if competion does lower costs how long would that last and what would be the consequences. As with all markets there is the initial fight for maket share within a growing market, but as market share fragments and profits fall you see market consolidation (buy-outs, take overs) and less competition. In the airline business example not only are we seeing a push for consolidation and partnerships we’re seeing reduced service – is that what you want for healthcare in the future?
    I’m not saying that I disagree with competition, I think Japanese (they have socialized healthcare)competition in the auto business gave us better cars, but we’re not talking about cars or other “products”, we’re talking about healhcare and how it is not like other products. Show me anywhere else in the world an example of the kind of “free market” McCain and Palin want in healthcare that is working better than the government run systems. Even Tiawan, which could have adopted any healthcare system in the world, adopted a government run and regulated model. http://www.npr.org/templates/story/story.php?storyId=89651916

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