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Archives for 2008 Election

Half a Plan Isn’t Half a Loaf


Given that he’s the presumptive Republican nominee, it’s time to look at what would happen if Sen. John McCain won the election and the Republicans took Congress and they passed the plan that he’s proposed. Of course, the good news is that what I’m about to describe is purely theoretical. As we stand this fall, Democrats should win back the White House and will pick up enough Senate and House seats to prevent any GOP-backed proposals making it into law.

Nevertheless, this contemplation is spurred on by my recent visit with the Washington Policy Institute, a right wing think-tank in rainy Seattle, not cherry-blossom filled D.C. where McCain’s proposal got serious attention.

His basic idea is to phase out the tax exemption for employer-based health care and replace it with an individual tax credit of $2,500 per individual and $5,000 per family, to buy insurance. In addition, state laws governing health insurance would be overridden – so low cost plans from one state could be sold in another.

The result of this would be that many – if not most employers – would get out of the business of providing health benefits, and people would take the tax credit to the individual insurance market. Where many, if not most, would buy high deductible individual plans. The problem is that these plans don’t insure people who are sick, ever have been sick or know anyone who may ever be sick, and make very big profits by doing so. I’ve ranted about one company, Mega Life and Health which sells dodgy plans to individuals, and has what’s known as a “medical loss ratio” that’s woefully low – around 30% – so only $3 in $10 paid in premiums gets spent on actual care. Another little known segment of the insurance marketplace, plans for college students, have just been exposed in BusinessWeek as having a medical loss ratios as low as 10%! But honestly, this isn’t all that unusual: the idea of keeping costs low by excluding sick people is what makes the insurance market a profitable business.

McCain has advisors who understand this. One, Galen Institute’s Grace-Marie Turner thinks giving sick people access to a combination of subsidies and government provided health plans of last resort can solve this problem. The idea is to help plans take on risker clients – by giving the consumer more money so the plan can charge them a little more – and then having states sponsor plans for those who fall between the cracks.

That may pass the theoretical smell test but in real life we’re talking about increasing taxes on the average to pay specifically for targeted groups that are likely to be poor, sick and expensive. As Sick author Jon Cohn often says, programs for poor people get treated poorly. If rich and poor are not in programs together – Social Security is the leading example – it’s easy for them to be ignored and de-funded. That’s happened with some states’ children’s insurance plans, and existing state-based high risk health insurance pools like those Turner proposes supporting.

The real solution, she says, is a new Federal program with more Federal dollars for people in high-risk groups, channeled through the state plans. The Libertarian sitting next to me called this yet another complicated government program. But the real issue is that it wouldn’t survive long. As soon as state budgets get tight, support for insurance for those on the margins will be cut, and the sickies will be left on the shelf. And since the employer-based market will be decaying even faster – it wouldn’t be tax exempt, remember – there’ll be more sick folks with no insurance.

The problem underlying all of these plans is that the care of sick people costs money. And somehow we have to redistribute money to pay for it. Simply suggesting that it ought to happen isn’t going to make it happen, no matter whether there’s an R or D after the politician’s name. Particularly if there isn’t a real, high demand for a solution. And I don’t think we’re seeing enough of that demand for Congress to come up with a plan that’s more than just window dressing.

So we’re going to spend the next few months going through the exercise of talking about health care reform. But it’s after all the talk, nothing’s going to happen. Which in the case of the McCain program is a good thing. His halfway solution is worse than no change.

Posted by Matt Holt at 3:39 AM | Permalink

Health Care Jungle


My six weeks of traveling the world on an extended honeymoon is over. With my lovely wife Amanda I’ve been diving on coral reefs, sleeping under the stars with the Bedouin, exploring 3,500 year-old tombs, watching lions tear apart a buffalo, and tracking chimps hanging out in the rain forest.

What better way to return than to enter the jungle of U.S. Presidential politics? So Tuesday, I sat in on two conference calls. One from the McCain camp on their health care proposal, the other from the Campaign for America’s Future, which is promoting Yale professor Jacob Hacker’s plan as the theory behind both Clinton and Obama’s policy intentions. Like the lion and the buffalo, it wasn’t pretty.

McCain’s proxies were Douglas Holtz-Eakin, sensible former director of the Congressional Budget Office, a usually fair-minded group of bean counters, and Carly Fiorina, the former CEO of Hewlett-Packard, apparently on the shortlist for the vice presidency.

The two surrogates offered a taste of what we can expect the Republican version of the health care debate to be as the election moves closer: For Carly it’s either free market choice, or the government telling your family which doctor you can go and see. You’re going to hear “government run heath care care” uttered as a threat – just as if we were all moving to the Gulag. Tomorrow.

After a lot of platitudes about medical homes and transparency and electronic medical records – Holtz-Eakin finally got down to the meat of the campaign’s proposal. McCain aims more or less end the employer-based system that’s currently in place for most Americans by taking away the tax deductibility of health benefits for individuals.

Instead, every family will get a $5,000 tax credit to go buy insurance in the individual market and they will no longer be restricted to buying insurance their own state thus, in theory, creating more competition between insurers. Holtz-Eakin has been sensible enough to get McCain to identify the problem associated with the main thrust of his plan: the consequences of forcing people into the individual insurance market. As many frustrated Americans know, under such a system most healthy people will find a high deductible policy that costs less than $5,000 a year but those with pre-existing conditions – like John McCain (were he not a Federal employee and eligible for Medicare) – would find insurance unobtainable.

There is a rational way out of this fix for those (including me) who want to hasten the end of employer-based health insurance. Establish a regulated national insurance market which forces insurers to take all comers. Massachusetts has made vague efforts towards creating such a market. And Sen. Ron Wyden has proposed something similar. But doing that without killing the insurance market requires the government to force everyone to buy in to the plan. It also means that benefits and options have to be made similar by regulatory fiat, and that a system of risk adjustment between those insurers needs to be in place. Failing that the whole thing collapses because insurers will be left with all the sick people while the healthy ones opt out of the system.

There’s no reason that McCain couldn’t have gone some way down that path – Wyden’s plan has Republican support. But McCain’s answer to the problem is literally, “we’ll study it more”.

Now, this should be sweet hay for the Democrats and the AFL-CIO. And yes, the Campaign for America’s Future’s folks were very persistent in reminding us that 1) McCain wants to take away employer-based health insurance and 2) you’re on your own in the individual market.

Funnily enough, though, they focused on point one – changes to health care tax deductibility ending the employer-based health care benefit. Instead they should explain the obvious about point two – the individual market is run by insurance companies who focus on attracting healthy customer who need fewer services, not on the sick. In the political jungle it should be pretty fair to say that the individual market is run by insurance companies (like some in California that retroactively cancel all sick people’s policies) and that under the McCain plan that’s the only place you’d be able to buy insurance! But I’m sure we’ll hear loads more about that come the Fall, won’t we?

But the lack of pointed Democratic criticism aside, why is straight talking maverick John McCain spouting the free market line drawn by the National Federation of Independent Businesses and the Cato Institute? Isn’t this a great area to be a maverick and deviate from the Bush rhetoric?

I assume that the answer is McCain feels health care is important enough that he has to say something, but he’s more concerned about not upsetting the health care industry. After all, even if he does win the election by some miracle (or the usual Democratic ineptitude) he’s not actually going to do anything about health reform.

But then again, my guess is neither are the Democrats.

Posted by Matt Holt at 1:23 AM | Permalink

Ghost in the Attack Machine


It’s almost full-on election season so I’m getting email from the Republican National Committee suggesting that there are problems with both the Sen. Hillary Clinton and Barrack Obama plans for health reform. Funny that – given my politics – but it gets better.

The RNC thoughtfully sent along a copy of a Wall Street Journal op-ed featuring an appearance by that blast from the health reform past, Betsy McCaughey who these days hangs her hat at the ultra-right wing Hudson Institute. In the 1990′s she was a brief star of the new right after writing, in early 1994, a magazine article in the then-quasi-liberal magazine The New Republic. Called No Exit, it contained a damning account of the Clinton Health Plan and got a fair amount of attention at the time. No Exit was a fair load of old tosh (you really keen health policy archaeologists can unearth the Clinton White House’s full rebuttal to see what I mean). The article’s impact on the demise of the Clinton health plan, which was already in substantial trouble by the time it came out, was in fact greatly overstated, not in the least by McCaughey herself.

Nonetheles, she somewhat improbably rode that wave to the New York Lieutenant Governor’s office under George Pataki, and to marriage to a multi-millionaire. Her relationship with Pataki, the millionaire and, some say, reality all fell apart in quick sequence. But now that health care politics are back so is she.

So what does she say in her new attack piece?

Well more of the same that’s been emanating from similar quarters, and has been smeared all over the WSJ op-ed pages for years. For example here’s McCaughey on:

The growing number of uninsured? The fault of those damn illegal immigrants! McCaughey seems to think there are reams of cancer patients swimming across the Rio Grande, even if a peer reviewed article in Health Affairs this very week shows that the increase in uninsurance has little to do with immigration and much to do with the decrease in insurance provided by employers.

Uninsured children? The fault of their parents who are too dumb, stupid or poor to sign them up for the wealth of public programs just desperate to enroll them. Not mentioned? Several states dis-enrolled “eligible” children from their programs in the last recession. And isn’t it funny that every other country seems to have much cleverer parents when it comes to ensuring their children have health coverage?

Mandates for universal coverage as Clinton’s current plan would impose? An unfair tax on cheap young people who are forced to transfer wealth to rich old people.

Health information technology – a part of Obama’s proposed plan? A pox on the super-efficient medical delivery system.

Regulation of the “politically unpopular” insurance industry? A sure path to collectivist Bolshevism!

In the bizzarro world of Betsy McCaughey and the far right, there are no problems with the American health care system and if there are, that’s entirely because of the system’s socialized nature. And they’ll insist that their version of reform is all about bringing market forces to health care. But that’s just not true.

There’s a basic mathematical concept at work here that just seems to escape these people. Care of a few people costs a lot of money. Somehow we have to figure out how to cross-subsidize the expensive care of those who are ill.

But logic and mathematics aren’t part of McCaughey’s argument. This type of attack is really about is stopping any real health care reform. Why? There are plenty of players in the current health care system who make a very nice living today and do not want to change that. They include insurers, pharmaceutical and device companies, most hospitals, many doctors and virtually anyone involved in the current system. The long-term logical outcome of the reform in the Clinton and Obama plans reduces the over-use of devices, drugs, procedures, and services that’s rampant in the current system. The plans also halt the games insurers play to boost profits.

So when you see these attack pieces – and you’re going to see a lot more – remember what this is about. It’s about maintaing the the appalling status quo in American health care today. And Betsy is no doubt ready for the next round.

Posted by Matt Holt at 1:17 AM | Permalink

Style, Sadly, Trumps Substance


Just when you thought it was safe to switch on the telly, the Democratic presidential candidates had yet another debate. The caucus in Nevada and the primary in South Carolina gave the three front runners an excuse to indulge in a long conversation about whether or not Sen. Barack Obama could find piece of paper on his desk, exactly how many years Sen. Hillary Clinton has had experience or to the minute how long John Edwards has been struggling to get out of that mill town.

And if I hear the word “change” one more time…

None of this has too much to do with the health care problem facing the nation. Or the housing slump, the crisis in Pakistan, global warming, energy independence, or – really – anything that matters very much. It’s quite possible that towards the end of the debate the candidates came to some earth-shattering conclusion about these topics. Unfortunately by that time I’d changed the channel to a rerun of Scrubs.

The problem is twofold. First, the primary process is essentially a contest among politicians who, in general, seem to agree with each other. If you look at their health care plans, the plans for Iraq, or much anything else, there’s not much difference between the main Democratic contenders. For that matter there’s not much difference between the main Republicans. There is of course a difference between the Democrats and the Republicans — although not perhaps as much as there ought to be.

But we’re not seeing the two sides debate on another because that’s not the American way. In fact head to head debate doesn’t even happen in Congress.

This means that we voters spend the vast majority of the political season concentrating on personality differences, essentially irrelevant compared to distinctions which might make a difference to our domestic and foreign policies. This focus on personality – on style, not substance – continues straight on into the presidential race when irrelevancies about the backgrounds of the candidates loom much larger. It may well be that President George W. Bush was technically a deserter from the Air National Guard. His Democratic opponent John Kerry may well have overstated the the risks he took in Vietnam (at the least he managed to piss off a sufficient number of other Vietnam vets that we ended up with the Swiftboat fiasco). But the point is that personal character traits, and supposed strengths and weaknesses, make very little difference to the impact that politicians have once they actually make it into office.

What actually matters is the legislation that gets enacted, and the types of interest groups that will be represented by the members of the Administration. So when George W. Bush appointed some of the most extreme and polarizing figures in American life to run the departments of Justice and Defense one can safely say that it mattered alot. It’s also clear that that the vast majority of those who voted for him had no idea what he was going to do in that regard. And then there’s the sneaking suspicion many of us have that the actual running of the country was carried out by Vice President Dick Cheney – who chose himself for the job. Regardless of how you look at it, the culmination of legislation and administrative action develop by the Administration has nothing to do with the various character traits of the individual running for office.

That’s why the real question about the future of American political life is not about the candidate’s personality, nor about their tears, nor about their self-styled monikers as fighter, change agent, or experienced decision-maker. The real issue is how the next President is going to appoint their team, and pick their fights over the big problems that require legislation, money and force. Getting that done does require them to be a skilled political operator (although it’s better for them to be more ruthless than skilled), but their personal character traits are less important.

Of course in many other countries an election has voters choose between teams not individuals, and the policies that will be put in place by the winner are worked out and known in advance. And the election cycle is (thankfully) much, much shorter. Even after living through seven years of what most Americans seem to think was a bait and switch, we know very little about the substance of what we are going to get in terms of practical change whomever takes over the White House in 2009. We will know how they described themselves “on message” during endless months of campaigning.

In the end the important thing is what they do not how they do it. For example, LBJ got civil rights and Medicare passed into law, but no one considered him full of empathy. Unfortunately, voters seem to value style over substance, which means that in the end we may not know much about the substance we get and it may not be much to our liking.

Posted by Matt Holt at 12:17 AM | Permalink

Just Saying “No”


An American by choice, the last few days have made me nostalgic for British elections, with their clearly defined, disciplined parties, 80-plus percent voter turnout and three-week campaigns. After all there’s barely a ha’penny’s worth difference between the three leading Democratic candidates.

To separate himself from the Democratic front-runners former Sen. John Edwards has spent the last few days laying into insurance company, Cigna, for its failure to immediately approve a liver transplant for California teenager, Nataline Sarkisyan. That action, says Edwards, in concession speech after concession speech, is emblematic not just of the health care system’s break-down but of a failure of the current American political system.

Edwards like most Democrats wants a single payer health system and his plan is the closest of the three front-runners to providing one. But his advocacy of Natalie Sarkisyan’s case raise a question no one else seems to be asking.

First, some background. Natalie’s doctors at UCLA Medical Center had suggested the transplant as essentially the last roll of the dice to save her life. Cigna initially refused to pay for the operation. Their reasoning – and it was quite a rational reason – was that the operation would be futile. To be fair, the surgeons at UCLA disagreed. (But as the Brits like to murmur at these moments, “They would say that wouldn’t they?”)

There was an immediate outcry of the kind we’ve become accustom to as health care policy becomes increasingly political. Ten days later Cigna relented, offering to pay for the transplant itself (if it simply approved the procedure immediately, Natalie’s mother’s employer would have paid). And, of course, UCLA Medical Center, which is after all a government institution, could just have sucked it up and paid for the operation itself, but it didn’t seem to be too keen to do that.

But two things get in the way of this, perhaps commensensical, approach on Cigna’s part. And they’re getting in the way of the current debate.

First, insurers have no credibility. Their bad behavior over the past few years means that no one trusts them at all.

Second, there’s an election to win, and John Edwards decided his campaign will be the voice of the girl’s parents, a fine idea for a politician seeking office. Lousy policy.

One good reason to have a single payer system is to rationally decide what is paid for and what isn’t. Meaning that if Edwards’ ideas about health care are adopted and become law there may well be more people being denied last-chance, possibly life-saving operations than there are now.

All health systems and all societies everywhere somehow ration what’s available to patients. Otherwise we’d all have full time nursing care every time we get a cold. However, compared to other countries the American health system has gotten particularly out of whack by delivering unnecessary, expensive and futile care, especially at the end of life.

To some extent, this state of affairs is the result of the work that trial lawyers – like Edwards – have done on behalf of grieving families like the Sarkisyans. It’s been an effective cudgel but not particularly good medicine. And it’s been going since the early 1990s when another insurer, HealthNet, had a multi-million dollar judgment against it for denying payment for a bone-marrow transplant for a woman with end-stage breast cancer. Ten years, billions of dollars, and thousands of literally agonizing procedures later, the clinical trial results finally arrived. The procedure didn’t work and did more harm than good.

Clearly no one trusts health insurers to make these decisions. But the process that Cigna, (and HealthNet), went through is defensible, and to some extent duplicates what happens in other countries. For single-payer (or any health system) to work and work well, someone somewhere has to say, “This is a justifiable procedure. That’s literally a waste of money that could be better spent somewhere else.” Any rational universal health care system is going to have to confront this problem, even while it solves many others that the current US system causes, such as the financial catastrophe visited on those who are uninsured and get very sick.

So why did Edwards bring up this debatable case? I guess it’s just that he felt that he’d get a quick political score based on a dramatic case that fits into his anti-insurer mantra. But it doesn’t obviate the main issue which is that at some point it’s humane for both the patient and the society for someone to say, “no.”

Posted by Matt Holt at 12:00 PM | Permalink

A Californian Crystal Ball


Pretty much anyone interested in U.S. politics is focused today on what 32 corn farmers in the middle of the country have to say about the 20-some people currently hoping to run the world by becoming President of the United States.

And while health care concerns have figured in many of the conversations the U.S. political press has had – or overheard – with Iowa Caucus voters, it’s been a wild holiday season for California’s health care system. The impact on what type of health care reform legislation will eventually come to national attention is probably just as great.

On Christmas Eve a California appeals court unanimously decided that the way insurers have been practicing in the state for many years is illegal. The case involving retroactive cancellation of policies was one that the nice well-behaved non-profit California Blue Shield had fought in the courts while its aggressive for-profit competitor, Wellpoint’s Blue Cross unit, had settled.

Blue Shield maintained it had the right to retroactively cancel those insurance policies for which it says that policy-holders had lied on their applications. At first the series of stories, which started coming out last year and ended up making an appearance in Michael Moore’s Sicko, seemed cut and dried. People who’d received expensive care were having their insurance canceled for pre-existing conditions that they’d either clearly disclosed on their applications, or couldn’t possibly have been expected to remember. Meanwhile the behavior of the health plans was shown to be particularly cynical, with one, HealthNet, actually paying out bonuses to staff doing “recissions” based on how many expensive policy holders they kicked off their rolls.

However, over time more of the recission stories seemed to be about people who had either been extremely careless in filling out the application or had fudged the truth. But the public opinion battle was clearly lost. Now the state insurance commissioner, Republican (yes you read that right) Steve Poizner, has decided that because insurers have the right to investigate before they issue policies, they have no right to retroactively cancel them, regardless of the circumstances. It appears that the district court is more or less agreeing. Leading one attorney, William Shernoff, who settled for his clients with Blue Cross on the same type of case to say:

“What this court is saying is these cases are going to juries, and that’s going to scare the hell out of the insurance companies,” Shernoff said. “Just one or two punitive damage awards by juries will clean this up, and the appellate court is now going to let that happen.”

Note the word “punitive” in that sentence. Want to place odds on how much sympathy a jury will have with a health insurance company? Didn’t think so.

So it looks like insurance companies’ really bad behavior in the individual market is coming to an end. That, in turn, probably means the end of the current individual market here altogether. Why? Because, under the current system, health care is so expensive for sick people that insurers who don’t exclude them really struggle to provide a inexpensive product for the majority who are not sick. A healthy person in California can buy a high deductible plan for the low hundreds of dollars a month – a plan that might cost a sick person thousands a month – if it’s available.

The banning of recissions could be seen as a first step towards forcing insurers to cover everyone at a “community-rated” price. That means healthy people pay more so that sicker people can be included in the same pool.

Which is just what the bill that passed the Assembly last month and will now become a ballot measure proposes. It bans underwriting – the process of investigating someone’s health history – and forces insurers to take all-comers. This would normally cause insurers to flee the state as their risk pools filled with only sick people. But the California plan includes an individual mandate and forces medium-sized employers to pay into a state fund for those not insured, bringing in a group that may not be insured now because of the cost but which may not – assuming they’re healthy and able to work – pose a substantial risk. Funnily enough, Blue Shield is one of the insurers who thinks this might turn out better for them.

Now we’re a long way from that being a done deal. In fact the California initiative won’t be on the ballot until November, which seems a life time away to those of us facing 11 months of Presidential horse-racing. And more to the point, the always vocal if not particularly logical shock-troops of small business are starting to raise their hackles about health care.

But it’s clear that the intentions that California’s politicians and judges have are similar to those of Democratic Presidential candidates Sen. Hillary Clinton, John Edwards and even Sen. Barack Obama’s plans (although I have severe doubts that Obama cares enough to push for it).

So by all means this week watch what’s happening in Corntown USA. But pay a little attention to how the rumblings in the California health insurance market are starting to spread across the political landscape too.

Posted by Matt Holt at 7:15 AM | Permalink

President Obama’s Health Care Head-Fake


It’s a perplexing time to be a liberal. A Martian arriving on earth, having seen the Republicans pandering hard to their base in the primaries would assume the Democratic base would be rallying behind the candidate who held the correct positions in 2004, and be apologizing for ignoring him last time.

Sadly, Rep. Dennis Kucinich – despite the addition of an unfeasibly hot young wife – is still stuck in the low single digits. Meanwhile, John Edwards, has changed his tune and gone to the populist left, repudiating his 2002 pro-war vote and suggested a health care plan that has some elements moving towards single payer. Something that around 30% of the country and there a majority of the Democratic base say they want. And front-runner Sen. Hillary Clinton is still playing to the undecided voters of 2004 election by trying to be tough on Iraq, Iran and terrorists.

But the candidate who’d really confuse the Martian is the one who has the advantage of being fresh, looking different and not being in the Senate when that war vote was taken. While Sen. Barack Obama was correctly (like Kucinich) opposed to invading Iraq, until recently he hasn’t really pressed that advantage over Clinton. Now, Obama has a health care plan, and his defense of it makes him sound more like a liberal Republican than a Democrat.

As I said, it’s now very perplexing to be a liberal.

First let’s consider the obvious: There are only two rational ways to provide universal health coverage. Have the government do it (Canadians, Brits or Americans over the age of 65), or create a quasi-private coverage structure that essentially puts everyone in the same regulated pool (Japanese, Dutch, Germans and French).

Our Martian friend would certainly note that the American system linking health insurance to employment is just daft. But since 60% of Americans get their coverage that way, it’s an easy place to start for politicians who want to pretend to fix things by tinkering at the margins. So Clinton and Edwards have come up with an “individual mandate” – a government edict that if your employer doesn’t buy you health insurance the government will tell you to do so.

You’d think that new arrival, and foreign policy lefty, Obama would be jumping all over that mandate position of Clinton’s. And he is. Just not from the side you’d think.

Instead Obama is proposing reforms that he claims will reduce the cost of insurance, make it easier to buy, and is scoffing at the ability of the government to enforce a mandate – with his proxies in the New York Times and the apparently “non-partisan” American Enterprise Institute comparing it to auto insurance which all drivers should have but 15% don’t. This has lead to much ridiculous mudslinging in the primary debates, with lots of liberals from the left of Clinton defending her to Obama’s attacks.

Like the free-marketeers at AEI, I’m glad that under President Obama’s forthcoming regime all mandates will be voluntary. I will no longer consider myself in need of having to pay tax, drive on the right side of the road, or stop drinking in bars after 2 a.m.

It seems that Obama’s advisers don’t understand the economics of health care. If you allow an industry to choose between serving everyone at an affordable price, or serving those who can afford it and have a virtually inelastic demand for that service, it’s by definition true that they’ll cherry-pick as it’s way more profitable. The only way to stop this is put everyone in the system which requires some kind of compulsion (tax or mandate with subsidies for the poor) while at the same time restraining the costs of the system. Getting to voluntary universal coverage by trying to encourage lower costs and hoping everyone will join in will not work, and even Obama’s main health care adviser admits it.

But this irrationality has got me thinking. Why is Obama trying to promote something he knows won’t work? Political strategy. He’s done a quick assessment of the 2009 landscape and realizes that health care reform won’t pass anyway. After all, job #1 for the new President will be Iraq, job #2 will be solving the likely recession created by the housing market collapse so there’ll be no political oxygen left for job #3, health care reform.

Obama has decided that he doesn’t want to set up a nasty fight with the health care industry that he thinks he’ll lose. So his plan for universal coverage isn’t a plan, it’s a head fake to get through the primaries, to be ignored once the real political fight of 2008 gets underway.


Posted by Matt Holt at 12:04 PM | Permalink

Taking Out The Trash-Talk


I’m not too worried that a Republican will actually win the White House in 2008. But I am worried that efforts by what I confidently believe will be a Democratically controlled White House to reform the U.S. health care system will founder on the free-marketeers devotion to faulty statistics, unsound analysis and, well, lying.

It’s not a new problem. But it’s one that’s increasingly difficult to combat.

Want a good example of the high-minded nature of the debate? A few weeks ago, Republican presidential hopeful Rudy Giuliani started running commercials in New Hampshire claiming that British men who got prostate cancer were, metaphorically, being summarily shot by firing squads. The low survival rate of those Brits was proof that the evil that is socialized medicine – if brought to these fair shores by careless Democrats – would mean an equivalent end for us.

Now, Giuliani been roundly criticized for his data manipulation. Even the British government got involved this time, explaining that the data he was using was wrong. But the Canadian free-marketeer advising Giuliani – the guy who supplied the soundbite statistics, David Gratzer – is bravely not backing down!

Clearly, we haven’t heard the last of this sort of garbage.

Another example? While the Giuliani Data Debate was being waged, the Wall Street Journal ran perhaps the biggest piece of intellectual rubbish seen in some time based on a study by economist Benjamin Zycher who, like David Gratzer, also hangs his hat at the conservative Manhattan Institute.

The claim the WSJ advanced is that single payer health care (i.e. where the government pays all the bills as with Medicare or in Canada) would be more expensive overall than the current system.

Now of course there’s the actual evidence from both other countries and the recent reports from The Lewin Group (pdf) that show that single payer health care would be cheaper. You might note that Lewin is a consulting group in business – not dipping a random toe into politics – to give unbiased advice and counsel. By contrast – and this is where the trouble starts – Zycher just throws in random irrelevancies that muddy the debate, arguing that the savings from single payer are not enough to cover the uninsured, and that a difference of $21 billion would have to be found by the taxpayer to cover everyone – despite savings from lower administrative costs.


Posted by Matt Holt at 8:29 AM | Permalink

The Garden Hose Health Care Brigade


It’s been a strange old week for me in healthcare. Half was spent working with new Health 2.0 technology companies who are trying change every conceivable aspect of the patient and physician relationship. The rest was spent hanging out with a bunch of right wing lunatics. In the background the major healthcare policy stories of the last few weeks have been Sen. Hillary Clinton’s announcement – at last! – of her plan for universal coverage, and President George Bush’s vetoing of the children’s health insurance program.
So, I guess it’s my job to try to make sense of all of this. And, well, I can. But not in ways you may like.
The politics of the moment is very strange indeed.
On the one hand, a deeply unpopular president has gone against moderate members of his own party by vetoing a bill to help “the children” by expanding government-backed health care for young Americans. If there is a more powerful sound bite for Democratic candidates during the next year, I haven’t seen it. Nor have you.
On the other hand, the Democrat presidential candidates have come up with a series of proposals that the Republicans have already dismissed as socialized or, worse, French. This despite the fact that the French health care system is commonly known as one of the best in the world and is actually one that Americans would rather like.
Meanwhile, inside the beltway and on WMUR, the only TV station that matters in Manchester, N.H., a myriad of interest groups are now focusing on the uninsured. The American Cancer Society is spending all of its publicity budget for the next year on the uninsured, while Physicians for a National Health Program (an advocate of the single-payer system) is attacking Democratic candidates because they all leave a role for private insurance companies in their policy proposals. The American Medical Association (AMA) is plastering the Washington DC Metro subway with exhortations to listen to the voice for the uninsured, hoping, I guess, that you’ll conveniently forget the AMA’s role in stopping any sort of national universal insurance program for the past century or so.
What this all comes down to is an open, raging and actually somewhat interesting philosophical battle about how best to provide insurance coverage. Which is how I found myself on a stage – with someone calling himself an “Objectivist” in that fine Ayn Rand tradition – speaking to an audience of knee-jerk libertarians. The Objectivist wasn’t very objective, but boy did he object to virtually everything done on behalf of the community. Why? In his philosophy anything done on behalf the community is, by definition, something done to somebody against their will. I have met plenty of people who want to abolish Medicare and Medicaid, without providing any substitute (and they are mostly young and rich). But this is the first time I’ve met someone wanting to abolish the publicly-funded fire department in favor of a garden hose brigade. My pleas that he support his contention that the private sector works better in healthcare than the public sector with actual data were roundly ignored so, faced with this sort of audience, I couldn’t help but feel some sympathy for the struggle any politician will have to get some level of common understanding of the real health care problems confronting America.


Posted by Matt Holt at 10:00 AM | Permalink

Health Care Now? Don’t Hold Your Breath


Judging by the number of articles about corporations, unions and politicians decrying America’s healthcare system, you could be excused for believing that we will have health care reform very soon. You’d be wrong.
That doesn’t mean the costs can’t be easily and immediately explained. Recently I heard one manufacturer explain that for their workers making less than $35,000, the average individual’s healthcare cost was over $9,000 and was going up at more than 10% a year. The cost of those health care chickens is coming home to roost in stagnant wages and exported jobs.
And, as a series of articles from Lisa Girion in the LA Times about retroactive policy cancellations makes clear, the “market” for individually purchased health insurance is beyond dysfunctional. Insurers will do anything they can to not sell insurance to people who might use it. That’s because healthcare costs are extremely concentrated among a very few people. Sell a few too many policies to sick people and insurance companies’ profits evaporate.
Historically, this has had limited political impact. And while that situation is changing – a bit – it’s not going to be enough to move legislation through Congress.
Most uninsured have been poor workers who didn’t vote much. America’s middle classes have usually been much more concerned about maintaining the healthcare benefits they have received from their employers. But with rising costs, the easiest option for many employers is simply to stop offering health insurance as a benefit.
Since 2001 for the first time ever in a period of economic expansion the proportion of people getting insurance benefits from employers has gone down. where this shows up most dramatically is in the rate of those uninsured who are middle income. In 1999 at the height of the boom, 18% of average income workers were uninsured for at least three months during a two year period.. By 2003, 25% were. Things have not improved since – in fact today’s data suggests that the uninsurance rate increased in 2006 – and of course the situation will get even worse if there is a recession.
Americans increasingly understand that a lack of health insurance means it’s difficult to get decent health care, and there’s a real prospect of financial catastrophe if they get sick. And these new additions to the uninsured population are much more likely to vote, which is another reason why the issue has become politically more important.


Posted by Matt Holt at 12:34 AM | Permalink

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