Arnold Kling  

The Massachusetts Health Care Tar-baby

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Shikha Dalmia writes,


The state health-care bill for fiscal 2008-2009 is expected to touch $400 million -- 85% more than originally projected. Still the state won't be able to fully shield those it subsidizes from the premium increases. But uninsured folks who don't qualify for government help really get pounded. Before the hike, the cheapest plan for uninsured couples in their 50s cost $8,200 annually. Now, unless government bureaucrats hand them an exemption, they might well find it cheaper to pay the penalty -- up to half the price of a standard policy -- than purchase insurance. That is, pay to remain uninsured. This is legalized extortion: TonySopranoCare.

...As reported in the Boston Globe, the Connector is encouraging insurance companies to include only a limited network of cheaper physicians and facilities in some plans to hold down premiums. Patients who wish to see more expensive providers will have to dig into their own pockets. Dr. Steffie Wollhandler, a professor of medicine at Harvard University, worries that the Connector will revive Gov. Romney's original idea of enrolling poor people in plans that only offer access to neighborhood health centers ill-equipped to treat anything beyond routine ailments. Forcing people to buy substandard care they cannot afford is not universal care, she says. "It is a hoax." And so Massachusetts is marching toward a system of two-tiered medicine -- the alleged market inequity that universal care is supposed to cure.


As government grabs the tar-baby of health care, it will flail around with mandates, rationing, price controls, and other regulations that ultimately will prove futile.

Many on the Left argue that other countries have better health care systems with more government involvement. My challenge to the Left is this: see if you can get Medicare and Medicaid to work as well as you believe the French system works or the Canadian system works or whichever you think we ought to be striving for. Only then should you reach for additional government responsibility.


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COMMENTS (14 to date)
Floccina writes:

I do not understand this:

Before the hike, the cheapest plan for uninsured couples in their 50s cost $8,200 annually.

My wife an I are in our 50s and we have 2 children and our family Blue Cross health insurance policy costs us $300 per month or $3600 per year. What gives?

Floccina writes:

Oh and I forgot to say that my wife has had breast cancer and another serious condition that cost over $30,000 a few years ago.

8 writes:

My employer told me insurance rates would increase in 2008. Under the Massachusetts law, I can take the employer paid portion and buy another plan. I assumed the Connector might have some cheap plans, but even the crappiest coverage is as expensive as my plan.

Chuck writes:
My challenge to the Left is this: see if you can get Medicare and Medicaid to work as well as you believe the French system works or the Canadian system works or whichever you think we ought to be striving for.

If we could get it taken up by both sides, where there wouldn't be actual obstructionism, that would be great because then we'd be able to focus on what would work, rather than what would be possible to get.

Also, I think there'd have to be allowances made for the adverse selection at work in Medicare and Medicaid - a system that covers the poor and the elderly is going to have the people that need the most care, but no healthy people to average the costs over.

On the other hand, how about if we simply switch from a focus on Medicare/Medicaid to the VA. I think there's lots of good things to be said about the VA, and that it in fact might already be on par with any national healthcare system in the world.

(Keep in mind, that the Walter Reed Medical center is part of the Army (or Navy) and not run by the VA.)

ChrisW writes:
If we could get it taken up by both sides, where there wouldn't be actual obstructionism, that would be great because then we'd be able to focus on what would work, rather than what would be possible to get.

I call foul. That breaks the experiment. Any government-regulated universal plan will have to reckon with the political realities. The point is to prove that Medicare and Medicaid can work in the real world in order to gain confidence that further intervention has any hope.

Are you conceding that the realities of politics does, in fact, make it impossible for such a plan to work?

Dan Weber writes:

Many on the Left do say that Medicare and Medicaid work just great.

RL writes:

Chuck,

Have you ever had treatment in a VA hospital?

There are two types of VAs. There are big showplaces, often associated with university hospitals, with all the bells and whistles, and learning residents taking care of you, or there are--the majority--poor quality institutions, unpleasant to be in, chronically undersupplied, typically staffed with foreign-trained physicians or those who can't get jobs elsewhere.

Consider: VA hospital coverage is free, yet the vast majority of veterans do NOT use it for their own healthcare needs. Only those driven by poverty to go there use it. What does it say about the quality of an institution that most of those eligible turn down FREE CARE?

Larry writes:

Isn't there a pretty easy fix to the Mass plan? That is to allow individuals to buy any plan offered in any state. That would drastically expand consumer choice, allowing people to find plans that fit them much better than the excessive mandates that Mass bureaucrats find essential.

I have no problem with the must-purchase mandate as long as it goes with a must-carry complement. We need to eliminate the freeriders and the left-behinds, and I see no other way to get that done.

In my dreams I imagine multi-year, even working-life long plans that correctly align the incentives of patient and insurer in maximizing health rather than controlling per-incident costs.

MattS writes:

RL - don't you think that most veterans probably have jobs with health care benefits? And could that possibly explain why most veterans don't use the VA?

I wish we'd quit mucking around in this country and reward our hard work and high productivity with universal health care, whether it's based on the German model, French, British, French Canadian, whatever. There's no excuse not to, aside from peevishness. Or is it a prideful self-reliance learned on the western frontier?

Babinich writes:

RL states:

"Consider: VA hospital coverage is free, yet the vast majority of veterans do NOT use it for their own healthcare needs. Only those driven by poverty to go there use it. What does it say about the quality of an institution that most of those eligible turn down FREE CARE?"

How many veterans Means Test out of VA based care?

MattS states -

"I wish we'd quit mucking around in this country and reward our hard work and high productivity with universal health care, whether it's based on the German model, French, British, French Canadian, whatever. There's no excuse not to, aside from peevishness. Or is it a prideful self-reliance learned on the western frontier?"

There are many reasons to avoid Universal Health Care. People differ in what they want so no program can be "universal" without being mandatory.

Each citizen is forced to pay for his neighbors' medical care in the form of higher taxes.

Does equal access to care for every citizen mean that visiting private care provider is forbidden? At one time this was a major issue in Canada. This alone is one issue to check out.

How will the government control costs? Will it be by rationing care? Will it be by controlling wages? If the wages of doctors are capped, does that mean that the best and brightest move into other disciplines?

I agree that the current health care system is flawed, but is Universal Health Care the answer?

I believe not...

To quote P. J. O'Rourke: "If you think health care is expensive now, wait until you see what it costs when it's free."

Waldo writes:

I don't understand the $8200 figure either. America presents with a unique healthcare blend of entrepreneurialship, Medicaid, and Medicare. Just enough government to insure everyone is covered, just entepreneurial enough to provide high standards of care, as well as maintain American ideals. Reportedly, healthcare administration costs are 15% in Canada, compared to Medicare's 3%. Any socialized healthcare plan will be heavily laden in bureaucracy and gatekeeping. Our current system is a work in progress, but its working.

MattS writes:

There are many reasons to avoid Universal Health Care. People differ in what they want so no program can be "universal" without being mandatory.

Mandatory sounds good. How else do you spread the risk out? You surely can't select just the healthy in the society. But people could still pay directly to see a private doctor; presumably it would still be a free country!

Each citizen is forced to pay for his neighbors' medical care in the form of higher taxes.

Also good, as long as the taxes were suitably progressive. I'd gladly pay more taxes (even in my meager bracket) for the convenience and safety net of universal care. I might consider starting my own business then, or my current employer might have extra income to expand, etc.

Does equal access to care for every citizen mean that visiting private care provider is forbidden? At one time this was a major issue in Canada. This alone is one issue to check out.

No, I think the Germans have figured this one out. They have public care and private. But these questions are straw men in what should be a simple question - do we value the health and lives of the workers whose labor generates our vast wealth? Actually, substitute 'our neighbors' for 'the workers' - sounds more community-minded.

How will the government control costs? Will it be by rationing care? Will it be by controlling wages? If the wages of doctors are capped, does that mean that the best and brightest move into other disciplines?

Other countries have figured out the cost and rationing questions. Or are we not as economically sophisticated as any given EU member? And if someone is going into medicine solely for the money, I'd rather not have them as my doctor, frankly. Let them chase the dollar in another industry.

I agree that the current health care system is flawed, but is Universal Health Care the answer?

I believe not...

To quote P. J. O'Rourke: "If you think health care is expensive now, wait until you see what it costs when it's free."

I suppose I'm not going to find many sympathetic ears on this blog, but I really think universal care is the only system that can work. There are just too many incentives in the private insurer model to eliminate insureds who are, for whatever reason, high risk or not in optimal health. Of course the details of crafting a new system hold their own pitfalls, but at least there are many successfully functioning single-payer systems to study for best practice methods.

Lucas writes:

Other countries have figured out the cost and rationing questions. Or are we not as economically sophisticated as any given EU member?

Really? I was under the impression that socialized systems were in the grip of very frank rationing of services (Canada, U.K.), broke (France), or both. Am I (grossly) misinformed?

And if someone is going into medicine solely for the money, I'd rather not have them as my doctor, frankly. Let them chase the dollar in another industry.

Given the political and cultural realities of the U.S., my guess is that the terms of government-run medicine would be dictated by providers' lobby. If you're interested in suppressing the profit motive in medicine, I don't believe that letting the government take over would help.

MattS writes:

Hi Lucas,

Given the political and cultural realities of the U.S., my guess is that the terms of government-run medicine would be dictated by providers' lobby. If you're interested in suppressing the profit motive in medicine, I don't believe that letting the government take over would help.

I don't want to suppress the profit motive either, I'd just like to think that doctors were called to their professions by more than just a good salary.

A proper health care system, in my mind, should cover everyone all the time (the unemployed get coverage, and there are no COBRAs to buy when you're between jobs). No physical exams to set levels of coverage, and no tiered pricing based on pre-existing conditions. And provisions for catastrophic coverage so that people like my good friend, who discovered she had cancer while she was uninsured, aren't yoked to mounds of debt for decades on end.

It also bugs me that a whole industry is created by government's unwillingness to enter fully into the market for providing health care. This imposes costs to our society just like higher taxes would, only they're hidden in the cost of goods and in lower base salaries. Other countries on the single-payer or hybrid models have much lower health care costs per capita and cover everyone. We should aspire to the same standard.

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