Arnold Kling  

Health Care Policy

Marcus Welby Was Greedy, Too... The Fiscal Policy Lag...

You can listen to me, giving what felt at the time like a good talk.

Also, I recommend Keith Hennessey

You cannot magically slow health spending growth without proposing policy changes that affect incentives and behavior. If the President is not willing to bite the bullet and lead on slowing long-term health cost growth, he will instead get a bill which is just a straight entitlement expansion, partly offset by Medicare Advantage cuts and tax increases, and obscured by budget gimmicks.

The way I put it in my talk, the Democrats will go for dessert now (entitlement expansion), spinach later (do something about costs).

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COMMENTS (4 to date)
John Thacker writes:

Virginia Postrel's point is fairly simple: Medicare first! The research, which you and I largely agree with, indicates that it's possible for Medicare to spend 30% less and achieve the same outcomes by having everywhere treat like the areas that treat the least but best. Why not try reforming the incentives in Medicare first? Why does the whole system have to made like the admittedly inefficient Medicare system first?

I believe that it may be politically impossible to cut the spending. It's been impossible to do so so far in Medicare. I don't think it will get easier by expanding Medicare to all.

If they do manage to reform Medicare and make it 30% more efficient than the insurance system (since the efficiencies are similar right now), then they'll have a strong case for expanding the program. But they're promising dessert now and spinach later, which seems unlikely.

Robin Hanson writes:

Yes, the key is whether they will put any serious cost-control into their benefit-expanding bill.

John Thacker writes:

I suppose one argument is that politically they can only get the cost control in there if they throw in the sugary dessert of universal health care. (Of course, this loses Republicans to get Democrats, but Democrats have a majority.)

But if the cost control is so unpopular, why will the compromise remain? Won't politics cause the cost control to be relaxed, sooner or later, if it's so unpopular?

SWH writes:

AK- There is a problem with your use of the distinction between "insulation" and "insurance" in that you say insurance is rightly rarely used and only to cover catastrophic events. To bring health care insurance back to its rightful (and useful) place, more than aggregate demand must be addressed. Today a relatively minor health care issue (relative to the '60s) can still be financially catastrophic for most people. The problem is not just the aggregate cost of health care, but also the higher cost of particular health care services. If we had more self-rationing by individuals in the "grey" area as you suggest, do you think "insurance" (covering the increased scope of catastrophic events) would be viable?

As a owner of a "high deductible" policy who has consequently paid, out of pocket, all health care expenses for my family for the last 7 "uneventful" years, I still pay 20% of my net income for insurance premiums. Part of the answer, I think, is the internal structures of health care system (the cultural health care philosophy of doctors and hospitals) that is not within the control of consumers. How do we get real cost/benefit analysis at that level? That aspect must be addressed before health care costs will be under control.

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