Arnold Kling  

Where Health Care Reform Stands

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Ronald Brownstein writes


To save costs, Democrats mostly want to change the incentives for providers. Republicans mostly want to change the incentives for patients by shifting toward a model where insurance covers only catastrophic expenses and people pay for more routine care from tax-favored health savings accounts. In essence, the Republican view is that the best way to hold down long-term costs is to directly expose patients to more of them. Few Democrats accept that logic though and it has little influence on either chamber's legislation.

Peter Orszag points proudly to the article, because it mostly interviews economists who heart the Senate health care bill. Folks like Jonathan Gruber, a key proponent of the Massachusetts debacle.

Reread the last sentence in the quote. When you read "that logic," what is meant is the law of supply and demand. It's a good thing that Congress doesn't vote on whether to accept the logic of gravity.


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The author at Health Care BS in a related article titled Dumbest Reform Post of the Week (II) writes:
    I know it’s a little early, but it’s a short week and I find it difficult to believe that this post by Ronald Brownstein can be topped for sheer cluelessness. How could anyone hope to surpass the childlike credulity required to believe that... [Tracked on November 24, 2009 9:16 PM]
COMMENTS (8 to date)
Mogden writes:

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8 writes:

A major problem is that this "logic" does not translate to the average voter. Right now, anyone thinking inside the box sees a shift to consumers as all cost and no gain, since medical care is "free". They see the government or employer benefiting at consumer expense.

Also, most people think of medical expenses in terms of cancer, heart attacks, etc. They focus on the major costs due to fear and ignore the huge expenses in routine care.

Pushing for consumer control of the money is a good first step, but then in the case of Medicare, Democrats will probably say it's wasting money to let people keep money they don't spend. This could easily be reverse-spun as welfare, and then there's the deficit.

What's needed is a major, blunt force educational campaign to show the public the way a logical system works and how illogical the current system and debate fail. And then how we get from this mess to a workable system, step-by-step.

Lord writes:

Since catastrophic is close to half of costs, one can quickly see the limitations of the patient approach, and while the desire to expose individuals to costs may be there, the creation of actual markets with full and transparent pricing is nearly totally absent. And far from proposing change, the Republican approach has been to preserve the status quo, only offering changes to forestall more significant ones.

Joe Cushing writes:

Arnold,

In a way, both sides are right on this debate. If you put costs onto the consumer it will raise their costs in the short run because it will take time for the market to work. In the early stages of your reform people will be paying crazy prices for care that would be way cheaper under a real market condition. So what we have is a transition problem. The right ignores the problem the left believes the problem is not a transition problem but a perpetual one. It will be hard to start a real market without at least acknowledgement this transitional problem. The faster we can get a market going the shorter the transition problem will last.


8,

One way to fix that problem is to have employers put money into people's HSAs. Then the money they spend will mostly be money that didn't come out of pocket. Then if they don't spend the money, they get to keep it for later.

dcpi writes:

One of Orszag's four pillars is an independent health care commission. Who is the commission to be independent of? Our elected representatives? The people themselves? So who will this commission be accountable to? Are we on the verge of inventing the tyranny of the unaccountable commission? Or is this the "death panel"?

steve writes:

Apparently, the only way we can be convinced to accept the realities of economics is to crash and burn on the unforgiving rocks of those realities.

I am tempted to simply hope those rocks arrive soon just so I can see things improving in my lifetime. But I remind myself, "No matter how bad you think things are, they can always get worse."

spencer writes:

When I see facts like these:

# Nearly one third of terminally ill patients with insurance used up most or all of their savings to cover uninsured medical expenses such as home care.

# 27 to 30 percent of Medicare payments cover the cost of care for people in the last year of life.

# 40 percent of Medicare dollars cover care for people in the last month.

# 12 percent of Medicare spending covers people who are in the last two months.

# 10 percent of Medicare beneficiaries account for 70 percent of program spending.

I find it hard to accept your basic premise this the problem of rising health care cost is individuals spending insurance money on easily deferable or omitted treatments.

Just once I would like to see you propose some specific examples of health care purchases people would not purchase out of their own pocket along with specific data on how much of total health care spending the examples account for.

It is like all your comments on defensive medicine. I have never been able to find a reputable estimate of how much of health care spending goes for defensive medicine, but you keep claiming it is a major reason for the increase in spending. How about showing me some hard data on how much of health care spending was defensive medicine 30, 20, 10 and 1 year ago.

For example, several years ago Texas placed a cap on court settlements for pain and suffering and made it much more difficult to prove malpractice in the courts. It worked very well in that Texas malpractice insurance rates fell.
But on the other hand I can find no evidence that it led to Texas doctors changing the way they practice medicine or the number of test they run.
Do you know of any such evidence?

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