I Finally Understand US Health Policy

The following exchange occurred during an interview of President Trump with journalists of the NYT:

HABERMAN: That’s been the thing for four years. When you win an entitlement, you can’t take it back.

TRUMP: But what it does, Maggie, it means it gets tougher and tougher. As they get something, it gets tougher. Because politically, you can’t give it away. So pre-existing conditions are a tough deal. Because you are basically saying from the moment the insurance, you’re 21 years old, you start working and you’re paying $12 a year for insurance, and by the time you’re 70, you get a nice plan. Here’s something where you walk up and say, “I want my insurance.” It’s a very tough deal, but it is something that we’re doing a good job of.

President Trump presides over the health-care experience of millions of Americans. Does his answer scare anyone else as much as it scares me?

Uwe Reinhardt is a professor of political economy at Princeton University.

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11 replies »

  1. Time to get rid of the “insurance” thing. If we make the political decision that we want to pay for all care for all people, there is no risk to insure against. All that matters is controlling the commitment of resources – not money, but actual human and material resources – so that other important things are not left undone for lack of real estate or brainpower. We do that in part by controlling utilization, which means a combination of co-pays and committees.

    Co-pays can be effective, but they do have less effect on the rich than the poor. OTOH, our economy operates on the assumption that wealth is earned, which is to say that it ought to have its perks. Maybe some rebalancing can be done with subsidies and taxes, but it’s not really the heart of the matter. The heart of the matter is the decision that needing healthcare will no longer be a risk and so does not be insured against.

    Insurance companies may not like that analysis, but only if they forget what business they are in. As Andrew Tobias explained, insurance companies are financial institutions. Instead of borrowing money to lend, they pool insurance reserves to lend. Same thing, really. Even an entitlement system can set aside reserves to pay for treatment, and those reserves need to be managed. Likewise, provider networks need to be created and negotiated with. There are lots of things an insurance company can do beyond bear risk, including invest reserves deposited by the government. Health “insurance” can be privately administered without actually being insurance.

    At the end of the day, universal coverage is ipso facto single-payer insurance, because the government must eventually pay for it, subject to whatever user fees make sense to control moral hazard. All we have to do is dress up our single payer plan to look like something else. That’s what our sausage makers are best at. But they really should understand what they are doing, even if they don’t admit it.

  2. What we are trying to do in health care is to help people who are not fortunate. They are not feeling well and are poor.

    We are habitually accustomed to thinking that the financial tool of “insurance” is the only way to fix this need. Alas, this is only one way to help the unfortunate. There are other ways.

    After all, insurance is a sort of monetary game where we trying to estimate the risk of something happening, and then by knowing what our payoff has to be to satisfy the expectation, we go through a mathematical game to figure out how much we should charge people to join this game, all the while trying to end up with a zero sum–where we take in revenue exactly the same amount as we pay off, including our profits. Playing this game in hundreds of offices throught our country is expensive.

    But we do not have to play this game. There are other ways to help the unfortunate besides insurance. We especially do not have to play this game if we are trying to help everyone, the foutunate and the unfortunate, because what is the point? We know that such a game cannot create new money or weath, it only cleverly redistributes.

    We may _believe_we need to use the insurance technique to achieve health care for all of us, because all health care is now so expensive that any instance of need for it, automatically puts us at risk of bankruptcy. This is a different problem altogether.

    Here are three alternatives to using insurance to achieve our goals: (there are others)

    1. We pay whatever it takes out of our taxation general fund to do the job….just as we pay for the military.

    2. Future potential patients save enough on their own, or with groups of other patients in cooperatives, to fund their health care needs.

    3. We pass legislation requiring providers to give care in return for debt issuance to patients…like Emtala for all but with debt issuance.

  3. Medicare as an insurance plan doesn’t exist other than in the myth structure of our social contract. President Lyndon Johnson cashed-in the Trust funds, wrote them an ‘Executive Branch’ IOU and spent the cash, off the books, to pay for the Viet Nam War. The annual report from their Trustees is a charade. Even so, the expectation by each citizen for retirement health insurance is real and worthy. The growth of its bureaucratic intervention into our nation’s health spending has maintained an over-riding effort to manage it solely as an actuarial problem.
    Unfortunately, the characteristics of a Power Law Distribution Curve have not been applied to the healthcare spending by the 3-5% of our citizens who account for 70-80% of the spending. And, 50% of our citizens use < 10% of the spending. The high spending citizens move in and out of the high cost end of the curve, year-in/year-out, and probably their spending would not change as we are trying to do so now. So, the real issue is: what are we doing to implement the character of healthcare in the lowest spending group to moderate the eventful onset of rapidly increasing health spending?
    Many studies of our nation's high maternal mortality point to this observation, for all women. See DEADLY DELIVERY posted in 2010 by Amnesty International USA. Also, we have no nationally promoted, locally implemented strategy to assess the equitable availability of Primary Healthcare, community by community. And, we have no nationally promoted, regionally implemented strategy to assess the character of each community's Primary Healthcare. Is there anyone who really anticipates that MACRA will do anything about the over-all cost and quality of our nation's healthcare?

  4. Maybe you should be his new press secretary. “This is what Trump said, this is what Trump understands, this is what that mens for the American public, now here’s the truth”.

    Sorry, the truth part was fantasy.

  5. I don’t know…. what is it you don’t understand here?
    Here is what he said in intellectualize:
    Taking away protection for preexisting conditions is tough, because you start paying for insurance when you are young, you pay all your life, so by the time you’re 70 or whatever, and have problems where you need to actually use your insurance, you should have a really nice plan that covers everything, because you put money in it all your life…. and we are doing a good job at making sure people have these protections over a lifetime.
    See? Perfectly clear 🙂 🙂

  6. You can’t have the mean household with an income of 56,000 subsidizing households with four times the federal poverty limit which is 47,900–97,000 ( one to four household members). This is like we are subsidizing the person in the mirror.

    Why would you design something like this?

  7. I posted the “health care” excerpt from his NY Times interview on my KHIT.org blog. ‘”The Presidential Oaf of Office”:

    President Trump just gave the New York Times a bizarre, on-the-record, audio-recorded interview (the one during which he threw his Attorney General under the bus, insulted the FBI, and threatened Special Prosecutor Mueller). From the health care segment of the transcript:

    TRUMP: Hi fellas, how you doing?
    BAKER: Good. Good. How was your lunch [with Republican senators]?
    TRUMP: It was good. We are very close. It’s a tough — you know, health care. Look, Hillary Clinton worked eight years in the White House with her husband as president and having majorities and couldn’t get it done. Smart people, tough people — couldn’t get it done. Obama worked so hard. They had 60 in the Senate. They had big majorities and had the White House. I mean, ended up giving away the state of Nebraska. They owned the state of Nebraska. Right. Gave it away. Their best senator did one of the greatest deals in the history of politics. What happened to him?

    But I think we are going to do O.K. I think we are going to see. I mean, one of my ideas was repeal. But I certainly rather would get repeal and replace, because the next last thing I want to do is start working tomorrow morning on replace. And it is time. It is tough. It’s a very narrow path, winding this way. You think you have it, and then you lose four on the other side because you gave. It is a brutal process. And it was for Democrats, in all fairness. I mean, you think of Hillary Clinton, and you look, she went eight years — very capable — went eight years as the first lady, and could not get health care. So this is not an easy crack. The one thing I’ll say about myself, so, Obama was in there for eight years and got Obamacare. Hillary Clinton was in there eight years and they never got Hillarycare, whatever they called it at the time. I am not in here six months, and they’ll say, “Trump hasn’t fulfilled his agenda.” I say to myself, wait a minute, I’m only here a very short period of time compared to Obama. How long did it take to get Obamacare?
    BAKER: March, March 2010.
    TRUMP: So he was there for more than a year.
    HABERMAN: Fourteen months.
    TRUMP: And I’m here less than six months, so, ah, you know. Something to think about.
    BAKER: We wrote the same stories, though, in August of 2009. “Obama can’t get it.”
    SCHMIDT: It died several times.
    HABERMAN: Several times.
    TRUMP: Well, it was a tough one. That was a very tough one.
    BAKER: He lost that election [the 2010 midterms].
    TRUMP: Nothing changes. Nothing changes. Once you get something for pre-existing conditions, etc., etc. Once you get something, it’s awfully tough to take it away.
    HABERMAN: That’s been the thing for four years. When you win an entitlement, you can’t take it back.
    TRUMP: But what it does, Maggie, it means it gets tougher and tougher. As they get something, it gets tougher. Because politically, you can’t give it away. So pre-existing conditions are a tough deal. Because you are basically saying from the moment the insurance, you’re 21 years old, you start working and you’re paying $12 a year for insurance, and by the time you’re 70, you get a nice plan. Here’s something where you walk up and say, “I want my insurance.” It’s a very tough deal, but it is something that we’re doing a good job of.
    HABERMAN: Am I wrong in thinking — I’ve talked to you a bunch of times about this over the last couple years, but you are generally of the view that people should have health care, right? I mean, I think that you come at it from the view of …
    TRUMP: Yes, yes. [garbled]
    TRUMP: So I told them today, I don’t want to do that. I want to either get it done or not get it done. If we don’t get it done, we are going to watch Obamacare go down the tubes, and we’ll blame the Democrats. And at some point, they are going to come and say, “You’ve got to help us.”
    BAKER: Did the senators want to try again?
    TRUMP: I think so. We had a great meeting. Was I late?
    TRUMP: It was a great meeting. We had 51 show up, other than John.
    BAKER: Senator McCain.
    TRUMP: That’s a lot. Normally when they call for a meeting, you have like 20.
    HABERMAN: How about the last one in June? Do you guys remember how many came?
    TRUMP: Ah, 49. It was actually 48, but John McCain was there. But I guess we had 51 today, so that counts. That shows the spirit.
    BAKER: Who is the key guy?
    TRUMP: Well, they are all key. The problem is we have 52 votes. Don’t forget, you look at Obama, he had 60. That’s a big difference. So, we have 52 votes. Now, I guess we lose Susan Collins. I guess we lose Rand Paul. Then we can’t lose any votes. That is a very tough standard. Statistically, you want to bet on that all day long. With that being said, I think we had a great meeting. I think we had a great meeting.
    HABERMAN: Where does it go from here, do you think?
    TRUMP: Well, I say, let’s not vote on repeal. Let’s just vote on this. So first, they vote on the vote. And that happens sometime Friday?
    HABERMAN: Next week.
    TRUMP: Or Monday? Monday. And then they’ll vote on this, and we’ll see. We have some meetings scheduled today. I think we have six people who are really sort of O.K. They are all good people. We don’t have bad people. I know the bad people. Believe me, do I know bad people.

    And we have a very good group of people, and I think they want to get there. So we’ll see what happens. But it’s tough.
    SCHMIDT: How’s [Mitch] McConnell to work with?
    TRUMP: I like him. I mean, he’s good. He’s good. It’s been a tough process for him.
    HABERMAN: He’s taken on some water.
    TRUMP: Yeah. It’s been a tough process for him. This health care is a tough deal. I said it from the beginning. No. 1, you know, a lot of the papers were saying — actually, these guys couldn’t believe it, how much I know about it. I know a lot about health care. [garbled] This is a very tough time for him, in a sense, because of the importance. And I believe we get there.

    This is a very tough time for them, in a sense, because of the importance. And I believe that it’s [garbled], that makes it a lot easier. It’s a mess. One of the things you get out of this, you get major tax cuts, and reform. And if you add what the people are going to save in the middle income brackets, if you add that to what they’re saving with health care, this is like a windfall for the country, for the people. So, I don’t know, I thought it was a great meeting. I bet the number’s — I bet the real number’s four. But let’s say six or eight. And everyone’s [garbled], so statistically, that’s a little dangerous, right?
    BAKER: Pretty tight.
    TRUMP: I hope we don’t have any grandstanders. I don’t think we do.
    TRUMP: I think it will be pretty bad for them if they did. I don’t think we have any — I think it would be very bad for — I think this is something the people want. They’ve been promised it…

    Okeee-dokeee, then.

  8. Hey–he said he was going to make it cheaper! $12 a year is cheap even by the “It’s the Prices, Stupid” standards. Almost reasonable. Could Mr Trump tell me where to sign up?

  9. This is why Congress, and not the President, presides over the health experience of millions of Americans. Whether that’s an improvement is a separate debate.