Wednesday, August 05, 2009

I Don't Believe in Obamacare

For a while now, I've been having issues with the idea of "Big Government" and it taking part in the health industry. There are lots of problems with health in the United States, but government bureaucracy is never a solution.

Consider the simple economic question of "how do we pay for this?" The answer has been various taxes on different entities. But that does not create value, it merely redistributes it. And any process of redistribution has overhead costs, and experience further tells us that government is quite inefficient doing this.

In short, we're simply talking about a productivity hit. Where is the additional value?

At a town hall meeting in Philadelphia, a woman had this to say:
I look at this health care plan and I see nothing that is about health or about care. What I see is a bureaucratic nightmare, senator. Medicaid is broke, Medicare is broke, Social Security is broke and you want us to believe that a government that can't even run a cash for clunkers program is going to run one-seventh of our U.S. economy? No sir, no.
She sums it up quite well. Our government has shown that it does not run programs well. The health industry is a huge part of our economy. I certainly do not trust it with the government.

I believe much of the problem in the health industry is in the supply chain. Huge markups exist at all points along the chain, and those costs are passed along to the insurance companies (not people!). Further, these supply chains and the resulting use and treatments are opaque, and (thus) resistant to careful analysis.

Many years ago, when I was not employed and had no health insurance, I was going to be billed $1500 by a hospital for a treatment. When the doctor found that I was uninsured, it was dropped to $1200. What does that tell us? There are costs in the chain of treatment that exist specifically to be paid by insurers. Rooting out inefficiencies like this would go a long ways to improving our health system today.


Anonymous said...

I can't say that I'm specifically an advocate of any one approach other than significant reform, but given Nate Silver's data based approach, I did find the following interesting.

Brandon Konkle said...

I completely agree! Government managed healthcare would be an epic disaster the likes of which we've only seen hinted at before. Obama has clearly said throughout his campaign that he is an advocate of a single government controlled healthcare system. I believe that this talk of a government "option" is a diversion, to draw attention away from the goal of universal government-run healthcare. Corporations can't compete with a business that is heavily subsidized by taxpayers who have no choice but to pay for it. Business across the nation will have the option of either continuing in more expensive private plans, or switching all of their employees to the cheaper, subsidized, government plan. How many business do you think will say "Nah, we'd rather pay more"?

mdi said...


Your argument rests on "creating value" as the end goal for health care, but that is not the end goal.

There are several goals:

* Providing care despite the treatment not being profitable (prevent an insurance company from blocking a treatment as they do regularly).

* Providing care to those with pre-existing conditions (another case of insurance companies not being interested in providing care if they are going to lose money).

* Providing care for those that are not insured today (too expensive for individuals to pay on their own).

* Ensure that self employment does not lead to poor coverage (ask any parent that run their own business how much coverage they get for birth).

Tim said...

Your argument needs refinement to deal with the observed fact that in many other countries, an equivalent or better level of health-care outcomes is achieved at much lower cost to the economy.

France and Canada and Australia and Germany all have different approaches, all have significantly greater public-sector involvement, and all do much better on the outcome/investment ratio than the US.

So nonspecific grumbling about the inefficiency of government doesn't really cut it in this space, I think.

Russ Nelson said...

You're right about prices being higher just to deal with insurance. Now, imagine if doctors and hospitals had to compete with PAs and clinics? Imagine if the people PAYing the bill were the people RECEIVing the care? We would have better care at lower cost (which of course means 1) better distribution of health care, and 2) better health outcomes).

In other words, we need to get BOTH the insurance companies AND the government out of the path between patients and doctors. Our corporate/insurance method is wrong, and the governmental socialized methods are wrong, too.

Greg Stein said...

@mdi: agreed that the goal is to create better care for humans. However, I don't think government is going to run the program well, or efficiently. I'm arguing against Obamacare (the Means), not the End.

@tim: saying that other countries can do it does not mean the US can do it. My point is that I have serious reservations about the US bureaucracy getting involved.

Again, I think the answer is in fixing the model, and that involving the government will introduce even more problems without addressing the broken model. (and agreed: other countries *have* found models that work)

Steve said...

The only thing more expensive that government-managed health care is privately-managed health care. It's quite possible that the total cost of evaluating eligibility for treatment exceeds the cost of the treatments excluded.

I was cared for under the UK National Health Service for 45 years (including a major leg surgery), and the business of having to deal with bureaucrats to determine whether particular treatments are necessary freaks me out: this should be a medical decision.

Ironically the reason that UK health care is in such disarray nowadays is largely that through successive rounds of funding cuts senior and middle management have (quite unsurprisingly) chosen to cut the jobs of health care professionals like doctors and nurses rather than eliminate their own jobs.

Consequently the UK now has an ineffective service overburdened by unnecessary layers of management and understaffed at the point of delivery.

Joe McCarthy has a lot to answer for. The minute anyone suggests using taxes to pay for something that would benefit the poor majority in this country a strident and unthinking minority starts screaming "socialism" as though the wolves are at the door. But nobody calls the interstate highways "socialized transportation".

The "health insurance" industry has promoted the myth that their economic performance is more important than the well-being of the American population, and the turkeys continue to vote for Christmas. Apparently in the land of the free and the home of the brave (which, by the way, in the light of the collective response to 9/11 always gives me a chuckle) the new motto is "I'm all right, Jack", with the implication that if you aren't all right it's your own fault and you aren't entitled to expect any help.

That wasn't the America I left Britain for, and I don't believe it's the America that a majority of Americans want to see.

I agree that there are real concerns with creating a bureaucracy of this size, but I don't see any constructive alternative proposition from the Republican side (as I point out here and here). If the alternative is to remain at the mercy of the current corporate cutthroats then I would say this would be a change I can believe in.

Jeffrey McManus said...

"government bureaucracy is never a solution"

So you'd prefer corporate bureaucracy? That's already been proven to be ineffective.

You're also inaccurately characterizing what's going on with health care. The proposal is not to put "government bureaucrats in charge" of health care.

Greg Stein said...

@jeffrey: no, that's not what I said. You're construction a false dichotomy here. It isn't either/or -- there are more choices than "govt bureaucracy" vs "corporate bureaucracy".

There is at least a third: more efficient corporate health provision.

Specifically, take a look at the article that sogrady linked to: one of the large problems is that health consumers usually get their insurance via their employer, so it is very difficult to make an informed decision about cost vs benefit.

This is what Russ was talking about: connect the health consumer directly to their provider. The consumer will make an informed decision about the cost versus the benefit/care they are receiving.

Lastly, I'm not talking about "bureaucrats in charge" (your words, not mine), I'm talking about govt meddling in the space at all. I think the govt is inefficient and has proven to be incapable of properly running (large) programs.

It is interesting to note, that if you don't mind putting insurers out of business, then the government option makes sense. People *will* get health care. Stephen's referenced article plays it cool, but that is actually the background tone: in the end, there will be just one insurer (fed govt) and everybody *will* be covered.

Joe said...

Patches welcome.

Carol said...

Greg, I live in Australia (as you know), and while our healthcare system has it's flaws, I have never heard of anyone going bankrupt paying for medical bills. It seems completely outrageous that in a civilised society that this should happen. Yet it seems you Americans accept it. I don't know the details of what is proposed in the US but I think there are vested interests opposing it which could do with some investigating.....

brain said...

Here's the funny top Glenn Beck finalist political satire spoof video making fun of Obamacare, and the progressive view of their "New America:" New America Video by NarfBiscuits

Platypus said...

Your experience with being charged less as an individual is the exception, not the norm. Not long ago I had to go to the hospital, when I had insurance but didn't yet have the card etc. (I had started just three days before) so I got to see both sets of bills. Billed to me, that ER visit would have cost $4K. Billed to my insurer, it would have been *half* that. Half, not double. I've mentioned this story many times, and many others have confirmed that those least able to pay (the uninsured) are routinely charged the most in this way.

You interpret your single old anecdote as indicating that there are inefficiencies there to be paid by insurers. I interpret my more recent anecdote, and all of the similar ones I've heard, as indicating that a major component of health-care cost is not inefficiency but plain old price gouging whenever and wherever the providers can get away with it. The insurers are the beneficiaries of that system, not its victims, and it *is* something that could be addressed by reform.

Whether the specific reforms that have emerged as a political "compromise" between the majority who want real reform for good reasons and the minority who want to block it for purely venal reasons is another question entirely.