Sunday, May 07, 2017

Mark K. Siegel: What The Republican Health Care Plan Gets Right

   I had to look around quite a bit for something that made a reasonable case for this. I don't have a position on any of the question, though obviously I tend to generally be more skeptical about the GOP than the Dems.

7 Comments:

Anonymous Lewis Carroll said...

There is a bit of equivocation in that piece Winston, when the author writes that 5% of the patient population generates about 50% of the medical expense, and then references his kindly older patient with the allergies. The fact is that it is people with chronic and very serious conditions that generate the ~50% of expenses, not people with questionable *overuse* of the health care system, like his patient. True, cutting back on some stuff like e.g. unnecessary MRIs etc could make a difference at the margins. But that is not where the *real* money is.

Second, any discussion of the US's high costs that doesn't even address our high unit costs is hopelessly lost. Most of the per capita difference in expenditure between us and other nations is explained not by overuse, but by high unit costs: http://content.healthaffairs.org/content/22/3/89.full And this is due to things like purposeful lack of bargaining power for purchasers like Medicare, overgrown patent and IP protections, artificial scarcity of providers due to limiting medical residency positions and physician immigration etc. etc.

Until we are really willing to take those things on, we will continue to have higher costs, people who can't afford to get care, and medical bankruptcies. Things which are almost uneard of in the rest of the developed world.

11:00 AM  
Blogger Winston Smith said...

Jesus Christ, how did I miss that sleight-of-hand about the woman with the allergies???? An excellent point, LC, and I'm embarrassed that I missed it.

The other stuff is *extremely* helpful to me. I'm shamefully ignorant of this stuff. Will pursue that info.

Thanks man.

11:10 AM  
Anonymous Lewis Carroll said...

Some of this stuff is a little esoteric Winston; I wouldn't necessarily expect you to know it if you don't spend a lot of time studying it.

A lot of the GOP's (willful or inadvertent, can't necessarily tell which) misguidedness on health care is that they cling to the mantra that free markets are the cure for our ills. However, ever since at least Kenneth Arrow in the early 60s, we've known that health care is unlike other goods and services. Much subsequent research has confirmed that medical care markets are plagued by asymmetric information, low elasticity of demand, barriers to entry, Baumol's Cost Disease, principal/agent problems, monopolistic power, among other market deficiencies.

Obamacare represents a last, best effort to retain some sort of private market-mediated system for most of the population; it attempts to grapple with most of the biggest market failures inherent in health care and health insurance. And it resembles the system in Switzerland, which is the next closest developed nation to the US in terms of per capita expenditures for health care.

That being said, there are ways it can be improved. But that will have to wait until either the Democrats have complete control (with someone at or near the sanity quotient of Obama himself as prez) or the GOP comes back from the Gamma Quadrant.

1:31 PM  
Blogger Winston Smith said...

This is also very helpful.

As is probably obvious, I have no sympathy for the idea that markets are the best solution to every problem. S. rex has drilled the "public goods and externalities" exceptions into my head...

I'd trust the GOP more on this stuff if they'd admit what I take to be fairly obvious: that markets alone can't provide the the most humane / best system.

The stronger argument, to my mind, is the argument against expansion of the welfare state: sure, our system will be less cozy...but it's worth it to resist the state from metastasizing further. The state does all sorts of things better than markets...but at some point you have to draw the line...

But they want it both ways: markets are always freer AND better.

Of course the other side wants to have it both ways, too: the state can do it better, and there's really no downside to an expansive state.

I'd be inclined to say: let's do the health care thing...and then no more!

But no sooner than we got the ACA, progressive types started talking about universal basic income... That kind of never-ending desire for a more and more expansive welfare state is exactly the kind of thing I think we should all worry about here.

2:46 PM  
Anonymous Anonymous said...

My read was the allergy patient was more a anecdote about poor price mechanisms in health care. If the price were more transparent to her, she would throttle down the unnecessary visits and thus the waste would be eliminated. Unfortunately some of ACA was structured to handle that with the way deductibles were jacked up, and people hated it.

So we have good evidence that people will hate a well-structured insurance market and any politician who creates one.

10:10 PM  
Anonymous Lewis Carroll said...

That is true, A. But there are definitely senses in which price signals are problematic in health care.

You're right that people hated it, but the logic of combining high standard deductibles with free preventive care/screenings makes a certain amount of sense. We want the hurdles to be high enough to keep down the unnecessary visits and waste, but not so high that we disincentivize preventive care and early intervention for serious conditions. Doing the latter has the perverse effect of possibly *increasing* costs by allowing problems to fester and thus become more complicated to treat. And there are large asymmetries of information between professionals and laypeople when it comes to knowing when and when not to seek care.

But I am not surprised that people hated it, since I believe this pretty much captures America's attitude toward health care:
https://economix.blogs.nytimes.com/2009/07/31/a-common-sense-american-health-reform-plan/?_r=0

Winston, I pretty much agree about the social safety net, and the critical thing is being clear-eyed about what types of things government does better and what types the private sector does better....history seems to show that gov does a better job with health care and a basic retirement income guarantee (as well as obviously defense, public safety, enforcement of contracts, minimum safety/working protections, standards of weights and measures, minimum mandating of transparency, regulation of industries with large externalities etc.).

But there is also the argument that the wealthier the society, the more it can 'afford' government to do. Here is F.A. Hayek from The Road to Serfdom:
"Nor is the preservation of competition incompatible with an extensive system of social services - so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields"...
And from The Constitution of Liberty:
"All modern governments have made provision for the indigent, unfortunate, and disabled and have concerned themselves with the questions of health and the dissemination of knowledge. There is no reason why the volume of these pure service activities should not increase with the general growth of wealth...It can hardly be denied that, as we grow richer, that minimum of sustenance which the community has always provided for those not able to look after themselves, and which can be provided outside the market, will gradually rise, or that government may, usefully, and without doing any harm, assist or even lead in such endeavors."
And since the OP was about health care, this from The Road to Serfdom:
"Nor is there any reason why the state should not assist individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong."

11:23 PM  
Anonymous Lewis Carroll said...

Also Winston, I'm not 100% sure the campaign for a UBI is exclusively a left-wing project. I have read a lot of support for it from libertarian-ish quarters, at least as a replacement for, rather than adjunct to, the social safety net.

The appeal seems to be twofold there: First, it is less paternalistic and more respectful of individual autonomy and responsibility - it appeals to the sentiment that individuals know best how to spend money on themselves their families, and so rather than giving the less fortunate a panoply of *programs*, we should just give everyone a UBI, 'national dividend' whatever you want to call it...then they can decide for themselves how best to spend it. Second, it is more allocatively efficient to make a lump-sum grant than have all of these overlapping and coordinated programs like SNAP, EITC, LIHEAP etc.

My experience is that those on the left might be more inclined to view UBI as an addition to existing programs though. SRW had an interesting series on the idea and its presumed tradeoffs: http://www.interfluidity.com/v2/5589.html

But there is also a sense in which UBI might be seen as the best hope of maintaining a stable market-based system that depends on consumption in the face of large and growing inequality. Because with stagnating wages, consumers need to take on additional debt in order to maintain the necessary levels of consumption. (It is ~ 2/3 of the economy) And we are occasionally reminded of the risks and consequences of that, as in 2008.

I'm not saying that that's the ONLY way of dealing with wages not keeping pace with productivity and median purchasing power declining....we could actually try to tackle those problems. But it does appear to be a plausible way of accepting those problems and mitigating their effects instead.

12:01 AM  

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