Health Care Reform And Scary Examples

I’ve frequently condemned those who use the health care systems in Great Britain or Canada as scare tactics to argue against health care reform. They should either be ignored as being totally ignorant of the issues currently under consideration or condemned as liars who are distorting the issue. Systems such as those in Great Britain and Canada are not on the table, period. Besides, if opponents of health care reform want to use examples of events elsewhere to scare people away from health care reform they do not need to turn to foreign countries. We have an excellent example here, in Massachusetts.

The Washington Post describes how Massachusetts wants to turn to capitation–payment of a flat fee per year per patient. This has attracted attention among those concerned that rising health care costs will interfere with attempts to pass health care reform nationally. The idea was first promoted by Richard Nixon, and later adopted by many insurance companies to screw both patients and doctors while increasing their profits.

Advocates of capitation in Massachusetts claim they will not implement this in the manner done by many HMO’s which led to disaster, but this remains to be seen. It is theoretically conceivable that a plan truly developed around delivering health care as opposed to making more money for HMO’s might be more successful, but I am very skeptical about this.

Megan McArdle lists some of the problems with capitation and then makes a prediction:

I predict this lasts about half a news cycle before the public outrage overwhelms state legislators, who start screaming for the heads of the traitorous, heartless bastards who suggested it.

I am not as optimistic as Megan. After having read about such a plan for a while, I fear they might really embark on this path. I am glad that Massachusetts is going ahead of the rest of the country so we can see hat happens before this is advocated nationally. If Massachusetts turns to capitation there are two possible outcomes (and I believe the second is more likely):

1) They will have really learned from the mistakes of the insurance companies and find a way to get capitation to actually work, or

2) It will be a terrible disaster, demonstrating to other states that they should not repeat this error.

Be Sociable, Share!


  1. 1
    Fritz says:

    A friend of mine does consulting IT work at a bunch of hospitals.  He says the hospitals lose money on Medicare and make it up on charging private insurance (one reason health insurance costs so much), and that they are terrified of the current proposals because they fear their ability to overcharge private insurance will go away and they will not be able to close the gap.
    Interesting assessment.

  2. 2
    Ron Chusid says:

    If that’s the case your friend is doing consulting work at hospitals which are inefficiently run. The DRG system is a challenge for hospitals, but a well run one can make money. The real cost shifting is due to all the uninsured, which adds to what they need to bring in from both Medicare and private insurance.

    For physician pay Medicare is a bit behind most private plans which pay fee for service, but there are also private plans which pay worse than Medicare. Medicare is also easier to deal with than many private plans. The lower overhead necessary to bill them, and not needing to spend staff time requesting prior authorizations, makes it more profitable to deal Medicare than many private plans. (The idea of requiring prior authorization is one which in principle might sound good to reduce waste, but it turns out that a terrific amount of money is wasted to handle this on both the insurance company and physician office side that the benefits are lost–especially as most requested things will ultimately be approved if persistent.)

  3. 3
    Fritz says:

    Well, their checks aren’t bouncing yet, at least.

  4. 4
    Christoher Skyi says:

    “If that’s the case your friend is doing consulting work at hospitals which are inefficiently run.”
    I wonder how widespread/common this is?  This is what worries/scares many and any rational person.
    Again, a  monstrous medical-industrial complex has grown around the entitlement programs. It is no more about the free market than the military-industrial complex.  All the problems Ron accurately describes can be traced back to insurers and service providers ultimately trying extract as much value as they can for themselves, as one would expect.
    Since this is has been going on, well, forever, the safe assumption, until someone convincingly demonstrates otherwise, is that adding yet another layer of bureaucracy will merely increases the cost to the hapless taxpayer.

  5. 5
    Brittancus says:

    It is a shame that some Americans are so gullible, to the outlandish propaganda and lies spat in the newspapers, television and radio about Obama’s health care agenda. They have demonized the British, Canadian and other worthy plans. Hidden under a disguise cover, these radical entities are determined to keep the special interest organizations in absolute power. Comprising of the money-draining profitable insurance companies and their rich stockholders. They don’t want any changes to the broken system of medical care, because it will hurt the status quo. I was born in England, in the county of Sussex and until the inception of the European Union and the European Parliament dictating to Britain. That
    they must accept millions of foreign workers, the nations medical system was exemplary. I never had to wonder if I would have to file bankruptcy, to pay my medical bills, or listen to the incessant ring of debt collectors on the phone.

    On several occasions I ended up in the cottage hospital and their was never a cost applied to it, never a ream of paperwork. Incidentally, I choose my own doctor where I Lived. The longest I waited for surgery was three months, as it was not an emergency. No doctor, no hospital or specialist asking  me for my Social Security number, drivers license or if I was covered by a predatory for-profit insurer. No premiums, no-cops and pre-existing condition clauses. Yes! Didn’t have a private room, but who cares?  Today the British Isles is being submerged under a barrage of legal and illegal immigrants, who have never paid into the system, have caused some rationing. Prior to the importation of foreign labor my trips to doctor, to hospital, the eye or a dentist was paid from my taxation. Unless we pass a national health care agenda, Americans will never know what it’s like to breeze through their lives, without worrying about paying for health care? Tell your Senators and Congressman you want an alternative to the–GET RICH– insurance companies, before a Universal health care is killed. 202-224-312  REMEMBER THE INVESTORS AND STOCKHOLDERS DON’T WANT THEIR PIECE OF THE $$$TRILLION$$$ DOLLAR PIE DISTURBED. EVEN SOME POLITICIANS HAVE THEIR DIRTY FINGERS IN THE PIE?

  6. 6
    Fritz says:

    Sounds like governors are getting cautious.

  7. 7
    Ron Chusid says:

    I don’t blame them in their position. Theoretically the federal government is supposed to pick up the extra expense of expanding Medicaid (which I consider a poor method of attempting to achieve universal coverage). It is understandable that the governors would fear that this would turn into an unfunded mandate and would make such noise now to attempt to get guarantees this will not happen.

  8. 8
    Eclectic Radical says:

    “It is understandable that the governors would fear that this would turn into an unfunded mandate and would make such noise now to attempt to get guarantees this will not happen.”
    That’s the trouble from going with ‘mandates are bad’ to ‘I believe a national mandate is the best solution.’ Prior experience with mandates has frequently involved entirely unfunded mandates or those that involve the cutting of funding for those who need it most because of their failure to meet the standards of the mandate. The states don’t have the resources of the federal government and don’t want to be left holding the bag because the feds change their mind again.
    On the other hand, if more of the governors were whipping up support for real reform, Obama wouldn’t have changed his thinking on mandates so drastically.

  9. 9
    Fritz says:

    The only resource the Fed has that the states don’t is that the Fed can run a deficit.  But that game is getting harder to play.

  10. 11
    Eclectic Radical says:

    Fritz, the US government as a whole has an exponentially larger tax base than the individual states. I’d say approximately x50. I’d count that as ‘greater resources.’

  11. 12
    Ron Chusid says:


    If you are going to judge by isolated horror stories there are far more which come up under our system. Far more people die frin preventable reasons here than in Great Britain–or any other industrialized country. A study of 19 industrialized country showed the Unites States was #19.

    I’ve found when I criticize the British system the responses I get from people actually living with it are uniformly positive. It is not the system I would prefer, but at least people do not lose coverage because they get sick  or because they lose their jobs.

  12. 13
    Fritz says:

    Sorry, Ron.  Excessive use of the caps lock key annoys me.  And note that I only used British sources.

  13. 14
    Ron Chusid says:

    There’s still a difference between horror stories from newspapers (even British) and the views which one generally sees from the people living under the system. People in Great Britain generally rave about the advantages of their system in a way which is not seen here.

  14. 15
    Ron Chusid says:

    I removed the bold from that comment–at least the caps aren’t as obnoxious when the bulk of the comment isnt bolded.

  15. 16
    Christoher Skyi says:

    “I’ve frequently condemned those who use the health care systems in Great Britain or Canada as scare tactics to argue against health care reform. They should either be ignored as being totally ignorant of the issues currently under consideration or condemned as liars who are distorting the issue. Systems such as those in Great Britain and Canada are not on the table, period.”
    True enough, team Obama is NOT using those plans as a template.  But the credibility problem remains — call it whatever you want—socialized medicine  . . . government-run health care . . . “a public
    plan”. . . individual & employer mandates — a Washington Post-ABC News Poll, June 18-21, 2009 survey found 4 out of 5 Americans agreed that a health care predominately run by the government would: REDUCE HEALTH CARE QUALITY, INCREASE COSTS, LIMIT CHOICES OF DOCTORS, INCREASE THE FEDERAL DEFICIT.
    The gloves are off and the fight is on, and I intend to join. will soon launch a series of radio ads (you can here one here) and Bob Barr has come out with this in the Atlanta Journal Constitution:
    “In “Sicko,” iconoclastic filmmaker Michael Moore extols the virtue of health care in such liberal “paradises” as the United Kingdom and Cuba. Leaving his audience to wonder where he would choose to go for treatment if he were facing a life-threatening illness — the People’s Hospital in Havana or the Mayo Clinic in Rochester, Minn. — Moore exhibits the same Alice-in-Wonderland delusion that has settled over the Obama administration.

    A majority of members of Congress, too, seem to believe that if only enough bureaucracy and taxpayer dollars are thrown at the health care “crisis,” then everyone in the country will have their every medical need met, when they want it, and at much reduced cost. Such a mind set turns Peter Pan’s Never Never Land into a reality show.

    For starters, advocates of the House legislation might want to talk to governors of those states, like Massachusetts, that have already implemented “universal” coverage plans. Increasing program costs, coupled with decreased state revenues as a result of the economic downturn, are causing serious fiscal problems and are forcing those states to consider cutbacks in coverage.

    However, witnessing the irrational, “gotta-do-this-now” push in our nation’s capitol to pass comprehensive health care “reform” within the next few weeks, it is obvious the proponents of Obama-care are not interested in anyone throwing the cold water of fiscal reality on their parade.

    The House version of the legislation, unveiled by Speaker Nancy Pelosi (D-Calif.) last week, includes substantial mandates on American businesses (including a severe, 8 percent payroll tax on any business that fails to offer health insurance coverage to its employees). Still, the Pollyannaish Pelosi claimed (with a straight face) it would “lower costs to businesses.” This is government logic at its finest — you lower the cost of doing business by raising taxes on those businesses.

    Pelosi’s obvious inability to grasp even the most basic of economic concepts was further displayed when she claimed that the “costs to consumers,” too, would be lowered. Apparently, this would be accomplished by placing a new surtax on those American consumers whose income exceeded the levels deemed worthy by the legislators.

    Analysts of the 1,000-plus page legislation calculate its 10-year cost to exceed $1 trillion. Other experts fear such a figure greatly underestimates its true cost. Even the Congressional Budget Office calculates that the government subsidy for health care coverage will amount to some $6,000 per person within the next decade, which figures to more than $1.8 trillion.

    Pelosi’s bill would also create a government-run insurance plan to compete with private insurers. Such a scenario, of course, is never a fair “competition,” because the government “owner” can always print money, spend borrowed money indefinitely, operate without regard for cost-benefit analysis, and threaten legal sanctions for those who fail to comply. None of these remedies are available to businesses (except, of course, for the “new” General Motors).

    The smoke-and-mirrors approach is evident also in the fact that high-income taxpayers, who would already be taxed in order to pay for the “universal” coverage for their less-well-off compatriots, would face escalating taxes if the government fails in the years ahead to achieve targeted “savings” in Medicaid and Medicare. In other words, the government will set “savings targets,” but if it fails to meet them, it is taxpayers who will pay the penalty, not those members of Congress or federal bureaucrats who decide how much to spend on the entitlement programs.

    Other industries, including pharmaceuticals, will face increased taxes as well, in order to pay for this “reform.” The more successful drug makers will pay a higher percentage tax than their smaller, less successful colleagues. Once again, success in the business arena is punished in the government arena.

    Truly, this bill is a monstrosity.
    With the auto bailouts, cap and trade, and now this health reform bill, Obama’ s domestic agenda will not be supported by a vast majority of  libertarians (many of who supported his candidacy).
    We need health care reform, but not this!

  16. 17
    Ron Chusid says:

    Nobody is advocating “government-run health care.” Most polls show public support for the plan. Opposition to the plan in some polls is not a reflection of the plan but the degree to which they fall for the type of false right wing talking points you quote.

  17. 18
    Fritz says:

    Are we now officially at a singular “the plan”?

  18. 19
    Ron Chusid says:

    No, not officially one definite plan yet, but there is a pretty good idea of what will probably come out of Congress. There’s still likely to be changes in the House bill, and it will have to be reconciled with the Senate bill.

  19. 20
    Eclectic Radical says:

    There are currently four plans I know of. There is the ‘official’ Senate Dem plan as Teddy Kennedy originally pitched it, though for obvious reasons other people are running with the ball now and there have been some adjustments. It’s watered down more than I would like and it doesn’t sovle the huge problem of linkage between health care and employement… in fact (in its original form, this will almost certainly change as I expect the public option to be dropped entirely in the final bill)  it would make that issue worse by levying a dedicated tax, on corporations not paying for their employees’ health care, to support the public plan. So really, the public plan is just a stick to force corporations to expand two-payer workplace care. The plan itself consists of an individual mandate coupled with a regulatory framework to make providers sell meaningful coverage instead of crap coverage and a plan to help pay for those who can’t afford coverage.
    The House Dems have a more aggressively ‘liberal’ plan that is very close to Obama’s original proposals regarding a public option to compete with insurers to keep them honest, coupled with assistance for the uninsured to help them get care. It has its own problems, most notably it still contains the individual mandate, but it doesn’t have the economic poison pill the Kennedy plan does, to my knowledge. It actually intends the public plan to be used, rather than for it to be a club to bully business to pay for more people.
    There is the bi-partisan plan I keep hearing about, co-sponsored by Senate Dem Ron Wyden of Oregon and a moderate Republican whose name I can’t remember, details of which I have not seen in the big flap about the major Dem plans. News of it is not really getting out.
    Then there is the catchy ‘CPR’, which was originally a House GOP plan from the Clinton era which has been picked up and retooled by the Senate Republicans. It’s a mandate funded only by tax cuts that come nowhere near covering health care costs in a meaningful way, with far less control of the quality of coverage sold, coupled with a plan to ration care and raise prices for Medicare recipients so that private insurance can compete more equally with Medicare in that demographic.
    CPR, the Republican plan, is currently the only health care reform proposal actually threatening to ration care for anyone. Something to think about when the GOP threatens rationed care.

  20. 21
    Ron Chusid says:

    At this time I only think of the Democratic plans as the ones which really have a chance, figuring the final bill will be some variation of the various Democratic proposals which are all along the same lines. If it turns out that this can’t pass then perhaps some alternative bipartisan measure will surface. So far the Republicans aren’t offering anything which really adds up and their proposals are more for political posturing than to propose anything real.

  21. 22
    Eclectic Radical says:

    “At this time I only think of the Democratic plans as the ones which really have a chance, figuring the final bill will be some variation of the various Democratic proposals which are all along the same lines. If it turns out that this can’t pass then perhaps some alternative bipartisan measure will surface. So far the Republicans aren’t offering anything which really adds up and their proposals are more for political posturing than to propose anything real.”
    I agree with this to a certain point. I think certain Senate Democrats, such as Ben Nelson and Arlen Specter (though I could be wrong about Specter, he had been willing to vote for Hillary-care as a Republican in the 1990s and Hillary-care was far more comprehensive than the current reform discussions), and possibly Wyden himself, my refuse to vote for a bill that doesn’t get votes from Susan Collins and Olympia Snowe two. Whether they would help Republicans filibuster is a different question, of course.
    I think Nelson may hold out for Republican votes, as he did on the economy, and if this presents a filibuster threat then we may see the Wyden plan. If Nelson does not threaten to hold up the vote itself, I think we’ll see a straight party line vote with Nelson and few others perhaps voting with the Republicans. So they’ll pass whatever version of a compromise between the Senate and House bills will please both the House and the Senate.
    My prediction right now is that the public option will not be a keeper, that we’ll definitely see the individual mandate, and that progressive Democratic Senators will be in a position to make sure that some degree of assistance for those who can’t afford insurance is included. I think conservative Dems will likely water down the regulatory controls over product quality enough that there will be some junk plans on the market for the poorest Americans who can’t afford any better. Hopefully, simple capitalism will also force some insurers to offer reasonable coverage at lower prices so that no one HAS to buy junk plans to be covered.
    This will be an improvement, but far from the best possible bill. I could be wrong and the finall bill could be better than I am outlining, which would be a pleasant surprise, or I could be painting too optimistic a picture.

  22. 23
    Terry Gallagher says:

    I am from the UK, specifically England, and, like most people on this side of ‘the pond’, we are amazed at the Republican comments being issued about the NHS in the UK. Quite frankly, they are simply trying to mislead the American people with a load of complete lies.

    There is no ageism in the NHS – people in their 80’s and 90’s get heart surgery provided, and this is the only proviso, that they are well enough for the surgery. Anyone who is so ill that they are almost certain to die on the table will be told this and offered alternative care.

    I can see my doctor in an emergency (and by the way, house visits are still done in the UK when the patient is too ill to get to the surgery or has swine flu!) and be admitted by ambulance straight from the doctor’s surgery if that is the need. No wasting time or waiting lists there! For non urgent cases, we have a guarantee of 18 weeks from seeing the GP to the actual definitive treatment (surgery if a surgical referral or starting the treatment if a medical referral) This includes all the outpatient consultations and necessary medical scans, MRI, CT, PET scans, echo cardiograms or whatever is necessary.

    On one occasion, I was in hospital having tests for a problem which suddenly became acute. At 715pm on the Saturday evening, I was hurting so much, despite the pain relief, I asked the nurse to see the doctor. The on-call doctor came at 7.20 and didn’t lik the look of me, so called the on-call colo-rectal surgeon. He arrived at 7.30 and decided to operate. Because of grade 4 difficult intubation, the Professor of Anaesthetics at the attached medical school was summoned form home and by 8.00pm I was in theatre having my colon removed – having suddenly developed toxic megacolon. Now can one complain about that?

    As a patient with two ostomies (although one is enough!) I get all my prescriptions free of charge. Also children of school age, those with certain long term medical conditions pregnant women and six months after the birth of their child, the over 60’s and those on low incomes all get free prescriptions too. Those who have to pay for their prescriptions (about 1/5 of the total!)can buy a season ticket (at around £100 per year) which means they do not pay anything for individual prescriptions, no matter what the cost of medication.

    I see my dentist every six months for a check up but can see her often the same day if I am in pain and there is an emergency service for overnight and weekends with instant access.

    I do not think you have anything to fear from ‘social medicine’ – rather the opposite where insurance companies decide what care you can or can’t receive, provided you can afford the co-pay, whereas here that decision is in the hands of the doctors who decide what needs to be done.

    Like many in countries which do not have your system, we do not want to go down that road: we want to keep our social medicine because it works for the benefit of the patient, not the shareholders of the insurance companies.

  23. 24
    Ron Chusid says:

    Thank you for your comments. I have promoted them to a separate post so they won’t be lost in the comments here.

1 Trackbacks

Leave a comment