The first thing we do, let's kill all the economists. No, wait... the first thing we do, let's kill all the journalists.
[with apologies to The Bard]
Actually, it would appear that neither economists nor journalists should be allowed anywhere near the subject of health care.
Case in point: Paul Krugman and Jonathan Chait.
In his post Noo Yawk Roolz! Krugman has a few random thoughts:
1. It’s petty and silly, but after what seems like a whole adult lifetime in which Central Casting insisted that major politicians be either Southern gentlemen or Midwestern heartland types, it felt good to watch and listen to Chuck Schumer, speaking the language of my roots, at the victory press conference — even with that green tie. Noo Yawk Roolz!
I agree, Noo Yawk roolz, but it's because of people like Anthony Weiner and Eric Massa, not Chuck Schumer. And yeah, it would be nice if, after a whole lifetime of in which Central Casting has insisted that major politicians be old white doodz, I'd really like to see more women. Hillary Clinton and Nancy Pelosi and some of those who went before them have been great pioneers, but it's not enough.
3. As expected, self-proclaimed centrists can’t bring themselves to say anything nice about a bill that delivers everything they claim to want. Many people have pointed to David Broder’s piece this morning; let me add a historical note. Back in 2006, Broder hailed the Massachusetts health reform as a “major policy success”. Now the Senate has passed a bill that is, broadly speaking, a better-funded version of the MA plan plus a major effort at cost control. Where’s the praise?
Agreed on the "centrists" -- partly. I would guess that the "centrists" don't like the "better-funded" part, because, like the right-wingers they pretend not to be, they don't really want to spend money on those who have not proven themselves morally worthy. And "morally worthy" means "not poor".
2. More seriously, Jon Chait is right: this is a great achievement.
I saved this one for last because it's the most egregious. Aside from wishing that all the historical historicity hysteria would just go away, I just want to delve [partway] into one paragraph for now.
In an article that should have been titled And the The Whole Thing Is Just Noise, Why the health care bill is the greatest social destruction experiment of our time, Chait writes this:
The most important source of revenue is a 40 percent excise tax on insurance plans costing more than $8500 a year for an individual. This tax represents the partial fulfillment of a longtime goal of both the right and the left. Employer-sponsored health insurance is tax-deductible, while wages are, of course, taxed. This means an additional dollar of health care benefits costs less than an additional dollar in wages—an anomaly that has contributed to runaway health care costs. Taxing high cost plans, which do not produce better health outcomes, will give employers a strong incentive to shop for cheaper plans. Either way, the government would collect revenue—either directly through the excise tax, or (better still) indirectly when employees start getting less compensation in the form of tax-free health care, and more in the form of taxable wages.
In A Cadillac Plan is one where you get the care you need, Ian Welsh says it best, so I'll quote his entire post [even though the title says it all]:
Seriously, someone explain to me what is wrong with Cadillac plans. Yes, they cost more. That’s because they’re the only plans where you stand a chance of actually getting the care you really need, when you need it, and not going bankrupt. We should want more of them, but that can’t be done because we can’t afford it.
Unless, of course, the US went to something rational—like, say, Medicare-for-all, instead of trying to reinvent the wheel. Why? Because Medicare-for-all would cut health care costs by at least a third.
The health care crisis isn’t about people not having insurance, it’s about people not getting the health care they need when they need it without having to pay money they can’t afford. When I go to a Canadian hospital, I never, ever, even see a bill.
And unless you’re a multi-millionaire, I get better care than you get too.
So why do Very Serious People keep trying to tell us that Cadillac Plans are wasteful?
The only thing I can find, in two or three years of digging through the internet, is the Rand HIE. HIE is short for Health Insurance Experiment, and really, it ought to become known as the Grand Health Insurance Experiment, said with tongue planted firmly in cheek.
What was this grand experiment? Short description, people were assigned to one of four "insurance plans" ranging from totally free care to being required to pay 95% of the first $1000 of medical expenses before the insurance kicked in [$1000 back then would be approximately $4000 now].
What was the result? The people who had to pay more of their own money practiced self-denial and got approximately one-third less medical care than did the group that got free care, but all groups appeared to have approximately equal health outcomes. Ergo, we do not need Cadillac Plans!
Don McCanne, of PNHP, refuting the economist darling of the moment, Jonathan Gruber [Gruber unquestioningly believes in the results of the HIE]:
So what is the real lesson of the RAND HIE? Cheap insurance works for healthy people. Period.
What happened in the Rand HIE [which followed people for only a few years, 3-5 iirc] was that low-income people with chronic illness were more likely to die if they had to pay more for their medical care [but who needs poor, sick people anyway?]. Also, people could leave the experiment at any time, and one of the failings was that the experimenters did not follow up adequately on those who left [how many had serious medical problems that they could only afford to tackle with better insurance? nobody really knows].
It is crucial to understand the nature of the population studied. The subjects were a gainfully employed workforce and their families, who were observed for a few years. Thus this was a study of relatively healthy workers and their healthy families during healthy years of their lives. Being employed, they had discretionary income sources that could be used for health care cost sharing.
The intrinsic validity of this study can be applied to similar healthy populations with reliable incomes, but it does not have extrinsic validity in a system of “universal coverage.” A system that would cover everyone must take into consideration the entire market basket of health problems, from conception to death. Even if sectors are segregated based on age (Medicare), income (Medicaid), employment (employer-sponsored coverage), or whatever, the remaining uninsured have a multitude of problems which result in their being uninsured in the first place. The RAND HIE conclusions would apply “on average” only to the employer-sponsored group, but not to these others, and certainly not to the uninsured.
There is also considerable question as to the overall impact on total health care spending. Although the 80 percent of us who are healthy would reduce utilization, we consume only 20 percent of health care. A modest reduction of only one-fifth of our health care bill would not have a major impact. The 20 percent of individuals who use 80 percent of health care, the group that was not studied in the RAND HIE, have little opportunity to selectively decline health care that seems necessary because of their health care problems.
Besides, is the RAND HIE “on average” conclusion satisfactory? Individuals in the RAND HIE with hypertension had a 10 percent higher death rate when cost sharing was required. The families of those who died receive little consolation in the fact that these deaths did not change the statistics of the overall beneficial outcomes of this healthy population.
There were actually a whole slew of experimental design shortcomings in the grand experiment, and you would think that a journalist whose father was a doctor and an economist who is smart enough to merit both a Nobel Prize and John Bates Clark medal would have the intellectual curiosity to look into those, but noooooo.
Because of this lack of intellectual rigorousness on the part of people who should know better [and who have a big enough megaphone to tell us about it], we aren't even going to get cheap insurance, but it's still going to be insurance that, aside from raiding their pocketbooks, will largely work for the healthy, not the sick. But then, we already know that the most cost effective way to cut health care spending is to just not spend money on sick people.