Archive for the ‘Health Reform’ Category

Shortly after Obamacare was enacted, I started writing about groups victimized by the law. But after highlighting how children, low-income workers, and retirees were disadvantaged by government-run healthcare, I soon realized that I wasn’t saying anything new or different.

Heck, Obamacare has been such a disaster that lots of people have been writing lots of good articles about the law’s failure and how various segments of the population are being unjustly harmed.

So I chose a different approach. I decided to identify groups that deserve to suffer because of the law. Or at least to highlight slices of the population that are not very deserving of sympathy.

Some politicians and staffers of Capitol Hill, for instance, are very upset about the prospect of being subjected to the law that they inflicted on the rest of the country. Gee, my heart breaks for them.

The bureaucrats at the IRS are agitated about the possibility of living under Obamacare, even though the IRS got new powers as a result of the law. How sad, cry me a river.

Professors at Harvard University, including many who supported Obamacare, are now upset that the law is hurting them. Oh, the inhumanity!

Now we have another group to add to this list. And this group is definitely in the deserve-to-suffer category.

That’s because we’re going to look at the big insurance companies that supported Obamacare, but now are squealing because the law isn’t working and they’re not getting the bailouts they were promised.

Here are some excerpts from a column by the irreplaceable Tim Carney of the Washington Examiner.

Until recently, the insurance giants saw Obamacare as a cash cow. They are now finding the law’s insurance marketplaces to be sickly quagmires causing billions in losses. …United Healthcare, the nation’s largest insurer, last week announced it was suffering huge losses in the exchanges. …The company forecast $700 million in losses on the exchanges. Fellow insurance giant Aetna also said it expected to lose money on the exchanges, and other insurers said enrollment was lower than they expected.

This seems like a feel-good story, very appropriate for the holidays. After all, companies that get in bed with big government deserve bad consequences.

But hold on to your wallet.

…Obamacare insiders — the wealthy and powerful operatives who alternate between top government jobs and top industry jobs — are hustling to find more bailout money for insurers. Republicans, if they are able to hold their ground in the face of lobbyist pressure, can block the bailout of Obamacare and its corporate clientele. …Obamacare included…a three-year safety net for insurers who do much worse than expected, paid for by an extra tax on insurers who do much better. The Centers for Medicare & Medicaid Services (CMS) had announced in October that insurers losses for 2014 entitled them to $2.87 billion in bailout payments… The problem is that super-profitable insurers did not pay nearly that much into the bailout fund.

This means there will be a fight in Washington. The Obama White House wants to bail out its corporate cronies. But there’s not enough money in the bailout fund.

And, thanks to Senator Rubio of Florida, the government can’t write checks out of thin air.

In late 2014, Sen. Marco Rubio, R-Fla., inserted into the so-called Cromnibus spending bill a provision that prohibited CMS from paying out more in risk corridor payments than it takes in. Profitable insurers — not taxpayers — must subsidize their less profitable peers.

Unfortunately, the Obama Administration oftentimes doesn’t care what the law says.

CMS announced last week that the government was going to find a way to pay the insurers their full bailout, anyway. …CMS also declared the unfunded portion of Obamacare’s initial promised insurer bailout was nevertheless an “obligation of the United States Government for which full payment is required,” even though at least under the current appropriation law it is illegal.

Tim outlines the incestuous relationship between Big Insurance and the Obama White House, all of which makes for nauseating reading.

But here’s the part that matters for public policy.

Rubio’s provision…expires along with the current government funding law on December 11. The Obamacare insiders, led by Slavitt and Tavenner, will fight to free up their bailouts and put the taxpayers on the hook for their losses caused by the law they supported.

In other words, we’re about to see – as part of upcoming appropriations legislation – if Republicans have the intelligence and fortitude to retain Rubio’s anti-bailout provision.

This should be a slam-dunk issue. After all, the American people presumably will not favor bailouts for corrupt health insurance corporations.

Especially since Obamacare is still very unpopular.

But what if Obama says “boo” and threatens to veto spending legislation if it doesn’t give him carte blanche bailout authority? Will GOPers be so scared of a partial government shutdown that they instantly surrender?

After all, when there was a shutdown fight in 2013, Republicans suffered a horrible defeat in the 2014 mid-term elections. Right? Isn’t that what happened?

Oh…wait…never mind.

P.S. Let’s not forget that there is one very tiny segment of America that has unambiguously benefited from Obamacare.

P.P.S. If you have any friends who work for the corrupt health insurance companies that are worried about a potential loss of bailout money, you can cheer them up this Christmas season with some great – and very appropriate – action figure toys.

P.P.P.S. Since we’re closing with sarcasm, here’s the federal government’s universal bailout application form.

Read Full Post »

Like many Americans, I’m suffering from Obamacare fatigue.

Health Freedom Meter before ObamacareBefore the law was implemented, I repeatedly explained that more spending and more intervention  in the health sector would worsen a system that already was suffering from too much government.

And since the law went into effect, I’ve pointed out – over and over again – the predictably negative effects of Health Freedom Meter after Obamacaregiving the government even more control.

So I’m tempted to wash my hands of the issue.

But that would be wrong, particularly since advocates of statism disingenuously might claim that silence somehow means acceptance or approval.

Moreover, we need to continuously remind ourselves that big government doesn’t work just in case there’s a chance to enact good reforms after Obama leaves office.

With that in mind, let’s look at recent developments that underscore the case against government-run healthcare.

How about the fact that Obamacare is extremely vulnerable to fraud?

…the GAO report showed that federal auditors 11 out of 12 times were able to gain subsidized coverage with fictitious applications, three of the successful applications never provided citizenship or immigration documentation. The investigators in each case were able to obtain $2,500 or around $30,000 annually in advance premium tax credits.

And what about the fact that the Obamacare co-ops have been a big flop?

Nonprofit co-ops, the health care law’s public-spirited alternative to mega-insurers, are awash in red ink and many have fallen short of sign-up goals, a government audit has found. Under President Barack Obama’s overhaul, taxpayers provided $2.4 billion in loans to get the co-ops going, but only one out of 23 — the one in Maine — made money last year, said the report out Thursday. Another one…was shut down by regulators over financial concerns. The audit by the Health and Human Services inspector general’s office also found that 13 of the 23 lagged far behind their 2014 enrollment projections.

Or what about the fact that deductibles have increased under Obamacare?

A survey released earlier this week by the Kaiser Family Foundation found that..deductibles have risen almost three times as fast since 2010 for employer-sponsored plans.

And should we care that Obamacare has meant rising health care costs?

…the actuaries estimated that health spending that year jumped by 5.5 percent, a bigger rise than the country had experienced in five years. …The actuaries cited three main reasons they think health spending is set to tick up. One is the aging of the population… Another is the improving economy… But the third, and a big one, was Obamacare’s coverage expansion.

All of the aforementioned things are contrary to what Obamacare supporters promised.

Though since I focus on policy rather than politics, I’ll take this opportunity to point out that higher deductibles in some ways are a good thing. Which is why I’ve defended Obamacare’s Cadillac tax.

But now let’s look at two additional Obamacare developments. And both represent very bad news.

First, new scholarly research shows that Obamacare will be bad news for all income levels, and even will be of questionable value to those getting big subsidies (h/t: Marginal Revolution).

…the average financial burden will increase for all income levels once insured. Subsidy-eligible persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements that offset the higher financial burden, depending on assumptions about risk aversion and the value of additional consumption of medical care. However, even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare.

In other words, people generally were making sensible choices when they had some degree of freedom.

But now that they’re being coerced into Obamacare, many of them are worse off. Even in many cases if they’re the ones getting subsidized!

Second, we now know that President Obama’s promise to lower health insurance premiums by $2,500 was laughably misleading.

But it’s not simply that the President exaggerated. As Investor’s Business Daily explains, the numbers actually have gone in the other direction

Since 2008, average family premiums have climbed a total of $4,865. The White House cheered the news, saying it was a sign of continued slow growth in premium costs. …Slightly less higher premiums aren’t what President Obama promised Americans when he ran for office touting his medical overhaul. He specifically said his plan would cut premiums. “We will start,” Obama said back in 2008, “by reducing premiums by as much as $2,500 per family.”

And keep in mind that Obama’s claim of big savings was not a one-time, off-the-cuff comment.

As you can see in this video, it was a pervasive part of his campaign for further government control of the health care system.

But the real story isn’t prevarication by a politician. That comes with the territory.

The real issue is that our healthcare system is more screwed up because government now is playing a bigger role.

And keep in mind that fixing the problem means a lot more than simply repealing Obamacare. We also need to deal with spending programs such as Medicare and Medicaid and address tax preferences and regulations that encourage over-insurance.

After all, never forget that our real healthcare crisis is a giant government-caused third-party payer problem.

Read Full Post »

I’m a long-time advocate of “dynamic scoring,” which means I want the Congressional Budget Office and Joint Committee on Taxation to inform policy makers about how fiscal policy changes can impact overall economic performance and therefore generate “feedback” effects.

I also think the traditional approach, known as “static scoring,” creates a bias for bigger government because it falsely implies that ever-higher tax rates and an ever-growing burden of government spending don’t have any adverse impact on prosperity.

There’s a famous example to show the lunacy of static scoring. Back in late 1980s, former Oregon Senator Bob Packwood asked the Joint Committee on Taxation to estimate the revenue impact of a 100 percent tax rate on income over $200,000.

When considering such a proposal, any normal person with even the tiniest amount of common sense is going to realize that successful people quickly will figure out it makes no sense to either earn or report income about that level. As such, the government won’t collect any additional revenue.

Heck, it’s not just that the government won’t collect additional revenue. Our normal person with a bit of common sense is going to take the analysis one step further and conclude that revenues will plunge, both because the government will lose the money it collected with the old income tax rates on income above $200,000 (i.e., the income that will disappear) and also because there will be all sorts of additional economic damage because of foregone work, saving, investment, and entrepreneurship.

But the JCT apparently didn’t have any bureaucrats with a shred of common sense. Because, as shown in Part II of my video series on the Laffer Curve, they predicted that such a tax would raise $104 billion in 1989, rising to $299 billion in 1993.

The good news is that both CBO and JCT are now seeking to incorporate some dynamic scoring into their fiscal estimates. Most recently, the CBO (with help from the JCT) released a report on the fiscal impact of repealing Obamacare.

Let’s look at what they did to see whether the bureaucrats did a good job.

I’ll start with something I don’t like. This new CBO estimate is fixated on the what will happen to deficit levels.

Here’s the main chart from the report. It compares what will happen to red ink if Obamacare is repealed, based on the static score (no macro feedback) and the dynamic score (with macro feedback).

There’s nothing wrong, per se, with this type of information. But making deficits the focus of the analysis is akin to thinking that the time of possession is more important than the final score in the Super Bowl.

What matters for more is what happens to the economy, which is affected by the size and structure of government. As such, here’s the most important finding from the report.

Repeal of the ACA would raise economic output…the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period.

There are two reasons the bureaucrats expect better economic performance if Obamacare is repealed. First, people will have more incentive to work because of a reduction in handouts.

CBO and JCT estimate that repealing the ACA would increase the supply of labor and thus increase aggregate compensation (wages, salaries, and fringe benefits) by an amount between 0.8 percent and 0.9 percent over the 2021–2025 period. …the subsidies and tax credits for health insurance that the ACA provides to some people are phased out as their income rises—creating an implicit tax on additional earnings—and those subsidies, along with expanded eligibility for Medicaid, generally make it easier for some people to work less or to stop working.

Second, the analysis also recognizes that there would be positive economic results from repealing the tax hikes in Obamacare, especially the ones that exacerbate the tax code’s bias against saving and investment.

Implementation of the ACA is also expected to shrink the capital stock, on net, over the next decade, so a repeal would increase the capital stock and output over that period. In particular, repealing the ACA would increase incentives for capital investment, both by increasing labor supply (which makes capital more productive) and by reducing tax rates on capital income. …repealing the ACA also would eliminate several taxes that reduce people’s incentives to save and invest—most notably the 3.8 percent tax on various forms of investment income for higher-income individuals and families. The resulting increase in the incentive to save and invest—relative to current law—thus would gradually boost the capital stock; consequently, output would be higher.

And here’s the most important table from the report. And it’s important for a reason that doesn’t get sufficient attention in the report, which is the fact that repeal of Obamacare will reduce the burden of spending and the burden of taxation. I’ve circled the relevant numbers in red.

Returning to something I touched on earlier, the CBO report gives inordinate attention to the fact that there’s a projected increase in red ink because the burden of spending doesn’t fall as much as the burden of taxation.

My grousing about CBO’s deficit fixation is not just cosmetic. To the extent that the report has bad analysis, it’s because of an assumption that the deficit tail wags the economic dog.

Here’s more of CBO’s analysis.

Although the macroeconomic feedback stemming from a repeal would continue to reduce deficits after 2025, the effects would shrink over time because the increase in government borrowing resulting from the larger budget deficits would reduce private investment and thus would partially offset the other positive effects that a repeal would have on economic growth. …CBO and JCT…estimate that repealing the act ultimately would increase federal deficits—even after accounting for other macroeconomic feedback. Larger deficits would leave less money for private investment (a process sometimes called crowding out), which reduces output. …The same macroeconomic effects that would generate budgetary feedback over the 2016–2025 period also would operate farther into the future. …the growing increases in federal deficits that are projected to occur if the ACA was repealed would increasingly crowd out private investment and boost interest rates. Both of those developments would reduce private investment and thus would dampen economic growth and revenues.

Some of this is reasonable, but I think CBO is very misguided about the importance of deficit effects compared to other variables.

After all, if deficits really drove the economy, that would imply we could maximize growth with 100 percent tax rates (or, if JCT has learned from its mistakes, by setting tax rates at the revenue-maximizing level).

To give you an idea of why CBO’s deficit fixation is wrong, consider the fact that its report got a glowing review from Vox’s Matt Yglesias. Matt, you may remember, recently endorsed a top tax rate of 90 percent, so if he believes A on fiscal policy, you can generally assume the right answer is B.

Here’s some of what he wrote.

Let us now praise Keith Hall. …his CBO appointment was bound up with a push by the GOP for more “dynamic scoring” of tax policy. …Yet today Hall’s CBO released its first big dynamic score of something controversial, and it’s … perfectly sensible.

Yes, parts of the report are sensible, as I wrote above.

But Matt thinks it’s sensible because it focuses on deficits, which allows his side to downplay the negative economic impact of Obamacare.

…the ACA makes it less terrible to be poor. By making it less terrible to be poor, the ACA reduces the incentive to do an extra hour or three at an unpleasant low-wage job in order to put a little more money in your pocket. CBO’s point is that when you do this, you shrink the overall size of GDP and thus the total amount of federal tax revenue. …The change…is big enough to matter economically (tens of billions of dollars a year are at stake) but not big enough to matter for the world of political talking points where the main question is does the deficit go up or down.

Yes, you read correctly. He’s celebrating the fact that people now have less incentive to be self-reliant.

Do that for enough people and you become Greece.

P.S. On a totally different topic, it’s time to brag about America having better policy than Germany. At least with regard to tank ownership.

I’ve previously written about legal tank ownership in the United States. But according to a BBC report, Germans apparently don’t have this important freedom.

The Panther tank was removed from the 78-year-old’s house in the town of Heikendorf, along with a variety of other military equipment, including a torpedo and an anti-aircraft gun, Der Tagesspiegel website reports. …the army had to be called in with modern-day tanks to haul the Panther from its cellar. It took about 20 soldiers almost nine hours to extract the tank… It seems the tank’s presence wasn’t much of a secret locally. Several German media reports mention that residents had seen the man driving it around town about 30 years ago. “He was chugging around in it during the snow catastrophe in 1978,” Mayor Alexander Orth was quoted as saying.

You know what they say: If you outlaw tanks, only outlaws will have tanks.

I’m also impressed the guy had an anti-aircraft gun. The very latest is self defense!

And a torpedo as well. Criminals would have faced resistance from the land, air, and sea.

If nothing else, he must have a big house.

One that bad guys probably avoided, at least if they passed the famous IQ test for criminals and liberals.

Read Full Post »

I feel compelled to comment on the Supreme Court’s latest Obamacare decision, though I could sum up my reaction with one word: disgust.

  • I’m disgusted that we had politicians who decided in 2009 and 2010 to further screw up the healthcare system with Obamacare.
  • I’m disgusted the IRS then decided to arbitrarily change the law in order to provide subsidies to people getting insurance through the federal exchange, even though the law explicitly says those handouts were only supposed to go to those getting policies through state exchanges (as the oily Jonathan Gruber openly admitted).
  • I’m disgusted that the lawyers at the Justice Department and the Office of White House Counsel didn’t have the integrity to say that handouts could only be given to people using state exchanges.
  • But most of all, I’m disgusted that the Supreme Court once again has decided to put politics above the Constitution.

In theory, the courts play a valuable role in America’s separation-of-powers system. They supposedly protect our freedoms from majoritarianism. And they ostensibly preserve our system of checks and balances by preventing other branches of the federal government from exceeding their powers.

To be sure, the courts – including and especially the Supreme Court – have not done a good job in some areas. Ever since the 1930s, for instance, they’ve completely failed to limit the federal government to the enumerated powers in Article 1, Section 8, of the Constitution.

The Supreme Court’s first Obamacare decision back in 2012 then took that negligence to a higher level.

Now we have a second Obamacare decision. And this one may be even more outrageous because the Supreme Court decided to act as a pseudo-legislature by arbitrarily re-writing Obamacare.

Here’s what George Will wrote about the decision.

The most durable damage from Thursday’s decision is not the perpetuation of the ACA, which can be undone by what created it — legislative action. The paramount injury is the court’s embrace of a duty to ratify and even facilitate lawless discretion exercised by administrative agencies and the executive branch generally. …The decision also resulted from Chief Justice John G. Roberts Jr.’s embrace of the doctrine that courts, owing vast deference to the purposes of the political branches, are obligated to do whatever is required to make a law efficient, regardless of how the law is written. What Roberts does by way of, to be polite, creative construing (Justice Antonin Scalia, dissenting, calls it “somersaults of statutory interpretation”) is legislating, not judging. …Thursday’s decision demonstrates how easily, indeed inevitably, judicial deference becomes judicial dereliction, with anticonstitutional consequences. We are, says William R. Maurer of the Institute for Justice, becoming “a country in which all the branches of government work in tandem to achieve policy outcomes, instead of checking one another to protect individual rights.

Here’s the bottom line, from Will’s perspective.

The Roberts Doctrine facilitates what has been for a century progressivism’s central objective, the overthrow of the Constitution’s architecture. The separation of powers impedes progressivism by preventing government from wielding uninhibited power.

Here’s how my Cato colleagues reacted, starting with Michael Cannon, our healthcare expert whose heroic efforts at least got the case to the Supreme Court.

…the Supreme Court allowed itself to be intimidated. …the Court rewrote ObamaCare to save it—again. In doing so, the Court has sent a dangerous message to future administrations… The Court today validated President Obama’s massive power grab, allowing him to tax, borrow, and spend $700 billion that no Congress ever authorized. This establishes a precedent that could let any president modify, amend, or suspend any enacted law at his or her whim.

Now let’s look at the responses of two of Cato’s constitutional scholars. Roger Pilon is less than impressed, explaining that the Roberts’ decision is a bizarre combination of improper deference and imprudent activism.

With Chief Justice Roberts’s opinion for the Court, therefore, we have a perverse blend of the opposing positions of the judicial restraint and activist schools that reigned a few decades ago. To a fault, the Court today is deferential to the political branches, much as conservatives in the mold of Alexander Bickel and Robert Bork urged, against the activism of the Warren and Burger Courts. But its deference manifests itself in the liberal activism of a Justice Brennan, rewriting the law to save Congress from itself. As Scalia writes, “the Court forgets that ours is a government of laws and not of men.”

And Ilya Shapiro also unloads on this horrible decision.

Chief Justice Roberts…admits, as he did three years ago in the individual-mandate case, that those challenging the administration are correct on the law. Nevertheless, again as he did before, Roberts contorts himself to eviscerate that “natural meaning” and rewrite Congress’s inartfully concocted scheme, this time such that “exchange established by the state” means “any old exchange.” Scalia rightly calls this novel interpretation “absurd.” …as Justice Scalia put it, “normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved.” …like three years ago, we have a horrendous bit of word play that violates all applicable canons of statutory interpretation to preserve the operation of a unpopular program that has done untold damage to the economy and health care system.

Now I’ll add my two cents, at least above and beyond expressing disgust. But I won’t comment on the legal issues since that’s not my area of expertise.

Instead I’ll have a semi-optimistic spin. I wrote in 2013 that we should be optimistic about repealing Obamacare and fixing the government-caused dysfunctionalism (I don’t think that’s a word, but it nonetheless seems appropriate) of our healthcare system.

This latest decision from the Supreme Court, while disappointing, doesn’t change a single word of what I wrote two years ago.

P.S. Since today’s topic (other than my conclusion) was very depressing, let’s close by looking at something cheerful.

I’ve commented before that America has a big advantage over Europe because of a greater belief in self-reliance and a greater suspicion of big government.

Well, now we have further evidence. Here’s some polling data from AEI’s most recent Political Report. As you can see, there’s a much stronger belief in self-sufficiency in the United States than there is in either Germany or Italy.

Polling data like this is yet another sign of America’s superior social capital.

And so long as Americans continue to value freedom over dependency, then there’s a chance of fixing the mess in Washington. Not just Obamacare, but the entire decrepit welfare state.

Read Full Post »

When I criticize government-run healthcare, I normally focus on programs and interventions that distort and damage the American health sector.

So I’ve written a lot on the failures of Medicaid, Medicare, and Obamacare, as well as the counterproductive effects of the tax code’s healthcare exclusion.

But if some government is bad for the health sector, then lots of government must be even worse.

And that’s exactly what we find when we peruse stories about the British National Health Service.

Here are some excerpts from a remarkable story in the U.K.-based Independent.

A London man whose leg was broken after thieves stole his bike was forced to take an Uber taxi to the hospital after he was told that his injury “wasn’t serious enough” to warrant an ambulance. …Suffering from a broken leg and lying on the ground in agony, he called 999, only for the person on the other end to tell him to call the 111 non-emergency number as his injury wasn’t sufficiently serious for an ambulance. Eventually, three police officers picked him up and drove him home. He then had to book an Uber taxi to take him to the hospital.

Though maybe this is an example of karma.

“That is the most disappointing thing. At the time I was incredulous. I’m always a defender of the NHS but I want to know why they didn’t listen to my call properly.”

Sort of like when a defender of the IRS experiences an audit.

So how does the government defend the fact that it ignored a man with a broken leg?

In a statement to the Standard, the LAS said: “From the information given us, the patient was concious and alert and had no immediately life-threatening injuries…”

Gee, how comforting. If you’re about to die, they’ll send an ambulance. But not for anything less than that.

I guess the National Health Service sets policy based on scenes from Monty Python movies. If you just have a “flesh wound,” you’re out of luck.

Some readers may be wondering if this is an isolated example of incompetence that shouldn’t be used to indict the British system.

That’s a fair point. Indeed, there are doubtlessly similar example of malpractice in the United States (particularly with Medicare and Medicaid) and other jurisdictions where government doesn’t run the entire healthcare system.

So let’s shift to a story in the U.K.-based Telegraph that is a searing critique of the overall track record of nationalized health care.

NHS delays diagnosing and treating cancer are costing up to 10,000 lives a year, experts have warned. …Britain has one of the lowest cancer survival rates in Western Europe.  Nice said too many GPs are “guessing” whether symptoms could mean cancer, with late diagnosis responsible for thousands of deaths. … Britain is eighth from bottom in league tables comparing cancer survival in 35 Western nations, latest research shows, on a par with Poland and Estonia. …Each year, the UK has around 10,000 more cancer deaths which could have been prevented, compared with similar countries in Europe.

Hmmm…, I guess I was right in my spat with a British television host.

The (potentially) good news is that there is an effort to address this terrible track record.

For the first time, GPs will be issued with checklists of symptoms to help them spot the disease, in a bid to prevent at least half of the needless deaths. …Roger Goss, from Patient Concern, said he was surprised that doctors needed to be given such advice.  “I would be quite worried if GPs don’t know the basics of common cancers and what to look out for,” he said.  He also said that in too many areas, family doctors were under pressure to reduce the number of patients referred for tests, in order to save money.

The last sentence in the excerpt is worrisome. One of the big problems with government-run healthcare is that everybody is playing with other people’s money, and healthcare providers don’t have much incentive to be efficient or to cater to the needs of patients.

Which is, unfortunately, quite similar to the problems we have in the United States thanks to pervasive government intervention, which has caused a huge third-party-payer problem.

So I’m not overly optimistic that a new set of guidelines is going to have much effect on the quality of care on the other side of the Atlantic.

Oh, I almost forgot. Why does the title of this column include the parenthetical statement about not telling Paul Krugman about these examples of horrible results in the U.K.’s government-run healthcare system?

For the simple reason that we don’t want to burst his bubble. Krugman assured us back in 2009 that government-run healthcare was a good idea, writing that “In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.”

So I guess these horror stories we just reviewed are just a figment of someone’s imagination.

And I guess we have to also conclude that all the other horror stories we’ve previously shared (see here, here, herehere, herehere, here, hereherehere, here, hereherehere, herehere, here and here) also must be false.

P.S. We also have some horror stories about government-run healthcare in Sweden.

P.P.S. Though I should point out that there are good things about Sweden.

Heck, there are also good things to say about the United Kingdom.

Read Full Post »

When one thinks about all the Obamacare lies, it’s difficult to identify the worst one.

In other words, just about everything we were told was a fib. Even the tiny slivers of good news resulting from Obamacare were based on falsehoods.

So I almost feel like I’m guilty of piling on by writing about another big Obamacare lie.

But Charles Krauthammer has such a strong critique of Obamacare’s mandate for electronic health records that I can’t resist. He starts by pointing out that doctors are unhappy about this costly new mandate.

…there was an undercurrent of deep disappointment, almost demoralization, with what medical practice had become. The complaint was not financial but vocational — an incessant interference with their work, a deep erosion of their autonomy and authority…topped by an electronic health records (EHR) mandate that produces nothing more than “billing and legal documents” — and degraded medicine.

Not just unhappy. Some of them are quitting and most of them are spending less time practicing actual health care.

Virtually every doctor and doctors’ group I speak to cites the same litany, with particular bitterness about the EHR mandate. As another classmate wrote, “The introduction of the electronic medical record into our office has created so much more need for documentation that I can only see about three-quarters of the patients I could before, and has prompted me to seriously consider leaving for the first time.” …think about the extraordinary loss to society — and maybe to you, one day — of driving away 40 years of irreplaceable clinical experience.

Then Krauthammer exposes the deceptions we were fed when Obamacare was being debated.

The newly elected Barack Obama told the nation in 2009 that “it just won’t save billions of dollars” — $77 billion a year, promised the administration — “and thousands of jobs, it will save lives.” He then threw a cool $27 billion at going paperless by 2015. It’s 2015 and what have we achieved? The $27 billion is gone, of course. The $77 billion in savings became a joke. Indeed, reported the Health and Human Services inspector general in 2014, “EHR technology can make it easier to commit fraud,” as in Medicare fraud, the copy-and-paste function allowing the instant filling of vast data fields, facilitating billing inflation.

A boondoggle on the back of taxpayers. Flushing $27 billion is bad enough, but the indirect costs also are large.

That’s just the beginning of the losses. Consider the myriad small practices that, facing ruinous transition costs in equipment, software, training and time, have closed shop, gone bankrupt or been swallowed by some larger entity. …One study in the American Journal of Emergency Medicine found that emergency-room doctors spend 43 percent of their time entering electronic records information, 28 percent with patients. Another study found that family-practice physicians spend on average 48 minutes a day just entering clinical data.

Here’s the bottom line.

EHR is health care’s Solyndra. Many, no doubt, feasted nicely on the $27 billion, but the rest is waste: money squandered, patients neglected, good physicians demoralized.

Not much ambiguity in that sentence. To put it bluntly, “EHR” is the kind of answer you get when you ask a very silly question.

But on a more serious note, now read what Dr. Jeffrey Singer wrote about electronic health records. Simply stated, this is like Solyndra, but much more expensive. Instead of wasting a few hundred million on cronyist handouts to Obama campaign donors, EHR is harming an entire sector of the economy.

The only thing I’ll add is that neither Krauthammer nor Singer contemplated the possible risks of amassing all the information contained in EHRs given the growing problem of hacking and identity theft.

P.S. On another topic, I’ve written several times about the excessive pay and special privileges of bureaucrats in California.

Now, thanks to Reason, we can read with envy about another elitist benefit for that gilded class.

…a little-known California state program designed to protect police and judges from the public disclosure of their home addresses had expanded into a massive database of 1.5 million public employees and their family members… Because of this Confidential Records Program, “Vehicles with protected license plates can run through dozens of intersections controlled by red light cameras and breeze along the 91 toll lanes with impunity,” according to the Orange County Register report. They evade parking citations and even get out of speeding tickets because police officers realize “the drivers are ‘one of their own’ or related to someone who is.”

You may be thinking that the law surely was changed after it was exposed by the media.

And you would be right. But if you thought the law would be changed to cut back on this elitist privilege, you would be wrong.

…the legislature did worse than nothing. It killed a measure to force these plate holders to provide their work addresses for the purpose of citations — and expanded the categories of government workers who qualify for special protections. This session, the legislature has decided to expand that list again, never mind the consequences on local tax revenues, safety and fairness. …Given the overwhelming support from legislators, expect more categories to be added to the Confidential Records Program — and more public employees and their families being free to ignore some laws the rest of us must follow.

This is such a depressing story that I’ll close today with this bit of humor about bureaucracy in the Golden State.

Read Full Post »

I’ve often complained that government-created third-party payer is the main problem with America’s healthcare system, and I was making that point well before Obamacare was imposed upon the country.

The issue is very straightforward. In a genuine free market, people pay “out of pocket” for routine expenses. And they rely on insurance only in cases where they may face large, unexpected costs.

But in our current healthcare system, thanks to Medicare, Medicaid, and the tax code’s healthcare exclusion, most of us buy services with other people’s money and that dramatically distorts incentives.

Here’s some of what I wrote about this messed-up approach back in 2009.

…our pre-paid health care system is somewhat akin to going to an all-you-can-eat restaurant. We have an incentive to over-consume since we’ve already paid. Except this analogy is insufficient. When we go to all-you-can-eat restaurants, at least we know we’re paying a certain amount of money for an unlimited amount of food. Many Americans, by contrast, have no idea how much of their compensation is being diverted to purchase health plans. Last but not least, we need to consider how this messed-up approach causes inefficiency and higher costs. We consumers don’t feel any need to be careful shoppers since we perceive that our health care is being paid by someone else. Should we be surprised, then, that normal market forces don’t seem to be working? …Imagine if auto insurance worked this way? Or homeowner’s insurance? Would it make sense to file insurance forms to get an oil change? Or to buy a new couch? That sounds crazy. The system would be needlessly bureaucratic, and costs would rise because we would act like we were spending other people’s money.  But that’s what would probably happen if government intervened in the same way it does in the health-care sector.

As you can see, I’m frustrated.

I think the system is inefficient from an economic perspective. But I’m also a consumer, and I’m very dissatisfied whenever I have to deal with the healthcare system.

Fortunately, more and more people are adding their two cents on this topic.

Here’s some great analysis on the issue by Mark Perry of the American Enterprise Institute. He starts by pointing out how prices for health care generally climb much faster than the overall CPI price level.

Between 1998 and 2014 the price of medical care services in the US (as measured by the BLS’s CPI for Medical Care Services) has increased by 88.5%, or more than twice the 45.8% increase in consumer prices in general over that period… On an annual basis, medical care costs in the US have increased more than 4% per year compared to an average inflation rate of only 2.4% over the last 16 years.

He then explains that a big problem is third-party payer, which eviscerates normal market forces.

As a result, consumers are relatively insensitive to price, which means producers and providers can charge more and be relatively inefficient.

One of the reasons that medical care costs in the US have increased almost twice as much as general consumer prices since 1998 is that a large and increasing share of medical costs are paid by third parties (private health insurance, Medicare, Medicaid, Department of Veterans Affairs, etc.) and only a small and shrinking percentage is paid out-of-pocket by consumers. According to data from the Census Bureau, almost half (47%) of health care expenditures in 1960 were paid by consumers out-of-pocket, and by 1990 that share had fallen to 20% and by 2009 to only 12%. …Consumers of health care have no incentive to monitor prices and be cost-conscious buyers of medical services when they only pay 10% themselves, and the incentives of medical care providers to hold costs down are greatly reduced knowing that their customers aren’t price sensitive.

Mark then asks what the world would look like if the free market was allowed to function. And he identifies a niche in the healthcare system where that happens.

How would the market for medical services operate differently if consumers were paying out-of-pocket for medical procedures in a competitive market? Well, we can look to the $7.5 billion US market for elective cosmetic surgery for some answers.

And the information he shares is remarkable.

The table…shows the top five most popular surgical procedures and top five most popular non-surgical procedures for 2014, the number of each of those procedures performed last year, the total expenditures for each procedure, the average price per procedure both in 1998 and 2014, and the percent increase in price since 1998 for each procedure. …For the top ten most popular cosmetic procedures last year, none of them has increased in price since 1998 more than the 45.8% increase in consumer price inflation…, meaning the real price of all of those procedures have fallen over the last 16 years. …For three of the top five favorite non-surgical procedures in 2014 (botox, laser hair removal and chemical peel), the nominal prices have actually fallen since 1998 by large double-digit percentage declines of -23.6%, -31.2% and -30.1%.  …none of the ten cosmetic procedures in the table above have increased in price by anywhere close to the 88.5% increase in medical care services since 1998.

Here’s Mark’s chart, and I’ve circled the relevant bits of data.

Just in case it’s not obvious, Mark then draws the should-be-obvious conclusions from this data.

Simply stated, when people spend their own money, they are careful shoppers. And when consumers are careful shoppers, that leads to competitive pressure on producers and providers to be much more efficient.

The competitive market for cosmetic procedures operates differently than the traditional market for health care in important and significant ways. Cosmetic procedures, unlike most medical services, are not usually covered by insurance. Patients paying out-of-pocket for cosmetic procedures are cost-conscious, and have strong incentives to shop around and compare prices at the dozens of competing providers in any large city. Because of that market competition, the prices of almost all cosmetic procedures have fallen in real terms since 1998, and some non-surgical procedures have even fallen in nominal dollars before adjusting for price changes. In all cases, cosmetic procedures have increased in price by less than the 88.5% increase in the price of medical care services between 1998 and 2014.

That last sentence is the key. Because of third-party payer, overall health care expenses have climbed about twice the rate of inflation.

For cosmetic surgery, where normal market forces operate thanks to an absence of government-imposed and government-subsidized third-party payer, prices climb slower than overall inflation.

Here’s a video, produced by the Center for Freedom and Prosperity, on the problem of third-party payer.

As you can see, Obamacare made the problem worse, but it’s just one small part of a really big problem caused by decades of government intervention.

P.S. The video expands upon the analysis provided in a previous CF&P video.

P.P.S. Setting aside the debate about whether it’s right or wrong, the abortion market also is an interesting case study of how prices don’t rise when consumers pay out of pocket.

P.P.P.S. Government-created third-party payer also is screwing up the market for higher education.

P.P.P.P.S. Mark Perry not only is a good economist, as you can see above, but he’s also a brave guy for being willing to antagonize feminists.

Read Full Post »

Older Posts »


Get every new post delivered to your Inbox.

Join 2,899 other followers

%d bloggers like this: