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.

A Prediction On Capitation

There are many possible ways to pay doctors. If for some bizarre reason I wanted health care reform to fail after enacted I would choose capitation. This is the way most likely to screw both physicians and patients and make everyone want to abandon the system. We’ve already seen that mistake under HMO’s, and we know how most people feel about them. While there is certainly a problem with doctors being motivated to  perform more expensive care with payment by fee for service, capitation provides motivation to do as little as possible as doctors are paid a flat mouthy amount regardless of what they do. We really don’t have a problem with too much being done in health care in this country overall. The problem is that some people receive more expensive services than needed while millions don’t receive the health care they need. What is needed is to reform the system so that care is available for all, which will keep doctors so busy providing necessary care that we should not need incentives not to work as occurs under capitation.

I’ve found it disturbing that many bloggers who are supporting health care reform are also naive supporters of capitation. Undoubtedly most of them are too young to require very much medical care and have never experienced the problems under capitation. There is a tremendous difference between reading and blogging about health care and actually having experience in the field (as is seen with the misconceptions among many liberal bloggers over care from the VA). At least I felt a little better after reading this post from Ezra Klein. Ezra supports capitation but I was happy to see he concluded by writing, “I’m actually a big fan of this model, but I rather doubt it will be adopted here.” In this case I hope that his ability to predict political outcomes is superior to his understanding of health care in the real world as opposed to theoretical blogging.

The Danger of Killing Health Care Reform From The Left

Matthew Yglesias has made an important point about the strategy of the “progressive block” to attempt to block any form of health care reform which does not meet their ideological goals. This now includes blocking plans which might serve the goals of health care reform if they do not include  a public option. An example of this was seen yesterday when they attacked an extremely sensible statement from Rahm Emanuel who argued that “The goal is non-negotiable; the path is.” I have used the Clinton’s as an example in criticizing the strategy of opposing any reform plan which the left does not consider to be perfect. Hillary convinced Bill to veto any bill which differed from the ideas of HillaryCare. As a result nothing was able to pass and the number of uninsured and under-insured has grown tremendously. Yglesias notes an even earlier parallel.

Yglesias points to a report on a plan proposed by Richard Nixon back in 1974 which is similar to what the Democrats are proposing today:

“It was an extremely extensive plan, as I remember, that would have given universal coverage” for health care, recalled Rudolph Penner, a former director of the Congressional Budget Office and economic official in the Ford administration.

Nixon introduced his Comprehensive Health Insurance Act on Feb. 6, 1974, days after he used what would be his final State of the Union address to call for universal access to health insurance.

“I shall propose a sweeping new program that will assure comprehensive health-insurance protection to millions of Americans who cannot now obtain it or afford it, with vastly improved protection against catastrophic illnesses,” he told America.

Nixon said his plan would build on existing employer-sponsored insurance plans and would provide government subsidies to the self-employed and small businesses to ensure universal access to health insurance. He said it wouldn’t create a new federal bureaucracy.

The Nixon plan won support from a Time magazine editorial on Feb. 18, 1974, which noted that “more and more Americans have been insisting that national health insurance is an idea whose tune (sic) has come.”

Considering his support for HMO’s I would have reservations about a plan advocated by Richard Nixon without seeing further details, but it is remarkable that we are still struggling this many years later over a way to do what every other industrialized country manages to do and enable all citizens to have access to affordable health care. The plan was not killed by conservatives but by those on the left who hoped for something better:

Despite the heated politics of Watergate, national health-care legislation was proceeding in Congress thanks to a compromise brokered by a young Democratic senator from Massachusetts, Edward Kennedy, a Nixon nemesis.

But then, according to a 1974 political almanac published by Congressional Quarterly, the AFL-CIO and the United Auto Workers lobbied successfully to kill the plan. Unions hoped to get a better deal after the next elections.

Yglesias concludes by saying essentially the same thing I have said on this topic in previous posts:

In retrospect, that particular iteration of the progressive block strategy doesn’t look so smart. And it’s possible that this time around, too, it’ll turn out that the votes aren’t there for a bill with a strong public option and the votes aren’t there for a bill without one either.

In retrospect, Emanuel was right and the liberal bloggers attacking him were wrong when Emanuel stated his concentration on the goals of health care reform as opposed to any specific path. For the past eight years we criticized George Bush and the Republicans for governing from the extreme right without compromise. Similar demands from the extreme left are no more rational.

Palinomics and Other Conservative Fantasies

To even consider taking Sarah Palin seriously on, well anything, is laughable. When she was first picked to be John McCain’s running mate my guess was that she was inexperienced but an up and coming conservative who was at least well versed in conservative ideas and had some basic competence in government. It turned out I was wrong and that she is clearly a politician of the George Bush model who knows how to schmooze people to get ahead but is remarkably ignorant when it comes to policy matters. In a recent speech, which I didn’t bother with commenting on at the time because of more important matters to attend to that day (which included happy hour with $2 glasses of Sangria and crab cake sliders) Palin said, “Some in Washington would approach our economic woes in ways that absolutely defy Economics 101, and they fly in the face of principles, providing opportunity for industrious Americans to succeed or to fail on their own accord.” Palin hardly seems to have any understanding of Economics 101, or any other, topic.

Conor Clarke, blaming his RSS reader as opposed to Sangria during happy hour, also didn’t get around to commenting on Palin’s speech until recently. He saw the absurdity in taking Palin seriously as a fiscal conservative, writing “In particular, that line about “industrious Americans” succeeding and failing of their own accord made we want to take a look at the federal dollars Alaska receives per resident relative to its federal tax burden.”

Conor made a chart of the data which is worth glancing at and concluded:

Alaska gets $13,950 per resident from the federal government, more than any other state in the nation. It ranks number one in taxes per resident and number one in spending per resident. It’s also number one in pork-barrel spending. Each Alaska resident receives a check for $3,200 a year from state oil revenues — which Palin bumped up from $2,000 last year. Palin once justified this by saying that the state of Alaska was “set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs.” (Sounds socialist!) Industrious indeed.

Paliin sure sounds more like a socialist than those she attacks as socialists, as I noted last October. Rather than having a state where people “succeed or fail on their own” Palin brought in more earmarks per capita than any other state (with John McCain having opposed many of these earmarks).

Clarke only hit on one of the absurdities of Palin’s speech but there were more. She warned of big government that will “control the people,” failing to understand both that the current economic crisis is a partially the result of insufficient government regulation of the banking industry and that pragmatic government action rather than blind adherence to ideology is needed to reverse the slide. While Economics 101 is well beyond Sarah Palin, she might check out a book by an economic conservative (assuming she wouldn’t agree to touch a book by a liberal) who has realized the danger in treating conservative dogma as a religion. While it is probably well beyond her, she should read A Failure of Capitalism: The Crisis of ’08 And The Descent Into Depression by Richard Posner.

In worrying about whether government will “control the people” Palin makes a mistake common among many conservatives and libertarians of confusing the need to limit the power of government with limiting the size of government and taking a knee-jerk opposition to any government economic action. What is important is how much control government has over the lives of individuals. While conservatives dwell on the size of government, liberals are more concerned with limiting the power of government in areas where they do not belong. While the faux libertarian rhetoric of Sarah Palin concentrates on her Voodoo Economic beliefs, she backs increased an increased influence of government in private matters, ranging from her opposition to abortion rights to her support for banning books which offended her supporters who oppose toleration of homosexuals. While liberals have been concerned with restoring the limitations on the power of the executive branch as advocated by the Founding Fathers, Palin has been a supporter of increased government secrecy and wanted to grab even more power than Dick Cheney.

For someone who expresses such concern over whether the government will “control the people,” Palin also displays a rather Orwellian view of First Amendment rights. She believes that the First Amendment was intended to prevent the media from criticizing her, not to protect freedom of the press.

For someone who claims to oppose big government, she supports the two major threats to freedom in America today, the social agenda of the religious right and the “war on terror.” The “war on terror,” along with its associated restrictions on civil liberties, capitalizes on the threat of terrorism to promote a massive increase in the power of the state. Rather than supporting legitimate defense against terrorism (which conservatives have a poor record on), Palin repeated the conservative lines that the Iraq war was about fighting terrorism and their ridiculous mantra that we must fight them there or we will have to fight them at home. In her speech she even said, “It is war over there, so it will not be war over here.” Sarah Palin’s understanding of foreign policy is no better than her understanding of economics–and don’t even get me started on her ridiculous views on scientific research and creationism.

Public Opinion And Payment For Medical Care

Just as in the previous post Megan McArdle is generally right but makes an error, the same can be said about this post from Ezra Klein on health care. Ezra looked at a Kaiser/NPR poll on health care and does make some good points, such as questioning why people have such little interest in  “in implementing the findings that emerge from cost effectiveness studies.” In this case it is more common for physicians than for the general public to be encouraged by cost effectiveness studies as we realize how much is done without good evidence. We want the data to make the best choices for our patients.

While Ezra reads a lot about health care and is very knowledgeable about the subject, such reading is often not a sufficient substitute for actual experience. This leads to his puzzlement over one issue:


Ezra writes in response to this question:

Honestly, I’m surprised patients even have an opinion on that. And it might be a very weak opinion. But for now, the public prefers that doctors get paid for each thing they do than on a salary basis. They prefer, in other words, that doctors have an incentive to do more rather than do less.

Here the majority of Americans are smarter than Ezra. Many have experienced the horrors of the HMO era in which doctors were actually paid based upon how little care they provided. Many also see the difference between the more old fashioned model of doctors in private practice as opposed to the increasing number of doctors who are employees paid a salary. They have seen the difference between a doctor who is motivated to work long hours to care for their patients and salaried doctors who check out at 5:00.

Imagine the negative incentives for being paid a yearly amount regardless of what is done. I’m often at the office past 8 p.m.  to see people who call with problems late in the day. If paid a fixed salary most doctors would tell them to take an aspirin and call (or preferably don’t call) back next month. I’ll often wind up  spending a  half hour to an hour with a patient who is having serious problems. If paid a salary doctors are encouraged to see the highest number of patients possible in as short a time as possible. The medical offices run by the local hospital (which has bought up most of the doctors in town) has nurses with stop watches monitoring office calls and knocking on the door to end the visit if it lasts over fifteen minutes!

Sure, when paid fee for service for taking care of patients this could lead to incentives to do too much to make more money. This is reduced by both utilization controls and by the fact that there is so much more to do than we have time for. Of course, as in the previous post, I’m writing from the perspective of primary care. There is undoubtedly far more waste in some of the high-priced procedures as opposed to primary care offices, but this is also the situation which most people are probably considering when responding to poll questions such as this.

More on Increasing Health Care Costs

In an earlier post on health care costs I noted that decreasing health care spending will be difficult, and that spending more on health care is not necessarily bad. Mickey Kaus responds to Timothy Noah’s belief that health reform is needed due to health care costs spiraling out of control. This chart is also discussed by both.


First, just because rising health care costs have eaten up all of the average American’s wage increases, it does not necessarily follow that either this rise was unwarranted or that health care costs need to be controlled. Maybe Americans, like richer people everywhere, want to spend more money on health care (as opposed to, say, newspapers) and advances in health care have given them more valuable services to purchase (or have their employers purchase for them). That’s probably not true–and almost certainly not 100% true–but you can’t tell it just by looking at Noah’s big graph. (Nor do I understand Robert Samuelson’s column, which seems to argue that because health care is not “material” it isn’t a valuable service and can’t be the basis for capitalistic economic growth.)  If the graph showed that rising expenditures on computer technology had eaten up all the increase in Americans’ paychecks, would we immediately declare a “computer cost crisis” and demand that rising laptop expenditures be constrained? Or would we say, “Hey, people are spending a lot more on computers these days”?

Second, the savings you get from the “public option”–savings on marketing and administrative costs, ability to use the massive purchasing power of the government to bid down prices–seem like one-shot propositions. We switch to a public plan, we save our 20-30 percent on administration and bargaining, and then the rise in health care costs resumes, thanks to ever-fancier technology and complex treatments (that actually are effective–just expensive). Soon costs have eaten up the 20-30 percent and are back on a rising path to consume a growing share of GDP, no?

The lesson I would draw isn’t that we shouldn’t try to reform health care, or that we shouldn’t try to reduce costs. It’s that we shouldn’t reform health care in order to reduce costs, and that we shouldn’t expect health care reform to in itself control the health care entitlement problem that’s scheduled to devour the budget. We should reform health care to provide long life, security and peace of mind to Americans, while we resign ourselves to the likelihood that this will consume an ever-larger portion of our economy.

Kaus is right on both points (which is not to say there is no room for any cost savings in health care). His comment on the one-shot decrease in cuts is based upon experience. We saw this with the move to HMO’s and other cost cutting efforts in the recent past. We got a one-shot decrease but health care costs continued to rise afterwards. None of these manipulations of the system change the underlying facts that we have an aging population and an increased amount of expensive technology which health consumers both want and benefit from.

Cool Things To Put On An iPod For a Queen


Barack Obama gave the Queen of England an iPod and a rare songbook signed by Richard Rodgers. Anna Post of the Emily Post Institute said, “For me, the iPod only works if he has some catchy reason why he gave it as a gift.” Perhaps the contents of the iPod made it catchy:

  • Photos from the Queen’s 2007 White House State Visit
  • Photos from the Queen’s 2007 Jamestown, Va., Visit
  • Photos from the Queen’s 2007 Richmond, Va., Visit
  • Video from the Queen’s 1957 Jamestown Visit
  • Video from the Queen’s 2007 Jamestown Visit
  • Video from the Queen’s 2007 Richmond Visit
  • Photos from President Obama’s Inauguration
  • Audio of then-state senator Obama’s speech at the 2004 Democratic National Convention, and
  • Audio of President Obama 2009 Inauguration Address

Choosing the gift was easier for the Queen. She gave Obama a signed photo of herself and her husband in a silver frame–the same gift she gives everyone. That must really make the holidays easy for her.

The real question is why so much attention is being paid to this. Right wingers will take any opportunity to attack Obama, but his Republican predecessor wasn’t  so hot with respect to following protocol. At least Obama didn’t try to give her a massage as Bush did with Angela Merkel.

GAO Report Shows Problems in Medicare Advantage Plans

A Democratic blog out of Texas, linking to one of my many previous posts on the problems with Medicare Advantage plans, also points out a new GAO report on Medicare Advantage plans (pdf format). After pointing out the financial problems with the plans costing 13 percent or 17 percent more to care for Medicare patients than under the government plan, they point out a few key problems with the plans:

Beneficiaries May Be Charged For Entire Cost Of Service: If beneficiaries in PFFS plans did not contact their plans before obtaining services to ensure that the service was covered, they may have had to “pay for the entire cost of the service if the coverage was later denied.” Enrollees in original fee-for-service Medicare are not charged the entire cost of a service unless the provider warns him or her that it may not be covered by Medicare.

Beneficiaries Charged Higher Cost Sharing: PFFS plans charged exorbitant cost-sharing to beneficiaries who did not “prenotify” a plan before obtaining services, a practice that may have violated laws governing PFFS plans. Medicare FFS plans, HMO, and PPO plans did not have prenotification requirements.

PFFS Plans Are Unpopular: Beneficiaries are noticing the poor treatment they’ve received from PFFS plans and are voting with their feet and are disenrolling at an average rate of 21 percent compared to 9 percent for other MA plans. The Center for Medicare and Medicaid Services did not comply with statutory requirements to mail information on MA plan disenrollment rates to beneficiaries.

Satisfaction and Quality In Health Care Reform

There have been a number of posts around the blogoshere regarding the health care debate between Ezra Klein and Andrew Sullivan which I previously discussed here. Follow up discussion has raised important points with regards to subjective satisfaction and evaluation of quality in health care. Like the topics I reviewed yesterday, these also indicate areas where left and right need to consider the opposing viewpoints with both extremes being unrealistic.

Ezra Klein responds to Andrew Sullivan by displaying evidence that the British are more satisfied with their system than Americans are. I am surprised that Ezra allows himself to be backed in to the corner of even defending the British system as that is not on the table here. As the question is what forms of health care would be tolerated in the United States, and not what was accepted in the United Kingdom, Sullivan easily demolishes Klein’s argument:

Satisfaction is a subjective function of subjective expectations. If you have the kind of expectations that many Brits have for their healthcare system, it is not hard to feel satisfied. The Brits are very happy with their dentists as well. And there is a cultural aspect here – Brits simply believe suffering is an important part of life, especially through ill health. Going to the doctor is often viewed as a moral failure, a sign of weakness. This is a cultural function of decades of conditioning that success is morally problematic and that translating that success into better health is morally inexcusable. But if most Americans with insurance had to live under the NHS for a day, there would be a revolution. It was one of my first epiphanies about most Americans: they believe in demanding and expecting the best from healthcare, not enduring and surviving the worst, because it is their collective obligation.

I suspect it is also a matter of having lived under such a system and not knowing anything different. Both Brits and Americans are more accepting of the faults in their own system. The British system was also instituted closer to World War II. Brits at the time were far more willing to accept sacrifices for a national program than Americans would at present.

It is a problem that liberal advocates of health care reform defend the British system as Klein does because this suggests a lack of understanding of what forms of health care reform would be acceptable in the United States at present. Unfortunately many liberals think that HillaryCare failed not because it was a poor system but because of an advertising campaign by the insurance industry. The Harry and Louise Ads would not have been so effective if they did not raise real problems seen by many voters.

I also questioned Ezra’s support for the British system in the past, especially with regards to his support for capitated systems as opposed to fee for service medicine. Ironically, the British system uses a system of capitated payment similar to what was used by businesses utilizing HMO’s in the United States until patients got fed up with the problems of such systems and their use declined.

While there are undoubtedly abuses under fee for service medicine, capitated systems run a far greater risk of ignoring the needs and desires of the patient. Whether they are used in a government-run system in the U.K. or in HMO’s in the United States, they pit the financial interests of the doctor against the best interests of the individual patient. Capitated systems, in which doctors receive a fixed amount of money per patient (often with adjustments for factors such as age and health status), risk having doctors forced to provide inadequate care in order to get by on what is paid. Doctors are given financial incentive to see patients as little as possible, do as few tests as they can get away with, and treat as little as possible.

Americans both demand the best and demand a greater degree of freedom of choice than was present in either the British system, under HillaryCare, or in capitated American HMO’s. This does not mean that health care reform is not possible. Obama has showed understandings of the failings of Clinton’s approach such as in seeking a more transparent method for considering reform, avoiding mandates, and stressing the ability of those who are satisfied with their current coverage to remain in their current plans. This turned out to be an advantage for Obama not only over Clinton but over McCain’s health care plan in the general election.

Measuring quality in health care allows both the left and th right to make points. In his original post Klein claimed that the British do not suffer from lack of quality in their less expensive system. James Joyner has an excellent round up of this entire debate (including a link to my earlier post) and cites evidence which does show the superiority of the American system in certain areas.

Both Klein and Joyner are correct in arguing for the quality of opposing systems depending upon the criteria used. In general, when subspecialty care is evaluated the United States comes out among the best in the world–for those who have access to such care. When quality is measured based upon more routine care the United States does not rank very highly due to the large number of people without access to health care. All too often those on the left or right only look at one of these measures of quality and ignore the importance of the other. Any system developed for the United States must preserve the high quality subspecialty care we now enjoy in the United States while making health care affordable for a larger portion of the population.

Repackaging Bad Ideas in Health Care

I fail to see why Ezra Klein is so excited about a proposal by Bobby Jindal to move Medicaid recipients in Louisiana into managed care plans. This is not anything new or innovative, and it is not a positive step towards health care reform. Many states have already adopted similar plans for Medicaid and it has hardly been a solution to the health care crisis.

This is primarily a way to change how the health care is paid for those already covered by the state’s Medicaid plan. There is some benefit in including more low-income individuals, but it is hardly a good model for health care reform for the entire population. The goal should be for more people to have real coverage, not to throw more people into the inadequate Medicaid systems. There is a tremendous difference between Medicare for All and Medicaid for More.

I do not share Ezra’s fondness for either the British model for universal health care or for capitated medical care. This HMO model was tried (and to some degree still exists) for employer-paid health care and was a dismal failure. (Incidentally, not that the person behind it necessarily means a particular plan is bad, but it was Richard Nixon who first began pushing this idea when he was president).

While there are undoubtedly problems with fee for service health care, the alternative turned out to be far worse, leading to the desire of most consumers to avoid HMO’s which are run in this manner. Capitated systems, in which doctors receive a fixed amount of money per patient (often with adjustments for factors such as age and health status), risk having doctors forced to provide inadequate care in order to get by on what is paid. Doctors are given financial incentive to see patients as little as possible, do as few tests as they can get away with, and treat as little as possible.

Jindal’s plan would include financial incentives if physicians met certain performance criteria. Such plans have not worked out very well so far. Frequently the burden of reporting data to receive financial incentives has been greater than the value of the incentives offered. It comes down to whether it is worth paying employees to submit more paperwork for a small amount of additional money.

While electronic medical records might change this in the future, at present the ability to monitor and reward based upon performance is quite primitive. Those who come out ahead in such systems are not those who really provide quality care but those who can best game the system by having computerized systems in place to report the data being monitored. This leads to problems such as the Veterans Administration, which has spent a lot of money on computerization, but often fails to spend the money to adhere to current standards of medical care. This leads to them looking good on paper, and unfortunately fooling some liberal publications based upon their ability to report data, despite the deficiencies in the care they provide.