Arnold Kling  

Taking Ezra Klein's Health Care Challenge,

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He writes that in order to cite the CBO criticism of the Democrats' health care reform proposals, one


must do some combination of the following:

a) Support, as the CBO says you should, the eradication of the tax exclusion that protects employer-based health-care insurance;

b) Support, as Lewin and Commonwealth say you should, a public insurance option that can bargain at Medicare's rates;

c) Support, as the Office of Management and Budget and every health-care wonk in town says you should, one of the various policies floating around to give MedPAC authority to continually reform and modernize Medicare;

d) Support some form of aggressive cost-sharing that would make people extremely angry because it will save money by reducing their access to health-care services;

e) Support comparative effectiveness review that can judge not only the effectiveness but also the cost-effectiveness of various treatments, and give the federal government authority to use that data when deciding reimbursement rates.


I pick (a), (d), and (e)*. What do I win?

Oops, there's some fine print. Ezra's rules apply to "Politicians." I'm not eligible.

*Bear in mind that with aggressive cost-sharing, the decisions about reimbursement rates will be driven more by consumers and less by government.


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COMMENTS (7 to date)
J writes:

Agreed, (a), (d), and (e). I contacted my U.S. Rep. yesterday and told him that if they touched my HSA I would be very pissed, and would do my utmost to make sure he never worked another day in public office if he did.

E. Barandiaran writes:

Mickey Kaus has a good reply to Ezra Klein's nonsense position. Read
http://www.slate.com/blogs/blogs/kausfiles/archive/2009/07/17/wonks-will-kill-health-care-yet.aspx

shayne writes:

The current health care industry has enjoyed a phenomenal growth rate over the past 30 years, and will continue to enjoy phenomenal growth, as long as it operates within a system of guaranteed payments for any and all services it can invent and provide - irrespective of efficacy, efficiency or price of those services.

Thus far, the debate and postulated 'solutions' have centered around prices, efficacy, and efficiency. Those ignore the central feature that the health care industry operates in a guaranteed payment environment, as few, if any, other industries do. Those advocating any form of expanded 'public' option are merely advocating the use of government coercive force powers to further reinforce the guaranteed payment feature - particularly for those 46 Million (or whatever the real number is) who are currently 'self-insured'.

It's curious that in all of the options being discussed, and in the special 'emphasis' on retaining and enhancing 'choice' in health care decisions, the very reasonable choice of being 'self-insured' is being eliminated for everyone. And I suspect it would be far less expensive for most to self-insure than it would be to have their personal resources drained to insulate (not insure) others from the costs of their health care choices. But that option certainly would degrade the viability of the guaranteed payments system the health care industry currently enjoys.

Gary Rogers writes:

I could possibly support (a) because there is no reason medical care should be tied to an employer and to continue to subsidize this is wrong. However, removing the tax exemption will mean that more employers drop their healthcare. This means more uninsured and additional problems that need to be considered. All of the other choices, though, are headed the wrong direction.

If I were going to make healthcare suggestions, I would start with a law that anyone is free to find healthcare anywhere they choose even if they are on a government program. This would change the current situation where someone on Medicare cannot go out on their own to see a doctor. As long as consumers are truly free to make choices, there will be providers willing to fill the demand.

The second change I would suggest is that any medical provider that deals in government care (Medicare, Medicaid, etc.) cannot also provide private care. This forces the government to actually fund their programs and prevents them from pushing costs to the private sector because compensation rates are too low.

If we could get government out of private healthcare, I am convinced that most of the problems will take care of themselves.

Dan Weber writes:

However, removing the tax exemption will mean that more employers drop their healthcare

I think employers will still get to deduct it as a cost. It's the employees who will now have to pay income taxes on it. The hopeful result is that some employees will negotiate for salary instead -- or maybe just opt-out entirely, getting nothing, but being better off because they can buy their own plan better.

This in turn would make the individual insurance market less a collection of screwballs* and bring some real competition.

I'll fully on board with (a), (c), (d), and (e). I'm not really sure how one can support (e) without supporting (c), but I'm willing to think I'm not seeing things right.

I can take or leave (b). From reading the House bill, the public option wouldn't be any attack on the market.

(* I mean this will full respect. However, if you are in the private insurance market, until recently the question was "why are you here, where you don't get the tax benefits?")

Kevin Bob Riste writes:

It strikes me as odd that you would support (e) but not (c). Are you against Medicare or MedPAC? It just seems like (c) is one particular application of (e). If 46% (Krugman blog) of medical payments in this country (probably by amount, which I realize skews the data) are made by the government, wouldn't this be a great start to making those payments more efficient and effective without monopolizing the industry since Medicare's scope is already inherently confined?

shayne: I fail to see how a financially independent public option created by the same people who are saying we need MedPAC to limit Medicare expenditures by assessing necessity and effectiveness could possibly reinforce the current system of payments. If there is a mandate, there will be a mandate regardless of whether or not there is a public option, and if there is not a mandate, the very same people who would be attracted to a public option for insurance are the types of people who over-economize on health care and only spend money on it when they absolutely have to, and would likely be insured if they were responsible or could afford it. Tax exemption or not, the number of people who can or should attempt to pay for their own health care completely out-of-pocket every year will never be high enough to be an effective cost control. The only possible road to this effect is outlawing insurance, which I am convinced would lead to hardship among those least able to bear the burden. The health care market is different from the electronics market. It would be more intellectually honest to recognize this.

mattmc writes:

A is one way to put forward a middle class tax hike without making it look like you're doing it. It may induce employees to choose cheaper plans.

B should be run as a non-profit, not a government bureaucracy. Otherwise, the temptation to suck tax funds is going to be irresistible.

C is only being opposed by politicians looking for aarp votes.

D is the key to bringing prices for services down and reducing demand. The current perverse system of prepaid care masquerading as insurance provides the incentive for people to use as much as they can without regard to cost. Deregulation in this area should leave people with something more like real insurance, with a focus on the catastrophic events.

E is stated incorrectly. Comparative effectiveness should be used to determine whether a treatment should be applied, not to step outside the market to centrally plan it's price.

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