The implicit standard in analysis of the health insurance system is that every consumer must have government-selected coverage. But why? This chosen paradigm doesn’t take into consideration the most forceful motivation of human behavior, namely, whether a large expenditure of limited resources is in one’s economic interest. This standard of “universal coverage” is as artificial as the government’s bloated health care costs.
This is the debate that the Congressional Republicans are ducking. As a result, the Overton Window has moved to the point where Obamacare will not be replaced until the Democrats replace it with full-on single payer.
The points that I would make are:
1. What we call health “insurance” is not real insurance. It is instead a layer of insulation between the recipients of medical services and the providers of those services.
2. It seems that hardly anybody wants real health insurance, meaning a policy that pays benefits rarely and only under extreme circumstances. Instead, what people want as individuals is unlimited access to medical services without having to pay for them. If that is the definition of health insurance in the popular mind, then we are all going to lose our health insurance. Unlimited access to medical services without having to pay for them is an unsustainable approach.
3. There are two alternatives to the unsustainable approach. One alternative is to have people face more of the cost of medical services, in which case they ration their own use of those services. The other alternative is to have the government pay for medical services, in which case it will be the government that rations the use of those services.
4. Much of health care spending is on medical procedures that have high costs and low benefits. Socializing the cost of those procedures means that people will undertake more of them, until the government starts to get serious about health care rationing.
5. Health spending is approaching one fifth of all spending in the economy. If we become culturally committed to socialized medicine, then we can expect the usual consequences of socialism: productivity stagnation; the emergence of an underground economy; corruption; and government repression.
Can you explain what you want to have happen when a human being is very ill and hasn’t got the financial means to pay for care? Should they be turned away at the emergency room door? What about the elderly?
Insurance.
Please understand the alternative is simply the government denying procedures.
Tom,
There are many viable options such as:
(1) Resources of family members
(2) Charity
(3) A social program focused on that specific need – which we essentially have with Medicare
(4) Doing nothing and accepting that death is inevitable
The psychology of this question is fascinating. We are supposed to be alarmed that a complete stranger might die when life-saving, yet unaffordable measures exist to keep the person alive. Except we convince ourselves that it is affordable! And that is the lie we tell ourselves – that we can afford to provide everyone the best medical treatment no matter the cost.
These aren’t even necessary. What we have is a race of who can get an unaffordable end of life condition first so they can get treated before all the money is gone.
What we need to move to is research in to maximizing quality of life years. It simply doesn’t make sense for us to give procedures to every person that are unaffordable for anyone. And as long as we keep doing it, the healthcare providers will oblige.
The healthcare sector creates is own demand.
Do I need procedure X?
What does my doctor say I need?
He says I need expensive procedure X. Who am I to disagree?
Dad, you better get expensive procedure X if that’s what your doctor says. We love you and we only want the best for you.
If you really want people to disagree with their doctors, you need some method other then “its expensive so just let your family member be sick and die because you don’t really love them.” Especially in an environment where cost is hard to determine and medical effectiveness is a crap shoot. Most people don’t even know what they are getting into when they go down a medical treatment path.
Trust is one of the key issues. Is there a way to develop an institution you trust more then your doctor? One that isn’t just creating its own demand. And how do you get doctors to act more ethically when they have that kind of power.
How do you get to the societal understanding that “what these people say is reasonable and your not a bad family member for turning down a medical procedure they say you shouldn’t have.” Right now trust is so low that all people can imagine are “death panels”, and given how little trust our institutions have earned I can’t blame them.
Make families pay for dad’s care and THEY will become the death panel. And if dad is unselfish he will concur.
It doesn’t work like that. People go broke because letting your own father die to save a few bucks makes you a sociopathic monster.
The only solution is to have some cultural norm where “this is the appropriate level of action that means you did right by your father”. Then cutting things off at a certain point doesn’t make you both feel like your entire lifetime relationship was a sham.
Complicating this is the fact that most actual health expenditure isn’t so clear cut. People come to a doctor and he says “well, this treatment might do something, but I don’t really know, and then there are a series of follow up treatments after that, depending, that also I don’t know how well they will work. Also, even I don’t know what my own costs are, but the girl at the front desk can give you a lot of vague and probably inaccurate estimates of an as yet undetermined treatment regimen.”
If people are spending their own money that is their choice. When people are spending “our” money than it is “our” choice. We can wise up and limit end of life medical care spending or we can go broke.
The issue is not denying dad a known solution. The issue is if dad knows the money is finite, he is more likely to realize the Stent is not worth it.
How much more likely?
I do benefits and pricing for drugs. You would be surprised how little people react to higher copays and coinsurance. I jacked up the tier and coinsurance on a set of drugs last year. I didn’t get that much of a change in utilization patterns. You would think making a drugs cost go from $5 to $100+ would make a difference, but it didn’t. It shocks me how many people, even those who have to bear most of the brunt of their own drug cost, will completely fail at effective or efficient care. I couldn’t even stop my own parents from blowing through their coverage limits on a $600 drug they don’t need because…our doctor prescribed it for us. He’s the doctor!
My own doctor sees slightly high cholesterol on a chart last year and writes an Rx for Crestor. Crestor! $200+ for something that Atorvastatin does for $4, assuming I even need it in the first place. Why? I ask him how big the tits on the drug rep they sent over to get him to do that, he gives me a smile. Jokes that we both know the game a re-writes it. You know why they pay blonde bimbos to talk doctors into prescribing expensive me-to drugs, because it works! It works even if you got it on the highest tier and people are paying most of it themselves. Who are we to question the doctor!
Changes in behavior due to cost burden are at the *margin* indeed.
To the extent that people do react its usually to select against another insurance company that didn’t up tier the same drugs. Or MACed wrong. Or happened to have a bad price at a particular pharmacy. There are tons of products out there, some company is always guessing wrong. It’s much easier to select against an insurance company then it is to change your behaivor.
The most important block, the one using most of the drugs, is the LIS block (low income subsidy). They don’t pay anything for their drugs, so of course they don’t react to incentives at all. You could make the entire NLI (non-low income) market 100% coinsurance and it wouldn’t matter because LIS is where all the money goes. From what I know of major med its a similar story.
The only thing that ever works to really move behavior is flat out denial of claim. You need to literally stop people from making dumb choices.
Let’s find out.
Soylent Green?
Short answer? I think they should be accepted and treated at the emergency room door. Just like they are under the ACA, under the proposed AHCA, and even before the ACA.
And why not? Treating the uninsured on an as-needed basis in a place that can triage them to the bottom of the list is clearly the least expensive way to treat them. As should be obvious by now, it is far less expensive than trying to insure them.
The Republicans should reject the big lies at the root of Obamacare:
1. that preventative care costs less than acute care in all but a few narrow cases and
2. that insuring people who can’t pay for their own care is less expensive than paying for their treatment at the point of service.
Emergency/stabilization services are trivial.
It’s more fundamental than that.
Prior to Obamacare all uncompensated care was trivial. It was 2% of health care spending — a rounding error in the costs on the system imposed by the ACA, an ACA pushed down the population’s throats largely based on the impression that getting primary care in emergency rooms was expensive!
I thought he answered that question in the beginning: Private Health Insurance.
What you are describing is exactly what he is advocating: Protection against catastrophic events.
The funny thing are those peoples that say for this we need protection for people with pre-existing conditions.Thats however wrong. First of, to have this protection for babys and children might be ok, because they have a lifetime to pay for it, but for everyone else this means the following:
# Coast along without paying for health insurance
# Get expensive disease (mostly when you are old)
# Get insurance and pass on costs
This is unstable and unsustainable, so what do European nnations, UK and Canada: Universal Health Care with forced insurance.
But they forgot the other half of the equation that Arnold talks about (market forces for most medicine).
In Germany, private insurance costs between 300 – 600 € / month depending on your plan (deductibles up to 2000 €) and age. Most plans include a cost stop for when your age increases.
Imo, this is ok and should be what your life and health is worth. Especially, when the government run health care costs almost the same! Except that it is slightly cheaper for families and retirees.
What I am describing is that if you can’t afford private health insurance, you don’t have health insurance.
You are saying that if you can’t afford private health insurance (a cost stop based on age is okay), then it is subsidized for you. That is the very root of health care cost disease.
I read your link. It proposes several kinds of “insurance”.
My question is simple. Why aren’t these products offered in the insurance market if its so damn obvious how useful they would be? I mean the market supplies beanie babies if people want them. Are we proposing that individuals wouldn’t want these products (I doubt that, because they did try to buy them when available) or that entrepreneurs are too stupid to supply them (in fact there have been attempts over the years).
Let’s take one of your examples: “Remaining Lifetime Care Insurance”
There was already a huge market for this product, it was called Long Term Care Insurance. I used to do LTC policy review during my brief time as a regulator. They all had loss ratios of 300% (the insurer pays out three dollars for every one dollar of premium). The industry thought it was a bright idea but in the end they had a hard time predicting costs and got heavily selected against by policy holders. You can still buy LTC insurance now but its pretty expensive and there are an incredible number of exemptions that make it pretty hard to make a claim and strong limits on what they will pay out.
And LTC was a much simpler policy then what you outline. It usually provides a straight payment cap (say, $XXX/day) and it doesn’t actually track medical expenses. If you get a big medical bill then tough. So its not really health insurance. Even with something as predictable as a flat dollar amount insurance companies screwed up royally pricing it.
The idea of government provided catastrophic reinsurance is a good one, but it needs to be paired with a reliable funding mechanism and strong controls to make sure people don’t just shove all the cost into the “cat” (like we do in my industry).
“In any event, apart from the very poor and the very sick, government need not be involved in paying for health care.”
The very poor and the very sick are the main drivers of health expense. Even if the government was only involved with them, it would mean being heavily involved in the healthcare sector.
Everything is about selection. Everything. Policy holders are in a selection war with insurers. Insurers are in a selection war with policy holders and each other. The government is in a selection war with all of those parties. All I do all day is deal with selection. How do we make sure the other guy pays for shit and we don’t. My customers are all trying to do the same to me. The very poor and very sick are the biggest selection hot potato.
As long as playing the selection game is the #1 game in town, expect it to be the only thing anyone cares about.
This is like when people ask “So why doesn’t the market work in banking!?!” Well, the government MAKES THE MONEY. There is no market when government makes the GD money. Regulatory arbitrage and nibbling around the edges, sure, but the market needs no excuse for not showing up.
You then go on to point out what Warren Buffett said, there is always a market ready and willing for you to sell terrible policies too. Did anyone promise life would be easy?
Can I just have my high deductible “sub-par” policy, please? If they aren’t scared of that, then why did they ban it?
Does anyone remember the pejorative strawman name Obama gave for plans that did not guarantee free birth control pills for males? It wasn’t “sub-par” but something like that.
I can’t believe we have to do this $#!+ all over again.
When I raised objection to insurance covering gender reassignment surgery I was told that basically made me one of the Nazi haters and my career was in danger. If you thought you could separate “I support X social choice” from “I’m willing to subsidize X social choice” you were a fool.
It’s the same with birth control and feminism. Stop negotiating with your enemies. Crush them and dictate the terms. They will do the same to you if they win.
I’m perfectly fine with insurance covering those things…as long as I don’t have to buy that policy.
The main reason insurance shouldn’t cover gender reassignment is that it is not an unforeseeable non-elective procedure. If you want to buy into a policy that covers those kinds of things, knock yourself out, but you aren’t really buying insurance. You are in some kind of weird earmarked group savings plan.
“is not an unforeseeable non-elective procedure”
Preaching to the choir man.
But don’t you know that gender dysmorphia is a disease and gender reassignment is the cure. It’s not different from treating cancer, bigot.
Remember the heroic narrative gay groups have about “making the government do something about AIDS.” What the fuck do you think that meant? It meant fags keep shagging each other until they all have the disease and the rest of us subsidize their five figure a year anti-retro-virals.
Don’t like that, well then your a bigot. Why should bigots be able to get out of paying their fair share towards healthcare desperately needed by this at risk community? If you don’t think it goes down like that I can tell you that’s exactly how these arguments go down in the industry.
Other peoples health problems are going to be your problem unless you can put together a political coalition to defeat them. Part of that might mean things like “you gays need to stop having anonymous chemsex mixers until you all have STDs.” Once you determine that self destructive behavior is “just a valid moral choice, man” your ability to quarantine the fallout was never going to be that good.
I always thought if Romney in 2012 had campaigned for OTC birth control for consumers… Instead getting into a pissing on whether on it or not it should mandated, it might have increased his chances in the election.
He could have campaigned getting big government from deciding your birth control would have been a good idea for swing voters!
I never understood why most libertarian economist did not state these recommendations Louder.
They banned it because their political interest groups wanted it banned. Do you have any realistic plan to form a political faction capable of getting an outcome you would find acceptable or are you going to bitch on the internet about “rights”? There are no rights, only force.
As long as most people are scared to death of becoming uninsurable or going to bankrupt from medical expenses you are never going to put together a big enough political coalition. You either find a way to address those concerns in a way that achieves most of what your going for, or you let your opponents dictate the terms, free birth control and all.
You are weird. Do I have to have a political faction all by myself, or was Trump winning on Repeal good enough?
Republicans are jagoffs for not having their own cockamamie scheme ready to go like Democrats did, I’m just trying to help them out.
Just legalize the stuff we just unwisely made illegal. The ink is still wet on it. Nothing could be easier. They proved that you don’t need a tipping point for HSA+High Deductible to reduce costs.
Trump won on anti-immigrant, anti-trade deficit, anti-PC. Only the last of those are you on the same side, but Trump fights to win and the GOPe doesn’t.
If you want a meta theme, he won running against this attitude:
https://www.youtube.com/watch?v=mWJSKhEwjy8
Pointing out that 90 IQ Mestizos with high unemployment on Medicaid that tend to vote big government aren’t great replacements is beside the point. The establishment disgust and hatred of the deplorables was what he ran against.
You’ll note he flat out asks Charles Murray to rebut him and Murray doesn’t take the opportunity. Murray will take the time to tweet about Hidden Figures and the scourge of racism, but when push comes to shove he’s ok with the WWC dying off.
BTW, Murray is pro-single insurance pool, pro-LIS and generational subsidy now too. I guess its been enough years since democrats lobbied for such things that conservatives now have to conserve it.
https://twitter.com/charlesmurray/status/841475918233231360
https://twitter.com/charlesmurray/status/841476212417548289
https://twitter.com/charlesmurray/status/841478193915785216
Healthcare was a sideshow during the campaign and non-Trump Republicans always regarded repeal as nothing more then a talking point. They are shills out to get what they can. What else do you expect out of people who consider their own voters deplorable.
People are generally angry at the incompetence with which Obamacare was implemented. They don’t like many particulars. They get the general impression its a subsidy for minorities and oxy dropouts paid for by them (and their right).
Trump got the WWC that makes too much money for Medicaid and exchange subsidies. Those WWC on the dole (perhaps that middle W should be taken out) have been voting D a long time and didn’t change last election.
People who work for a living but are getting screwed by the system stopped associating Democrats with the New Deal and starting associating it with a globalist cabal of managers (not even entrepreneurs, just smart people who work the system of large institutions). The GOPe (whatever Democrats were a few years ago) simply ceased to be a driving force beyond its own inertia.
Like I said, weird. People supported and opposed Trump thinking he is anti-immigrants but what he really said was rational border and immigration policy. I’m not far from that. I’ve put in a,lot of words explaining it to people.
Also not sure how relevant it is.
whenever I hear someone darkly warn about the dangers of socialized medicine, I want to know: compared to what? And to be clear, the “what” I am looking for is an actual healthcare policy implemented by an actual government somewhere on planet earth.
Then could the same individual explain why every other first world countries healthcare policy is worse than the US. Note that would require empirical metrics. Like cost and healthcare outcomes….oh wait
When you look at the actual metrics, the US is the best, and provides about half the innovation.
When your number one metric is “provides socialized medicine” and then doctors the outcome stats, then it varies.
I want to be Singapore in the streets, and America in the sheets.
The Myth of Americans’ Poor Life Expectancy
https://www.forbes.com/sites/theapothecary/2011/11/23/the-myth-of-americans-poor-life-expectancy/#578fbae12b98
Look at the chart. Basically all advanced countries are at the point of diminishing returns and it is unlikely that the massive expenditures the US makes are doing too much damage to life expectancies.
I want to be Singapore in the streets, and America in the sheets.
Maybe being Singapore in the streets makes it impossible to be America in the sheets. I do find the most popular libertarian state/city is Singapore, who is beloved for their high IQ, and their fertility rate is ridiculously low. I wonder if there is SOME causation/correlation/circular reference here.
All modern NE Asian nations have low fertility. And the specifically urbanized areas are the lowest. Hong Kong and Macau are no better then Singapore. I doubt it has anything to do with government policy. I think rich urbanized NE Asian cultures just get slammed by the same trends you can see in the West but harder. It’s not like secular whites in SF, NYC, or Boston have high TFR either.
No, just go look up their medical financing on Wikipedia. It is basically what I have proposed knowing nothing about it.
Then, spend like mad on cost-effectiveness research and pharma.
Every time I go to a hospital, I get basically nothing and it costs tens of thousands of dollars. I go to the drug store and my life gets better for a few bucks a month.
I suspect, someone should do a study if they haven’t, that doctors take part of their cues from whether a procedure is fully re-imbursed enthusiastically.
One of the legit functions of public health is doing large-scale effectiveness studies. The FDA approval process is actually too short and limited for this.
When you look at the actual metrics, the US is the best, and provides about half the innovation.
And the US pays all the bills for innovation. I personally agree with Alex T. on EPA other nations passing the new drugs as long as our insurance companies can source drugs from that nation.
“I want to be Singapore in the streets, and America in the sheets.”
Perhaps those two items are inseparable. Have you considered that? People with broken chaotic private lives rarely maintain order in the streets.
There is a reason I don’t like suggesting Policy X works well in this nation without noting the downsides of the program. And yes East Asian nation have exceptionally low birth rates and I do believe that is a long term problem for these nations.
1) What is the one variable that that increase both the AS-AD curves the most? The population size. (I believe it hits the AD first and than AS curves. Probably explains 1970s inflation and 2010 low inflation a lot)
2) Look at the Japanese government debt to GDP ratio nearing 2.5x. Even with higher birth rates less babies are born today than 1985. That will bust at some point although it still might have a decade or so.
3) Look at struggling Euro nations. I think the struggling Southern Euro nations if they had higher births decades would be in better shape with more long term workers.
4) It seems really weird that the richer we are the less we can afford to have children. It is a quality of life thing and 99% of us are not on a deathbed wishing we were more productive.
I’m not talking about rocket science or miracles, I’m simply referring to things like meaningful co-pays on everything.
Seriously, someone should do a study to show how quickly marginal savings would take place.
I contend that every market has a minority of cost and quality conscious participants that everyone else free-rides off of, but it works out.
We simply don’t know how powerful this is in healthcare because we assume it is too complicated and I doubt that.
If people are like me they are paying meaningful co-pays in addition to paying significant insurance premiums. The only explanation is that “private” health insurance is a tax and a vehicle for wealth redistribution.
A lot of co-pays are significant, but not meaningful. I don’t know how they are calculated, but they don’t seem like they were designed with an understanding that it should be an incentive. But then I’ll also go to the clinic and there will be no out-of-pocket whatsoever. I don’t think it is rationalized yet.
The implicit standard in analysis of the health insurance system is that every consumer must have government-selected coverage. But why?
1) For all its issues, Obamacare with the state run internet sites seems like a fairly good market idea for consumers.
2) I think part of the issues is the US is mostly Employer based insurance which is not stable for most families. Overall the system is fucking awful in the long run.
3) Remember at the heart of the Trump anti-elite campaign was the WWC voters and any repeal of Obamacare hits these voters in WV, KY, AR and AK hard. If Trump campaigned that he would repeal Obamacare which lowers the people insured to 50M+ I bet he does not win.
4) Death and disease is scary. And not getting healthcare because of lack of insurance and funds is not a good choice. In my life, I am not saving enough retirement because we are spending more on our autistic son education and healthcare. At some point, I know I chose a shorter life because of this decision.
5) Should libertarians be supporting more assisted suicide? Seems like a natural idea to control healthcare!
5) If you really want to talk turkey, it’s cryonics.
1) Yes, I can see some coordination, first-mover problems that Obamacare helped with. I do wonder if the reason they weren’t tried before has to do with anti-trust/collusion or other regulation, though.
2) I see several problems with employer-based coverage: 1. It doesn’t follow you or stay with you through job loss/change. 2. Being earmarked to healthcare and having little in the way of cost-sharing or anything to dissuage externalizing your costs to your cohort it facilitates healthcare inflation 3. It creates an incentive to get rid of older workers. 4. Being tax-deductible it hurts both the individual health insurance market as well as small business. We should definitely begin phasing it out. We should have started 8 years ago instead of retrenching this problem.
3) Trump actually wants full coverage, and while his lack of principle is scary, there are better ways to accomplish this. Getting costs under control goes part and parcel with fixing the coverage issue. We can’t afford to cover everyone in a market where people can’t afford coverage. Single-payer is a make-believe solution to this problem.
4) Again, somebody has to not get the unaffordable treatments. We just have the worst system now where everyone assumes they should have access to the premium product. Making the premium product illegal, or hiding it is also a make-believe solution.
We should have started 8 years ago instead of retrenching this problem of the employer based program.
I do believe Obamacare was suppose to do some of this judging by the CBO guessestimations. Notice the CBO in 2009 nailed the number of people at 28M uncovered by insurance but over estimated the exchange numbers by 20M…Because the skilled labor market starting in ~2012 became tight and companies stop ditching the employer based plans. So the companies could roll this back anymore.
ACA penalizes employers, but also caused more part-time.
But they also did not inflation adjust the Cadillac tas.
With Gruber who knows what the actual objective was.
Don’t get hung up on Singapore. It is just an example of one way to do it.
There is actually a lot of diversity. Lumpimg verything else as if the whole world is single payer is not accurate.
.Given the choice, I would buy only non catastrophic insurance and skip catastrophic insurance. Non catastrophic insurance costs less and is the most productive. What difference does it make to be bankrupted by catastrophic insurance or by catastrophe. This would mean someone else would be paying, which is why government is the most efficient insurer for this. Government and insurers face equivalent problems.
“As a result, the Overton Window has moved to the point where Obamacare will not be replaced until the Democrats replace it with full-on single payer.”
Disheartening words, but I fear probably true.
‘. It seems that hardly anybody wants real health insurance”
(raises hand)
I was self-employed for decades, and finding basic insurance was near impossible. I kept an insurance policy that was probably worthless but made me feel better about potentially getting hit by a truck. But for the most part, I paid all my medical bills out of pocket.
I’m a teacher now, but our local union negotiated a fair option for everyone. A decade or so ago, the district stopped paying for our insurance, and upped our pay. We can purchase our own insurance from a few options negotiated by the state, paying the full cost. These options are very good in terms of coverage and co-pays–far better and cheaper than we could get on individual policies. But they are far more expensive than they’d be if everyone were forced to buy a policy–and everyone isn’t. Teachers can opt out, buy an individual policy, or go without if they want–which many of the younger teachers do.
Many unions force everyone onto policies, negotiate a fixed price that is advantageous for married teachers with two kids, but far more money than it would cost the average single person (union of two jobs ago, I’m looking at you). Many teachers with families bitch about the high cost of insurance, but I think this is pretty fair. And, of course, we get the deduction for paying for our own insurance.
But I’d still be happy with paying half as much for major medical and catastropic, if it were an option.