OP-ED

Victims of Health Care Reform

Who will be hurt the most by the health reform legislation Congress passed last year?

Answer: The most vulnerable segments of society: the poor, the elderly and the disabled. That’s right. Virtually everyone in Congress who is left-of-center voted for a law that will significantly decrease access to care for the people they claim to care most about.

Why isn’t anyone writing about this?

Answer: Because almost all the people who write about health care know almost nothing about economics.

Basically, there are two ways to reform health care. One way is top down. The other is bottom up. The latter is based on the economic way of thinking. The former rejects that way of thinking. The latter gets the economic incentives right for all the individual actors, leaving the social result largely unpredictable. The former starts with a social goal and tries to impose it from above, leaving individuals with perverse incentives to undermine it. The latter depends for its success on people acting in their self-interest. The former depends for its success on preventing people from acting in their self-interest.

I think I can probably count on the fingers of two hands the number of people in health policy who accept the economic way of thinking. All the rest — 99.9% of the total, including a lot of people with “Ph.D., economist” after their names — reject it in spades.

Almost everybody in health policy thinks you can have a plan designed by people at the top that will work, even though every doctor, every nurse, every hospital administrator and 310 million patients all have an economic self-interest in defeating the plan.

They are so convinced of the collectivist vision of health care they do not even think it’s necessary to discuss the incentives of individuals. For example, Harvard health economist David Cutler (who admits to having a hand in the health reform bill) wrote an article the other day entitled, “The Simple Economics of Health Reform,” in which he mentioned the word “patient” not even once. For perspective, this would be like an economist writing about the market for gasoline without even mentioning the people who drive cars, trucks and vans. It would be like an economic analysis of the housing market that completely ignores the role of homebuyers.

Here are some points I’ve made before that completely escape Cutler, but should be included in any economic analysis of health reform:

  • Thirty-two million otherwise uninsured people will try to double their consumption of medical care.
  • Almost everyone with private insurance and all Medicare enrollees will try to increase their consumption of preventive services — promised without deductible or copayment.
  • With no increase in supply, doctors and patients will face a huge rationing problem.
  • There will be up to 900,000 additional emergency room visits and the time price of care (rationing by waiting) will jump substantially at every emergency room, every primary care facility and for most specialty services as well.
  • If everyone in America succeeds in getting all the recommended preventive care, for example, primary care physicians will have to spend more than 7 hours of every working day delivering services to basically healthy people.
  • Patients whose plan pays below-market rates will be pushed to the rear of the waiting lines; this includes our most vulnerable populations — the elderly, the disabled and poor families on Medicaid.
  • In the meantime, a large flourishing market for concierge services is likely to emerge — draining resources from the third-party payer system and making the rationing problem worse for all who are left behind.

In general, the left is obsessed with distributional issues. That’s why it’s so surprising that they passed a law that is going to force middle- and upper-middle-income families to have more insurance than they really want. Once they have it and act on it, they will in the process make access more difficult for the poorest and most vulnerable segments of society.

It’s amazing how much you can learn if you really do take advantage of some “simple economics.”

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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MedicalNegligenceUKPhysical Therapy SuppliesniknateLindsey Recent comment authors
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MedicalNegligenceUK
Guest

This paints a rather frightening picture of healthcare in the US but the points raised seem valid. There has to be more non-political dialogue with people that matter.

In the UK we are extremely privileged to have our NHS system which is ostensibly free.

Lindsey
Guest
Lindsey

The new health care bill will create more problems for patients wanting access to care. I am a RN working in an outpatient specialty clinic. Right now the clinic is understaffed and overpopulated with patients. Often times, a provider is seeing 15-20 patients in a 3 hour period. Patients are being rushed during appointments and not being given the best quality of care. What happens when legislation provides insurance to all and the need for specialty follow-up care is more difficult to access due to lack of providers? Not only the lack of providers, but the lack of nurses in… Read more »

Tavia
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Tavia

I am by no means an expert on the health care reform but have done quite a bit of reading up on it for a class in my Master’s program. I currently work as a nurse. I don’t understand at all why you would think the poor and elderly would be the victims of this reform. From what I have gathered, this is who will actually benefit. It’s the middle and upper class who will continue to pay more because they make more. Why would you assume that 32 million uninsured, once they obtain insurance, would double their consumption of… Read more »

Physical Therapy Supplies
Guest

I like your post, it’s very informative. I appreciate your healthy blog. That’s having lots of ideas for improving my health. Thanks to post. Keep posting.

rbar
Guest
rbar

Nate and fellow libertarians, are you aware that there are nongov aid organizations that are active in the 3rd world and the US, but not in Canada or Europe? One obvious major difference between US and other developed world poor is the fact that the poor in the US don’t have medical coverage, except for those who have medicaid. Also, I haven’t seen so many people with terrible dental status in germany or France. Probably just a liberal conspiracy that wants to embarass US capitalism. It would also be interesting to compare the number of homeless and illiterate people –… Read more »

nik
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nik

Keep in mind that most of these European countries can probably afford to maintain a uhc system because the health burden in those countries is much lower than in the US where unhealthy lifestyles and the resulting problems are a major reason for our current costs. Therefore the “minor” inefficiencies of UHS in Europe would probably be exacerbated in the US.

nate
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nate

“The US is definitely closer to developing countries than the rest of the industrialized world due to the huge income differences between rich and poor,” Not a very accurate or honest argument rbar, our poor as exactly the same as the poor in the rest of the industrialized world, our rich are just considerably richer. While technically accurate your claim doesn’t support your argument. http://www.coyoteblog.com/coyote_blog/2011/02/speaking-of-income-distribution.html When comparing to European social democracies, it turns out that while the US‚Äôs income distribution is wider, that is almost entirely due to the top end being higher. The poorest 10% make about the same… Read more »

Bart
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Bart

JUST LIKE MAGGIE
Thanks for proving my point, that so many OweBama-its can’t do math.
Looking forward to you and OweBama, failing miserably.
—-
” .. But let me reply in the same vein: Na na na boo boo stick your head in doo doo.”

rbar
Guest
rbar

Bart,
Even though I do not agree with you, your points are well taken and your comments are thought provoking. But let me reply in the same vein:
Na na na boo boo stick your head in doo doo.

WMC
Guest
WMC

He doesn’t mention “patient” once, eh? Did you read it? “Providers that receive the bundled payment would then be responsible for the hospital costs, post-hos- pital rehabilitation, and subsequent follow-up care for those patients.” “This type of methodology shows up in many guises: from bundled chronic disease programs, to accountable care organizations (bundling payments for patients as a whole), to pay-for-performance programs for primary care physicians.” I see “patients” twice, but that’s a stupid argument anyway, there are plenty of other ways you can express “patient,” and indeed in insurance parlance–this is more about insurance than anything–the term “beneficiary” is… Read more »

Bart
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Bart

BEYOND STUPIDITY
What is 100% clear here, is how many people do not understand math, finance and economics.
They are as blind as OweBama, Pelosi and Reid about limited resources and UNLIMITED demand.
Having NEVER been accountable for managing large numbers of people and resources, they thumb-suck and claim “government can do this.” Right – and pigs will fly, too. And Europe and Asia will pay their fair share of medical research costs.
See you in court. See you, after your inexperienced, naive efforts fail and you have to be rescued.

James
Guest
James

“Gee, what have I been saying since this farce of an act was signed: you can’t mandate people buy insurance.”
Tell the Germans, French, Swiss, Dutch……
Steve
The Germans, French, Swiss, and Dutch have their own national constitutions that their body of laws must stay within. Two federal judges have now looked at the individual mandate and declared that it falls outside of the bounds of the U.S. Constitution, which is the only constitution they get to look at when deciding.

rbar
Guest
rbar

Uhmmh, industrial health, the rest of the industrialized world HAS universal coverage or sthg close. You may want to read up on that. I lived in 2 european countries (and now live in the US after realizing that my spouse’s US diplomas would be of better use in the US, and I traveled a lot incl. developing countries (south america, india, thailand). The US is definitely closer to developing countries than the rest of the industrialized world due to the huge income differences between rich and poor, poor social net resulting in gated communities, ghetto (akin to slum-) formation, poverty,… Read more »

industrial health
Guest

It truly amazes me that one can make a comparison of medical care in developing countries as opposed to developed countries and draw social conclusions. Of course, the more we give over our health care and other economic planning decisions to the government, the sooner we might actually know what it feels like to be in a developing country…

rf
Guest
rf

While the author writes about the importance of economic thinking, he does not suggest an economic solution. Our current system is a deeply flawed marketplace with externalities, monopolistic marketplace and public good characteristics. The problem is that our current private insurance based system does not provide an efficient market place provide both high quality care and efficient costs. Rather, the primary incentive is for insurance sponsors to exclude, through benefit design, pricing or marketing individuals with serious and predictably high medical costs. The insurers shift the costs to others, forcing those with chronic conditions to poverty and government sponsored plans.… Read more »