Matthew Holt

Health “reform”: Lest we forget…

6a00d8341c909d53ef0105371fd47b970b-320wi There’s been a lot of hand-wringing and b.s. discussed about the comparatively minor health reform that’s snaking its way through Congress. And when I say comparatively minor I mean it. Mostly because there’s lots this legislation doesn’t do.

1) There’s no significant reform of how we pay for health care—even though Orszag, Obama et al want it, and maybe Rockerfeller will inject the “MedPAC as Federal Health Board” into the end result….but I doubt it.

2) There’s no significant change in how we raise money for health care. Employment-based insurance stays as it is. Medicare and Medicaid basically stay as they are. Even if there are NO revenue sources for extending care to the uninsured, it’s still only a roughly a 5% increase in the cost of health care. If you hadn’t noticed we get that increase every year anyway! (By the way CBO actually scores the economics as being significantly better than that).

3) There’s no significant tax increase. Well the apologists say so, but the proposed tax increase on very high earners is trivial compared to how well they’ve done in the last twenty years. The chart below shows the share of overall earnings since the 1980s.

Note that those in the top 1% have done by far the best and it’s those in the top 0.1% responsible for most of that gain!(Note: I’ve lost the great blog post from which I stole this—can someone tell me where it comes from?) Margalit tells me it comes from here, but the exact chart I'm using comes from a different post by the same author at Afferent Input and the one I use is relative income distribution instead of absolute relative growth. But the message is the same.

Income_distribution

Can anyone say with a straight face that there’s a) no money in that top 1% to pay for greater social equity, or b) that economic redistribution hasn’t gone the other way in the last thirty years? I will grant that the pay or play tax on employers may be a trifle more problematic, but I don’t hear much bleating about that. And anyway, it’s only a levelling of the playing field between businesses that provide health care now and those that don’t.

So what does this legislation do?

1) It basically reforms the individual and small group insurance “markets” so that the general dysfunction for the poor suckers forced to buy their care there and the abuses inflicted upon many of them will (I hope) be eradicated.

2) It gives subsidies so that the uninsured can potentially afford it when they are forced to buy in. (I view the public plan option fight as a big distraction and at least a couple of smart people agree with me)

Commonwealth reminds us this morning why that matters. 73% of people trying to buy an individual policy couldn’t or didn’t buy one. Longtime THCB readers won’t need a lecture from me about what’s wrong with the individual and small group market.  But the only really significant part of health reform so far for me is that AHIP has been pressured into agreeing to give up its current model for that market in exchange for getting tens of millions of more customers. And of course there need to be subsidies (that’s the $100 billion) so that people who don’t get health benefits from their employers, can afford it. And I worry greatly that those subsidies will not be enough. But for what is a minor reform of the health care system—and far less than we need—this is not a bad outcome.

Of course we’ll be back here in a few years because the fundamental problems of the health care system—employment-based insurance & fee-for-service medicine—will remain whatever happens this summer. And they continue to be a recipe for disaster. Although of course it’s a disaster that has lots of supporters.

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недвижимость мюнхенJCEconomistjdDoug Recent comment authors
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недвижимость мюнхен
Guest

Очень интересный и полезный
материал прочла я здесь у вас.

JC
Guest
JC

you are all stupid

Economist
Guest
Economist

You can’t succeed when you turn commercial Health Insurance products into social tools. It just gridlocks trading of certain goods and services and ruins that economic sector which then trickles to the rest of the economy. If Obama wants to insure more people then put them on some kind of medicaid paid by other cuts or at worst case by increasing taxes. But forcing Insurance companies to accept preexisting conditions is nuts. It’s like forcing GM to give away every 10th car for free to someone who can’t afford it. Accepting preexisting conditions is not “Insurance”. Insurance is supposed to… Read more »

Deron S.
Guest

Margalit – Any comparison to other countries in terms of the relationships between healthcare systems and healthcare costs makes a huge leap. It assumes that the cultures and people are the same, which couldn’t be further from the truth. This country does not enjoy the high level of social responsibility that other countries do. From its very beginning, we have had an individualistic, “cowboy” culture. We are a patchwork of cultures and beliefs like no other. If you continue to hang your hat on the “comparison countries argument” read Culture Code by Clotaire Rapaille. It will put much of that… Read more »

tcoyote
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tcoyote

Unfortunately, jd, providers make more money providing completely unnecessary care to healthy people (CT scans for headaches, angiograms w/o doing a stress test first, etc) than they do rendering “sick” care. Sick people have comorbidities and are more expensive to treat. Too many Americans are still stuck in a place where they’d rather “do something” than wait and watch (and suffer). They don’t get that most of their real problems are actually created by the health system’s solutions. A lot of the reason physicians provide unnecessary care is because patients demand it, and will sue them if they DON”T get… Read more »

jd
Guest
jd

Matt is of course right that this is minor reform, in that it only is likely to address 1 of the 3 major components in a serious way (access, cost, quality). Sadly, a few of us have been saying for a long time that this was inevitable. The forces arrayed against reforms to the delivery system to reduce costs, and significantly improve care coordination and use of best practices, are too strong. The public never got what real reform would look like–and without the public behind it, good luck reforming 18% of the American economy. The naivete, even sometimes on… Read more »

Doug
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Doug

Take courage my friend….this reform is nothing more than a Trojan horse. The politicians know that this is just a layup for national health care. The public plan is so corrosive and will erode the number of folks those that are on private plans. There is one thing that the government can do that no insurance company can do and that is PRINT MONEY. A private insurer is required to have capital reserves to underwrite risk. The federal government just prints money, sells bonds, and runs up debt. There will be little to no competition and eventually the takeover that… Read more »

Nate
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Nate

MG would it be my comment on the chart he included or my comment on the expected dissatisfaction with reform that was off topic? Sorry I will try to not comment over your comprehension ability in the future. Back to the chart, couple points to ponder; This came off tax returns, living in Vegas I have “become aware of” the difference between what people really make and what their tax return says. Half of this town makes under 30K a year and lives in 300K houses. Tax returns don’t even come close to showing the true financial picture of anyone… Read more »

Margalit Gur-Arie
Guest

Deron, are there any studies showing that folks in other developed countries where everybody is “shielded” from the real costs of medicine, are over utilizing the system, thus driving costs through the roof? Or is this presumed behavior limited to the US? Or maybe that’s not the problem at all?

Deron S.
Guest

Matthew – I agree that real reform does not appear to be on the table and it will have to be revisited. I’m just not sure I would list employer-based insurance among the top cost drivers. Sure, it exacerbates the issue of insurance shielding patients from the real cost of medicine, but any insurance plan with little or no deductible/copays does that anyway, as does Medicare and Medicaid. The unfortunate reality is, we don’t spend someone else’s money the same way we spend our own. Premiums that fund private insurance or taxes that fund single-payer both amount to the same… Read more »

Skeptic
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Skeptic

Not only is Zeke Emanuel missing in action, but Peter Orzag is being forced to defend the indefensible—those of us who seek a health care financing system modeled on transparency were hoping he would speak Truth to Power but that is not the case. You can be sure that when Bob Woodward publishes his insider account of the Obama health care reform fiasco, we will learn that Orzag is pulling his hair out right now, wondering how why he allowed him to get entangled in this mess.
Skeptic

Margalit Gur-Arie
Guest
Biotech Analyst
Guest
Biotech Analyst

The best you can do to support your argument for “sharing the wealth” (a la Karl Marx) is a blurry, unreadable, unattributed graph?
Furthermore, depending on a surtax on the wealthy to fund the nation’s health program is the height of folly. Just look at California and New York. One of the major reasons they are in a deep hole is their highly progressive tax structure. No doubt justified by comments like “the proposed tax increase on very high earners is trivial compared to how well they’ve done in the last twenty years.”

MG
Guest
MG

Nate – Do you rant endlessly and mindlessly like this during the day in actual conversations bringing up points/issues that are completely irrelevant to the conversation at hand?

Dr.Rick Lippin
Guest

“Lighting even a small candle is better than railing against the darkness”- Adlai Stevenson
So what is about to happen is a prelude to future and better reform.
Dr. Rick Lippin
Southampton,Pa
http://medicalcrises.blogspot.com