Matthew Yglesias: Response To Ponnuru

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Response To Ponnuru

Just a quick thought in response to Ramesh Ponnuru's reply to my criticisms of Bob Dole on health care. I think his post is indicative of the lack of conservative seriousness on health care that I was talking about. If what we had right now in any way resembled a free market in health care, then saying "we should halt any efforts to get the state involved" would be a wrongheaded, but perfectly sensible from an ideological point of view, thing to say. But that's not the health care system we have. The insurance industry is heavily regulated, and even "private sector" health care spending is heavily influenced by the government's odd tax treatment of health dollars. What's more, over 40 percent of health care spending is already public sector. Indeed, as I've pointed out before, the US government spends more per capita on health care than does virtually any government operating under a "socialized medicine" system. What's more, the state role in health care keeps expanding -- even under Republicans. The current favorite conservative proposal on health care -- Health Savings Accounts paired with high-deductible catastrophic insurance -- may be a good idea or it may be a bad one (well, actually, it's a bad one) but it still implies that this sector of the economy will be essentially run by government regulation.

So under the circumstances to just say "big government is bad" isn't really participating in the debate in a meaningful way. While conservatives probably won't like my ideas about health care, anyone who looks at the situation seriously can't help but regard the status quo as intolerable. Brad Delong has some smart things to say about changing it, and there are plenty of smart people on the right, so they should join the debate.

August 25, 2004 | Permalink

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» "Socializing" Insurance Insead of Medicine from The 80/20 Club
The point for me isn't whether [government reinsurance of private insurance for high-cost accounts] is the ideal solution. It's that it seems like a good, relatively low-cost (compared to overall aggregate expenditures) relatively low-impact (compared... [Read More]

Tracked on Aug 25, 2004 5:02:14 PM

Tracked on Aug 25, 2004 5:06:41 PM

Comments

The behavior becomes much more easily understood if you understand the fact that conservatives will ignore any fact, or outright lie, in order to advance their agenda.

Posted by: Ferguson Foont | Aug 25, 2004 1:30:32 PM

It's simple.

Conservatives are dishonest people with no regard to the facts.

They will mislead, and if that fails, they will lie, and if that fails, they will beat you to a pulp.

Posted by: Ferguson Foont | Aug 25, 2004 1:32:46 PM

Wow.

Kristol was right to urge opposition to Clinton's original plan, and possible later compromises based on it, "sight unseen."

Why? What if it was awesome?

Kristol's theory was that Clinton wanted to move the country toward some form of national health insurance, and that this would be bad for the country, that one of the ways it would be bad for the country was that it would encourage an unhealthy degree of public dependence on the government and the party of government, and that this was one of the reasons Clinton wanted it.

What does Kristol know about health care? And why assume Clinton wanted it just to created dependence on government?

So of course you didn't need to wait to see the details to oppose the plan; you could oppose the whole concept.

Does not follow. Again, what if the plan turned out to look different than you had imagined?

There's nothing ideologically incoherent about that, and it is not on its face a repudiation of the public interest.

The public interest is served when policies are debated rather than opposed "just because." It is actually ideologically consistent for conservative ideologues to oppose an expansion of health care, so I don't know what he's worried about here.

The stance undermined the public interest only if one or more of these premises were wrong (which I don't believe they were).

See above.

Getting senators to back away from bad ideas they had supported, meanwhile, is something Senate majority leaders should do more often.

Again, how would you know going in whether it was a bad idea or not.

Moron.

Posted by: praktike | Aug 25, 2004 1:39:21 PM

The proposal of the Brandeis University prof, of a government-backed reinsurance pool for annual medical costs in excess of $50,000, is a clever idea worth exploring. It would likely allow health insurers to cover people who they seek to avoid covering now, and make health insurance a more attractive option for the young and healthy. However, if it is to actually bring medical expenses in the U.S. more in line with other nations, as a percentage of GDP, it will eventually run up against the political conumdrum that all health care reform proposals must eventually face; that our current regime is more generous, with the least amount of rationing, than any regime in world, for retirees, and retirees are the most politically pandered-to constituency in American politics.

If the U.S. is going to reduce medical expenses as a percentage of GDP, the U.S. must eventually seek to limit the amount of money spent on annual expenses exceeding $50,000, which will mean more rationing to that segment of the population with the greatest likelihood to incur $50,000 plus in expenses, with the least pay-off in terms of extending life. Of course, this group's votes are the most highly sought. It is a terribly difficult political problem.

Posted by: Will Allen | Aug 25, 2004 2:04:58 PM

What's more, over 40 percent of health care spending is already public sector.

FWIW, The Economist cites a figure of around 60%, when the economic value of tax code treatment of health benefits is accounted for:

"There are three main ways of funding health care: mostly through taxation, as in Canada, Britain and Sweden; mainly from compulsory contributions made by employers and workers, as in Germany, France and the Netherlands; and with a large contribution from voluntary private insurance, of which America is the only example. This stream of funding is dominated by employers because health-care benefits for employees are exempt from taxes. Allowing for the value of that tax break, the government is estimated to finance nearly 60% of all health spending in America."

http://www.economist.com/surveys/displayStory.cfm?story_id=2895984

Posted by: P.B. Almeida | Aug 25, 2004 2:39:58 PM

Ponnuru’s piece wasn’t exactly a paragon of taut thinking, but your characterization of it is misleading at best. First, you put quotation marks around statements Ponnuru did not make ("we should halt any efforts to get the state involved" and "big government is bad"). Second, you ignored his main substantive statement (“Kristol's theory was that Clinton wanted to move the country toward some form of national health insurance”). Dismissing opposition to “national health insurance” as opposing “any efforts” to involve the state or as a simplistic opposition to “big government” is absurd.

Reeks of the hack, in fact.

Posted by: ostap | Aug 25, 2004 2:58:38 PM

While you're right that to "just say "big government is bad" isn't really participating in the debate in a meaningful way," in the same post you point to HSAs and say "they're bad," no explanation necessary. Care to explain your position?

Once again, conservatives are participating in the debate on HC reform. You simply refuse to pay notice to their ideas.

Posted by: Adrienne | Aug 25, 2004 3:06:44 PM

In other words, Kristol opposed the plan because he didn't want to strengthen the Democrats, then he accused Clinton of proposing it for partisan reasons. And Ponnuru backs him up. Fan-fucking-tastic.

These people are a cancer on American society - a cancer that only socialized medicine can treat.

Posted by: EH | Aug 25, 2004 3:14:31 PM

HSAs are bad because they undermine the risk-pooling that's present (in a minimal way, but there nonetheless) in employer-based insurance schemes. Krugman puts it this way:

Although the 2005 budget presents that new deduction under the heading ”Helping the uninsured,” health savings accounts don’t seem to have much to do with the needs of the families likely to find themselves without health insurance. For one thing, such families need more protection than a plan with a $2,000 deductible provides. Furthermore, the tax advantages of health savings accounts would be small for those families most at risk of losing health insurance, who are overwhelmingly in low tax brackets.

But for people whose income puts them in high tax brackets, these accounts are a very good deal; making the premiums deductible turns them into a great deal. In other words, health savings accounts will offer the already affluent, who don’t have problems getting health insurance, yet another tax shelter. Meanwhile, health savings accounts, in the view of many experts, will actually increase the number of uninsured....

In the case of health savings accounts, the key side consequence is a reduced incentive for companies to insure their workers. When companies provide group health insurance, healthier employees implicitly subsidize their sicker colleagues. They’re willing to do this largely because the employer’s contributions to health insurance are a tax-free form of compensation, but only if the same plan is offered to all employees.

Tax-free health savings accounts and premiums would provide healthier and wealthier employees an incentive to opt out, accepting higher paychecks instead, and would lead to higher insurance premiums for those who remain in traditional plans. This would cause some companies to stop providing health insurance, or raise employee contributions to a level some workers can’t afford.

The notion that a small, tax-deductible benefit favours those who can already afford it (or are confident enough to gamble on good health) is not that fantastic, is it?

Once again, conservatives are participating in the debate on HC reform.

Well, maybe. Was the Medicare prescription drug benefit -- a boondoggle for the insurers and pharmaceuticals companies -- a contribution to the 'debate'? Right now, it looks like a wrench thrown in the works.

Posted by: ahem | Aug 25, 2004 3:22:45 PM

My dad is as far right as I am left, and we both agree wholeheartedly that A) the current system sucks, B) there are difficulties inherent in any of the alternatives, and C) whether or not a new system would work is in the details.

Personally, as a liberal, I am a little reluctant to put my health care needs in the hands of a federal government full of "drown it in a bathtub" conservatives trying to undermine the system. I'm worried enough that I'm going to get screwed on social security as it is.

Incidentally, MY linked to an article on HSA's a few days ago. It's not that he won't discuss it, it's that he already has (sort of).

Posted by: Royko | Aug 26, 2004 2:29:24 AM

Maybe you'd be interested to learn about Australia's socialised health system?

We have all the usual subsidies and bulking buying elements most socialised health care systems have, but in additional there is one element that could do wonders for your main problem: your excessive medical expenses as a percentage of GDP.

Basically, in all countries, the health care market is extremely inefficient because the sellers have close to perfect market information, while the buyers (doctors and patients) have close to no (useful) market information. This inefficiency manifests itself as higher prices.

The Australia government recognised this inefficiency a while back and so decided to employ expert buyers who could "recommend" drugs and provide information on their "comparative value" (how new drugs compared to those already in the marketplace).

This means that in Australia's healthcare marketplace, both buyers and sellers have roughly the same information. This in turn leads to a more efficient market, resulting in genuine "market value" (in this case, cheaper) drug prices.

I would note that Big Pharma tried to have this system scraped in recent FTA discussions between Australia and the US. Clearly, they're not big fans of geniune competition nor informed consumers!

Posted by: Sean Kellett | Aug 26, 2004 3:28:20 AM

Sean, that's what you call "genuine competition"? Reducing the number of buyers to effectively one?

The problem with risk pooling, to the extent we're talking risks that are subject to modification by individual behavior, is that it reduces the incentive people have to take preventative actions. And the failure to do proper "preventative maintainance" is one of the biggest contributors to health care costs.

Posted by: Brett Bellmore | Aug 26, 2004 6:21:02 AM

Brett, in Australia we do not have a single buyer in the healthcare marketplace. And it's highly unlikely we'll ever have a single buyer. It would be ruineous and would only last as long as it would take to boot the government out of office! IOW, not long.

It is true, of course, that our government takes the advice of the experts when deciding which drugs to subsidise, but individual Australians are free to buy whatever legal drug they wish at whatever price they're able to afford. Most natually choose to go with what the experts recommend. Some don't, for whatever reason, but that is their (informed) choice.

This is by any reasonable definition "genuine competition", and as I said, with Big Pharma looking to destroy the system one can only assume it's the competition they're not happy about!

To your point regarding "preventative maintainance", I wholeheartedly agree.

Australia's system of expert buyers (hmm, I see now "buyers" was a poor choice of words) and the concept of 'preventative maintainance' are complementary ideas, not exclusive.

Posted by: Sean Kellett | Aug 26, 2004 7:35:02 AM

This argument about partisan politics may not be the right place, but I want to point out a fundamental problem about health care.

People tend to want the best possible health care, particularly when their lives are at risk. We want better health care than we can afford.

The "best" treatment improves at whatever rate that medical research goes, and it is increasingly expensive. Profitable medical research depends on creating a product that quickly pays off the extremely expensive testing process.

If we were each dependent on our own resources we would save as mnay hundreds of thousands of dollars as we could, and at some point we would suffer injury or disease that would take it away. Most of us would settle for far better than the best care available, we would prefer to have some money left for later treatment.

We don't like making that kind of choice. We want the best, and would consider it wrong that rich people could afford thousands of times as much medical care as poor people can.

Insurance lets people get far more expensive medical care than they can afford -- if they need it -- at the expense of paying an affordable amount for nothing if they happen to be healthy. But the costs keep rising. Not just prices charged to people who lack insurance, which might make up for the lower prices for insurance companies who can get volume discounts. The actual costs.

Somehow we must either deny the most expensive treatment to many people, or we must tax our grandchildren to pay for it.

But since it's a political question, the voters have to agree that whoever gets denied expensive treatment deserves to be denied -- or else the voters must be bamboozled into agreeing to service reductions they don't understand.

Any approach to the problem that doesn't deal with financially irresponsible medical research will fail -- after an interval that will vary according to how much money is available from the rest of the economy and how much of that is wasted. At present we 'waste' about a third of the total so that we can deny services according to insurance-company policy that no one understands and that no one can be held responsible for. Some faceless adjuster in Chicago refuses to approve a doctor's treatment plan -- no one shows up at his cubicle and says "You killed my father. Prepare to die.". It could be argued that denying responsibility is worth a third of the budget.

My best suggestion is to socialise the medical testing industry. Instead of having private companies spend billions of dollars to test their products under review by government agents, have the government do the testing for free on the government's schedule.

Spread a lot of horror stories about biased testing done by and for private vendors. New methods that turned out not to work. Etc.

The government in theory should choose which projects to test on merit; in practice some companies would have an in to get quick testing. Unfortunate but not crippling. It should be policy that innovations which promise cheaper as well as better results should tend to have priority.

Give free medical care to welfare recipients, and test new procedures on them. They may be in the control groups and get the best standard treatment or they may wind up in the experimental groups and get the best current experimental treatment. New approaches should not be approved without at least 20 years of testing. Current approaches allow testing that's far too skimpy.

With that approach there wouldn't be such a cachet to get the latest treatment. You can pay for the surgeon with the best hands but he'll probably be doing the same things another surgeon would -- as far as you can tell. If you do due diligence and you think an experimental technique would be better, you can volunteer to be a test subject and have maybe a 50% chance of getting it done for free.

We would do testing at a rate we could afford, and so medical costs would rise at a rate we could afford. Nobody would get denied the best currently-known treatment. People who said that medicine should advance faster could get the response that not only can we not afford it, but it isn't safe.

Posted by: J Thomas | Aug 26, 2004 10:34:52 AM

Very nice site. Will sure visit again.

Posted by: John | Nov 22, 2005 8:01:00 PM