Reality Check on Health Care Reform

David Cutler argues that health care reform will save money. There are certainly ways to spend health care dollars more efficiently. We should concentrate more on primary care and preventive care. This does not mean this will save money, at least for many years, as I’ve discussed previously. It will cost money to provide preventive care services and it will cost money to provide care for those who are now uninsured. It will take quite a bit longer than a decade to see any meaningful cost savings from such health care reform. The Obama administration really over-estimates the value of health information technology and under-estimates the difficulties in getting systems in place which will actually turn out to be of value.

There are many reasons why we should reform health care, and there are certainly societal benefits to improving preventive care and improving access to health care, but arguing it will save money is a bogus argument for health care reform. If the country wants increased health care services we are going to have to pay more for them. Fortunately many polls do show that a majority of voters are willing to pay higher taxes if it means more affordable health care and no longer fearing the loss of coverage. If only the politicians had the courage to admit it will cost money and discuss where it will come from.

David Leonhardt (via Andrew Sullivan) sees one organization which might question some of Cutler’s assumptions:

It’s going to be interesting see whether the Obama administration tries to make a version of this argument to pass a health-care reform bill — and whether the Congressional Budget Office, which will be responsible for coming up with the all-important budget number for the bill, will buy the argument.

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21 Comments

  1. 1
    Lloyd Y. Asato says:

    Reality Check on Health Care Reform – Liberal Values – Defending … http://tinyurl.com/p3zt23

  2. 2
    Lloyd Y. Asato says:

    Reality Check on Health Care Reform – Liberal Values – Defending … http://tinyurl.com/p3zt23

  3. 3
    Michael Kirsch, M.D. says:

    I have my own reality check.  There was nothing real about the White House ‘tea party’ that Obama held with several medical groups this past week.  This love affair will be a brief fling that will evolve into a rancorous dispute among rivals.  Why are they all holding hands now?  http://mdwhistleblower.blogspot.com/search/label/Health%20Care%20Reform%20Quality

  4. 4
    Christoher Skyi says:

    Megan McArdle also pulls the curtain back on the “Medicare is going to bankrupt us, which is why we need universal health care” fallacy:

    “Perhaps predictibly, someone showed up in the comments to my post on Medicare and Social Security to argue that liberal analysts have very serious plans to cut Medicare’s costs, which is why we need universal coverage, so that we can implement those very serious plans.

    I hear this argument quite often, and it’s gibberish in a prom dress.  Any cost savings you want to wring out of Medicare can be wrung out of Medicare right now:  the program is large and powerful enough, and costly enough, that they are worth doing without adding a single new person to the mix.  Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people.  Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.

    I suppose there’s some possible argument that only with universal health care can we prevent providers and consumers from realizing there’s an alternative they prefer to the status quo . . . but that implies a Canadian style system that outlaws private care, which is not what anyone’s proposing, not what anyone’s going to get out of the American political system if they do propose it, and not just a little bit disturbingly totalitarian.

    Otherwise, people who want to reform Medicare to make it more cost effective should go ahead and propose the changes to Medicare they can get passed.  I am not going to buy a pig in a poke on the slim chance that the pig might be able to get me 20% off an echocardiogram.”

  5. 5
    Ron Chusid says:

    She is really talking about a different issue. She is talking about the argument of needing health care reform to save money in Medicare. That one is partially true but there are also faults to the argument. Megan leaves out an important point that having everyone in the risk pool would be more cost effective. Medicare is limited to the oldest people and to the disabled, who frequently also have increased health care needs.

    Even though her argument is faulty, she is right on the general issue that the reason for health care reform is not to help Medicare. The reason is to help all the people without Medicare who do not have affordable care. While Megan is responding to an argument a handful of people have made, this really is not a significant point.

    She also plays one of the typical right wing games of bringing up Canada, but a Canadian system is not on the table here. Here is a very safe rule of thumb in evaluating discussion of health care reform in the United States: Anyone who brings up Canada or Great Britain as arguments against health care reform should be ignored.

  6. 6
    Ron Chusid says:

    Michael,

    Note that I didn’t even bother to post about the meeting. I can’t believe how many people saw that as something meaningful. I guess those of us in health care who are accustomed to hearing lies from insurance companies are going to be quicker to realize that it is safest to believe nothing which is said by such people.

  7. 7
    Fritz says:

    Most people want (and can use) more health care than they can afford.  I believe the French government did a study a while ago that said that if everyone got all of the health care they could use, it would be 4x the GDP.

    Everyone would like to third-party expenses that really just stop them feeling worse so they can spend their own money on things that make them feel better.

    Once you get into the habit of third-partying your medical care (as the US did in the 1930’s), then it isn’t all that big a step to transferring the responsibility from your employer to the government.

    So, yeah, I think we will wind up with national health care.  And I think it will suck (well, OK, it will be better if your current standard is the county).  Clearly our opinions differ on that.  🙂

    Ron — culturally, the two countries that are closest to the US in terms of history and culture are Canada and Great Britain.  Consequently I see by far the most probable future is that the US when (not if, IMO) we go to nationalized health coverage, we will follow their models.  So I think it is a bit disingenuous for you to insist in bold fonts that everyone should ignore anyone who brings up their systems as arguments against nationalization.

  8. 8
    Ron Chusid says:

    Fritz,

    The historical cultural relationships with Canada and Great Britain are irrelevant with regards to health care plans. The health care industries have evolved in very different ways. More importantly, nobody who is involved in proposing plans for health care reform is looking at plans anything like these.

  9. 9
    Fritz says:

    Ron, if we remember, one of us can buy the other a beer when we find out what kind of nationalized medicine we get.

  10. 10
    Ron Chusid says:

    Fritz,

    First of all, the current plans are not for “nationalized medicine.”

    Secondly, what we wind up with depends a lot upon when it is done. The longer we wait for reform, the more likely we will have a government-run system. The private system is collapsing. If we reform the system now we can preserve the system of private coverage as is being advocated by those currently working on health care reform. If we wait another 10-15 years it is likely the private insurance system will completely collapse and will be replaced by a government run system due to absence of any other choice.

    The best time to have acted was  in 2005 if the 2004 election had turned out differently. Kerry’s plan would have been more voluntary and would have kept the health care system alive. Instead we lost another four years, the problem is far worse, and the solutions therefore involve more government action than was advocated in 2003-4. One reason I supported Kerry’s plan was that I saw it as the best, and our last, chance to solve many of the problems in health care without resorting to even more government action.

  11. 11
    Fritz says:

    All the plans are “government-run”.  If you have a single payer, that single payer controls the system. 

    Doctors and hospitals should push for full nationalization.  With single-payer, their payments would still be reduced because of the destruction of anything like a market but they would still be liable for malpractice claims.  If they were true and full government employees, it would be as hard to sue them as it is to sue cops or police departments.

  12. 12
    b-psycho says:

    Not to say I have much thought about it these days (I concluded awhile back that health care is an issue that is inherently unsolveable, in the sense that most think of it), but it’d be nice if this kind of view got some air time occasionally, if only to provoke thought.

  13. 13
    Ron Chusid says:

    Fritz,

    There is still a big difference between government running the system as in the British system and in a single payer system. A single payer will have a lot of say, but there are still independently run practices. Regardless, even single payer is not on the table in this country. While many people, including many physician groups, back single payer both Obama and most Congressional Democrats have rejected this.

    If we had single payer, the bad thing is that the government would have more say over things. The good thing is that the insurance companies and HMO’s would no longer have a say over things. Corporate controlled medicine has turned out to be far worse than socialized medicine–another reason why conservative cries about socialized medicine fail to scare many doctors anymore.

    We certainly do not want full nationalization. While a single payer system would give us more freedom than we now have, full nationalization would put us under government control. Malpractice is hardly a reason to drive what type of system to want. While malpractice is a nuisance, the significance of it is about 1 percent of what conservatives make it out to be. Besides, there are other solutions besides full nationalization, such as taking claims for health care damages out of the judicial system.

  14. 14
    Fritz says:

    b-pyscho — very nice read.

    Ron — I don’t see that “government pays” obviously gives more freedom than “random collection of large corporations under government regulation pays” (or really much less freedom, for that matter). 

    Ultimately, nobody (OK, very few people) is in favor of truly free market in health care, because then people who can’t afford treatment are left to die.   Or middle-aged people have to decide whether grandma dies right away at the cost of the family losing the house for an operation that will give her a few more years.   Or whether the new permanently-damaged premie is left to die naturally or will bankrupt the family.

    These are the types of decisions that make up a market — can I afford to go out to dinner, how badly do I want new shoes, maybe I don’t buy a camera.  But when the market is medicine, the choices are starker.

    So almost everyone wants to third-party the decisions and have them tilted in favor of more care than is economically reasonable for most people.   We gussy it up in calling it insurance, but it really isn’t usually.  Insurance, rather by definition, does not cover expected expenses.  You don’t get car insurance to pay for oil changes.  Similarly, any health insurance that pays for annual checkups or birth control pills is not insurance — it is just third-partying your medical costs.

    Because of these perfectly reasonable motivations, I think we will head into a fully government-controlled system.  Unlike you, I don’t see a huge difference, in the long run, between “government pays for everything” and “government runs everything”.  Maybe there are short-term differences, but I don’t think they will last — no market, after all.

    I hope that the government has the sense to leave some sort of parallel system for those able to completely opt out so that there is some market pricing information left.

  15. 15
    Ron Chusid says:

    Fritz,

    “I don’t see that “government pays” obviously gives more freedom than “random collection of large corporations under government regulation pays” (or really much less freedom, for that matter). ”

    You are missing the point. This isn’t what “obviously” does anything. This isn’t about applying arm chair logic, but about looking at the facts in the real world.

    “I hope that the government has the sense to leave some sort of parallel system for those able to completely opt out so that there is some market pricing information left.”

    That is what is being proposed–both so that there will be some market pricing information left and to leave people with more choice.

  16. 16
    Fritz says:

    Sorry, Ron, but my observation of “facts in the real world” is that government consuming a large sector of economic activity rarely if ever leads to more freedom.  Maybe this time will be different, I guess.

  17. 17
    Ron Chusid says:

    I’m referring to what currently exists. Corporate medicine limits freedom far more than government involvement in health care.

  18. 18
    Jim Z. says:

    So-called health care reform will not save money unless and until private insurance companies are removed from  the picture.  So, as long as puublicly-run payer system is put on the table, no one should hold their breath or wast their energy – it’ll be just rearranging the furniture in the same old room.

  19. 19
    Jim Z. says:

    Oops – meant to say:

    “unless and until publicly-run payer system is put on the table,…”

  20. 20
    Ron Chusid says:

    Jim,

    It depends what your goals are for health care reform. If the goal is reducing cost then it is a no-brainer. There is no alternative to a single payer system.

    I don’t agree that health care reform is a waste of time without single-payer as for me the most important goal is improving access to health care. This can be done without a single-payer system, but we won’t see the cost savings of a single-payer system.

    It is amusing when conservatives cite cost as an argument against health care reform as if cost savings is the goal than single-payer is the best option and preservation of private insurance is the most costly.

  21. 21
    b-psycho says:

    Ron: on a related note (as far as the myth of the current health care system being “free-market”), I figured you might find this interesting…

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